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D39BU – Business Management in the Built Environment

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1 D39BU – Business Management in the Built Environment
Company Organisation Dr. Turker Bayrak

2 Learning Outcomes Explain the meaning & nature of organisation structure. Identify levels of organisation & debate the importance of the hierarchy. Explore the factors to be considered in the design of organisation structure. Explain the importance of good structure & consequences of a deficient structure. Review the relationship between the structure of an organisation & the people who work within it.

3 Introduction The intensification of research on organisational effectiveness by scholars in the fields of management, social anthropology and organisational development has led to the identification of several organisational factors that have influential roles on the determination of organisational performance. (Becker, 2001)

4 Organisations are made up of complex & dynamic systems comprising:
Organisation Strategy, Structure & Culture which affect the implementation of organisational goals & objectives

5 In order to achieve its goals & objectives, the work of an organisation has to be divided among its members.

6 Some structure is necessary to make possible the effective performance of key activities & to support the efforts of staff.

7 Organisation Structure
Structure provides the framework of an organisation & its pattern of management.

8 Organisation Structure
It’s by means of structure that the purpose & work of the organisation are carried out.

9 Organisation Structure
Who reports To whom & For what

10 Class Activity Examine critically arrangements for the division of work & linking together of activities in your own/ some other organisation of your choice. Design the organisation chart. Comment on the apparent effectiveness of this organisation structure. Give reasons, together with practical examples, in support of your comment. Explain fully changes you would recommend in order to help improve organisational performance.

11 Organisation Structure is determined by Purpose of the group
People who make up the group Tasks involved in goals of the group Culture (values) of the group Authority, formality, centralisation of decision-making Degree of specialisation, standardisation External environment

12 Design Process The purpose and goals of the organisation must be very clear. The design process of organisation structure consists of four elements: Assignment of tasks and responsibilities for the individual job positions, Grouping the individual positions into units and departments, Determining various mechanisms for the vertical co-ordination, and Determining various mechanisms for the horizontal co-ordination

13 Organisation Chart An organisation chart is a simple line diagram showing the organisation’s structure.

14 Organisation Chart The organisation chart normally depict:
major organisation positions, chain of command, reporting relationship, and communication channels

15 Chairperson, M.D., and C.E.O. Secretary’s Office GM Marketing General Counsel Operations H.R. Finance Market Support Communication Field Mgmt Region 2 Field Mgmt Region 1 Actuarial Insurance Operations IMS Health Unit H.R. Develop Training Investment Internal Audit Financial Analysis Real Estate Tax

16 Types of Organisation Structure
Functional organisation Product-based organisation Geographical organisation Divisionalised organisation Matrix oranisation

17 Functional Organisation Structure

18 Functional Organisation
Advantages Tasks are linked on basis of common functions (marketing, finance, etc) Better opportunities for advancement Disadvantages Hierarchical chain of command Particular functional groups are constrained by overall organisational goals

19 Product-based Organisation Structure

20 Product-based Organisation
Advantages Each group has its own functional specialism Can better cope with change/needs Disadvantage Each general manager may impede other sections by his own motivations

21 Geographically-based Organisation Structure

22 Geographical-based Organisation
Advantages Located in/near regional decision-making centres Disadvantages Very decentralised Can have control/communication difficulties

23 Divisionalised Organisation Structure

24 Divisionalised Organisation
Advantages Divided into specialised divisions (product and/or geographical) Each division has its own functional groups, in addition to HQ functional groups Good for highly diversified groups in many regions Disadvantages Complex chain of command

25 Matrix Structure

26 Matrix Management All resources and skills are equally shared across the organisation Suits a project oriented organisation Can be very efficient way of utilising resources Provides variety of projects, and hence can be stimulating and satisfying for employees It may result in overloading of some members Allocation of resources between different projects can be challenging.

27 Matrix Structure

28 Matrix Organisations A functional organisation with project-based structures Advantages Helps the functioning of highly complex industries, such as aircraft manufacture Provides stability and efficiency of hierarchical structure with flexibility and informality of team work Project manager has direct contact with clients

29 Project 3 4 1 2 Engineer System Installer Tech

30 Division C D A B Human Resources Quality Assurance Finance Product
Management Finance

31 Matrix organisation – some practical experiences
Enforces uniform policy application across divisions. Facilitates sharing of specialised resources. Brings together functional expertise and customer responsiveness. BUT Can result in responsibility conflicts and confusion in responsibilities and reporting. (Who’s my boss?) Overall resource planning has to be effectively managed – otherwise overloads and/or poor utilisation.

32 Matrix Organisations Disadvantages
Potential conflict over resources and division of authority Possibility of divided loyalties between project groups and functional groups

33 Informal Organisations
As well as formal structures, organisations do have informal structures not designed by management but emerging from common the interest or friendship. Informal organisation elements also impact on how organisations behave.

34 Span of Management Span of management, or span of control, is the number of subordinates reporting directly to a specific manager. Managers should have neither too many nor too few subordinates. Then, what is a “good balance” of the span of management?

35 Span of Control "The nearer we approach the supreme head of the whole organization, the more we ought to work towards groups of three; the closer we get to the foot of the whole organization, the more we work towards groups of six.“ The Soul and Body of an Army Arnold, London, 1922, p.229

36 Wider Span of Management
Research indicates spans of management can be wider under certain circumstances: Subordinates' work is such that little interaction with others is required. Managers and/or their subordinates are highly competent. The work of subordinates is similar. Problems are infrequent.

37 Subordinates are located in close physical proximity to one another.
Managers have few non-supervisory duties to perform. Managers have additional help such as secretaries or assistants. The work is challenging enough to motivate subordinates to do a good job. (From GA’s experience, a critical factor is the individual manager’s ability to delegate. Refer P282 of text –’Guidelines for effective delegating’).

38 How span of control affects organisational structure
49 Positions No of Levels = 3

39 How span of control affects organisational structure
49 Positions No of Levels = 4

40 Hierarchical Levels Organisational effectiveness is influenced by the number of its hierarchical levels. Problems with very tall organisations: high administrative overhead, slow communication and decision making, more difficult to pinpoint responsibility for various tasks, and encouragement of formation of dull, routine jobs.

41 Centralisation Decentralisation
Allocation of authority Authority: Legitimate power to commit people, money and materials Oranisations must decide how much authority to delegate From the top (pyramid hierarchy) From the centre (small entrepreneurial)

42 Critical Reflection The trend is towards more horizontal structures, teamwork, empowerment, flexible working arrangements & informal relationship. Do you believe this has reduced significantly the need for, & importance of formal organisational structures? What do you see as the likely effects of developments in ICT for organisational structure design?

43 Centralisation Decentralisation
Highly centralised Senior managers hold the authority Highly decentralised Authority is widely diffused at every level What are the implications of each approach to organisations?

44 Decentralisation Advantages Disadvantages
Prevents top management overload Speeds operational decisions Contributes to staff motivation Disadvantages Requires good communication Requires good managerial coordination May result in conflict between departments

45 Terminology Authority Responsibility (accountability)
Legitimate power to commit people, money and materials At the top or delegated from the top Responsibility (accountability) Obligation to perform Can not be delegated

46 Terminology Power Empowered Ability to implement actions
May have authority but lack power Empowered Managing people such that team members are given authority to make decisions on day-to-day basis

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