Starter Activity Name 3 types of organisation structure What does ‘centralised’ mean? What does ‘decentralised’ mean? What are SoC’s and CoC’s? Describe Merlin’s overall org structure

Organisation Type

Organisation Type Different types of business have different types of organisational structure Financial services firms are known for having tight procedures and rigorous control systems.  Staff in design agencies, on the other hand, can sometimes seem to operating as free agents.  Big organisations merge to achieve "synergies", but they sometimes also split divisions out into separate, more agile companies. How can you determine the best structure for your business?

Henry Mintzberg According to renowned management theorist Henry Mintzberg, an organisation's structure emerges from: The aims and objectives of the organisation The environmental forces it experiences The way in which the business is set up When these fit together well, they combine to create organisations that can perform well. When they don't fit, then the organisation is likely to experience severe problems.

Henry Mintzberg Different structures arise from the different characteristics of these organisations, and from the different forces that shape them (which Mintzberg calls the "basic pulls" on an organisation). By understanding the organisational types that Mintzberg defines, you can think about whether your company's structure is well suited to its conditions. If it isn't, you can start to think about what you need to do to change things.

Mintzberg’s 5 components of an organisation

Mintzberg’s 5 components of an organisation An organisation begins with a person who has an idea- strategic apex, or top management. As the organisation grows, it acquires intermediate managers between the chief executive and the workers. These managers form the middle line. The organisation may also find that it needs two kinds of staff personnel. Technostructure- formal planning and control of the work Support staff The basic work of the organisation- called the operating core.

Mintzberg’s 5 organisational types The main successful organisational structures that he identifies are as follows The entrepreneurial organisation. The machine organisation (bureaucracy). The professional organisation. The divisional (diversified) organisation. The innovative organisation ("adhocracy").

Mintzberg’s 5 organisational types Organisation Type Type of structure Who might use it? Other key features Entrepreneurial Organisation Machine Organisation Professional Organisation Divisional Organisation Innovative Organisation

Entrepreneurial Organisation An entrepreneurial company has a flat organisational structure and is typically driven by entrepreneurial-minded or creative types of leaders. Startup companies managed by their founders commonly exemplify this organisational type. Forward-thinking ideals, energy and enthusiasm are common strengths. Limited structure, poor task discipline, inefficiency and controlling management are potential drawbacks or risks if emphasis isn't placed on defined work processes.

Machine Organisation Often tall, complicated structures Mintzberg labeled a highly bureaucratic organisation as being like a "machine.” Government agencies and other types of large, set-in-their-ways corporations epitomize this style. While structure, consistency and longevity are strengths limited openness to new ideas and inefficiencies resulting from bureaucratic processes are common deficiencies.

Professional Organisation The professional organisation type has a similar level of bureaucracy to the machine type. However, it is characterized by a high degree of professional, competent knowledge workers who drive the economic engine. These technically skilled workers usually have specialized skills and autonomy in their work, making for more decentralized decision making than is prevalent in the machine type.

Divisional Organisation Tall structures or Matrix Structures A divisional structure is most common in large corporations with multiple business units and product lines. In some cases, companies divide their businesses and products into divisions to promote specific management of each division. Centralized control is common in this format with divisional vice presidents overseeing all aspects of the work within their respective divisions.

Innovative Organisation Small flatter structures An organisational type that allows for cutting-edge leadership is the innovative type. This is common in new industries or with companies that want to become innovative leaders. Decentralized decision making is a key trait as talent leaders are allowed to make judgments with efficiency in mind. The potential for leadership conflict and uncertainty over authority are drawbacks.

Today Mintzberg believes that structures are often a product of their time. He states that simple structures and machine bureaucracies were a feature of the past, when developed economies were highly reliant on large-scale production and manufacturing. By contrast, professional bureaucracies and the divisionalised form are more common today. Mintzberg predicts that the adhocracy/innovative will become more important in the future.

Limitations There's no one "right" organisational structure Mintzberg gives us a useful description of common structures that are appropriate in different circumstances. None of these is necessarily ideal, and they're very simplified versions of what exists in real life. In fact, it's common for a company to have a combination of elements of each structural type.

Which one best describes Merlin PLC?

Divisional Organisation A central headquarters supports a number of autonomous divisions that make their own decisions, and have their own unique structures. You'll often find this type of structure in large and mature organisations that have a variety of brands, produce a wide range of products, or operate in different geographical regions. Any of these can form the basis for an autonomous division. The key benefit of a divisional structure is that with day-to-day decision-making decentralized, the central team can focus on "big picture" strategic plans. This allows them to ensure that the necessary support structures are in place for success. A significant weakness is the duplication of resources and activities that go with a divisional structure. Also, divisions can tend to be in conflict, because they each need to compete for limited resources from headquarters. And these organisations can be inflexible, so they work best in industries that are stable and not too complex.

Divisional Organisation How can this help Merlin to exploit Market Opportunities? How can this help Merlin to operate efficiently How would this motivate staff?