Organisations - structure, functions and culture

Objectives n Be able to describe the ways in which organisations may be structured n Know the characteristics of tall and flat organisational structures n Understand centralisation/decentralisation n Have an overview of organisational functional areas n Know the importance of information systems in organisations

First - a definition! n “the structure of an organisation can be defined simply as the sum total of the ways in which it divides its labour into distinct tasks and then achieves coordination between them” (Mintzberg, 1979)

Purpose of Organisational Structure n To allocate tasks and responsibilities (DISINTEGRATION) n To identify and clarify roles and levels of responsibility n To coordinate activities and roles once allocated n (INTEGRATION) n To facilitate and regulate information flows and decision making processes n To serve, in some measure, as a means of resolving differences

Issues! n Task differentiation - how much? n Tight or loose control? n Mechanistic Vs organic? n Central or devolved authority? n Prescriptive job definition? n Span of control? n Communication flows/decision making? n External (environmental) factors?

Basic factors involved n Purpose and goals n Tasks n People n Technology n Culture n External environment

Functional Specialisation n Professional expertise enhanced n Usually effective in practice n Traditional form of departmentalisation n Readily accepted by employees n Sub-optimality n Problems adapting to change (geographical, product diversification) n Narrow functional experience less suitable as training for general managers AdvantagesDisadvantages

Geographical Specialisation n Faster decisionmaking n Uses local knowledge n Speedier reaction time n Some operating costs lower (storage, transport) n All round experience good training for managers n Loss of control by “head office” n Problems co-ordinating local activities n Duplication of effort AdvantagesDisadvantages

Product Specialisation n Develops expertise in products/services n Responsibilities clearly identified n Diversification and technological change easier to handle n Sub optimality again! n Possible co-ordination problems n Loss of control by senior management AdvantagesDisadvantages

Project C Manager Matrix Structure (1) Chief ExecProductionFinanceResearchMarketing Project A Manager Project B Manager Vertical flows - functional authority Horizontal flows - Project authority

Matrix Structure (2) n Can help motivation n Helps direct effort n Can result in “division of authority/responsibility” conflicts n Resource allocation problems n Resentment of “functional heads” n One man, One boss?! Tries to combine stability & efficiency of “functional” division with flexibility and directness of “project based” division

Factors influencing span of control Narrow spanWider Span Complex work Simple work Uncertain environment Stable environment Less able subordinates Able subordinates More risk/dangerLess risk/danger Less able managerAble manager

“Tall” Vs “Flat” structures n Size of organisation n Complexity & nature of operations n Production methods n Technology n Management style n Amount of delegation n Spans of control n Ability of managers & personnel

“Tall” Vs “Flat” structures n Larger size n Many levels n Narrow span of control n Long chain of command n More formality, specialisation & standardisation n Smaller size (usually) n Fewer levels n Broad span of control n Short chain of command

Decentralisation advantages n Improvement of local decision making n Improvement of strategic decision making n Increased flexibility n Reduced communication problems n Increase motivation of local management n Better training for junior management

Decentralisation disadvantages n Possible sub-optimal decision making n More co-ordination problems n Control and monitoring problems n Needs intelligent & well motivated junior managers

Don’t decentralise! n Decisions about technologies, markets & products n Decisions about diversification and contraction n Decisions about corporate finance n Decisions about corporate personnel policy and key appointments (Drucker)

The “Flexible Firm” n Core versus peripheral activities n Functional flexibility for core activities n Polyvalence/multiskilling n One man, one job? n Numerical flexibility for peripheral activities n Outsourcing n “Hire & fire”

Business Functions n Marketing n Production n Finance n Personnel n Administration

Marketing n What does the customer need? n Product design n Production levels n Storage, distribution and delivery n Market Research n Advertising n Selling

Production n Making or assembling product from raw materials or components n Types of production ä One-off ä Small batch ä Large batch ä Continuous process

Finance (1) n Financial accounting ä “keeping the books” ä provision of info for taxation authorities ä production of statutory and traditionally required documents

Finance (2) n Management accounting ä Provision of information for decisionmaking n Budgets ä statements of resources available for a given period ä expenditure monitoring and control n Financing ä Amounts and methods of raising funds

Personnel(1) n Recruitment n Deployment n Training n Selection for promotion/advancement

Personnel(2) n Wages/salaries & benefits n grievances and discipline n Termination of employment ä retirement ä redundancy ä dismissal ä death!

Administration n Creating and operating rules, procedures and regulations n Implementing decisions and directives n Creating and maintaining channels and media for communication n Implementing changes in organisational policy

Effects on Info. Systems n IS must be tailored to suit needs n Consider information flow requirements n Consider control issues n Consider culture n Consider degree of centralisation n Consider empowerment/delegation issues n Consider available technology!

Further Reading n Bott et al sections 2.3, 3, 4, 8 n Butel L et al (2002), Business Functions, an Active Learning Approach, Blackwell, Oxford ä Sections 1.1 and 4 n Learnmanagement link Learnmanagement link