Organisation Structure The established pattern of relationships among the component parts of the organisation The features which serve to control or distinguish its parts

Formal Structure Often Described In Terms Of: The pattern of formal relationships and duties - charts, job descriptions, etc. The way in which the various activities or tasks are assigned to differentiate departments and/or people - differentiation The way in which separate activities or tasks are co-ordinated -integration The power, status, and hierarchical relationships within the organisation - the authority system The planned and formalised policies and procedures and controls that guide the activities and relationships of people in the organisation - the administrative system

Differentiation The state of segmentation of organisational systems into components. Vertical differentiation:- decision making and authority at different levels in the organisation Horizontal differentiation:- tasks; units, etc, differences at the same level of hierarchy

Integration The degree of co-ordination and control which exists between the various levels and activities of the organisation. Conventional integration mechanisms:- rules, policies, procedures, hierarchical referral Non-conventional integration mechanisms - management into-systems, integrator roles, cross functional teams, re-organisation into a matrix structure

Co-Ordination Mechanisms Mutual adjustment Direct supervision Standardisation: work processes outputs skills and/or knowledge norms or values necessary because of differentiation and division of labour

Basic View Of "Strategy-Structure" Relationship “fit”

Crucial Elements Of Chandlers Thesis 1. Organisation structure follows the growth strategies of the firm. 2. USA firms had followed a stage or stepwise process of development of strategies and structures. 3. Organisations do not change their structures until provoked by inefficiencies to do so. 4. Added later by Drucker and Miles and Snow: "structure constrains strategy".

Organisational Design Variables Product/market policies Task uncertainty diversity interdependence People recruitment, selection transfer & promotion training & development Structure division of labour departmentalisation shape distribution of power Reward Systems compensation promotion leadership style job design Information & Decision Processes planning & control budgeting integration mechanisms performance measures Success

Approaches To Organisational Design The One Best Way Approach e.g. scientific management, bureaucracy, administrative management, management by objectives, long range planning, organisational development and so on. All organisations should be of the same design. The Contingency Approach e.g. it all depends upon the situation facing the firm. The situation determines the design. The Configuration/Context Approach e.g. design parameter and situational factors cluster together into internally consistent groupings. Design and situation relationship is symbiotic not deterministic.

Organisation Design (1) Individual positions job specialisation behaviour formalisation training indoctrination The skeletal structure bases for establishing groupings function/activity knowledge, skill, process, function market output, client, place (time may be a sub category of either) size of units

Organisation Design (2) Design of lateral linking devices liaison devices planning and control systems Design of decision making systems centralised decentralised

Basic Contingency Model Organisation Design Organisation Effectiveness Organisation Environment

Situational Factors (1) Perception of environment Age of industry different configurations favoured at different times. of organisation increasing age increasing formalisation Size of organisation growth leads to increasing average unit size, increasing formalisation, more elaborate configuration

Situational Factors (2) Technical system in operating core regulatory systems formalisation and bureaucracy complexity elaborate administrative system and selective decentralisation automation organic administrative systems Power increasing external control, centralisation & formalisation individuals favour centralisation fashion overrides common sense

Why Do Configurations Exist? The ”Darwinian" Perspective survival of the fittest The ”Harmony” Perspective consistency, synergy, strategic fit The ”Quantum Leap” Perspective approach to strategic change

Six Basic Elements Of The Organisation the strategic apex the middle line the technostructure the support staff the operating core the ideology

Six Basic Elements Of The Organisation

Six Structural Configurations the simple structure pull to centralise the machine bureaucracy pull to standardise the professional bureaucracy pull to professionalise the divisionalised form pull to balkanise the adhocracy pull to collaborate the missionary pull to evangelise

The Simple Structure (1) Key co-ordinating mechanism direct supervision Key element strategic apex

The Simple Structure (2) Design parameters Specialisation - little Training - little Indoctrination - little Formalisation of behaviour - little Style - organic Groupings - functional Unit size - wide Planning and control - no formal systems Liaison devices - few Decision making power - centralised Situational factors Age and size - young and small Technical system - simple, not regulatory Environment - simple, dynamic (hostile?) Power source - Managing Director authority and control

The Entrepreneurial Context (1) Dominated by a single individual, with clear and distinct mission, directing a responsive organisation new organisations small organisations crisis organisations autocratic organisations charismatic organisations entrepreneurial organisations The Simple Structure

The Entrepreneurial Context (2) Environment tends to be: simple dynamic nichés in existing fragmented mature industries Advantages centralisation strong ideology effective in some situations Disadvantages confusion inefficient vulnerable to loss of leader narrow environment range leader resists change abuse of authority

The Machine Bureaucracy (1) Key co-ordinating mechanism standardisation of work Key element technostructure

The Machine Bureaucracy (2) Design parameters Specialisation - high; vertical & horizontal Training - little Indoctrination - little Formalisation of behaviour - high Style - bureaucratic Groupings - functional Unit size - wide in operating core, narrow elsewhere Planning and control - action planning Liaison devices - few Decision making power - limited horizontal decentralisation Situational factors Age and size - old and large Technical system - simple, not automated or sophisticated Environment - simple, stable Power source - technocratic and external

The Machine Bureaucracy The Mature Context (1) An integrated set of simple, repetitive tasks must be performed precisely and consistently by human beings Found in:- older mature organisations with regulatory technical systems. Strong external control by dominant stakeholder Regulatory functions Safety conscious organisations The Machine Bureaucracy

The Mature Context (2) Environment tends to be: simple stable demanding mass provision of goods and services Disadvantages boring, repetitive work inflexibility conflict limited scope of personal development Advantages control / accuracy certainty / precision efficiency (?)

The Professional Bureaucracy (1) Key co-ordinating mechanism standardisation of skills Key element operating core

The Professional Bureaucracy (2) Design parameters Specialisation - high in horizontal plane Training - high Indoctrination - little Formalisation of behaviour - little Style - bureaucratic Groupings - functional and market Unit size - wide in operating core, narrow elsewhere Planning and control - little Liaison devices - roles in administration Decision making power - horizontal decentralisation Situational factors Age and size - variable Technical system - not regulatory or sophisticated Environment - complex and stable Power source - professional operator control

The Professional Context (1) Organisations designed to deal with stable yet high complex working patterns Organisations tend to be: public service personal service orientated missing regulatory, sophisticated or automated technical systems strong operating core & support staff bases The Professional Bureaucracy

The Professional Context (2) Environment tends to be: stable complex Disadvantages lack of control co-ordination difficulties discretion over use of standard programmes innovation inflexibility Advantages Democratic provides extensive autonomy

The Divisionalised Form (1) Key co-ordinating mechanism standardisation of outputs Key element middle line

The Divisionalised Form (2) Design parameters Specialisation - high in horizontal and vertical plane Training - little Indoctrination - some in key roles Formalisation of behaviour - high Style - bureaucratic Groupings - market Unit size - wide at top Planning and control - high performance control Liaison devices - few Decision making power - limited vertical integration Situational factors Age and size - old and very large Technical system - divisible, often mirroring machine bureaucracy Environment - diverse Power source - middle line control

The Diversified Context (1) A set of quasi-autonomous units coupled together by a central administrative structure Organisations have diverse markets created by product/service or client or regional segmentation. Client and regional segmentation encourages superimposition of machine bureaucracy in operating core Technical system divisible into efficient units. Larger, older firms. The Divisionalised Form

The Diversified Context (2) Environment tends to be: multiple simple static Advantages strategic flexibility efficient allocation of capital helps personal development spreads risk responsiveness Disadvantages expensive duplication lack of central control extended shareholder grouping lack of synergy quantitative performance measures

The Adhocracy (1) Key co-ordinating mechanism mutual adjustment Key element support staff

The Adhocracy (2) Design parameters Situational factors Specialisation - high in horizontal plane Training - high Indoctrination - some Formalisation of behaviour - little Style - organic Groupings - functional and market Unit size - narrow Planning and control - limited action planning Liaison devices - many and various Decision making power - selective decentralisation Situational factors Age and size - young Technical system - sophisticated and automated or simple and non-regulatory Environment - complex and dynamic Power source - expert control

The Innovation Context (1) Organisations designed to deal with complex technologies and systems under conditions of severe dynamism. Organisations tend to be:- operating adhocracy administrative adhocracy entrepreneurial adhocracy competitive adhocracy temporary adhocracy mammoth project adhocracy automated adhocracy Young organisations - age breeds standardisation The Adhocracy

The Innovation Context (2) Environment tends to be: dynamic complex Advantages copes with difficult conditions provides challenges very effective Disadvantages confusion and ambiguity inefficient internal politics and conflict group goals must dominate unbalanced workloads drift towards other configurations

The Missionary Organisation (1) Key co-ordinating mechanism standardisation of norms Key element ideology

The Missionary Organisation (2) Design parameters Specialisation - little Training - little Indoctrination - high Formalisation of behaviour - little Style - bureaucratic Groupings - market Unit size - wide Planning and control - little Liaison devices - few Decision making power - decentralised Situational factors Age and size - middle range Technical system - simple and non-regulatory Environment - simple, usually stable Power source - ideological control

Configurations as One System Simple Structure Ageing Professionalism complexity hostility hostility complexity Machine Bureaucracy Professional Bureaucracy rationalisation automation sophistication dynamism diversification hostility Ageing / success success in one area consolidation complexity fragmentation Divisionalised Form Adhocracy dynamism

A Portfolio Of Configuration At The Business Level Stars simple structures Question Marks adhocracies or simple structures Cash Cows machine or professional bureaucracies Dogs machine or professional bureaucracies R & D adhocracies