ORGANISATIONAL STRUCTURE LECTURE 11 ORGANISATIONAL STRUCTURE

Organisational Policy & Objectives Objectives set out more specifically the goals of the organisation, the aims to be achieved and the desired end results Policy is developed within the framework of objectives. It provides the basis for decision-making and course of action to follow in order to achieve the objectives. Policy is translated into rules, plans and procedures.

Critical Reflection ‘In large scale organisations, the goals and objectives of the organisation, management and the workforce are never likely to be fully compatible. Attempts at harmonisation are not worth the effort and may cause further friction. It is easier just to accept the inevitability of organisational conflict’. To what extent do you agree? How would you attempt to achieve compatibility of goals and objectives?

A systems view of organisational goals and objectives

Dimensions of organisational structure It is unclear whether organisational structure follows the corporate strategy or strategy follows the organisational structure Although it may not be possible to define which one comes first, there is the need to ensure that strategy and structure are consistent with each other

Organisational structure defined It is the division of work among members of the organisation and the co-ordination of their activities so that it can be directed towards the goals and objectives of the organisation. The structure defines tasks and responsibilities, work roles and relationships as well as channels of communication.

Objectives of structure The objectives of organisational structure can be summarised as to provide: The economic and efficient performance of the organisation and the level of resource utilisation Monitoring the activities of the organisation Accountability for areas of work undertaken by groups and individual members of the organisation

Objectives of structure cont’d Co-ordination of different parts of the organisation and different areas of work Flexibility in order to respond to future demands and developments and to adapt to changing environmental influences The social satisfaction of members working in the organisation

Organisational structure and culture Culture is a contingent factor of structure Watson (1998) suggests that we must be careful not to treat structures and culture as if they are solid things that exist separately from the processes and relationships that the two concepts are intended to help us make sense of.

The importance of good structure According to Drucker, it is the correct design of structure that is of most significance in determining organisational performance …the form of organisational structure we employ transports values back into society and carries a message about how to treat people Child

Division of work by major purpose or function

The Human Element The functions of the formal structure, the activities and the defined relationships within it exist independently of the members who carry out the work. However, personalities are important part of the working of the organisation Lord Forte , drew attention that the human aspect in a business is vital; you can keep drawing squares and lines, but within these squares you must have people and they must be deeply involved with the business. If this does not happen, then the lines and squares and diagrams mean nothing

The interrelated levels of organisation Organisations are layered. The determination of policy and decision-making, the execution of work, the exercise of authority and responsibility are carried out by different people at varying levels of seniority throughout the organisational structure The three broad interrelated levels of the hierarchy are: technical level, managerial level/Institutional level and the community level

Interrelated levels of organisation

The interrelated levels of organisation explained The Technical Level: is concerned with specific operations and discreet tasks to be done. For example the physical production of goods in a manufacturing firm. Managerial/Organisational Level: is concerned with the co-ordination and integration of work at the technical level. Decisions at this level relate to the resources needed for performance at the technical level.

The interrelated levels of organisation explained The Community or Institutional Level: concerned with broad objectives and the work of the organisation as a whole. Discussions at this level include selection of operations and development of the organisation. Examples of community level within organisation are the Board of Directors, governing bodies of educational institutions, trustees of an NGO.

Interrelationship of Levels In practice there is no clear division between determination of policy and decision-making. The levels interrelate for example; decisions taken at the community or institutional level determines objectives for managerial level and decisions at the managerial level set the objectives for the technical level

Underlying features of organisational structure Variables that influence organisational structures and system of management include situational factors and contingency approach. The following also influence decisions on structural design: Changing patterns of work organisation Managerial processes such as delegation and empowerment

Reflections Organisations are collections of people brought together for a purpose. To achieve this purpose successfully, people need to be organised within the best possible structure. Decisions on structure are primary strategic decisions. Structure can make or break an organisation

Basic considerations in the design of organisation structure

The Task and Element Functions In order to produce a good or service, there are four essential functions that the organisation must perform and these are: The good or service must be developed Something of value must be created The product or service must be marketed Finance is needed to make available resources used in developing, creation, marketing and distribution of product or service. These essential functions are referred to as TASK FUNCTIONS

The Task and Element Functions cont’d However, other activities of the organisation are not directed towards specific and definable ends but are supportive of the task functions and an Intrinsic part of the management process. These are referred to as ELEMENT FUNCTIONS examples of element functions are: Human Resource Management, Quality Control Division, Public Relations.

Task and Element functions cont’d However, it must be noted that what constitute a task or element function may depend on the type of organisation.

Implications of Task and Element Functions on Organisational Structure The two kinds of functions differ in a number of ways and have important implications for Organisations. Failure to distinguish between the two types of functions can lead to confusion in the planning of structure and in the relationship between members of the organisation.

Implications of Task and Element Functions on Organisational Structure For example activities concerned with raising funds for the business, keeping accounts and determination of financial policy are seen as Task Functions. Management accounting concerned with prediction and control of production administration is an element function. Hence primarily a servicing and supportive one.

Critical Reflection ‘Many organisationsal conflicts arise through element and task functions. Such as the Human Resource Management overstepping responsibilities and the failure to recognise that their primary function is to support the essential task functions of the organisation’ What are your views? What has been your experience between the task and element functions?

Division of work and grouping of people The most commonly used basis for grouping activities is according to specialisation, the use of same set of resources or the shared expertise of members of staff. Each organisation is different it is a matter of decision as to which activities are important enough to be organised into separate functions i.e department, sections or units.

Division of work by major purpose or function

Division of work by product or service

Division of work by location

Factors to consider for groupings The culture of the organisation The need for co-ordination The identification of clearly defined divisions of work Economy The process of managing the activities Avoiding conflicts The design of work organisation which takes account of the nature of staff employed, their interests and job satisfaction.

Centralisation and Decentralisation The balance between centralisation and decentralistion is one of the major debates in organisational structure Each approach has its advantages and drawbacks

Advantages of centralisation or decentralisation

Principles of Organisation The classical writers placed emphasis on the definition of organisational structure in terms of division of work, chain of command, span of control and reporting relationships. Urwick, L. (1947) originally identified 8 principles of organisation and later reviewed to 10 as follows:

Principles of Organisation The principle of the objective The principle of specialisation The principle of co-ordination The principle of authority The principle of responsibility The principle of definition The principle of correspondence The principle of span of control The principle of balance The principle of continuity

Span of control and the Chain of command Span of control refers to the number of subordinates who report directly to a given manager or supervisor. According to Urwick the span of control to a given supervisor or manager should not exceed six (6)

Span of control and the Chain of command The chain of command refers to the number of different levels in the structure of the organisation sometimes called the scalar chain. The chain of command establishes the vertical graduation of authority, responsibility and the framework for superior-subordinate relationships in an unbroken line down from the top of the organisation. WHERE DO YOU FIND YOURSELF IN THE SPAN OF CONTROL AND CHAIN OF COMMAND?

How span of control affects organisational structure

Critical reflection: Is the hierarchy obsolete? Advancement through the hierarchy is seen as an indicator of career progression, recognition of merit and reward for hard work. Organisations are a form of social stratification. Removing the hierarchy will only cause lack of ambition and dissatisfaction’ To what extent do you think this statement has any validity in modern work organisations? How do you feel about working in an organisation with little or no hierarchy?

Effects on lack of organisational structure or deficiency in the structure Organisational life becomes illogical because in good social practice no member should be appointed to a senior position without identification of responsibilities and relationships attached to the position Cruelty on staff not knowing exactly their role in the organisation. Likely to be blamed for poor performance.

Effects on lack of organisational structure or deficiency in the structure Organisations may waste their human resources because jobs are not put in functional specialisations Inefficiency because the organisation is not founded on any principles and managers are forced back on personalities. Playing politics on promotion, study leave etc by managers

Effects on lack of organisational structure or deficiency in the structure Low motivation and morale Late and inappropriate decisions Conflict and lack of co-ordination Poor response to new opportunities Rising costs Provides opportunity for illicit activities of staff

Empowerment & Control The various activities of the organisation has to be planned, organised, directed and controlled. It is important that individuals are empowered with authority that commensurate with their positions for the effective control of organisational operations

WHERE IS THE STRUCTURE OF YOUR ORGANISATION? Contributions Questions Criticisms Please do not go and change your organisational structure always advise and remember organisational structure is a strategic decision