CHAPTER BASIC ELEMENTS OF ORGANISATIONAL STRUCTURE © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Lecture outline • • • • • Nature of organisational structure Job design Types of departmentalisation Methods of vertical co-ordination Promoting innovation (methods of horizontal co-ordination) © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Nature of organisational structure Formal pattern of interactions and co-ordination designed by management to link the tasks of individuals and groups in achieving organisational goals © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Nature of organisational structure Four elements: Assignment of tasks and responsibilities to individuals and units Clustering these to form a hierarchy Mechanisms for vertical co-ordination Mechanisms for horizontal co-ordination © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Nature of organisational structure • The organisation chart – Line diagram depicting broad outlines of an organisation’s structure • Principles chart design – As few hierarchical levels as possible – Charts should show who has authority over who – Charts should show official lines responsibility & communication © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Nature of organisational structure A B C I N C C E O D IR E C T O R H R M D IR E C T O R F IN A N C E D IR E C T O R SALES MANAGER F IN A N C E S U B O R D IN A T E © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Job design • Job design Specification of task activities associated with a particular job • Design jobs to enhance motivation Job simplification: breaking jobs into small elements Job rotation: moving through sets of tasks in sequence Job enlargement: wider range of similar tasks • Alternative work schedules Managing work diversity © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Managing diversity & work schedules ‘… ‘… balancing balancing work work and and personal personal life’ life’ Flexitime: Flexitime:core corehours hours to tobe beworked, worked,others others at Jobsharing: sharing: two twoor or atemployee employeediscretion discretion Job more morepeople peoplesharing sharing aafull-time full-timejob job Compressed Compressedwork work week: week:longer longer hours hoursworked worked per perday, day,shorter shorter working workingweek week © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Types of departmentalisation Departmentalisation: Clustering of individuals into units and units into departments and larger units to facilitate achievement of organisational goals • Functional • Divisional • Hybrid • Matrix © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Types of departmentalisation Functional: Functional:based basedon on expertise, expertise, skill skill&&similarity similarity ofofwork workactivity activity Divisional: Divisional:based basedon on product product orormarket marketsimilarities similarities Hybrid: Hybrid:some some activities activities grouped groupedby byfunction, function, some some by byproducts productsorormarkets markets Matrix: Matrix:Superimpose Superimpose horizontal horizontaldivisional divisional over overhierarchical hierarchical functional functionalstructure structure © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 10 Methods of vertical co-ordination Linking of activities at the top of the organisation with those at the middle and lower levels to achieve organisational goals • Formalisation • Span of management • Centralisation vs de-centralisation • Delegation • Line & staff positions © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 11 Methods of vertical co-ordination Formalisation: • Degree to which written policies, rules, procedures, job descriptions and other documents specify what actions are(not) to be taken under a given set of circumstances • Extent of formalisation tends to grow with age & size © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 12 Methods of vertical co-ordination Factors influencing span of management: – – – – – – – – High competence levels Low interaction requirements Work similarity (between organisational peers) Low problem frequency and seriousness Physical proximity Few non-supervisory duties of managers Considerable available assistance High motivational possibilities of work © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 13 Methods of vertical co-ordination Centralisation Extent to which power & authority are retained at the top organisational levels De-centralisation Extent to which power & authority are delegated to lower levels Factors favouring centralisation • • • • Large organisational size Geographic dispersion Technological complexity Environmental uncertainty © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 14 Methods of vertical co-ordination ‘… ‘…extent extentto towhich whichpower powerand andauthority authoritywill willbe beretained retainedat at upper upperlevels’ levels’ Influenced Influencedby: by: Large Largesize: size:larger larger organisations organisations likely likelyto tobe bemore more Decentralised Decentralised Technological Technologicalcomplexity: complexity: with withmore morecomplex complex technology,need technology,needto todevolve devolve authority authorityto tolower lowerlevels levels Geographic Geographicdispersion: dispersion: more moredispersed dispersedlikely likelyto tobe be decentralised, decentralised,to toenable enable control controlat ataanumber numberof ofsites sites Environmental Environmentaluncertainty: uncertainty: with withrapid rapidchange, change,need needfor formore more employees employeesto tobe beinvolved involvedinin responding respondingto tochallenges challenges © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 15 Methods of vertical co-ordination Delegation Assignment of part of a manager’s work to others, along with both responsibility & authority necessary to achieve expected results Factors restraining delegation • • • • • • Fear subordinate failure Time to train subordinates Enjoy doing tasks Release of authority Concern for task performance Fear subordinate competence © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 16 Methods of vertical co-ordination Configuration of line and staff positions: • Line authority Authority following the chain of command established by the formal hierarchy • Functional authority Authority of staff over others in the organisation in matters related directly to their respective functions e.g HRM dept © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 17 Methods of horizontal co-ordination Horizontal co-ordination: Linking of activities across departments at similar levels • Need for information processing across the organisation • Promotes innovation through dissemination of ideas & information © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 18 Methods of horizontal co-ordination Horizontal co-ordination promoted by: • Slack resources Cushion of resources that facilitates adaptations to internal/external pressures, as well as initiation of changes • Information systems One information source for many users • Lateral relations Direct contact, liaison roles, task forces, teams © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 19 Lecture summary • The nature of organisational structure – Definition – Organisation chart – Job design • Job design – Designing for motivation: • Job enlargement, rotation, enrichment, simplification • Types of departmentalisation – Functional, divisional, hybrid, matrix © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 20 Lecture summary • Methods of vertical co-ordination – – – – – Formalisation Span of management Centralisation vs de-centralisation Delegation Line & staff authority • Methods of horizontal co-ordination – – – Slack resources Information systems Lateral relations © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 21 [...]... Types of departmentalisation – Functional, divisional, hybrid, matrix © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 20 Lecture summary • Methods of vertical co-ordination – – – – – Formalisation Span of management Centralisation vs de-centralisation Delegation Line & staff authority • Methods of horizontal co-ordination – – – Slack resources Information systems Lateral relations © 2003 McGraw-Hill Australia...Methods of vertical co-ordination Linking of activities at the top of the organisation with those at the middle and lower levels to achieve organisational goals • Formalisation • Span of management • Centralisation vs de-centralisation • Delegation • Line & staff positions © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 11 Methods of vertical co-ordination Formalisation: • Degree to which... frequency and seriousness Physical proximity Few non-supervisory duties of managers Considerable available assistance High motivational possibilities of work © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 13 Methods of vertical co-ordination Centralisation Extent to which power & authority are retained at the top organisational levels De-centralisation Extent to which power & authority are delegated to... initiation of changes • Information systems One information source for many users • Lateral relations Direct contact, liaison roles, task forces, teams © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 19 Lecture summary • The nature of organisational structure – Definition – Organisation chart – Job design • Job design – Designing for motivation: • Job enlargement, rotation, enrichment, simplification... activities across departments at similar levels • Need for information processing across the organisation • Promotes innovation through dissemination of ideas & information © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 18 Methods of horizontal co-ordination Horizontal co-ordination promoted by: • Slack resources Cushion of resources that facilitates adaptations to internal/external pressures, as well as... part of a manager’s work to others, along with both responsibility & authority necessary to achieve expected results Factors restraining delegation • • • • • • Fear subordinate failure Time to train subordinates Enjoy doing tasks Release of authority Concern for task performance Fear subordinate competence © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 16 Methods of vertical co-ordination Configuration... Configuration of line and staff positions: • Line authority Authority following the chain of command established by the formal hierarchy • Functional authority Authority of staff over others in the organisation in matters related directly to their respective functions e.g HRM dept © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 17 Methods of horizontal co-ordination Horizontal co-ordination: Linking of activities... descriptions and other documents specify what actions are(not) to be taken under a given set of circumstances • Extent of formalisation tends to grow with age & size © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 12 Methods of vertical co-ordination Factors influencing span of management: – – – – – – – – High competence levels Low interaction requirements Work similarity (between organisational peers)... levels Factors favouring centralisation • • • • Large organisational size Geographic dispersion Technological complexity Environmental uncertainty © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 14 Methods of vertical co-ordination ‘… ‘…extent extentto towhich whichpower powerand andauthority authoritywill willbe beretained retainedat at upper upperlevels’ levels’ Influenced Influencedby: by: Large Largesize:... decentralised,to toenable enable control controlat ataanumber numberof ofsites sites Environmental Environmentaluncertainty: uncertainty: with withrapid rapidchange, change,need needfor formore more employees employeesto tobe beinvolved involvedinin responding respondingto tochallenges challenges © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 15 Methods of vertical co-ordination Delegation Assignment of