Organisation Analysis and Design

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Organisation Analysis and Design

• Structural Frame I Traditional Forms and
  Contingencies

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Overview of this Weeks Class

• Importance of the structural frame
• Classic forms of organising
• The life-cycle of organisations
• Organisational simulation
• Design contingencies
• The purpose of organisations

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(No Transcript)
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Functional Structure
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Advantages of the Functional Structure

• Maximizes functional interests
• Efficient use of resources
• Simple communication
• Measurement of functional outputs
• Simplifies training of specialists
• Status to functional areas
• Top strategic control preserved

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Disadvantages of the Functional Structure

• Difficult cross functional coordination
• Parochial objectives
• Cost of coordination can be high
• Change difficult
• Little broad training
• Interdepartmental rivalry
• Low client satisfaction

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Divisional Structure

• By Product
• By Region
• By Customer Base

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Advantages of Divisional Structure

• Autonomous profit centres
• Accommodates growth
• Rapid functional coordination
• Structural flexibility
• More client focus
• Broad training

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Disadvantages of Divisional Structure

• Coordination problems between specialist areas
• Decreased functional communication
• Duplication

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Hybrid Structure
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Matrix Structure
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Advantages of the Matrix Structure

• Adapts to fluctuating work loads
• Innovation/responsiveness
• Focal person for projects
• Maximum use of functionalist specialists
• Home base between projects
• Diversified training

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Disadvantages of the Matrix Structure

• Premium on teamwork
• Interpersonal and command conflict
• Project/functional manager power struggles
• Slow decision-making

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Stop and Think

• Imagine you are the CEO of a large multinational
  corporation.
• When would you choose which structure for your
  organisation?
• Why?

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The Life-Cycle of Organisations

• The Story of Ms. Raku

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Exercise

• Organisational Simulation

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Debriefing
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Contingency Factors

• Tall/flat - size
• Environment
• Strategy
• Technology

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Size

• Span of Control
• Small groups in tall hierarchies
• Big groups in flat hierarchies

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Effectiveness

• Wider spans of control
• when work does not interlock
• in professional organisations
• in knowledge based organisations

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Environment
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Dimensions of the Environment

• Stability
• predictable versus unpredictable changes
• Complexity
• easily versus hardly comprehensible knowledge
  requirements
• Market Diversity
• integrated versus diversified
• Hostility
• munificent to hostile

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Mintzbergs Hypotheses

• The more dynamic the environment, the more
  organic the structure.
• The more complex the environment, the more
  decentralised the structure.
• The more diversified the organisations markets,
  the greater the propensity to split it into
  market-based units (given favourable economies of
  scale)

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Mintzbergs Hypotheses (cont.)

• Extreme hostility in its environment drives any
  organisation to centralise its structure
  temporarily.
• Disparities in the environment encourage the
  organisation to decentralise selectively to
  differentiated work constellations.

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Types of Environments
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Stop and Think

• Does the environment select an appropriate
  structure?
• Does a structure enact an appropriate
  environment?
• Who decides?

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Strategy

• Structure follows strategy (Chandler)
• vs
• Strategy follows structure (Amburgey and Dacin)

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The Relationship between Strategy and Structure

• Defender - functional - centralised
• Prospector - divisional - decentralised
• Analyzer - matrix - moderate central control

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Rate of Technological Change
Change Rate
Computer
Space
Fire
Wheel
Tool
Steam
2,500,000 BC.
1,000,000 BC.
2000 AD.
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Technology Issues

• Choosing the appropriate technology
• Interdependency (Thompson)
• pooled, sequential, reciprocal
• Manufacturing (Woodward)
• unit, batch, process
• Complexity (Perrow)
• task variability and problem analysability
• few/many exceptions well/ill defined

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Complexity and Technology

• Interaction between technology and knowledge
  involved in utilizing it
• craft technology (performing arts, trades)
• routine technology (auditing, sales)
• non-routine technology (strategic planning)
• engineering technology (accounting, legal
  services)

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Research and Hypotheses

• The more sophisticated the technical system, the
  less personalized the control
• Pugh et al., 1968
• Child, 1972
• Khandwalla, 1974
• The more regulating the technical system, the
  more formalized the operating work and the more
  bureaucratic the structure of the operating core
• Mintzberg, 1979
• Pugh et al., 1968
• Hickson et al., 1969
• Inkson et al., 1970
• Child and Mansfield, 1973

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Research (continued)

• The more sophisticated the technical system, the
  more elaborate the administrative structure,
  specifically the larger and more professional the
  support staff, the greater the selective
  decentralization (to that staff), and the greater
  the use of liaison devices (to coordinate the
  work of that staff)
• Mintzberg, 1979
• Udy, 1959, 1965
• R.G. Hunt, 1970
• Hickson et al., 1969
• Khandwalla, 1974

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Next Week

• Expanding the model coordination and control