Basic Elements of Organisation Structure

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Basic Elements ofOrganisation Structure

• Engineering Management
• ELE 22EMT

George Alexander G.Alexander_at_latrobe.edu.au http/
/www.latrobe.edu.au/eemanage/
Lecture 8 14 September 2005
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1. Forming 2. Storming 3. Norming 4. Performing
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Definition

• Organisation structure is the formal pattern of
  interactions and co-ordination that management
  designs to link the tasks of individuals and
  groups to achieve the organisational goals
• How would you apply the Top-Down design
  approach to organisation structure?

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Design Process

• The purpose and goals of the organisation must be
  very clear.
• The design process of organisation structure
  consists of four elements
• Assignment of tasks and responsibilities for the
  individual job positions,
• Grouping the individual positions into units and
  departments,
• Determining various mechanisms for the vertical
  co-ordination, and
• Determining various mechanisms for the horizontal
  co-ordination

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Organisation Chart

• An organisation chart is a simple line diagram
  showing the organisations structure.
• The organisation chart normally depict
• major organisation positions,
• chain of command,
• reporting relationship, and
• communication channels

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Chairperson, M.D., and C.E.O.
Secretarys Office
GM Marketing
General Counsel
GM Operations
GM H.R.
GM Finance
Communication
Insurance Operations
H.R. Develop
Internal Audit
Market Support
Actuarial
Health Unit
Investment
Field Mgmt Region 1
IMS
Training
Real Estate
Field Mgmt Region 2
Financial Analysis
Tax
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Matrix Management

• All resources and skills are equally shared
  across the organisation
• Suits a project oriented organisation
• Can be very efficient way of utilising resources
• Provides variety of projects, and hence can be
  stimulating and satisfying for employees
• It may result in overloading of some members

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Project 3
Project 4
Project 1
Project 2
System Engineer
Project Engineer
Tech
Installer
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Division C
Division D
Division A
Division B
Quality Assurance
Human Resources
Finance
Product Management
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Matrix organisation some practical experiences

• Enforces uniform policy application across
  divisions.
• Facilitates sharing of specialised resources.
• Brings together functional expertise and customer
  responsiveness.
• BUT
• Can result in responsibility conflicts and
  confusion in responsibilities and reporting.
  (Whos my boss?)
• Overall resource planning has to be effectively
  managed otherwise overloads and/or poor
  utilisation.

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Informal Organisations

• As well as formal structures, organisations do
  have informal structures not designed by
  management but emerging from common interest or
  friendship.
• Informal organisation elements also impact on how
  organisations behave.

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Job Design

• As different job types require different skills
  and activities it is necessary to determine the
  areas of work specialisation.
• Job design involves the specification of tasks
  associated with a particular job.
• Work specification includes a collection of jobs
  necessary for achieving organisational goals.
• A well done job design is important for the
  efficient performance of the organisation and
  motivation of its members.

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Job Design Trends

• Move from efficiency-driven highly defined,
  repetitive, (boring) jobs to -
• More varied approaches to job design featuring -
  
• Job rotation
• Multi-skilling
• Job enrichment
• Greater autonomy especially for groups of
  workers

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Vertical Co-ordination

• Vertical co-ordination is the linking of
  activities at the top of the organisation with
  those at the middle and lower levels in order to
  achieve organisational goals.
• Think in terms of information flow through a
  network, delays, bottlenecks, etc.

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Policies Procedures

• Formalisation is the degree to which written
  policies, rules, procedures, job descriptions,
  and other documents specify what actions are (or
  are not) to be taken under a given set of
  circumstances.
• Most organisations need some degree of
  formalisation so that fundamental decisions do
  not have to be made more than once and so
  inequities will be less likely to occur.

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• Being too highly formalised can lead to
  cumbersome operations, slowness in reacting to
  change, and low levels of creativity and
  innovation.
• It becomes then a question of balance as to how
  much formality is necessary, and should apply.
• International quality standards ISO9001,9002
  (and common sense) demand that formal procedures
  etc. do reflect actual practice.

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Span of Management

• Span of management, or span of control, is the
  number of subordinates reporting directly to a
  specific manager.
• Managers should have neither too many nor too few
  subordinates.
• Then, what is a good balance of the span of
  management?

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Wider Span of Management

• Research indicates spans of management can be
  wider under certain circumstances
• Subordinates' work is such that little
  interaction with others is required.
• Managers and/or their subordinates are highly
  competent.
• The work of subordinates is similar.
• Problems are infrequent.

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• Subordinates are located in close physical
  proximity to one another.
• Managers have few non-supervisory duties to
  perform.
• Managers have additional help such as secretaries
  or assistants.
• The work is challenging enough to motivate
  subordinates to do a good job.
• (From GAs experience, a critical factor is the
  individual managers ability to delegate. Refer
  P282 of text Guidelines for effective
  delegating).

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Hierarchical Levels

• Organisational effectiveness is influenced by the
  number of its hierarchical levels.
• Problems with very tall organisations
• high administrative overhead,
• slow communication and decision making,
• more difficult to pinpoint responsibility for
  various tasks, and
• encouragement of formation of dull, routine jobs.

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Restructuring

• Restructuring an organisation is the process of
  making a major change in the structure, often
  involving
• reducing management levels, and
• changing major organisational components through
  divestiture and/or acquisition.
• Centralising/decentralising activities

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Division C
Division D
Division A
Division B
Quality Assurance
Human Resources
Finance
Product Management
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Downsizing

• Downsizing is the process of
• significantly reducing the layers of middle
  management,
• expanding spans of control, and
• shrinking the size of the work force.
• Downsizing must be planned and implemented
  carefully.
• Done poorly, downsizing may result in loss of
  valuable employees, demoralised survivors, and an
  ultimate decline in productivity.

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• Done well, downsizing may result in reduced
  costs, faster decision making, more challenging
  jobs, fewer redundancies, and increased
  innovation.
• Voluntary redundancy, how does it work? and what
  is wrong with it?

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Typical Characteristics of FC(Refer Economics,
Lecture 6 and Breakeven Analysis.Reduced volume
could necessitate downsizing to regain
profitability)

FC 3
FC 2
FC 1
Quantity
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References

• Bartol, K.M., Martin, D.C., Tein, M., Matthews,
  G., Management A Pacific Rim Focus,
  McGraw-Hill, 2002.

Thanks for your attention