Basics of Structure and Design

Business Organisation 2012

Robert Westwood

Reading
Daft et al (2010) Chapter 3

Hinings, B. (2003) rganisation. !n R. Westwood " #. Clegg (eds) Debating Organisation: Point-Counterpoint in Organisation Studies. $p2%&'2(2. )ford* Bla+,well

-.nro, R. (2003) Disorganisation. !n R. Westwood " #. Clegg (eds) Debating Organisation: Point-Counterpoint in Organisation Studies. $p2(3'2/%. )ford* Bla+,well

Objectives
After completing this module you should be able to: 8 Define and understand organisational structure 8 Appreciate and describe how structure affects processes and behaviour 8 now what type of factors help to determine and change organisational structure 8 !nderstand the core elements of organisational structure: comple"ity# centralisation and formalisation 8 now how some generic configurations of organisation are formed 8 Describe changes and trends in organisational forms and configurations

Organisation as $orld%&a'ing

rganisation is the +ar0ing o.t of order fro1 an otherwise +haoti+, in+hoate world of fl.) and transien+e. We i1pose or ins+ribe order on disorder We, literall2, 1a,e o.r world thro.gh the +onstr.+tion of order and organisation

Chia, Robert (2003a) ntolog2* rgani3ation as 4World'-a,ing5. !n R.!. Westwood and #. Clegg (eds) Debating Organization: PointCounterpoint in Organization Studies. $p. /('113. )ford* Bla+,well. 6ote the two readings also

(ell: A )rotological Organisation

Circles of Hell in Dantes Inferno

Defining and clarifying structure

Organisational Structure

All organisations have to ma'e provision for the continuing activities directed towards the achievement of aims* Regularities in activities such as tas' allocation# supervision and coordination are developed* +uch regularities constitute the organisation,s structure# and the fact that these activities can be arranged in various ways means that organisations can have differing structures

Structure and Performance

An effective and appropriate structure is vital to organisational performance and success* Organisations need to adapt their structures as conditions change An effective structure depends upon ma'ing the right choices and decisions and achieving an effective configuration

Basic -lements of +tructure

Complexity
vertical and horizontal differentiation, personnel ratios

Formalisation Centralisation

+tructural /omple"ity
Differentiation and .ntegration -"tent of hierarchical structure -"tent and nature of differentiation
Degrees of specialisation 0of tas' or function1 2orms of departmentation (ow much 3ob4tas' definition

-"tent and 5ature of .ntegration

5ature and e"tent of interdependence between processes4units !se of lin'ing devices

2ormalisation

he !xistence, !xtent an Deployment of "olicies, "rocedures, and #ules $hich %uide, Direct and&or Constrain 'ctions and Choices

/entralisation
he degree to (hich formal authority to ma)e discretionary choices is concentrated in an individual, unit or level, thus permitting employees minimum input into their (or)*

he strategic choice of organisational structure+

7 -anage1ent theor2 s.ggests that organisational str.+t.res are the res.lt of high'le0el rational design pro+esses, whi+h atte1pt to best match a parti+.lar organisational str.+t.re to the contingencies that the organisation fa+es.

7 B.rns and #tal,er (1/81), for instan+e, is a +lassi+ te)t in this regard, whi+h arg.ed that* rganisational str.+t.res follow the en0iron1ent in whi+h the2 operate. 9hose that operate in stable, +ertain, ro.tine en0iron1ents (sho.ld) adopt a mechanistic, or traditional b.rea.+rati+, str.+t.re. 9hose that operate in .nstable, .n+ertain and d2na1i+ en0iron1ents (sho.ld) adopt a 1ore organic, fle)ible, fl.id or looser str.+t.re.

A Reminder
Mechanistic System Paradigm
Vertical Structure

rgani+ #2ste1 $aradig1

Horizontal Structure

Routine Tasks

Rigid Culture

Organizational Change in the service of performance and survival

Empowered Roles

Adaptive Culture

Formal Systems

Competitive Strategy

Shared Information

Collaborative Strategy

Stable !nvironment !fficient "erformance

urbulent !nvironment ,earning Organization

Source: Adapted from David K. Hurst, Crisis and Renewal: Meeting the Challenge of Organizational Change (Boston, Mass.: Harvard Business School) 2001

External contingencies and their effect on choice of organisational structure.

Complexity increases with size (numbers of employees) and requires more formalization, standardization and formalization: so a more bureaucratic structure may be needed.

More professional or creative workers may need and want greater autonomy and discretion: tightly bureaucratic structures may not suit.

+i6e of Organisation

7he nature of the wor'force

#tr.+t.re

7echnology

Stable, certain and predictable environments suit simple and bureaucratic structures, turbulent environments require more adaptable structures such as matrix structures.

-nvironment

Organizations with more routinized technologies are more suited to bureaucratic structures.

Organisational structure and the shaping of the individual

Organisational structures have an immediate and direct impact on people in the organisation Structures are constraining but also enabling organisational structures can function in subtle ways to change and shape the individuals who occupy the role. Such that these individuals police and control themselves in the organisationally desired way. McKinlay (2002), for example, provides an excellent historical discussion of the ways that the a bureaucratic notion of career helped to change bank workers in just such a way.
McKinlay, A. Dead Selves: The birth of the modern career. Organization, 2002, 9, 595614.

Organization Design 'lternatives

9hree ,e2s indi+ators of organi3ation design
Re8uired wor' activities Reporting relationships Departmental grouping options % Functional grouping - Divisional grouping - Multi-focused grouping - Horizontal grouping - Virtual network grouping

Departmental %rouping Options

Functional Grouping

Divisional Grouping

Multifocused Grouping

Horizontal Grouping

Virtual Network Grouping

Functional vs* Divisional Structure -!xample

Functional Structure
+trengths $ea'nesses

:llows e+ono1ies of s+ales within f.n+tional depart1ents ;nables in'depth ,nowledge and s,ill de0elop1ent ;nables organi3ations to a++o1plish f.n+tional goals !s best with onl2 one or a few prod.+ts

#low response ti1e to en0iron1ental +hanges -a2 +a.se de+isions to pile on top, hierar+h2 o0erload <eads to poor hori3ontal +oordination Res.lts in less inno0ation !n0ol0es restri+ted 0iew of goals

Divisional Structure
+trengths $ea'nesses

#.ited to fast +hange in .nstable en0iron1ent <eads to +.sto1er satisfa+tion !n0ol0es high +oordination :llows .nits to adapt to differen+es Best in large organi3ations with se0eral prod.+ts De+entrali3es de+ision 1a,ing

;li1inates e+ono1ies of s+ale in f.n+tional depart1ents <eads to poor +oordination ;li1inates in'depth +o1peten+e and te+hni+al spe+iali3ation -a,es integration and standardi3ation a+ross prod.+t lines diffi+.lt

.ulti-Focused Structures
rgani3ing to 1eet needs of .sers=+.sto1ers b2 geograph2, 1ar,et +hannel, 1ar,et seg1ent. -an2 1.ltinational +orporations are organi3ed b2 +o.ntr2 or 1ar,et !t is also parti+.lar +o11on in large nonprofit organi3ations in ter1s of geograph2 >o+.ses 1anagers and e1plo2ees on spe+ifi+ geographi+ regions or 1ar,et +hannels or seg1ents #trengths and wea,nesses si1ilar to the standard di0isional organi3ation

Matrix structure

.atrix Structure
+trengths
:+hie0es +oordination to 1eet d.al de1ands >le)ible sharing of h.1an reso.r+es a+ross prod.+ts #.ited to +o1ple) de+isions and .nstable en0iron1ent $ro1ote f.n+tional and prod.+t s,ill de0elop1ent Best in 1edi.1'si3ed organi3ations with 1.ltiple prod.+ts

$ea'nesses
D.al a.thorit2 +a.se +onf.sion 6eed good interpersonal s,ills and e)tensi0e training 9i1e +ons.1ing 6eed +o11on .nderstanding a1ong parti+ipants Re?.ires great effort to 1aintain power balan+e

/ontemporary 7rends and 2orms

1. Restructuring and downsizing

2. Horizontal, Process & Re-engineering designs and organisations

High performance organisations

3. Boundar less and !irtual organisations

". #etwor$ed and %odular organisation

/orizontal Structure
Organi6ation around core processes* ey characteristics:
' #tr.+t.re is +reated aro.nd +ross'f.n+tional pro+esses ' #elf'dire+ted tea1s are the basis of organi3ation design and perfor1an+e ' $ro+ess owners are responsible for entire pro+ess ' $eople on the tea1 are gi0en a.thorit2 for de+isions ' Can in+rease organi3ation5s fle)ibilit2 ' C.sto1ers dri0e the hori3ontal +orporation. ' 9he +.lt.re pro1otes openness, tr.st and +ollaboration.

/orizontal Structure
+trengths $ro1ote fle)ibilit2 and rapid response to +hanges >o+.s on the prod.+tion and deli0er2 of 0al.e ;a+h e1plo2ee has a broader 0iew of organi3ation goals $ro1otes a fo+.s on tea1wor, and +ollaboration !1pro0es ?.alit2 of life for e1plo2ees $ea'nesses Deter1ining +ore pro+esses is diffi+.lt and ti1e +ons.1ing Re?.ires 1an2 +hanges 9raditional 1anagers 1a2 ba.l, when the2 ha0e to gi0e .p power and a.thorit2 Re?.ires signifi+ant training of e1plo2ees Can li1it in'depth s,ill de0elop1ent

Sample /orizontal&"rocess Structure

"rocess team design

0irtual, Boundary-less or 1et(or) Structures

;)tends the +on+ept of hori3ontal +oordination and +ollaboration be2ond the bo.ndaries of the organi3ation. Brea, bonds of ti1e and spa+e ;nabled b2 new te+hnolog2 @irt.al in sense of a +o11.ni+ation networ, for1 @irt.al in the sense of a te1porar2 +oales+en+e of ele1ents to p.rs.e a proAe+t 9he 0irt.al networ, organi3ation ser0es as a +entral h.b with +ontra+ted e)perts @irt.al or 1od.lar str.+t.res s.b+ontra+t 1ost of its 1aAor f.n+tions to separate +o1panies Co11on 0ariant is outsourcing

0irtual, Boundary-less or 1et(or) Structures

+trengths ;nables organi3ations to obtain talent and reso.r+es widel2 = worldwide Bi0es a +o1pan2 i11ediate s+ale and rea+h witho.t h.ge in0est1ents ;nables the organi3ation to be highl2 fle)ible and responsi0e to +hanging needs Red.+es ad1inistrati0e +ost $ea'nesses -anagers do not ha0e hands'on +ontrol o0er 1an2 a+ti0ities and e1plo2ees Re?.ires a great deal of ti1e to 1anage relationships Ris, of organi3ational fail.re ;1plo2ee lo2alt2 and +orporate +.lt.re 1ight be wea,

/ybrid Structure

rgani3ations often .se a h2brid str.+t.re that +o1bines +hara+teristi+s of 0ario.s str.+t.re approa+hes tailored to spe+ifi+ needs ne +o11on t2pe is the +o1bination of the f.n+tional and di0isional str.+t.res.

Periphery

Semi-periphery Casual

Outsourced

Core >.ll'ti1e $eripher2 #e1i'peripher2se >.n+tional fle)ibilit2 Part-time, contracted Job-sharing

Sub-contractors Agency temporaries

Evolution of Organisational Forms

Product/Market strategy 1800> Single product or service Local/regional markets Limited, standardised product/service line Regional, national markets Diversified, changing product/service line National, international Standard and innovative products and services Stable and changing markets Product or service design Global, changing markets Organisation structure Agency Core activity and control system Personal direction and control Centralised, differentiated into functional units, formalisation. Corporate policies and divisional profit centres Temp teams and lateral allocation devices

1850>

Functional

1900>

Divisional

1950>

Matrix

2000>

Dynamic network

Temporary network structures, shared info, mutuality and collaboration

1ext opic - 2* 3ob Design and the .eaning of $or)

Daft et al (2010) Chapter 3 #inger, C. " D.0al, #. (2000) 4High $erfor1an+e $artnering b2 #elf -anaged 9ea1s in -an.fa+t.ring5. Engineering Management Journal, 12(D)* /'1&. EHarle2 Da0idson Case #t.d2F Gnights, D. " -+Cabe, D. (2000). Bewit+hed, bothered and bewildered* 9he 1eaning and e)perien+e of tea1wor,ing for e1plo2ees in an a.to1obile fa+tor2. uman !elations, &3(11), 1D(1'1&1% -orin, ;.-. (200D) 49he 1eaning of wor, in 1odern ti1es5, paper presented at the 10th World Congress on H.1an Reso.r+es -anage1ent, Rio de Caneiro, Bra3il, :.g.st, 20th, 200D.