Module No: 4HR018

Organisation Structures
for Effective Management

Module Leader: Kevin Willmore

Lecture 10
Module Learning Outcomes
• LO 1: Discuss the historical and theoretical basis of
organisation structure
• LO2: Analyse the relationship between organisational
structure and business strategy
• LO3: Examine the key factors to be considered in the design
of the structure of organisations
• LO4: Evaluate the implications of organisational structure for
the management and development of people and resources
Lecture Learning Outcomes – Focus for
today

LO4: Evaluate the implications of organisational

structure for the management and development of
people and resources
Implications of organisational structure for the
management and development of people and resources

• Developing staff

• Management of change

• Financial implications
Developing staff – Organisational Development
We define organisation development (OD) as ‘planned and systematic approach
to enabling sustained organisation performance through the involvement of its
people’. (CIPD, 2017).

https://www.linkedin.com/pulse/20141020053632-73915208-how-organization-development-differs-from-other-change-models /
OD applies to changes in the strategy, structure,
and/or processes of an entire system…….
such as:
• An organisation
• A single plant of a multi-plant firm
• A department or work group
• An individual role or job
What does Organisational Development
Involve?
• OD is based on the application and transfer of behavioural science
knowledge and practice (such as leadership, group dynamics and
work design), and is distinguished by its ability to transfer such
knowledge and skill so that the system is capable of carrying out more
planned change in the future
• OD is concerned with managing planned change, in a flexible manner
that can be revised as new information is gathered
• OD involves both the creation and the subsequent reinforcement of
change by institutionalising change
Developing staff
OD is focussed on improving organisational effectiveness by:

• Assisting members of the organisation to gain the skills and

knowledge necessary to solve problems by involving them
in the change process

• Promoting high performance including financial returns,

high quality products and services, high productivity,
continuous improvement and a high quality of working life
Developing staff
https://www.cipd.co.uk/knowledge/strategy/development/management-factsheet - Accessed 01/09/17.

Management development is the structured process by which managers enhance their

skills, competencies and/or knowledge, via formal or informal learning methods, to the
benefit of both individual and organisational performance.

• The development of managers helps sustain their performance at the highest levels
possible is a particularly crucial element of wider organisational learning strategies
• Managing involves the planning, organisation, co-ordination and implementation of
strategies, programmes, tactics and policies in respect of people, resources,
information, operations and finance
• Management development interventions may therefore cover any or all of these
areas, depending on the level and nature of the management role as well as other
factors such as the stage of the individual’s career
Developing staff

The nature and characteristics of the management base means that the
task of identifying and providing effective learning opportunities for
managers presents a significant challenge for HR and L&D
professionals.
• For senior managers, there is often a need for individually tailored
development solutions
• Some very senior people, such as managers at board level, may have
the perception that others in the organisation fail to understand the
pressures they face. However, they can also be sensitive to their
senior status, and may reject the idea that they need to learn,
although the neutrality of the term 'development' often appeals.
Developing staff

There are differences too in respect of company size or nature.

• Small firms are not simply smaller versions of big companies in terms of
managerial roles but have different priorities and needs. Their senior
management development needs may relate to functional skills more normally
demonstrated in large environments by specialists

• Large global firms often need to consider the issues involved in international
management development when deploying managers on overseas
assignments, for example, developing them to deal with potentially widely
differing approaches to negotiating styles or marketing techniques, in addition
to the more obvious fundamental needs such as training in language skills and
cultural awareness.
Developing staff

Managers at all levels need a certain set of skills associated with their
people management role, and these need to be developed. It should
also not be assumed that well-qualified professionals who gain
promotion to posts involving line management responsibilities will
automatically adapt to the people management role.
Developing staff

The approach taken to management development needs to originate

from the highest organisational levels, reflecting the organisation’s
strategy and aims, while company culture is also a key determinant of
management style and attitudes to management development.
Developing staff
Larger organisations often have the capacity to identify the
requirements for effective management in the form of specific
competence frameworks, which will include many of the specialist
areas such as:
• the skills of managing others
• knowledge of management techniques and the development of
strategy
• interpersonal skills such as communicating, influencing and
negotiating.
Management of change

Reasons for changing your organisational structure

Organisations change their structure for many different reasons. These can be planned or
unplanned, and caused by external and internal factors.
What causes organisational change?
• The main reason for restructuring your business is to allow it to achieve its strategic
objectives. A business often needs to make changes when it reaches a new stage in its life
cycle. This can include moving from an entrepreneurial organisation to one with a more
stable, planned development.
You may also choose to restructure your business due to:
• Business growth
• Change in management, e.g. taking on a partner
• Moving into new product lines
• Expanding your business overseas
https://www.nibusinessinfo.co.uk/content/flat-and-hierarchical-organisational-structures - accessed 04/09/17
Management of change

Other factors, both internal and external, can also prompt change to your
organisational structure.
Internal factors include:
• Senior management and shareholders objectives to re-focus the business
• Change of ownership
External factors that might prompt a change in your business' structure
include having to:
• Address new markets
• React to changes in product or service demand
• Keep up with new technologies or products from competitors
Management of change

Other external events that can affect either your business or your rivals
can also stimulate organisational change. These include, for example:
• mergers and acquisitions - Common ways to expand your business
include making a strategic acquisition or merging with another
business.
• joint ventures and business partnerships - A joint venture is when
two or more businesses pool their resources and expertise to achieve
a particular goal. They also share the risks and rewards of the
enterprise.
• preparing to sell your business
Management of change – Merger and Acquisition

• An acquisition is when you buy another business and end up

controlling it.

• A merger is when you integrate your business with another

and share control of the combined businesses with the other
owner(s).
Management of change - Joint Venture

Forming a joint venture can have unique benefits for some businesses.
A joint venture could give you:
• More resources
• Greater capacity
• Increased technical expertise
• Access to established markets and distribution channels
Management of change – Internal Factors

Internal factors affecting organisational change

Internal business needs can also prompt positive business change. For
example, these may include the need to:
• Raise additional capital, improve cash flow or profitability of your
business
• Address outdated and inefficient working practices and processes
• Eliminate excess job positions and remove duplicate management
roles
• Reorganise internal functions for efficiency, such as sales and
marketing
Management of change

http://www.themanager.org/Strategy/Change_Problems.htm
Financial implications

Finances fuel all businesses, whether they are on the upswing or a

downturn.

• An organization making good money is more likely to add employees and

managers to accommodate future growth
• A business facing a financial crisis forces top management to trim the
organizational structure.

Whichever direction the financial picture steers a company, it must

smoothly adapt to changing needs.
Financial implications

When Finances Look Good…….

• An upturn in business signals a time of expansion for many

companies.
• Growth, new acquisitions and new product or service lines mark a
business on its way up.
• The organizational structure may need to change, with new positions
created and new departments springing up to meet increasing
demand.
Financial implications

• When Finances Look Bad

• A financial crisis forces companies into survival mode. Instead of
planning for growth, staying solvent becomes the biggest issue. Saving
money will be the order of the day. Business management may panic
during a financial crunch, concentrating on short-term answers
instead of building for the future. A stunted economy,
mismanagement or strong competition will cause financial crises,
forcing large and small businesses to change their organizational
structures to streamline operations as necessary.
Financial implications

Structural Changes in an Upturn

• Business owners take financial issues into account when
deciding the best time to grow and expand the workforce.
• Maintaining that success and pushing forward is the main
emphasis during good times.
• Increasing customer demand not only creates the need for
more employees, but more departments and upgraded
equipment.
Financial implications
• Structural Changes in a Downturn
• Financial problems will cause business owners to rethink which departments
are essential. Some will be eliminated entirely, and others absorbed by other
departments. Even in a small business, the first cuts are often seen in
departments geared toward the future. If the cuts are made blindly, the
departments most geared toward future growth may be the first to go. If
departments have natural rivalries between them -- such as sales vs.
production, these rifts will widen. Financial worries will cause management to
cut back on production jobs, laying off some workers. Those who stay will find
their duties increased to keep pace. Even if business improves, the company
may be slow to rebuild its staff and continue to have employees doing double
duty.
Financial implications
As your business grows, you might need to:
• add departments,
• bring outsourced functions in house,
• downsize or otherwise take steps to restructure your organization.
• While organizational restructuring aims to make a business more
efficient, it can also have negative consequences. Before making
significant changes to your business structure, consider all of the
positive and negative impacts your changes might bring.
Financial implications
More Control
One way to restructure an organisation is to create departments to
handle tasks you previously outsourced.

This might include; hiring a full-time bookkeeper, information

technology person, human resources manager and marketing director.

Unlike contractors, employees are at your beck and call, with no other
boss to work for, giving you more control over their work.
Financial implications
Workforce Characteristics
Human resources should influence the strategic choices leading to restructuring.
• To develop strategy, the owner must consider the company’s competitive
position, including employees’ strengths and weaknesses.
• HR supplies the owner with a workplace assessment -- a thorough inventory of
the employees’ skills and other characteristics such as talent, turnover, education
and experience.
• The inventory is compared against the strategies under consideration to calculate
how well the company’s workforce can enact them.
• Once strategy is chosen, HR then evaluates how it must transform the company’s
workforce to fill the company’s needs in the context of the restructuring and
strategy.
Financial implications
Organizational Structure
• Organizational structure determines job scope, working
relationships and resource sharing, so it has a profound
impact on how business gets done.
• Keeping the company’s strategy at the centre of structural
decisions allows HR to make the best choices. For example, if
a small business wants to focus on fine, custom-built
products, the organizational structure must promote
individual accomplishment instead of mass production.
Financial implications
Job Design
An article in Pepperdine University’s “Graziadio Business Review” listed job
design and talent choice as most critical in implementing new organizational
structure.
• HR must reassess the tasks and workflows needed to effectively do
business and compare those to the organization’s existing jobs and
processes.
• Positions may stay the same, change or be removed.
• Some tasks may require new positions. Considerations when designing
jobs include how specialized a job should be, how much authority an
employee needs to accomplish work and how much supervision is needed.
Summary
We have today, considers implications of Organisational Development
and growth.
As we have seen three areas need to be considered and strategies
developed to overcome the issues:

1. The need to consider the Developing staff to meet the needs of the
organisation
2. The importance of Managing the Change process
3. The Financial implications associated with the development of the
organisation
Any Questions?
Essential Reading
Bhattacharyya, D. K. (2009) Organisational Systems, Design, Structure
and Management, 1st ed), Himalaya, Mumbai.

Buchanan, D. A. & Huczynski, A.A. (2013) Organisational Behaviour:

An Introductory Text (8th ed), Prentice Hall, Hemel Hempstead.

Handy, C. (1993) Understanding Organisations, (4th ed) Penguin,

London.
Recommended Reading
Boddy, D. (2011) Management: An Introduction. (5th.ed), Prentice
Hall, Hemel Hempstead.

Galbraith, J. (2014) Designing Organisations: An Executive Briefing

Based on Strategy, Structure and Process, (3rd ed), Jossey-Bass.

Mullins, L. J. (2016) Management and Organisational Behaviour. (11th

ed), Pearson, Cambridge.