6.3 organisational design

organisational design

shows how employees ands management are organised in a business

factors affecting the organisation structure

• type of business - several locations, skill of labour

• size of business

• management and leadership style

• competitive environment

organisational structure determines

• authority and responsibility

• job roles and titles

• the people to whom others are accountable for

• communication

product based structure

business organises teams around different products

each team has its own, marketing, operations and finance departments

ADV product based structure

• focused expertise in each products increasing productivity

• faster decisions, more streamlined increasing efficiency

• useful when products are diverse or have a unique characteristic

DIS product based structure

• may lead to duplication of functions or resources

• coordination between teams may become complex

regional based structures

organisation is divided into different geographical locations

ADV of regional based structures

• local adaptation, tailor product and marketing to region

• streamlined, fast decision making increasing efficiency

• more flexible

DIS of regional based structures

• lack of communication between regions

• lack of standardisation between regions

• cost duplications - diseconomies of scale

matrix structure

employees report to both the project manger and the functional manager

used by large businesses

ADV of matrix structure

• increase flexibility of organisation

  • adapt faster to market conditions

• higher efficacy, skills are shared

• increased collaboration

DIS of matrix structure

• employees may be unclear as to what their priority is

• employee burnout, decreasing productivity

• slower communication as there’s too many stakeholders

functional structure

employees are organised on their roles and functions

creates department / functional areas

streamlining efficiency and expertise

ADV of functional structure

• specialisation, more efficient

• beneficial in a centralised structure

• skills developed

DIS of functional structure

• departments may not communicate properly

• less flexible, slower to adapt to change

ADV of tall (narrow) structures

• more opportunity for promotion

• employees can be closely supervised

• clear lines of responsibility

DIS of tall (narrow) structures

• slow lines of communication

• less opportunity for delegation

ADV of flat (wide) structures

• more opportunity for delegation

• improved communication’

• faster decision making

DIS of flat (wide) structures

• insufficient time dedicated to each employee

• limited room for promotion - demotivating

• overworked managers - lowers productivity

job design

consists of the duties and responsibility of the job

job enrichment

giving employees more challenging and complex duties

empowerment

give employees greater control over their working lives

job enlargment

increases the number of similar duties

centralisation

keep decision making firmly at the top of the hierarchy (senior management)

ADV of centralisation

• economies of scale

• valuable when most employees are low skilled

• fast decision making

• easier to implement policies

DIS of centralisation

• de motivated staff

• more beurocratic

• lack of authority lower down may demotivate employees

decentralised structure

spread out their decision making to include more junior managers. This empowers local managers to make on-the-spot decisions

ADV of decentralised structure

• junior employees feel more empowered and motivated

• reduces workload from senior managers

• focuses on needs of local customers

DIS of decentralised structure

• decision making is not strategic

• harder to ensure consistent practices

• limits standardisation

why change structure

• expansion, more formal structure

• reduce costs and complexity

• employee motivation needs boosting

• customer service improvements

challenges

• employee resistance

• disruption

• costs

• negative impact on customer service or quality

delegation

the passing down of authority through the organisation

internal influences on delegation

• leadership / management style

• business objectives

• skills of workforce

external influences on delgation

• technological environment

• competitive environment

• economic environment

reasons to recruit staff

• expansion

• entering new markets

• employees leave

• business needs new skills

ADV of part time / flexible work

• cheaper to employ - entitled to less benefits

• more flexible workforce

• wide range of potential recruits

DIS of part time / flexible work

• employees feel less valued - less motivated

• harder to manage and coordinate

internal recruitment

jobs given to staff already in the business

involves promotion and reorganisation

ADV of internal recruitment

• cheaper

• employees feel valued and motivated

• faster - less lost productivity

DIS of internal recruitment

• lower range of skill sets

• staff who don’t get promoted could be demotivated

• have to fill new gap after promotion

external recruitment

job centres, advertise, head hunting

ADV of external recruitment

• new skills and ideas

• somebody to motivate staff

DIS of external recruitment

• expensive

• long process - lost productivity

redundancy

when a business dismissed an emplyee they no longer need

redeployment

moving an employee from one job to another

ADV of redeployment

• maintain job security for employees

• business retains skill and experience

• labour recourses are allocated more effectively

• reduced cost of recruitment

ADV of training

• better productivity

• more flexible - better skills

• less supervision required

• improved motivation through greater empowerment