OBA Week 10 - Organisational structure and design

Organisational design

The process of selecting and managing aspects of organisational structure and culture to enable the organisation to achieve its goals

Organisational structure

The formal system of task, power and reporting relationships

Organisational chart

Diagram of the chain of command and reporting relationships in a company

Span of control

The number of people reporting directly to an individual, narrow = expensive, closer supervision vs wider = more autonomy

Division of labor

The degree to which employees specialize, high = more specialsied vs low = generalised

Hierarchy

The degree to which some employees have formal authroity over others, too much = too much power to top management/lead more unethical behaviour vs too little = problems when need control

Formalisation

Extent organisational roles, procedures and communications are noted and followed, high = little flexibility in decison-making

Centralisation

Degree which power and decision-making authority concentrated at a higher level rather than distributed, high = clear lines of comms, managers solely responsible vs decentralised = lower levels more power and autonomy in decisions

Decentralized organisations

The authority for making decisions affecting an organisation is distributed

Centralized organisations

Concentrate power and decision-making authority at higher levels of the organisation

Mechanistic organisations

Rigid, traditional bureaucracies with centralized power and hierararchial communications

Organic organisations

Flexible, decentralized structures with less clear lines of authority, decentralized power, open communication channels, and a focus on adaptability in helping employees accomplish goals

Determiant of structure: Business strategy

Simple designs for simple strategies vs complex designs for complex processes, match structure to strategy for higher firm performance

Determinant of structure: External environment

Rapid change environments need flexible, decentralised authority to process and adjust to change

Determinant of structure: Organisational talent

Flexible structure best for highly skilled workers with flat/team-based strucuture

Determinant of structure: Organisational size

small organisation = less bureucracy vs large organisation = greater specialisation/hierarchy

Determinant of structure: behavioural expectations

Expectations how employees should behave, encouraged attitutdes/suppress, based on company values. Expect decision-making/collab = decentralised and flat structure vs expect following explicit rules = hierarchy and centralised structures

Determinant of structure: production technology

Firm using unit production = small batches, employee talent more important, complex unprogrammed, need flat structure ad low span of control vs mass production = large generalised products, tall structure and wide span of control vs continuous production = constant production, mechanistic structure, low supervision

Determinant of structure: organisational change

Organisation change strategies and adapt chaning environments, modify structure to support change

Bureaucratic structure

An organisational structure with formal division of labor, hierarchy, and standardization of work procedures

Prebureaucratic structure

Smaller organisations with low standardization, total centralisation, and mostly one-on-one communication

Functional structure

An organisational structure that groups people with the same skills, or who use similar tools or work processes, together into departments

Division

A collection of functions organised around a particular geographic area, product or service, or market

Global product division structure

functional attitudes controlled by product group, local management involvement low, good when global integration large and local difference is small e.g. mcdonalds

Global area division structure

Regional/country managers substantial autonomy to fit strategy to local situations, good when local difference is large and benefits local integration small

Global transnational division structure

Balanced matrix between local and headquarters, 2-way flow, best when global integration and local responsiveness needed

Regional headquarters structure

Regional headquarters established in geographic area, collab with product division to give local units clear goals and directions, best when balance global integration and local responsiveness

Matrix structure

Employees report to both a project or product team and to a functional manager

Team-based structure

Horizontal or vertical teams define part or all of the organisation

Lattice structure

Cross-functional and cross-level subteams are formed and dissolved as necessary to complete specific projects and tasks

Network organisation

A collection of autonomous units or firms that act as a single larger entity, using social mechanisms for coordination and control

Joint payoff

Network organised around specific products and projects, payment arranged based off final product, product doesnt make it = no profit, motivates people to do better

Restricted access

Restrict exchanges to long-term partners, more dependent on each other. Increase future business chances, decreases incentive for taking advantage over another or get killed out = losing opportunity of future work

Virtual organisation

An organisation that contracts out almost all of its functions except for the company name and managing the coordination among the contractors

Communities of practice

Groups of people whose shared expertise and interest in a joint enterprise informally bind them together

Unit production

Producing in small batches or making one-of-a-kind custom products

Mass production

Producing large volumes of identical products

Continuous production

Machines constantly make the product

Liaison role

A manager or team member is held formally accoutnable for communicating and coordinating with other groups

Direct contact

Managers from different units informally work together to coordinate or to identify and solve shared problems

Task force

A temporary committee formed to address a specific project or problem

Cross-functional team

A permanent task force created to address specific problems or recurring needs