4 - Fundamentals of Management - Organising

Organising

Objectives

• What is organising.

• Formal and Informal structure.

• Organisational chart.

• Elements of organisational structure.

• Types of design; Bureaucratic and Adaptive Organisation.

• Contingency- environment, strategy, size.

What is Organising

• The deployment of organisational resources to achieve strategic goals.

• Organising is the ongoing, deliberate effort to align people, resources, and activities toward the achievement of shared objectives.

  • Which tasks need to be done.

  • Who will do them.

  • How they will be grouped.

  • Decision-making authority will flow.

• Translate broader organisational objectives into actionable steps and define how individuals and teams should coordinate their efforts.

Formal VS Informal Organisational Structure

• Formal: The way in which the various parts of an organisation are formally arranged.

  • The system of tasks, workflows, reporting relationships, communication channels that link the work of diverse people and groups.

  • Main aim is to improve the effectiveness of an organisation achieving its goals.

• Informal: ‘Shadow’ organisation.

  • Unofficial but often critical working relationships between organisational staff.

  • Created by the staff, NOT the organisation.

  • It cuts across all levels of the organisation; people meeting for coffee, exercise groups etc

  • Very personal and network oriented.

Basic Elements of Formal Organisational Structure

• The four elements of Organisational Structure

  • Work Specialisation

  • Departmentalisation

  • Differentiation

  • Integration

• Organisational Chart is a diagram that shows formal reporting relationships and formal arrangements of work positions.

  • Created by the organisation

1st Element: Job Design

• Work specialisation - degree to which the work necessary to achieve organisational goals is broken down into various jobs.

• Job Design - specification of task activities associated with a particular job.

• Tasks activities need to be grouped in reasonably logical ways.

• The way that jobs are configured influences’ employee motivation.

Approaches to job design

1. Simplification

   • Advantage: Gain production efficiencies.

   • Disadvantage: Job dissatisfaction - repetitive, boring jobs.

2. Rotation

   • Advantage: Cross-train and development of employees.

   • Disadvantage: Job dissatisfaction – combating of boredom is short-lived.

3. Enlargement

   • Advantage: Reduce boredom and fatigue helps individual’s motivation.

   • Disadvantage: Problems can arise from under- training or overworking staff.

1.4. Job Enrichment

• To move beyond simple specialisation job needs potential for:

  • Meaningfulness in their work

  • Taking responsibility for their work

  • Knowledge about their outcomes

• Encouraging workers to develop new skills.

• Allowing workers to monitor and measure their own performance.

• It’s not ‘just’ about doing your job. It’s about Job Depth, in skills and significance.

• Perceptions, personalities, attitudes, emotions and moods which all influence individual behaviour at work.

1.4. Job Enrichment

• Job Characteristics Model (Hackman & Oldman)

  • Core job characteristics

    • Skill variety

    • Task identity

    • Task significance

    • Autonomy

    • Feedback

  • Critical psychological states

    • Experienced meaningfulness of work

    • Experienced Responsibility for work outcomes

    • Knowledge of results of work

  • Job outcomes

    • High internal work motivation

    • High growth satisfaction

    • High general satisfaction

    • High work effectiveness

• Car production line

  • It is contingent to worker’s wanting to grow – so it is not for everyone

  • Teams of 6

    • Skill Variety – 6 workers need all the skills to assemble one car

    • Significance – They completed the ‘whole’ car – 6 workers were inter-dependent i.e. need to rely on each other = Meaningfulness

    • Autonomy – self managed teams = Responsibility

    • Feedback – warrantee feedback = Knowledge

    • Task Identity – completed car

Job design

2nd Element: Departmentalisation

• Commonly termed the departmental structure

• The clustering of individuals into units, units in larger units and departments in order to facilitate achieving organisational goals

Three Fundamental Departmentalisations

• Functional

  • This is the type of departmentalisation in which staff positions (jobs) are grouped according to what they do

  • For example marketing, human resources, production and accounting

• Divisional

  • The type of departmentalisation where positions are grouped according to: product or service; or type of client; or geography

• Teams based

2.1 Functional

• Advantages

  • In-depth expertise developed

  • Clear career paths within functions

  • Economies of scale

• Disadvantages

  • Conflict between departments

  • Performance often difficult to measure

  • Managers may be trained too narrowly

  • Less efficient as organisation grows and diversifies

2.2 Divisional

• The three major forms are:

  • Product/Service Division - created to concentrate on single product or service or at least a relatively similar set.

  • Geographic Division - designed to serve different geographic areas.

  • Customer Division - set up to serve particular types of clients or customers

• Advantages

  • Can focus on own client

  • Performance easier to measured

  • Managers have a broad training

• Disadvantages

  • Duplication of resources

  • In-depth expertise may be sacrificed

  • Divisions may compete rather than work together

2.3 Team-Based Approach

• Cross-functional teams- consist of employees from functional departments, team members report to the team and also their functional departments. It is common in new products, services, and projects, and innovation

• Advantages

  • More flexible and competitive

  • Better coordination and corporation

  • More moral and enthusiasm in employees

• Disadvantages

  • Dual loyalty and conflict

  • Time and resources on meetings

  • Unplanted decentralisation

Element 3: Differentiation

• Horizontal differentiation

• Vertical differentiation

• Spatial Dispersion

3.1 Horizontal differentiation

• Groups of specialists (job specialisation) are normally grouped into departments (as discussed in the previous section – functional, divisional, hubrid)

• Often termed ‘creating organisational silos’ and each silo may have different

  • Goal emphasis

  • Time orientations

  • Work vocabulary

3.2. Vertical differentiation

• Vertical differentiation refers to the number of layers of management in an organisation

• The greater the number of layers the more complex an organisation becomes, and the more potential for communication breakdown!

Barriers Within Downward Communication Channels

• Downward communication through several levels can get very distorted

• Loss in Understanding (Noise)

• Final Message (80% loss of understanding)

Barriers Within Upward Communication Channels

• Upward communication through several levels can get very distorted

Vertical differentiation - continued

• Span of control refers to the number of subordinates (staff) a supervisor can effectively control

• All things being equal, the narrower the span of control the taller the organisation (more layers)

• Tall Structure

  • Span of 4

  • Org level : 7

  • Front line staff: 4,096

  • Managers: 585

• Flat Structure

  • Span of 8

  • Org level : 4

  • Front line staff: 4,096

  • Managers: 1,396

Spatial Dispersion

• The degree to which the location of an organisation’s offices, plant and personnel is dispersed

• Spatial dispersion is high when the operation of an organisation are geographically widely spread. (e.g. Multinational IKEA --- local Tillmans)

• Greater spatial dispersion increases complexity

Element 4: Integration

• The level of coordination achieved among an organisation’s internal units

• Formalisation

• Centralisation

4.1. Formalisation

• The degree to which jobs and procedures within the organisation are standardised

• High formalisation

  • Minimum discretion over when and what is done

  • Clear job descriptions

  • Many rules to follow (e.g. McDonalds)

• Low formalisation

  • Employee behaviour relatively non-programmed

  • Greater job discretion (e.g. UC lecturers)

Formalisation techniques

• Selection: select people that will ‘fit in’

• Role requirements: high or low formalisation

• Rules, procedures and policies: specific standards and statements that govern or guide employees and often result in uniform behaviours or outputs

• Operations scheduling: coordinating

4.2. Centralisation

• Centralisation refers to the degree to which decision making in made at a single point in the organisation

• In common usage, centralised decision making occurs when most decisions are made by top management

• On the other hand, when decision making is widely dispersed within the organisation it is termed decentralisation

Organisational Design

• How the organisation should be structured to best support its strategy and goals.

• It’s about

  • What an organisation needs

  • Gap between where it is and where it needs and to be

  • Designing organisation in a way that bridge that gap

• There is NO best organisational design. It is situational (contingency theory)

• Organisational design aligns structure with situational contingencies

  • Environment

  • People

  • Strategy

  • Size

  • Technology

Types of Design

Bureaucratic Organisation (Mechanistic Design)

*Organisational designs based on logic, order and legitimate use of formal authority
*Clear cut division of labour
*Strict hierarchy of authority
*High level of formal rules and procedures
*Promotion base on competency
*Today the term ‘bureaucracy’ has negative connotations
*They have their limitations but also have their uses

Adaptive Organisation (Organic Design)

*Organisational designs emphasis flexibility, speed and performance objectives
*Adaptive organisations – operate with minimum bureaucratic feature and with cultures that encourage worker empowerment and participation
*Organic designs – relatively loose systems in which a lot of work gets done through informal structures and networks of interpersonal contacts