1-1© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Chapter 6

Organisation structure and design

1-2© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Lecture outline• The nature of organisation structure• Job design• Types of departmentalisation• Methods of vertical co-ordination• Promoting innovation: Methods of

horizontal co-ordination• Weighing contingency factors

1-3© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

The nature of organisation structure

The four elements:• Assignment of tasks and responsibilities to

individuals and units• Clustering: positions > units > departments >

larger units• Mechanisms facilitating vertical (top-to-bottom) co-ordination• Mechanisms facilitating horizontal (across

departments) co-ordination

1-4© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Organisation structure: Formal definition

Formal pattern of interactions and coordination designed by management to link the tasks of individuals and groups in achieving organisational goals.

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Organisation design

The process of developing an organisation structure

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The organisation chart

• A line diagram showing organisation structure in broad outline.

• It maps the chain of command.– Chain of command is the unbroken authority

line linking each person to the top of the organisation through a managerial position in each layer.

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Work specialisationDegree to which work necessary to achieve

organisational goals is broken down into various jobs.

1-8© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Job designSpecification of task activities associated with

a particular job.

1-9© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Job design and motivationThe four approaches to job design that foster

motivation:• Job simplification• Job rotation• Job enlargement• Job enrichment

1-10© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Job simplification

The design of a job to minimise the range of tasks it entails

1-11© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Job rotation

Practice of periodically shifting workers through a set of jobs in a planned sequence.

1-12© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Job enlargement

• It is the allocation of a wider range of similar tasks to a job, to increase the challenge to employees.

• Enlargement increases job scope—the number of tasks an employee performs in a particular job.

1-13© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Job enrichment

• Process of upgrading the job-task mix in order to significantly increase its potential for growth, achievement, responsibility and recognition.

• Hackman and Oldham (1980)’s job characteristics model is a guide to achieve job enrichment. Its components are:– Core job characteristics– Critical psychological states– Outcomes– Moderators

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Job characteristics model

The core job characteristics:• Skill variety• Task identity• Task significance• Feedback from job

1-15© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Job characteristics modelThe critical psychological states:

A worker must experience• Meaningfulness of the work• Responsibility for outcomes of the work• Knows the actual results of the work activities

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Job characteristics model

Outcomes:• High internal work motivation• High ‘growth’ satisfaction• High general job satisfaction• High work effectiveness

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Job characteristics model

Moderators:

• Knowledge and skill• Growth-need strength (how much a worker needs

personal growth and development on the job)• ‘Context’ satisfaction

1-18© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Types of departmentalisation

It clusters individuals into units, and units into departments and larger units in order to achieve organisational goals.

Two common departmentalisation types:• Functional• Divisional

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Functional structure

A type of departmentalisation in which positions are grouped into functional areas.

1-20© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Functional structure

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Divisional structure

A departmentalisation type in which positions are grouped according to similarity of products, services or markets.

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Divisional structure

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Hybrid structure

– A departmentalisation form with both functional and divisional structure elements at the same management level.

– Fast response to environmental change, which is met by its divisional structure.

– Has functional expertise and efficiency, which is met by its functional structure

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Matrix structure• A departmentalisation form that superimposes

divisional horizontal reporting relationships onto a hierarchical functional structure.

• Both functional and divisional at once.• Two command chains—one vertical and one

horizontal.• A staff member reports to two matrix bosses.

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Matrix structure

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Emerging structures• Product team structure

– Structure where people are organised into permanent cross-functional teams.

• Networked structure– Form of organising where many functions are contracted out

to other independent firms and co-ordinated by use of information technology networks so that they operate as if they were within a single corporation.

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Methods of vertical co-ordination

Linking of activities at the top of the organisation with those at the middle and lower levels to achieve organisational goals.

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Four methods of vertical co-ordination

• Formalisation• Span of management (span of control)• Centralisation v decentralisation• Line and staff positions

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Formalisation

Degree to which written policies, rules, procedures, job descriptions and other documents specify what actions are (or are not) to be taken under a given set of circumstances.

1-30© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Span of management(span of control)

Number of subordinates who report directly to a specific manager.

Factors influencing span of control:– Low interaction– High competence– Work similarity– Low problem frequency– Physical proximity– Highly motivational work– Few non-supervisory duties

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Tall and flat structures

Tall structures– Structure with many hierarchical levels and

narrow spans of control.

Flat structures– Structures with few hierarchical levels and wide

spans of control

1-32© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Downsizing

Process of significantly reducing middle-management layers,increasing spans of control and shrinking workforce size.

1-33© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Restructuring

Process of making a major change in organisation structure.

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Centralisation v Decentralisation

• Centralisation– Extent to which power and authority are retained at the top

organisational levels

• Decentralisation– Extent to which power and authority are delegated to lower

levels

1-35© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Line and staff positions• Line position

– It has authority and is responsible for reaching an organisation’s major goals.

• Staff position– It gives line positions specialised expertise and assistance.

1-36© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Promoting innovation: Methods of horizontal co-

ordinationHorizontal co-ordination

– Linking of activities across departments at similar levels.

Means to promote horizontal co-ordination– Slack resources– Information systems– Lateral relations

Direct contact Liaison roles Task forces and teams Managerial integrators

1-37© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Weighing contingency factors

• The best organisation structure relies on contingency factors.

• The contingency factors:– Strategy– Technology– Size– Environment

1-38© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Strategy• Design structures to support organisation strategy

1-39© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Technology• Higher technological complexity and interdependence

between levels need more horizontal co-ordination.

1-40© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

SizeAs organisations grow:• Departments and levels are added, and structures

grow more complex.• Require more rules and regulations.• Decentralisation increases.• Staff positions increase.

1-41© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Environment• Stable environments foster

– fairly mechanistic characteristics,– highly centralised decision-making,– many rules and regulations,– hierarchical communication channels.

• Unstable environments foster– more organic characteristics,– highly de-centralised decision-making,– few rules and regulations,– lateral communication channels.

1-42© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia)

Lecture summaryIn this session, we are able to understand

– The nature of organisational structure– Job design– Different types of departmentalisation– Methods of vertical co-ordination– Methods of horizontal co-ordination– How can the contingency factors influence organisational

structure