Pm wk 5 organisational structure

Malaysian Institute of Aviation Technology

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Principle of Management

Week 5

Organizational Structure & Design.


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OrganisationalStructure and

Designs.

Organisational Design

Decisions.

Common and contemporary organisational

designs


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• Table of contents;– Defining organisational structure and design.– Organisational Design Decision.– Common and contemporary organisational design.– Case application- A laboratory in organisational

designs. – Summary.– Motivating your self.– Reading assignment (Group Discussion and

presentation).


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The process of creating anorganisation’s structure

DefinitionDefinition

Organising Purpose

Divides work to be done into specific jobs and departments

Coordinates diverse organisational tasks

Coordinates diverse organisational tasks

Clusters jobsinto units

Establishes relationship among individuals, groups and departments

Establishes formal lines of authority

Allocates and deploys organisational resources

Assigns tasks and responsibilities associated with individual jobs


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Organisational structure

The formal framework by which job tasks are divided, grouped and coordinated

Organisational Design

The developing or changing of organisation’s structure

6 key elements of Organisational Designs• Work specialisation• Departmentalisation• Chain of command

• Span of control• Centralisation and decentralisation

• Formalisation


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Work specialisation:The degree to which tasks in an organisation are divided into

separate jobs, also known as division of labour.

Departmentalisation: The basis by which jobs are grouped together.

Functional Departmentalisation:Grouping jobs by functions performed.

Product Departmentalisation:Grouping jobs by product line.

Geographic Departmentalisation: Grouping jobs on the basis of territory or geography


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Process Departmentalisation: Grouping jobs on the basis of product or customer flow.

Customer Departmentalisation: Grouping jobs on the basis of common customers.

Cross Functional Team: A group of individuals who are experts in various specialties

(job functions) and who work together.


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Chain of Command: A continuous line of authority that extends from the upper levels of

the organisation to the lowest levels and clarifies who reports to whom.

Authority: The rights inherent in a managerial position to tell people what to

do and to expect them to do it.

Responsibility: The obligation to perform any assigned duties.

Unity of command: The management principle that each person should report to only

one manager.


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Span of Control: The number of employees a manager can efficiently and effectively manage.


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Centralisation: The degree to which decision making is

concentrated at a single point in the organisation.

Decentralisation: The degree to which lower level employees

provide input or actually make decision.


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Factors that Influence the amount of Centralisation and Decentralisation:

• More centralisation– Environment is stable.– Lower level managers are not

capable or experienced at making decisions as upper level managers.

– Lower level managers do not want to have a say in decisions.

– Decisions are significant.– Organisation is facing a crisis or

the risk of company failures.– Company is large.– Effective implementation of

company strategies depends on managers retaining a say over what happens.

• More Decentralisation.– Environment is complex, uncertain.– Lower level managers are capable

and experienced at making decisions.

– Lower level managers want a voice in decisions.

– Decisions are relatively minor.– Corporate culture is open to

allowing managers to have a say in what happens.

– Company is geographically dispersed.

– Effective implementation of company strategies depends on managers having involvement and the flexibility to make decisions.


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Formalisation: The degree to which jobs within the

organisation are standardised and the extent to which employee behaviour is guided by rules and procedures.

Formalisation: The degree to which jobs within the

organisation are standardised and the extent to which employee behaviour is guided by rules and procedures.


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• Mechanistic Organisation:

– An organisational design that is rigid and tightly controlled.

• Organic Organisation:

– An organisational design that is highly adaptive and flexible.

• Mechanistic:• High specialisation.• Rigid depatmentalisation.• Clear chain of command.• Narrow spans of control.• Centralisation.• High formalisation.

• Organic.• Cross functional teams.• Cross hierarchical teams.• Free flow of information.• Wide spans of control.• Decentralisation.• Low formalisation.

Organization design decisions (con’t)


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Organisational DesignDecisions

Contingency Factors• Strategy & Structure• Size and structure

• Technology and structure• Environmental uncertainty and structure

depends oncertain...


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• Traditional Organisational Designs.– Simple structure.

• An organisational design with low Departmentalisation, wide spans of control, centralised authority and little Formalisation.

– Functional structure.• An organisational structure that groups similar or

related occupational specialties together.

– Divisional structure.• An organisational structure made up of separate,

semi autonomous units or divisions.

Common organization designs


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Strength and WeaknessesTraditional Organisational Designs.

Strengths.• Simple structure:

– Fast, flexible, inexpensive to maintain.

– Clear accountability.• Functional structure:

– Cost saving advantages from specialisation (economies of scale, minimal duplication of people and equipments)

– Employees are grouped with others who have similar tasks.

• Divisional structure:– Focuses on results. Divisional

managers are responsible for what happens to their products and services.

Weaknesses.• Simple Structure:

– Not appropriate as organisation grows.

– Reliance on one person is risky.• Functional structure:

– Pursuit of functional goals can cause managers to lose sight of what’s best for overall organisation.

– Functional specialists become insulated and have little understanding of what other units are doing.

• Divisional structure:– Duplication of activitis and

resources increases costs and reduces efficiency.


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• Contemporary Organisational Designs.– Team based structure:

• An organisational structure in which the entire organisation is made of work groups or teams.

– Project structure:• An organisational structure in which employees

are permanently assigned to project.

– Matrix Structure:• An organisational structure that assigns

specialists from different functional departments to work on one or more project.


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• Contemporary Organisational Designs (con’t).– Autonomous internal units:

• Separate decentralised business units, each with its own products, clients, competitors and profit goals.

– Boundary less organisation:• An organisation whose design is not defined by, or limited to, the

horizontal, vertical or external boundaries imposed by a predefined structure.

• To minimise or eliminate these boundaries managers might use virtual, network or modular organization structure

– Learning Organisation:• An organisational that has developed the capacity to continuously

adapt and change because all members take an active role in identifying and resolving work related issues.


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LearningOrganisation

Organisation Design:• Boundary less.• Teams.• Empowerment.

Leadership:• Shared vision.• Collaboration.

Organisational culture:• Strong mutual relationship.• Sense of community.• Caring.• Trust.

Information sharing:• Open.• Timely.• Accurate.

Characteristics of a learning organization


END

THANK YOU

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• Reading Assignment.

• Article : TOYO Australia Team Based Organisation.

• Prepare for discussion on the 18th March 2009 class.

Business

Pm wk 5 organisational structure