Robbins 5e Ch04

Robbins, Barnwell: Organisation Theory 5e © 2007 Pearson Education Australia

PowerPoint to accompany

Stephen RobbinsNeil Barnwell

Organisation TheoryCONCEPTS AND CASES

5e

Robbins, Barnwell: Organisation Theory 5e © 2007 Pearson Education Australia

Chapter four

Dimensions of organisation structure

Robbins, Barnwell: Organisation Theory 5e © 2007 Pearson Education Australia 3

Aims of this lecture

Introduce and describe the three components of complexity

Discuss formalisation techniques

Discuss the centralisation-decentralisation debate

Describe the five basic structural configurations


Complexity

Comparing organisations is difficult because of their intangibility

However some things we can measure and these form the basis of organisational complexity

Complexity is the degree of horizontal, vertical and spatial differentiation in an organisation


Horizontal differentiation

Horizontal differentiation refers to the degree of specialisation in the organisation

It includes the number of different specialist tasks, departments and the orientation and skill background of members

Groups of specialists are normally grouped into departments


Vertical differentiation

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

This can normally be easily counted

Span of control refers to the number of subordinates a supervisor can effectively control


Spatial dispersion

Spatial dispersion is the degree to which an organisations facilities and personnel are geographically dispersed


Formalisation

Formalisation is the degree to which jobs and procedures in the organisation are standardised

High formalisation assists in regulating employee’s behaviour by reducing variability

High formalisation can also assist in increasing productivity for standardised tasks

It can also simplify training and reduce job skills


Formalisation continued:

Formalisation techniques include:

• Staff selection• Defining role requirements• Existence of rules, policies and procedures• Socialisation where individuals absorb the norms and

values of the organisation• Training• Participation in rites and rituals


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


Centralisation continued:

Centralisation also includes all steps in the decision making process being taken by one person or group

Finding an appropriate balance between what to decisions to centralise and what to decentralise is an ongoing problem for organisations


Coordination

Coordination is integrating the objectives and activities of the organisation to achieve the organisation’s goals

Programmed coordination relies upon standardised techniques to schedule repetitive tasks

Individual coordination uses staff members to undertake coordination tasks

Informal coordination is where individuals coordinate through voluntary action


Organisation design options

There are not an infinite number of organisational options

Organisations may be grouped into one of five configurations

A configuration is a complex, cohesive clustering of elements which are internally consistent and which forms a repetitive pattern


Common organisational elements

All organisations have five common elements• Operating core where work related to the production

of goods and services takes place• Strategic apex which has overall responsibility for the

organisation• Middle line connects the operating core to the

strategic apex• Technostructure standardises the work of the

organisation• Support staff provide indirect support services


Common organisational elements continued:


The simple structure

The simple structure is typical of a small organisation

It is low in complexity, has low formalisation and authority is centralised in one person

Operations are flexible, decision making is fast and accountability clear

But its operations are limited by its small size and the capabilities of the manager


The simple structure continued:


Machine bureaucracy

The machine bureaucracy is a large organisation with very routine and formalised operating tasks and extensive rules and regulations

The key part of the organisation is the technostructure

Its key strength is in performing standardised activities in an efficient manner

In this it achieves economies of scale


Machine bureaucracy continued:


Machine bureaucracy continued:

The machine bureaucracy’s weaknesses are• Difficulties in adapting to change• Subunit and departmental conflict• Obsession with rule following• Best adapted to a stable environment


Divisionalisation

The divisional structure consists of a set of autonomous self contained units reporting to a central headquarters

The divisions may be based upon product, geographic area or sometimes customer

Each division is run by separate management and is a profit centre


Divisionalisation continued:



Divisionalisation’s strengths include• Identifies clear areas of accountability• Decentralises decision making • Frees headquarters to concentrate upon strategic

matters• Divisions may be added or disposed of relatively

easily• Enables participation in a number of different markets

at the same time



Weaknesses include• Duplication of functions • Cooperation between divisions often poor• Difficult to balance the responsibilities between the

head office and the divisions

Divisionalisation is only effective when the technical core can be divided into self contained parts

A very common business form


Professional bureaucracy

A structural form which permits highly trained professionals to practice

It is high in complexity and decentralised

Formalisation derives from the professional’s training and professional standards

It is a form common to management consultancies, professional accounting firms, legal firms and similar


Professional bureaucracy continued:


Professional bureaucracy continued:

Its strength is that it can undertake unique, specialised tasks on behalf of clients

Its weakness is its difficulty in determining strategic direction and in coordinating tasks

There are also no economies of scale, but rather economies in applying knowledge

The dominant part is the operating core


Adhocracy

An adhocracy handles unique tasks but is better coordinated than the professional bureaucracy

It is very flexible, has high horizontal differentiation (many different skills), low vertical differentiation (few layers of management), low formalisation and is intensively coordinated

It undertakes tasks which are difficult to formalise and to coordinate i.e. theatre productions, engineering construction, complex design


Adhocracy continued:


Adhocracy continued:

Adhocracy is a complex form which needs to be managed well. Poorly managed adhocracies have high levels of conflict, spend too much time in administration and are slow to make decisions

The matrix is a form of adhocracy which responds to two environmental pressures at once

Either the entire organisation, or only part of the organisation may conform to an adhocracy


Discussion questions

What are the challenges involved in managing complex organisations? How can these be overcome?

How may the various formalisation techniques be applied?

Why is important to get the balance between centralisation and decentralisation right?

What is it like to work in a simple structure? A machine bureaucracy? A professional bureaucracy? An adhocracy?

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Robbins 5e Ch04