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Topic

Organisation Structure and Design

William Meaney MBA BSc. ACMA 1


JSW Model

People and Systems

• Organisational Cultureand Values

• Change management

Organisation structure

• Organisation structure

• Strategy v Structure

• Mintzbergs Organisational fit

Resource planning

• Budgeting

• Resource allocation

• Project management

• Balanced Scorecard

• Performance monitoring

William Meaney MBA BSc. ACMA

Strategic Implementation

4

Learning outcomes

After completing this topic you should be able to;

• Describe the influence of different structures on strategic management

• Outline the relative strength and weaknesses of centralisation versus

decentralisation

• Be able to see the deficiencies in organisations structure and the impact

on effective strategy implementation

• Be able to suggest improvements to organisation structures

• Have an awareness Mintzbergs configuration model of organisational

design, the types of structures and co-ordinating mechanisms


5

Balanced scorecard

Strategy implementation

Final thoughts

StrategicMarketing

Change management

Project management

MotivationOrganisation structure and

design

Culture and values

LeadershipHuman

Resources

Strategic IT

Resource allocation


Structural determinants Structural deficiencies

• Organisation size

• Tasks to be completed

– Complexity

– Diversity

– Interdependence

• Environment in which the firm operates

– Degree of stability

– Industry, competition, demand

• Ideology

– Management style

– Ability to adapt/manage change

– Communication style

• Problems of motivation an morale

• Decision making delays/faults

• Conflict and lack of co-ordination

• No/ Slow response to change

• High administrative costs


Organisational Structure Topics

(1) Organisation structure

The way in which an organisations activities are divided, organised and co-ordinated

(2) Organisation Chart

A diagram of organisation structure, showing the functions, departments, or positions

of the organisation and how they are related

(3) Tall versus Flat organisation structures

(4) Formal versus informal organisational structure

(5) Centralisation versus decentralisation

(6) Approaches to effective co-ordination

7William Meaney MBA BSc. ACMA

8

Fundamental issues in organisational design (Burns and Stalker)

Organisational Design Issues

Division of labour

Distribution of authority

Departmentalisation

Span of control

Mechanistic Organic

Design Design

High Work Specialisation Low

Low Centralisation High

delegation delegation

High Work type Low

Uniformity Uniformity

Few No. of subordinates Many


Issues in organisation structure and design


• Tall v Flat

• Centralised V Decentralised

• Formal v Informal

Tall V Flat organisational structure


Formal v informal organisation


Or a lighter perspective


The formal

organisation

chart

The real

organisation

chart

Centralised organisation structure


Decentralised organisation structure


Organisation structure types

Types

(a) Entrepreneurial / owner managerial

(b) Functional structure

(c) Divisional structure

(d) Matrix organisation


Entrepreneurial

Advantages

• Enables founder to control all aspects

of the business

• Easy to manage growth and

development.

Disadvantages

• Founder may not have adequate

• Knowledge in specific areas.

• Only appropriate to certain size


Employer

EmployeeEmployeeEmployee

Functional

Advantages

• Chief executive in touch with all operations

• Reduces/simplifies control mechanisms

• Clear definition of responsibilities

• Specialists at senior and middle management levels

Disadvantages

• Senior managers overburdened with routine matters

• Senior managers neglect strategic issues

• Difficult to cope with diversity

• Coordination between functions is difficult

• Failure to adapt


Chief executive

Personnel ProductionFinanceMarketing

Multi Divisional

Advantages

• Flexible (add or divest divisions)

• Control by performance

• Ownership of strategy

• Specialisation of competences

• Training in strategic view

Disadvantages

• Duplication of central and

divisional functions

• Fragmentation and non-

cooperation

• Danger of loss of central control

18

The matrix structureThe matrix structure combines different structural dimensions simultaneously, for example

product divisions and geographical territories or product divisions and functional specialisms.


Advantages

• Integrated knowledge

• Flexible

• Allows for dual dimensions

Matrix organisation - disadvantages

Disadvantages

• Length of time to take decisions

• Unclear job and task

responsibilities

• Unclear cost and profit

responsibilities

• High degrees of conflict


Mintzbergs configurations

An alternative view of organisation structure!


Mintzbergs five design configurations

• The Strategic Apex

Top level managers with overall responsibility for the organisation

• Middle line managers

Managers who connect the Strategic apex to the operating core

• Technostructure

Analysts who have responsibility for affecting certain forms

of standardisation in the organisation

• Support staff

People who provide indirect services for the organisation

• The Operating Core

Employees who perform the basic work related to the production

of goods and services



Six possible configurations

• Simple structure

Strategic apex and operating core

• Machine bureaucracy

Technostructure

• Professional bureaucracy

Dominance of Operating Core


Mintzbergs configurations continued…

• Adhocracy

Complex and disorderly structure i.e.

project teams


• Divisionalised organisation

Examples of Mintzbergs organisation types


Mintzbergs coordination mechanisms


5 major trends in organisation structure

• Flatter organisation structures

• Wider span of control

• Decentralised decision making – Empowerment

• Use of teamwork, self managed teams

• More flexible organisations – Handy's shamrock organisation

• Technological innovation

• Changes in job design – job variety and multi-tasking

• Improved communication


Implications for management – 5 key changes.

• Downsizing due to need for less managers

• More democratic/participative style

• Manager more motivator, facilitator, mentor

• Constant upskilling required

• Project management skills key to strategic achievements


How will this be helpful in your exam?

• You will be able to explain the reasons why all organisations are different

and understand the impact of organisation structure and design on

strategic implementation.

• A possible if unlikely theory question.


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