Contents of Organisational Design / Organisational Structuring Guide

• Defining and Contextualising Organisational Structuring or Organisational Design

• Defining Organisational Structure

• Types Of Organisational Structure

• Figure 1. Mechanistic-Organismic - Organisational Structure - Continuum

• Contextualising Organisational Structure

• Approaches To Organisational Design or Organisational Structuring

• The Interrelationship Between Organisational Design or Organisational Structuring And International Business

Defining and Contextualising Organisational Structuring or Organisational Design

Defining Organisational Structure

It may be accurate to suggest that organisations exhibit varying levels of control - "the ability to cause something to happen" (Mann, !975, p.84) as an inherent feature of their structure. A terse definition of organisational structure might therefore be "the way in which work is organised and control exercised" (Salaman, 1979, p.61). It can also be described as:

A system of roles, relationships (established or on-going interactions), responsibilities, power, authority, accountability and communication channels.

The arrangement (formal system of relationship) which is necessary to pursue goals (Perrow, 1965). or

"The metaphor for the power arrangement of an organisation" (Westwood, 1987, p.193).

According to Blau and Schoenberr (1973, p.19), though:

"....... the power is rooted in the structure of the organisation, no individual has it, and individuals merely make the decisions through which this power is exercised as incumbents of positions in the formal structure".

Richard Hall (1972, p.53) adopts Blau’s definition that it is:

"the distribution along various lines, of people among social position that influence the role relations".

Mullins (1996) suggests that it enhances the economic and efficient performance of the organisation through equitable resource utilisation and monitoring of organisational activities. He also asserts that it provides a system through which accountability and co-ordination might be promoted. It allows the organisation the flexibility, which it needs to respond to environmental influences and cater for the social satisfaction of its members. Although not explicit in this discussion, one objective of organisational structure must certainly be to determine whether the members are able to vary their behaviour and exercise discretion.

Types Of Organisational Structure

Because this discussion is only an introduction, rather than a formal exposure  to organisational structure and design we will neither be dealing with design features nor the general characteristics of major types of structure and their merits, demerits and contingent factors. Organisational structures range from simple (simple structure), where activities are mutually co-ordinated, to the complex (family of matrices), where roles are, to a great degree, mutually co-ordinated. Leaving the simple structure aside, there are two fundamental groups of organisational structures - hierarchical and matrix structures. The hierarchical group consists of functional and divisional structures. There are three basic types of divisional structures - product/service divisional structure; client/customer divisional structure and regional/geographic divisional structure. The matrix group incorporates a range of structures that can be positioned on various points on the right side of a structural continuum (see mechanistic-organismic continuum, below). These are given different names by their designers and adapters. Two popular types of matrices are functional matrix and divisional matrix.

Figure 1. Mechanistic-Organismic - Organisational Structure - Continuum

Contextualising Organisational Structure or Organisational Design

It is generally accepted that at, or shortly after, the inception of an organisation, a structure emerges. However, this structure may change several times during the life of that system. These changes may be in whole or part, and some organisations make constant adaptation in an effort to determine the correct fit.

The concept of organisational design (organisational structuring) may, therefore, be interpreted as the structuring and re-structuring of organisations in an effort to respond to internal and external environmental demands. This is suggestive of the fact that, since environments are far from being static, the process is continuous - particularly so because there is a constant tension between stability and change. As Stoner and Freeman (1989) observe the process is never always a rational one.

The process constrained by micro-political factors, which can hardly be ignored. Recent research has revealed one important factor relating to the difficulties which are involved in any attempt to make radical changes in certain entrenched relationships. In some cases resistance can be enormous.

It may be appropriate to suggest that a desire to promote effectiveness is the chief motivating factor in organisational design. This assertion can be supported by the fact that the process has recently featured prominently in the work of managers, consultants and ‘pure’ organisational analysts.

The start-off point is a recognition of the fact that organisational design, if appropriately effected, may yield a great deal of benefit for an organisation. On the other hand, flaws in a structure may result in the system’s ineffectiveness and eventual demise. Stoner and Freeman (1989, p.281 - reporting in part from Daughen (1971) for example, have drawn attention to the following case:

When Pennsylvania Railroad merged with the New York Central Railroad to from Penn Central ... the opportunities for a larger, more efficient organisation seemed promising. The two companies did not, however merge their organisation into one sound structure. The resulting rivalry and duplication of effort contributed to Penn Central's financial collapse in the early 1970’s. Following large losses by creditors and shareholder Penn Central emerged from bankruptcy in 1980 with a very different structure and strategy. In fact, it was no longer a railroad business.

This scenario helps to reinforce the importance of organisational design. Creating or adjusting an organisational structure is relatively simple. What is difficult is getting the most appropriate structure, that will gear the enterprise towards operational effectiveness.  Before an effective choice can be made, a number of contingent factors need to be taken into account. 

Approaches To Organisational Design or Organisational Structuring

The universalist approach to organisational design relied on a number of principles which should be observed and which would, therefore, create systems which would be effective irrespective of the situation. However, now there has been a move to the contingency approach which suggests that there are a number of environmental variables which affect the organisation, as an open system. Therefore, the forces which affect particular organisations must be analysed, accurately, before organisational design occurs.

The classical approach to organisational design, is largely bureaucratic in its orientation. It holds that hierarchy, with legalised formal authority, rules and regulations - the most efficient way of structuring. Max Weber, Frederick Taylor, Henri Fayol are associated with this approach. 

Neo-classical approach to organisational design embrace the ideals of Douglas McGregor, Rensis Likert, Chris Argyris. It emphasize the importance of people cantered management, which facilities worker-empowerment, leading to real industrial democracy.

Modern approaches to organisational design, employs the contingency school of thought - embracing the idea of best-fit for a particular situation. These incorporate the notion of organisational-environmental mix - stable, changing, turbulent- mechanistic and organismic relationships.

The Interrelationship Between Organisational Design or Organisational Structuring And International Business

There is a definite relationship between organisational design or organisational structuring  and international business. Each has a crucial implication for the other. Some structures which work effectively in the domestic environment, might prove impracticable to operate internationally. Other may need adjustment to facilitate a foreign operation.

Although efforts may be made to maintain a particular structure, going international will dictate structural change. While the old design is retained, the organisation may literally assume another structure when it is taken internationally. In other words, a functional structure, which operates in this country can be copied in a foreign country. However, the fact that a geographical move has been made the structure has actually changed. This is because going overseas has created an international environment which did not exist before. The structure will then have to adjusted to manage the relationship between the old and newly created subsystems.

In order to make an effective choice of structure the design features of the different organisational forms will need to be analysed. For example, some structures may demand a great deal of communication between the subsystems and corporate management. This may prove both difficult and expensive to operate internationally. One might find that because of the geographical and technological impracticality, designs like the functional structure may tremendously reduce the level of effectiveness of the decision-making process. Not only will the foreign operation be adversely affected, but this will subsequently reflect on the effectiveness of the organisation as a whole.

Many organisations find it convenient to create strategic business units (SBU) in an effort to alleviate some of the problems which other structures might otherwise have caused. The strategic business unit is a distinct divisional structure which provides the leader of the subsystem with a high level of autonomy. Regional SBUs tend to present a great deal more benefits than the problems which are thereby created.

Having conducted empirical research, and with several consultancy engagements in this area, HRODC's Chief Consultant takes a personal interest in helping organisations to design and implement the structure which best fits their current and predicted future circumstances. Taking this contingency approach, it has been able to redesign organisations with assured effectiveness improvement.

Below are the objectives and contents of our Organisational Design Course

Organisational Design Course

 Course Duration: 3 Days

 Course Objectives and Contents of Organisational Design Course

 Course Objectives

 By the conclusion of the specific learning & development activities, delegates will be able to:

• v          Suggest the approaches which might be adopted in    designing an organisation

• v          Design an organisation adhering to the principles of        horizontal and vertical relationship

• v          Distinguish between the basic types of structure

• v          Appropriately define organisational structure

• v          Distinguish between organismic and mechanistic structures;

• v          Explain the approaches to organisational design

• v          Match the organisational design approach with the level of development of the organisation.

• v          Identify horizontal relationships in organisational design

• v          Show the vertical relationships in an organisational chart.

• v          Indicate the importance of vertical and horizontal relationships in organisational design

• v          Illustrate lines of authority in an organisational chart

• v          Illustrate communication channels in an organisational chart

• v          Discuss the co-ordinating mechanism in a simple structure.

• v          Name the fundamental organisational structures and their variations.

• v          Demonstrate an awareness of the fundamental issues associated with organisational design and their implications for effective organisational functioning;

• v          Identify an organisational structure from verbal description

• v          Distinguish between different organisational structures

• v          Provide examples of different bases of divisional structure

• v          Distinguish between the different types of matrix structures

• v          Illustrate their ability to design an appropriate organisational structure that takes account of contingent internal and external environmental factors;

• v          Recommend the most appropriate structure for an        organisation, taking contingent factors into account  

• v          Be aware of the relationship between organisational structure and leader and organisational flexibility

• v          Translate the positive and negative factors of particular types of structure to the design of an organisation which will enhance the effectiveness of an enterprise

• v          Demonstrate their ability to encourage the type of superior-subordinate relationship which will be conducive to organisational success

• v          Provide the bases for structural contingencies

• v          Illustrate the effect of organisational structure on communication within an organisation

•  

Contents of Organisational Design Course

•           An introduction to organisational design:

•           Approaches to organisational design

•           Classical organisational design

•           Neo-classical organisational design

•           Classical Approach to organisational design

•           Scientific Management to organisational design

•           Humanistic Approach to organisational design

•           Mechanistic Approach to organisational design

•           Human Relations Movement

•           Contingency approaches to organisational design.

•           Organisational structure and internal and external relationships

•           Levels Of Control And Role Specificity

•           Mechanistic & Organismic Structures And Their Types Of Relationships

•           A Case In Point: The Mechanistic Factory Setting

•            Vertical relationships in organisational design

•            Horizontal relationships in organisational design

•           Lines of authority and accountability in organisational design

•           Types of organisational structure

•           The simple structure. 

•           The functional structure.

•           The divisional structure and its internal relationships. 

•           Basis of divisionalisation. 

•           Product Divisional structure

•           Service Divisional structure

•       Geographic or Regional Divisional structure

•       The Matrix Structure

•      Divisional Matrix Structure

•      Functional Matrix Structure

•      Customised Matrices

•      The divisional structure compared with the functional structure on the basis of:

•       Communication,

•       Co-ordination,

•       Worker autonomy,

•      Organisational control

•       Organisational Flexibility.

•       The organisation of the matrix structure

•       Decision-making and communication patterns in functional structures

•      Decision-making and communication patterns in divisional structure

•           Decision-making and communication patterns in matrix structures

•           Structural contingency

•           The Interrelationship Between Organisational Design And International Business

•           The Place Of The Divisional Structure In International Operations

•           Identifying & Designing Organisational Structures  

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