Organisations - structure,
functions and culture
(special thanks to Geoff Leese)
Objectives
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Be able to describe the ways in which
organisations may be structured
Know the characteristics of tall and flat
organisational structures
Understand centralisation/decentralisation
Have an overview of organisational functional
areas
Know the importance of information systems in
organisations
First - a definition!
“the structure of an organisation can be
defined simply as the sum total of the
ways in which it divides its labour into
distinct tasks and then achieves
coordination between them”
(Mintzberg, 1979)
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Purpose of Organisational Structure
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To allocate tasks and responsibilities
(DISINTEGRATION)
To identify and clarify roles and levels of
responsibility
To coordinate activities and roles once
allocated
(INTEGRATION)
To facilitate and regulate information flows
and decision making processes
To serve, in some measure, as a means of
resolving differences
Issues!
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Task differentiation - how much?
Tight or loose control?
Mechanistic Vs organic?
Central or devolved authority?
Prescriptive job definition?
Span of control?
Communication flows/decision making?
External (environmental) factors?
Basic factors involved
Purpose and goals
 Tasks
 People
 Technology
 Culture
 External environment
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Functional Specialisation
Advantages
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Professional expertise
enhanced
Usually effective in
practice
Traditional form of
departmentalisation
Readily accepted by
employees
Disadvantages
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Sub-optimality
Problems adapting to
change (geographical,
product diversification)
Narrow functional
experience less suitable
as training for general
managers
Geographical Specialisation
Advantages
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Faster decisionmaking
Uses local knowledge
Speedier reaction time
Some operating costs
lower (storage,
transport)
All round experience
good training for
managers
Disadvantages
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Loss of control by “head
office”
Problems co-ordinating
local activities
Duplication of effort
Product Specialisation
Advantages
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Develops expertise in
products/services
Responsibilities clearly
identified
Diversification and
technological change
easier to handle
Disadvantages
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Sub optimality again!
Possible co-ordination
problems
Loss of control by
senior management
Matrix Structure (1)
Chief Exec
Production
Finance
Marketing
Project A
Manager
Project B
Manager
Project C
Manager
Vertical flows - functional authority
Research
Matrix Structure (2)
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Can help motivation
Helps direct effort
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Can result in “division of
authority/responsibility”
conflicts
Resource allocation
problems
Resentment of “functional
heads”
One man, One boss?!
Tries to combine stability & efficiency of “functional” division with
flexibility and directness of “project based” division
Factors influencing span of control
Narrow span
Wider Span
Complex work
Simple work
Uncertain environment
Stable environment
Less able subordinates
Able subordinates
More risk/danger
Less risk/danger
Less able manager
Able manager
“Tall” Vs “Flat” structures
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Size of organisation
Complexity & nature of operations
Production methods
Technology
Management style
Amount of delegation
Spans of control
Ability of managers & personnel
“Tall” Vs “Flat” structures
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Larger size
Many levels
Narrow span of
control
Long chain of
command
More formality,
specialisation &
standardisation
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Smaller size
(usually)
Fewer levels
Broad span of
control
Short chain of
command
Decentralisation advantages
Improvement of local decision making
 Improvement of strategic decision making
 Increased flexibility
 Reduced communication problems
 Increase motivation of local management
 Better training for junior management
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Decentralisation disadvantages
Possible sub-optimal decision making
 More co-ordination problems
 Control and monitoring problems
 Needs intelligent & well motivated junior
managers
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Don’t decentralise!
Decisions about technologies, markets &
products
 Decisions about diversification and
contraction
 Decisions about corporate finance
 Decisions about corporate personnel
policy and key appointments
(Drucker)
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The “Flexible Firm”
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Core versus peripheral activities
Functional flexibility for core activities
Polyvalence/multiskilling
One man, one job?
Numerical flexibility for peripheral activities
Outsourcing
“Hire & fire”
Business Functions
Marketing
 Production
 Finance
 Personnel
 Administration
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Marketing
What does the customer need?
 Product design
 Production levels
 Storage, distribution and delivery
 Market Research
 Advertising
 Selling
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Production
Making or assembling product from raw
materials or components
 Types of production
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 One-off
 Small
batch
 Large batch
 Continuous process
Finance (1)
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Financial accounting
 “keeping
the books”
 provision of info for taxation authorities
 production of statutory and traditionally
required documents
Finance (2)
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Management accounting
 Provision
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of information for decisionmaking
Budgets
 statements
of resources available for a
given period
 expenditure monitoring and control
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Financing
 Amounts
and methods of raising funds
Personnel(1)
Recruitment
 Deployment
 Training
 Selection for promotion/advancement
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Personnel(2)
Wages/salaries & benefits
 grievances and discipline
 Termination of employment
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 retirement
 redundancy
 dismissal
 death!
Administration
Creating and operating rules,
procedures and regulations
 Implementing decisions and directives
 Creating and maintaining channels and
media for communication
 Implementing changes in organisational
policy
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Effects on Info. Systems
IS must be tailored to suit needs
 Consider information flow requirements
 Consider control issues
 Consider culture
 Consider degree of centralisation
 Consider empowerment/delegation issues
 Consider available technology!
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Further Reading
Bott et al sections 2.3, 3, 4, 8
 Butel L et al (2002), Business
Functions, an Active Learning
Approach, Blackwell, Oxford
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 Sections
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1.1 and 4
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Organisational structures