“It is not the strongest of
the species that survives,
nor the most intelligent,
but the one most
responsive
to change.”
— Charles Darwin
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Role of HRM
Organizational structure
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7S -
Richard Pascale, Tony Athos,
Tom Peters and Bob Waterman
The Principles of the model are:
• All the elements are equally important.
• All elements are inter-connected- altering one element
affects other elements.
• Effective strategy is more than individual subjects - it is the
relationship between strategy, structure and systems
coupled with skill, style and super ordinate goals.
• Provide a checklist of important variables for evaluating the
proposed strategies (coherence)
• It provides a way of examining an organisations operation
and its inter-relationships and core competencies.
• Peters and Waterman's in Search of Excellence 1982, uses
it as a starting point for identifying and examining other
relationships.
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Organizational architecture
Totality of a firm’s organization :
formal structure, control systems,
incentives, processes, organizational
culture and people. To be effective:
– Strategy and structure must fit
– Strategy, structure and competitive
environment must fit
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Organizing human resources
• You can’t see it, but it’s probably
the most important thing in a
business.
• Why do organisations need a
structure?
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Let’s address these questions:
1. What is meant by organisation
structure?
2. How does one design a suitable
structure?
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Design of structure
Nature of function, type of business,
geographical area
– Entrepreneur /small team
– Functional structure
– Product structure
– Key customers structure (verticals)
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Key principles of org struc
1. Span of control: wide/ narrow
– Number of subordinates reporting directly to a manager
– Wider the span of control; the greater the degree of
delegation
– More trust : everyone made accountable
2. Levels of hierarchy : tall
– Slow decision making
– Narrow span of control
– Greater sense of remoteness at lower levels
– Greater the levels of hierarchy, longer the chain of
command
3. Chain of command : route through which authority is
passed on
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Key principles of org struc
(contd)
4.Delegation : passing down of
authority to perform tasks and take
decisions from higher to lower levels
– Accountability
– Authority
– Responsibility
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Centralisation/ Decentralisation
Centralisation
Keeping important decision-making
powers in the HO
Decentralisation
Passing decision making powers to
managers in other areas
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Centralisation
Decentralisation
Fixed set of rules and
procedures
Allows more local decisions to
be made which reflect
different conditions
Business has consistent
policies, prevents conflict
Develops more junior
managers and prepares them
for challenging roles
Senior managers take
Allows delegation and
decisions in the interest of the empowerment and these will
whole business
have positive effects on
motivation
Central buying should allow
Decision making in response
for greater economies of scale to changes – local market
conditions should be quicker
and more flexible
Senior managers at central
office will be experienced
decision makers
HO involvement not required
all the time
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Centralization
+ facilitates coordination
+ ensures that decisions are
consistent with organizational
objectives
+ gives top-level managers means to
bring about needed organizational
changes
+ can avoid duplication
of activities
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Why Decentralization?
+ overburdening of top management if decisionmaking is centralised
+ gives top-management time to focus on critical
issues by delegating more routine issues to
lower-level managers
+ motivational theories favour individual freedom
and empowerment
+ better decisions made closer to the spot
+ increasing control – fewer excuses for poor
performance if power given to (subunits)
managers
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Do all organisations need structure?
Draw one for your dream company
•
•
Formal division of organization to subunits
(products, functions)
Location of decision-making responsibilities
within that structure
When done, evaluate it in terms of:
1.
2.
3.
4.
5.
Speed, accuracy of communication
Span of control
Centralization
Degree of delegation used
Can structure affect employee motivation,
performance
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Does your org-chart show?

Who has overall responsibility for decision making?

Formal relationships between different people and
departments

Ways in which accountability and authority may be
passed down the organisation = chain of command

The number of subordinates reporting to each senior
manager = span of control

Formal channels of communication – vertical, horizontal

Identity of the supervisor or manager to whom each
employee is answerable and should report to
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Points to ponder…
Tall v Flat: “Tall” organizations have layers of managers
structured in a hierarchy. ‘Flatter’ companies have fewer
layers - which they claim gives them more flexibility.
Chain of Command: A tall company has a long chain of
command, but managers have a narrow span of control.
Hierarchies have their advantages, but are they too rigid?
Team Working: In multinational drugs company Eli Lily,
staff work in numbers of different teams in a matrix
structure.
Human Costs: Firms flatten hierarchies by cutting staff,
but what about the human cost?
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size, range of activities influence
org-structure?
• Small firms entrepreneurial
Owner
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Does style of mgmt, retrenchment, adopting
new technologies affect org-structure?
• Theory X => smaller span of control
• Theory Y => wider span of control,
few levels of hierarchy
• Retrenchment => delayering,
shortening the chain of command
• Adopting new technologies => ???
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Hierarchical or Bureaucratic
Advantages
 Divisions could be based on functional
departments or regions or products
 Role of every employee clearly defined
 Clearly identifiable chain of command
 ‘Role’ determines hierarchy
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Hierarchical or Bureaucratic
Disadvantages
1. One-way (top-down) communication is
the norm
2. Minimal horizontal links between
departments = lack of coordination
3. Tunnel vision – looking at problems from
the point of view of their department
alone
4. Inflexibility
5. Not pro-active - cannot cope with
change!
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Matrix structures
• Matrix
– Eliminates many problems associated
with hierarchy, cuts across departments
and creates project teams made up of
people from all departments, divisions
– Task or project focused
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Matrix structure
Marketing Operations Finance
Mgmt
Product
Develop √
ment
Sales,
Service
Promoti √
on, PR
team
Personnel
√
√
√
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Matrix
Advantages
• Allows total communication between
managers
• Approach – what is good for the
business as a whole
• Specialist knowledge in different
areas = more creative solutions
• Can respond to changing market
conditions
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Matrix
Disadvantages
• Teams empowered – less direct
control from the top
• Conflicts – two bosses
• Faster reaction but reduced control
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Why did matrix emerge?
•
The matrix model came from the recognition that companies not
only have vertical chains of command but that people also work
horizontally, across their functional specialisation. In theory, the
matrix allows managers to harness the services of employees
irrespective of their function, to work collaboratively on key
projects.
•
The matrix manager can pool necessary resources in order to
achieve what, from the strategic objective, is the overriding
priority.
•
It slices through unwieldy lines of control. It frees up leadership in
everyone concerned, not relying on few people who have
positional power.
A single multidisciplinary or cross-functional team is one thing but what happens when a number of these cross-functional teams
are working simultaneously requiring people to relate to one
another vertically, horizontally, and diagonally, all at the same
time?
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Delegation
Releases managers to
undertake a more strategic
role
If the task is not made
clear, training not provided,
then delegation is
unsuccessful
Shows trust in subordinates If sufficient authority not
and this motivates staff to
granted, then delegation
do well
will be unsuccessful
Develops and trains staff for
more positions and is one
way of assisting people to
achieve
Managers may delegate
boring jobs that they do not
want to do – this will not
prove to be motivating
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advantages
Delayering
disadvantages
Reduces business costs
There could be one-of
costs of making managers
redundant
Shortens chain of
command
Increased workloads for
those who remain
Increases span of control
Overwork and stress
Increase opportunity for
delegation
The fear that redundancies
might be used to cut costs
creates insecurity
Increases workforce
motivation due to less
remoteness
‘Need for security’ is an
important need - Maslow’s
theory
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questions
1. Would you advise a multinational
furniture retailer to adopt a
centralised management structure?
Explain your answer
2. Explain the link between span of
control and degree of delegation
exercised
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Henry Mintzberg
• Interpersonal roles
– Figurehead
– Leader
– Liaison
• Information roles
• Decision making roles
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Mintzberg contd
• A manager is not always a
systematic planner. Planning carried
out on a day-to-day basis
• Managers perform a number of
routine duties
• Managers prefer verbal
communication
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Tom Peters
In Search of Excellence - the eight themes
•
A bias for action active decision making - 'getting on with it'.
•
Close to the customer - learning from the people served by the business.
•
Autonomy and entrepreneurship - fostering innovation and nurturing
'champions'.
•
Productivity through people - treating rank and file employees as a source of
quality.
•
Hands-on, value-driven - management philosophy that guides everyday practice management showing its commitment.
•
Stick to the knitting - stay with the business that you know.
•
Simple form, lean staff - some of the best companies have minimal staff.
•
Simultaneous loose-tight properties - autonomy in shop-floor activities plus
centralised values.
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