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1. Organisational Structure
1.1 Formal Organisational Structure
Organisational structure can be defined as hierarchical framework in which an
organisation bases its line of authority, communication structure and allocates rights
and duties to its members. The type of structure that can be employed within a
company depends entirely on its primary objectives and strategical approach to the
industry. Several structures that are commonly used in practice include functional,
divisional, matrix or any combination of two or more structure, termed as hybrid.
Permasteelisa Australia comprises of its Melbourne and Sydney offices. It is part of a
larger group that branches out different regions around the globe including Asia, the
Middle East, North America and Europe. The Australia office operates under the
management of Mr. Huub van der Staak, the Managing Director of the Asia Business
Unit while Mr. Van Der Staak and the other Managing Directors of the different
continental regions works under Mr. Lucio Mafessanti, the Executive Director of
Permasteelisa Pacific Holdings Ltd.
The organisational structure in Permasteelisa Sydney itself is considerably shallow. A
matrix structure can be seen very clearly in Appendix 1. This section of the report will
aim to discuss the reasons for using this structure in Permasteelisa, accompanied by
background information given by the Director of Permasteelisa Sydney himself, Mr.
Andrew Vatiliotis along with relevant literary backup.
1.1 Matrix Structure
The matrix organisational structure involves using the same pool of resources and
sharing/rotating these resources among the different sections of the organisation (Van
der Merwe, 1997; cited in Laslo et al. 2007). The matrix organisation aims to combine
the merits of functional structure with product-oriented structures to create share
responsibilities between project and functional management (Laslo et al. 2007).
1.1.1 Advantages
According to Laslo (2007) the matrix structure is typically employed in global
organisations where resources are scarce. An organisation with a matrix structure has
the advantage of accomplishing similar work objectives to that of a functional
structure with a limited amount of resources. Since employees are rotated between
jobs, a company with a shallow structure such as Permasteelisa would still be able to
deliver high outputs. As it can be seen in Appendix 1, there are (up to 5) 4 jobs
running concurrently with the same number of people used in several jobs at once or
even all of them. Resources that are not specific to one project, such as the
Information Technology (IT) and Purchasing department are shared throughout the
project which enforces work efficiency and allows for a reduction in human resource
expenditures.
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The matrix structure also allows for decentralised management which would result in
faster communication (Laslo, 2007). As Mr. Vatiliotis explained his duty was to
assign a team leader to each different jobs and they would continue to delegate tasks
to the lower reaches of the team without having to wait for approval from central
management. A Project Manager was then responsible for moving from one project to
another on a weekly basis to obtain information and report it back to headquarters.
This is the main reason why team leaders (written as Design TL in Appendix 1) are
the only resource not rotated between jobs as they are required to be permanently on
site for the duration of the project.
1.1.2 Disadvantages
The decentralised management system described in Section 1.1.1 can also bring about
problems in the company, one of which is the clash of objectives between project
managers and team leaders (Laslo, 2007). Project managers tend to focus more on
long term goals while team leaders concentrate more on (short term goals) immediate
accomplishments. This issue may give rise to arguments as team leaders often seek
resources to meet unrealistic demands by either expanding existing capacities or
subcontracting its work to external parties. On the other hand, project managers often
rejects the outsourcing of work cause of possible underemployment of firm personnel
(Laslo, 2007).
The sharing of resources, which has been discussed in Section 1.1.1 to be of benefit to
a company, may occasionally be the reason of disputes between project managers.
Companies that undertake projects concurrently such as Permasteelisa may find it
difficult to prioritise the allocation of resources, which will reduce the overall success
of the organisation. The problem of scarce resources is further complicated by the
nature of projects’ due dates and penalties for failure to meet objectives. In this case,
the organisation is prone to internal lobbying between project managers which will
cause further implications such as mistrust and conflicts (Laslo, 2007).
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