BUS102 SU04 Organisational Design: Evolving Structures

What are the elements in Organisational Design? (Chain of Command - Responsibility) [WDCS-CD-F]

It is an obligation or expectation to perform duties assigned by the Manager.

What does it mean to be Digital?

It is characterised by rapid access to immense amounts of information that are easily compressed, preserved, and transmitted. Information takes on new forms through smartphones and other mobile devices.

Challenges to the Digital Organisation

The problems companies run into once they decide on a digital strategy - how to organise, how to build agility in teams, and how to build a service-centric organisation - are not technology problems; they are people problems. - Ethical issues related to aggressive algorithms that profile and track employee privacy. - Potential social and inequalities resulting from AI in the workplace. - Link this with Corporate Digital Responsibility: a set of practices and behaviours to use data and digital technologies in a way that is socially, economically, technologically, and environmentally responsible. - For example, educational programmes that help to create a healthy and safe relationship with the technology used in the schools.

Contemporary Organisational Designs (Others)

1. Telecommuting is a work arrangement in which employees work at home and are linked to the workplace by a computer. 2. A compressed work week where employees work longer hours per day but fewer days per week. 3. Flextime is a scheduling system in which employees are required to work a specific number of hours a week but are free to vary those hours within certain limits. 4. Job sharing is the practice of having two or more people split a full-time job. 5. The contingent workforce are persons who do not expect their jobs to be permanent or who reported their jobs as temporary. 6. A learning organisation is characterised by its capacity to continuously learn, adapt, and change

How to select/decide an Organisational Design? Mechanistic or Organic? What are the Four Contingency Factors? [SST-EC]

Appropriate organisational design - whether mechanistic or organic - depends on four contingency variables: strategy, size, technology, and environmental uncertainty.

Organising for Collaboration

Collaboration improves communication and coordination, innovation, enhances employees' ability to address complex problems, and serves as a platform for sharing information. In this Digital Age, working arrangements are not easy to manage and Managers are encouraging collaborative work among employees working in complex structures. Collaboration can be internal (employees) or external (stakeholders).

What are the elements in Organisational Design? (Departmentalisation - Customer) [WDCS-CD-F]

Customer - Employees are organised based on specific customer needs.

What are the Four Qualities in managing a Digital Organisation? (Harmonising) [DGHE]

Digital Technology can be a natural force that binds people together. Thus, Managers can capitalise on this effect to promote collaboration over competition (assessing an Organisational's Culture). Many software solutions and digital tools facilitate team work and collaboration within and outside organisations. Digital organisations should embrace global collaboration with the right digital tools and move away from protectionism and nationalism.

What are the elements in Organisational Design? (Departmentalisation - Functional) [WDCS-CD-F]

Employees are organised based on specific functions: marketing/sales/human resources.

What are the elements in Organisational Design? (Departmentalisation - Geographic) [WDCS-CD-F]

Employees are organised based on their geographic boundaries.

What are the Four Qualities in managing a Digital Organisation? (Empowering) [DGHE]

Empower and engage employees to retrain/reskill in line with the organisation's digital strategy, to innovate and collaborate. Empower employees with remote working conditions.

What are the elements in Organisational Design? (Others - Organic) [WDCS-CD-F]

In contrast, an organic structure is highly adaptive with a loose structure that allows it to change (Robbins & Coulter, 2021). Jobs are not highly standardised and are arranged in teams. There is a weak chain of command, and fewer hierarchical layers with decentralised decision-making.

Contemporary Organisational Designs (Project Structures)

In this structure employees continuously work on projects. It does not have any formal departments. Employees work in teams on a project and, once completed, will take up a new project

Contemporary Organisational Designs (Team Structures)

In this structure, the entire organisation is made up of work teams. Employee empowerment is a fundamental principle in this structure. Additionally, employees work in permanent teams that coordinate work activities to accomplish organisational goals. An organisation may use cross-functional teams consisting of employees from various functional departments who work as one team. However, such arrangements are temporary and do not constitute a team structure.

What are the Traditional (vertical approaches to) Organisational Designs? (Functional Structure) [SS-FS-DS]

It adopts a traditional, vertical approach of organising employees with similar occupational skills or expertise into a single department (human resources/accounting/production/marketing). It is a strong vertical design. Information flows up and down the vertical hierarchy, and the chain of command converges at the top. Employees communicate primarily with others in the same department to coordinate work and accomplish tasks or implement decisions. Managers and employees are compatible because of similar training and expertise. Most organisations follow a functional structure.

What are the Traditional (vertical approaches to) Organisational Designs? (Simple Structure) [SS-FS-DS]

It characterised by low departmentalisation, wide spans of control, authority centralised in one person, and little formalisation. As an organisation grows, its structure gets more specialised and formalised and, based on the contingency factors, it may move towards a more mechanistic or organic type and take a form of either a functional or a divisional structure.

What are the elements in Organisational Design? (Chain of Command - Authority - Line Authority) [WDCS-CD-F]

It entitles a manager to direct the work of an employee whose organisational function contributes directly to the achievement of organisational objectives. In a manufacturing firm, line managers are typically in the production and sales functions, whereas managers in human resources and payroll are considered staff managers with staff authority.

What is the Organisational Structure?

It is a formal arrangement of jobs within an organisation.

What are the elements in Organisational Design? (Chain of Command - Authority) [WDCS-CD-F]

It is a formal right inherent in a managerial position, to tell people what to do and to expect them to do it, so as to coordinate and oversee the work of others. Importantly, it is related to one's position and not one's personal characteristics. However, a manager's authority rests on the subordinates acceptance of his/her right to give orders and expect compliance. This is known as the 'acceptance theory of authority'. A manager should provide orders that are unbiased, reasonable to an employee's skills, and consistent to the organisation's purpose, to gain his/her employees authority.

What are the elements in Organisational Design? [WDCS-CD-F]

It is a process that involves decisions about six key elements - work specialisation, departmentalisation, chain of command, span of control, centralisation and decentralisation, and formalisation.

What is the roadmap to Digital Transformation (DT)?

It is a remarkable shift in perspective on the adoption and use of digital tools, people, and processes, to influence business performance.

What are the Traditional (vertical approaches to) Organisational Designs? (Divisional Structure) [SS-FS-DS]

It is a vertical structure approach of organising different functional departments based on organisational outputs. For example, a large divisional organisation will have its separate engineering, human resources, and marketing departments, for a single product/service. It is sometimes referred to a product structure, geographic, program structure, or self-contained unit structure. Most large corporations have separate divisions that perform different tasks, use different technologies, or serve different customers. The difference between divisional and functional structures is that the chain of command from each function converges lower in the hierarchy. Differences of opinion would be resolved at the divisional level rather than by the president.

What are the elements in Organisational Design? (Chain of Command - Authority - Staff Authority) [WDCS-CD-F]

It is created to support, assist, advise, and generally reduce some of their informational burdens on the Line Authority. It is narrower than the Line Authority.

Why is Organising important?

It is important because it follows planning, which defines what and when to do a task. In contrast, organising defines how and who to do it - i.e., how tasks are divided, resources deployed, departments coordinated, as well as the reporting lines, i.e., who reports to whom.

What is Organising?

It is one of the four management functions. It defines the role of each employee towards the attainment of organisational outcome(s)/goal(s).

What are the elements in Organisational Design? (Chain of Command - Accountability) [WDCS-CD-F]

It is the alignment of authority and responsibility. Those with authority and responsibility are subject to justifying task outcomes to those above them in the chain of command. This relates to the management principle of Unity of Command where each employee should report to only one Manager.

What are the elements in Organisational Design? (Chain of Command) [WDCS-CD-F]

It is the line of authority extending from the upper organisational levels to the lowest levels, which clarifies who reports to whom (Robbins & Coulter, 2018, p. 387). Managers need to consider it when organizing work because it helps employees with questions such as "Who do I report to?" or "Who do I go to if I have a problem?" The scalar principle refers to a clearly defined line of authority in the organisation that includes all employees. The three concepts related to the chain of command are authority, responsibility, and unity of command.

What are the elements in Organisational Design? (Work Specialisation) [WDCS-CD-F]

It is the process of dividing work activities into separate tasks to increase (i) work output and (i) quality. This is also known as the division of labour. Consequently, employees gain experience and expertise, and become efficient in their own specialisation. For example, Ford increased car production efficiency when jobs were divided into smaller and standardised tasks. However, excessive specialisation, or overspecialisation, is said to be the cause of human diseconomies - boredom, stress, low productivity, high absenteeism, and turnover.

What are the elements in Organisational Design? (Departmentalisation) [WDCS-CD-F]

It is the process of grouping similar specialisations into groups known as departments to coordinate and accomplish organisational goals. There are five common forms of departmentalisation. Other forms include using teams and a matrix. Many large organisations continue to use a combination of most or all of the five types of departmentalisation.

Contemporary Organisational Designs (Matrix Structures)

It made up of specialists from different functional departments to work on projects led by a project manager. This structure follows a dual chain of command as employees have two manager - one functional manager and the project manager. Thus, it violates the principle of unity of command. This structure is common in healthcare settings where a patient a patient receives care from a team of multidisciplinary healthcare professionals.

What are the elements in Organisational Design? (Centralisation) [WDCS-CD-F]

It pertains to who, where, and how decisions are made. Decision Authority is located near or at the top of the organisation. Enabling Factors: 1. Environment is stable. 2. Lower-level managers are not capable or experienced in decision-making. 3. Lower-level managers do not want to have a say in decisions. 4. The size of organisation is large 5. Organisation is facing a crisis and is facing a risk of company failure. 6. Effective implementation of strategies depends on managers' retaining a say on what happens.

What are the elements in Organisational Design? (Decentralisation) [WDCS-CD-F]

It pertains to who, where, and how decisions are made. Decision Authority is pushed down to the lower levels. Enabling Factors: 1. Environment is complex. 2. Lower-level managers are capable and are experienced in making decisions. 3. Lower-level managers want to have a say in decisions. The corporate culture is open and allows managers to say what matters. 4. The company is geographically dispersed. 5. Organisation is not facing a crisis and there are no risks of company failure. 6. Effective implementation of strategies depends on managers' involvement and flexibility to make decisions.

What are the elements in Organisational Design? (Span of Control) [WDCS-CD-F]

It refers to the number of employees a Manager can efficiently and effectively manage. It governs the number of levels and managers an organisation will have (Robbins & Coulter, 2021). The wider the span the more efficient the organisation becomes. 9 determining factors: 1. The skills and abilities of managers and employees 2. The characteristics of the work 3. Similarity and complexity of tasks 4. The physical proximity of subordinates 5. The degree to which standardised procedures are in place 6. The sophistication of organisation's information system 7. The strength of organisation culture 8. The preferred style of management 9. The ideal number of subordinates

How to select/decide an Organisational Design? Mechanistic or Organic? What are the Four Contingency Factors? (Size) [SST-EC]

Large organisations tend to have a mechanistic design (more specialisation, departmentalisation, centralisation and formalisation). However, size has less influence on structure when an organisation grows past a size, (more than 20,000 employees). For example, size does not affect structure of large conglomerates like Unilever.

What are the Four Qualities in managing a Digital Organisation? (Globalising) [DGHE]

Organisations must remain connected and competitive in the global arena. There are numerous digital platforms organisations can adopt or build to remain connected and competitive in the Digital Economy.

What are the elements in Organisational Design? (Departmentalisation - Process) [WDCS-CD-F]

Process - Employees are organised based on the stage in the production line they are working on, commonly found in production lines.

What are the elements in Organisational Design? (Departmentalisation - Product) [WDCS-CD-F]

Product - Employees are organised based on the product they are working on, commonly found in production lines.

Strengths and Weaknesses of the Functional Structure (Traditional Approach to Organisational Design)

Strengths: Cost saving advantage from specialisation, economies of scale. Weaknesses: Functional specialists become insulated with little understanding of what other departments do. Example: A software company with functions as engineers (product development), business development, marketing, and human resources (HR).

Strengths and Weaknesses of the Simple Structure (Traditional Approach to Organisational Design)

Strengths: Fast, flexible, inexpensive, and with clear accountability. Weaknesses: Not appropriate as organisations grow; Reliance on one person is risky. Example: A start-up company with less than 20 employees.

Strengths and Weaknesses of the Divisional Structure (Traditional Approach to Organisational Design)

Strengths: Focuses on results or effectiveness more than efficiency. Weaknesses: Cost inefficiencies brought by duplication of resources and activities. Example: A large organisation like GE with separate divisions: aviation, electronics, transportation.

What are Digital Organisations?

Technology is an important external environmental factor reshaping and redefining organisations today. (Recall: Digitisation and Digitalisation). Organisations incorporate digital tools/processes/procedures in areas like customer service, accounting, production, and marketing.

What are the elements in Organisational Design? (Others - Mechanistic) [WDCS-CD-F]

The combination of the six elements of organisational designs creates a Mechanistic Organisational Structure. Employees are specialised and organised into departments and, consequently, there is a clear chain of command and a narrow span of control with a high level of centralisation and formalisation.

What are the elements in Organisational Design? (Formalisation) [WDCS-CD-F]

The degree to which jobs within an organisation are standardised and the extent to which employee behaviour is guided by rules and procedures (Robbins & Coulter, 2021). It varies widely between organisations and within organisations.

How to select/decide an Organisational Design? Mechanistic or Organic? What are the Four Contingency Factors? (Strategy) [SST-EC]

The organisations structure should support the organisational strategy. If the organisational strategy leans towards: 1. Innovation, it needs the flexibility and free flow of information present in the organic design. 2. Cost minimisation, it needs the efficiency, stability, and tight controls of mechanistic design. When organisations aim to minimise costs, a more mechanistic design is suitable as it helps in increasing efficiency. The low-cost, no-frills budget airlines are examples that use cost minimisation. 3. Imitation, it uses some of the characteristics of both mechanistic and organic designs. Most companies use imitation strategy by following innovations of other companies (also called first movers).

How to select/decide an Organisational Design? Mechanistic or Organic? What are the Four Contingency Factors? (Technology) [SST-EC]

The type of organisational structure depends on the type of technology/technical complexity used in the production of good of services. According to the Woodward Studies, mass production technologies are associated with a more centralised and bureaucratic form of structure, and unit and process production is most successful in decentralised structures. The three common types of technology: 1. Unit production (production in small units): This is labour intensive and least technologically complex - for example, custom clothing, special design goods, or machine tools. 2. Mass production (production of items in mass batches): This uses a more rigid division of labour and may use moderately complex technology - for instance, an automobile assembly line. 3. Process production (i.e., production of items in the continuous process): This continues in nature, is mechanised, and uses sophisticated and complex production technology - for example, a chemical plant. You may also discuss the use of Digital Technologies (digitisation, digitalisation, Artificial Intelligence, Machine Learning, Data Analytics).

What are the Four Qualities in managing a Digital Organisation? [DGHE]

They are decentralising, globalising, harmonising, and empowering Negroponte (1995).

Organising for Collaboration (Internal)

This helps to integrate the work of employees and makes use of cross-functional teams and task forces to resolve the problem on hand. For example, an organisation forms a production task force with expert members in the production department to address a complex production issue.

Organising for Collaboration (External)

This involves collaboration involves customers and other stakeholders are take two forms: open innovation and strategic partnerships. "Open Innovation opens up the search for new ideas beyond the organisation's boundaries, and allows innovation to be easily transferred inward and outward" (Robbins & Coulter, 2018, p.399).

What are the Four Qualities in managing a Digital Organisation? (Decentralising) [DGHE]

This is related to the six elements of Organisational Design (centralising and decentralising). In the Digital Age where the environment is rapidly changing and uncertain, the centralised organisation will not survive. Digital Organisations are supported by a decentralised infrastructure with virtual network structures. It may maintain a traditional top-hierarchical structure but uses autonomous networked teams with a shared purpose and vision. Or other contemporary Organisational Designs.

Contemporary Organisational Designs (Virtual Network Structure)

This structure is also known as boundary-less organisation. There is an absence of any definite structure - vertical or horizontal, or external boundaries (those that separate the organisation from its customers, suppliers, or other stakeholders). It is flexible and draws on resources and expertise worldwide. Beyond the Virtual Network Structure are Virtual Organisations that operate with a small core of full-time employees and outsources specialists to work on projects on an as-needed, temporary basis. This structure is not linked by physical assets but by information only. Modular Approach is another Organisation Structure where a manufacturing company seeks suppliers to provide pieces of a product which are then assembled into a final product by a handful of workers.

Why do Managers do Organisational Design? Performance (Efficiency & Effectiveness)

To achieve both effectiveness and efficiency in organisations, managers look into the way work is arranged or structured.

How to select/decide an Organisational Design? Mechanistic or Organic? What are the Four Contingency Factors? (Environmental Certainty) [SST-EC]

When the environment is stable, the organisation uses a mechanistic system with a rigid, vertical, centralised structure, with decisions being made at the top. In rapidly changing environments, the organisation tends to be much looser, free-flowing, and adaptive, using an organic system.