Designing Organizational Structure

The structure of the organisation describes the functions, tasks and authorities of the departments, divisions and individual employees and the relationships between them (line of command, communication and procedures). It also describes the number of employees in each division, unit and department. It divides, but also has to provide coordination mechanism if the process is divided over more units.

Typical structures:

Organisations can be structured in different ways. Usually the structure

is based on splitting and grouping of tasks on basis of 6 different criteria and the final structure is often a combination of these six criteria:

1. Outputs (goods/services)- university faculties |easier communication

2. Functions - grouped on basis of similarity in activities. Each group tends to operate

more or less independently of each other. |little interaction, tasks may seem monotonous

3. Target groups

4. Skills

5. Geographical areas

6. Work shifts

The output and function grouping are the most common form of

grouping forms.

There are basically three ways of coordination:

1. Mutual adjustment- coordinates work by (informal) communication. Mutual adjustment can be regulated through horizontal and diagonal links.

2. Supervision- having one person take responsibility for the work of others. The manager thinks how to use the hands of others, give the workers instructions and monitor their performance. The vertical lines of command present supervision.

3. Standardisation- allows coordination to take place on the drawing board,

before the action takes place. Standardisation cannot be presented in

an organisation structure.

The above-presented charts are all so-called line organisations. The line organisation is the most basic form of organisation, which does not contain advisory function and has long vertical communication lines. Top management makes lots of decisions for lower levels.

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Staff organisation- similar to line organization, but has a units which role is only to advice and do not have any hierarchical responsibilities and authorities. The advisory units are usually expensive

and often it is cheaper to procure expertise externally.

A special form of advisory unit is a unit that give binding advice to line agencies. –eg. Laws, law

Often these advisory units not only provide the binding advice but also implement it. Typical examples are the admin & financial departments and the human resource departments.

functional organisation- advisory unit in the staff organisation is only able to advice in the

functional organisation these specialists have a limited, clearly defined scope of authority and are able to give directions.

Project organisation- limited time of activity. Members can be regular employees or specially recruited for it

Matrix structure- used in companies working by series of projects – specialists are the resource, and project managers assign them to the specific projects

DESIGNING STRUCTURES

An organisation usually starts small and hopefully becomes more successful and grows. Because it grows, it needs to structure itself. Most organisations do not grow from a one-person operation to a hundred-person operation overnight. They evolve and so does the organisation structure.

Reorganisation- action with an objective to improve the effectiveness

and/or efficiency.

Basic functions of organisations

1. Core Operations- the actual production processes. It contains activities like purchasing, operating machines, assembling, sales and shipping.

2. Support Operations- facilitate the core operations. For example: legal counselling, public relations, Industrial relations, research & development, pricing, pay roll, reception, mailroom and cafeteria.

3. Technostructure- maintains and develops the efficiency- strategic planning, controller, Personnel training, Operations Research, Production Scheduling, and work-studies.

4. Strategic Apex- formulates and controls strategies for the whole organisation. Typical examples of the strategic apex are board of directors, president, and executive committees.

5. Middle Line Management- connects the strategic apex with the rest of the organisation. Typical examples of middle line managers are plant managers, regional sales managers, foremen and district managers.

Goods & services- defining the customer, product and ways of distribution is the key. Certain organisations depend on others for the delivery of their outputs and realisation of their objectives.

Breakdown production process- creation of parts and putting the product together. – linkages.

The activities to produce and deliver the outputs have to be identified. Furthermore the activities lead times and possible links need to be described. The linkages will be limited due to a number of factors like;

• Procedures of organisation

• Previous investments in equipment and buildings

• Available technology on the market

Most organisations adapt their structure to the existing equipment and building items. Structure has to be down-to-earth, connected to real possibilities, knowledge, technology

Resources- it is necessary to identify for every activity the inputs in terms of manpower and equipment, both in quantity and quality.

Finally the required support operations are identified and similarly analysed. After collecting and analysing of all the necessary data, the design process starts and tasks are being assigned.

LOCATING AUTHORITY

Seeking authority:

-Who has the information to take the decision and who can obtain such information quickly?

-Who has the skills and knowledge to take the decision?

-Does the issue relate to an emergency and is the decision urgent?

-Is coordination with other locations or other units, divisions or departments required?

-What is the impact of the decision?

-What is workload of the qualified officers?

-Is it possible to motivate employees by giving them decision authority?

If the authorities are not well divided it may result in a number of

problems. For example:

• Capacities of units and persons are under-utilised

• The authority goes beyond the capacity of the person

• The control over the resources is insufficient to carry out the tasks efficiently

• The unit has more control of the resources than its

tasks/function requires

• Conflict over the allocation of resources if two or more units

have control over them

• Conflict between formal and informal powers & responsibilities

• The decision process takes too long

• The decisions miss out on particular interests

Date: 2015-02-16; view: 931