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Chapter 11: ‘Organisation Design’

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Learning Objectives

After completing this chapter, students will be able to:

• Describe six key elements in organisational design.

• Contrast mechanistic and organic structures.

• Discuss the contingency factors that favour either the

mechanistic model or the organic model of

organisational design.

• Describe traditional organisational design options.

• Discuss organising flexibility in the 21st century.

• Develop your skill at acquiring and using power.

• Know how to stay connected and “in the loop” when

working remotely.

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Elements of Organisational Design

• Organising: management function that involves

arranging and structuring work to accomplish the

organisation’s goals

• Organisational structure: the formal arrangement of

jobs within an organisation

• Organisational chart: the visual representation of an

organisation’s structure

• Organisational design: creating or changing an

organisation’s structure

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Purposes of Organising

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Work specialisation

• Work specialisation: dividing work activities into

separate job tasks

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Economies and Diseconomies of Work

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Departmentalisation

• Departmentalisation: the basis by which jobs are

grouped together

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The Five Common Forms of

Departmentalisation (1 of 3)

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The Five Common Forms of

Departmentalisation (2 of 3)

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The Five Common Forms of

Departmentalisation (3 of 3)

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Cross-Functional Team

• Cross-functional team: a work team composed of

individuals from various functional specialties

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Chain of Command

• Chain of command: the line of authority extending from

upper organisational levels to the lowest levels, which

clarifies who reports to whom

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Authority

• Authority: the line of authority extending from upper

organisational levels to the lowest levels, which clarifies

who reports to whom

• Line authority: authority that entitles a manager to

direct the work of an employee

• Staff authority: positions with some authority that have

been created to support, assist, and advise those

holding line authority

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Responsibility

• Responsibility: the obligation or expectation to perform

any assigned duties

• Unity of command: the management principle that

each person should report to only one manager

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Span of Control

• Span of control: the number of employees a manager

can efficiently and effectively manage

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Contrasting spans of controls

If one organisation has a span of four and the other a span of eight, the organisation

with the wider span will have two fewer levels and approximately 800 fewer managers.

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“Centralisation” and “Decentralisation”

• Centralisation: the degree to which decision making is

concentrated at upper levels of the organisation

• Decentralisation: the degree to which lower-level

employees provide input or actually make decisions

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Factors that affect an organisation’s use of

“Centralisation” and “Decentralisation”

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Employee Empowerment

• Employee empowerment: giving employees more

authority (power) to make decisions

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Formalisation

• Formalisation: how standardised an organisation’s

jobs are and the extent to which employee behaviour is

guided by rules and procedures

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Mechanistic and Organic Structures

• Mechanistic organisation: an organisational design that

is rigid and tightly controlled

• Organic organisation: an organisational design that is

highly adaptive and flexible

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Mechanistic vs. Organic Organisations

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Strategy and Structure

• An organisation’s structure should facilitate goal

achievement. Because goals are an important part of

the organisation’s strategies, it is only logical that

strategy and structure are closely linked.

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Size and Structure

• There is considerable evidence that an organisation’s

size affects its structure, but once an organisation grows

past a certain size, size has less influence on structure.

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Technology and Structure

• Unit production: the production of items in units or

small batches

• Mass production: the production of items in large

batches

• Process production: the production of items in

continuous processes

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Mechanistic vs. Organic Organisations

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Environmental Uncertainty and Structure

• In stable and simple environments, mechanistic designs

can be more effective.

• The greater the uncertainty, the more an organisation

needs the flexibility of an organic design.

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Traditional Organisational Design Options

• Simple structure: an organisational design with little

departmentalisation, wide spans of control, centralised

authority, and little formalisation

• Functional structure: an organisational design that

groups together similar or related occupational

specialties

• Divisional structure: an organisational structure made

up of separate, semiautonomous units or divisions

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Traditional Organisational Designs – Strength

and Weaknesses

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Team Structures

• Team structure: an organisational structure in which

the entire organisation is made up of work teams

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Matrix and Project Structures

• Matrix structure: an organisational structure that

assigns specialists from different functional departments

to work on one or more projects

• Project structure: an organisational structure in which

employees continuously work on projects

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Example of a Matrix Organisation

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The Boundaryless Organisation

• Boundaryless organisation: an organisation whose

design is not defined by, or limited to, the horizontal,

vertical, or external boundaries imposed by a predefined

structure

• Virtual organisation: an organisation that consists of a

small core of full-time employees and outside specialists

temporarily hired as needed to work on projects

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Task Forces

• Task force (or ad hoc committee): a temporary

committee or team formed to tackle a specific short-term

problem affecting several departments

• Open innovation: opening up the search for new ideas

beyond the organisation’s boundaries and allowing

innovations to easily transfer inward and outward

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Benefits and Drawbacks of Open Innovation

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Telecommuting

• Telecommuting: a work arrangement in which

employees work at home and are linked to the

workplace by computer

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Compressed Workweeks, Flextime, and Job

Sharing

• Compressed workweek: a workweek where

employees work longer hours per day but fewer days

per week

• Flextime (or flexible work hours): 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

• Job sharing: the practice of having two or more people

split a full-time job

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The Contingent Workforce

• Contingent workers: temporary, freelance, or contract

workers whose employment is contingent on demand

for their services

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Review Learning Objective 11.1

Describe six key elements in organisational design:

1. Work specialisation

2. Departmentalisation

3. Chain of command

4. Span of control

5. Centralisation / decentralisation

6. Formalisation

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Review Learning Objective 11.2

Contrast mechanistic and organic structures:

• Mechanistic structure: rigid, tightly controlled

• Organic structure: highly adaptable, flexible

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Review Learning Objective 11.3

Discuss the contingency factors that favour either the

mechanistic model or the organic model of

organisational design:

• An organisation’s structure should support the strategy.

• Structure can be affected by size and technology.

• Organic structure is most effective with unit production

and process production technology.

• Mechanistic structure is most effective with mass

production technology.

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Review Learning Objective 11.4

Describe traditional organisational design options:

• Simple structure: little departmentalisation, wide spans

of control, authority centralised in one person, and little

formalisation.

• Functional structure

• Divisional structure

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Review Learning Objective 11.5

Discuss organising for flexibility in the twenty-first

century:

• Structures:

▪ Team

▪ Matrix

▪ Project

• Boundaryless organisation

• Virtual organisation

• Compressed workweeks, flextime, job sharing

• Contingent workforce