Unit 01: Introduction to Management

Foundations of Organisational Design

Organising

• Organizing is the deployment of organizational resources to achieve strategic goals.

• Organizing is deciding how best to group organizational activities and resources so that

the organization will achieve its goals.

Purpose of organising

1. Divides work to be done into specific jobs and departments

2. Assigns tasks and responsibilities associated with individual jobs

3. Establishes relationships among individuals, groups and departments

4. Establishes formal lines of authority

5. Allocates and deploys organisational resources

Organisational Structure

• Organisational structure is the formal arrangement of jobs within an organisation.

The set of formal tasks assigned to individuals and departments

Formal reporting relationships, including lines of authority, decision responsibility, number of levels and span of control

The design of systems to ensure effective coordination of employees across departments

Organisational Chart

• The organization chart shows departments and job titles , with lines linking senior

executives to the departments of people for whose work they are responsible.

• This shows who people report to, and clarifies four features of the formal structure:

• Tasks – the major activities of the organization

• Subdivisions – how they are divided

• Levels – the position of each post within the hierarchy

• Lines of authority – these link the boxes to show who people report to

Organisational Design

• Creating or changing an organisation’s structure or a process which involves making

decisions about the following factors:

• Work specialization

• Departmentalization

• Chain of command

• Span of control

• Centralization and decentralization

• Formalization

Organisational Design

• Work Specialisation

• Dividing work activities into separate job tasks: division of labour

• People become more expert in one task than they could be in several and are more likely to come

up with improved ideas or methods.

• Departmentalisation

• Process of grouping jobs together to ensure coordination of tasks in known as departmentalization.

• Departmentalization identifies

• what job tasks will be done by whom?

• Common work activities

Common form of departmentalization:

Functional departmentalization

Geographical departmentalization

Product departmentalization

Process departmentalization

Customer departmentalization

Organisational Design

• Chain of Command

• The lines of authority show the links between people – who they report to and who reports to them.

• In particular chain of command shows who they can ask to do work, who they can ask for help and

who will be expecting results from them.

• Span of Control

• The span of control is the number of subordinates reporting directly to the person above them in the

hierarchy.

• Span of control could be NARROW or WIDE

Organisational Design

• Centralisation vs. decentralisation

• Centralization is when a relatively large number of decisions are taken by management at the top of

the organization.

• Decentralization is when a relatively large number of decisions are taken lower down the

organization in the operating units.

• Formalisation

• Formalization refers to how standardized an organization’s jobs are and the extent to which

employee behavior is guided by rules and procedures

• These include rules, procedures, instruction manuals, job descriptions (things which people must do)

Models of Organisational Structure

Introduction

• Each organisation will have a unique structure to themselves to

optimise on their business operations.

• Unity of command will determine the differences in these

organisational structures.Classifications

Hierarchical Structures

Functional Structure

Geographical Structure

Customer Structure

Product Structure

Non-Hierarchical Structures

Matrix Structure

01. Functional Structure

• Functional structure groups the people, facilities and other resources representing

common functions into a single department

President

Finance Manufacturing MarketingHuman

ResourcePurchasing

02. Product Based Structure

• Departments are grouped together based on similar organisational outputs.

• This type of structure is suitable for companies that operate within several different

product areas where each requires some degree of specialisation in its management.

President

Division 1 : Electronics

ManufacturingResearch &

DevelopmentMarketing

Division 2: Consumer Products

ManufacturingResearch &

DevelopmentMarketing

03. Geographical Structure

• This structure is appropriate when an organisation needs primarily to provide a local

coverage of all of its functions to a specific region of the country or the world.

Chief Executive Officer

Wester U.S. Division

Eastern U.S. Division

Latin American Division

Asian Division

Tall vs. Flat Organisations

• Large, complex organizations often require a

taller hierarchy. In its simplest form, a tall

structure results in one long chain of

command.

• As an organization grows, the number of

management levels increases and the

structure grows taller.

• In a tall structure, managers form many

ranks and each has a small area of control.

• Flat structures have fewer management

levels

• Each manager will be held responsible for

the controlling of a broad area or group.

• These structures encourage autonomy, self

direction, and employee creativity to solve

problems

Thank You!