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2.2 Organisational structure 2014
Transcript of 2.2 Organisational structure 2014
Delayering - the removal or one or more of the levels of hierarchy from an organizational structure.
reduces business costs
shortens the chain of command and should improve communication.
increases span of control and opportunity for delegation
may increase workforce motivation due to less remoteness from top management and greater chance of having more responsibilities
could be one-off costs of making managers redundant (redundancy pay)
increased workload of management who remain - could lead to overwork and stress
fear that redundancies might be used to cut costs could reduce the sense of job security
An organizational/administrative system with standardized procedures and rules. This system is most commonly found in government organizations and the military. In business there is a formal hierarchical structure with rules and procedures.
It discourages initiative and decisions are taken centrally and then put into effect by staff following set procedures and protocols. Typically, such organizations require paperwork to get tasks accomplished and have "red tape" to show that procedures have been correctly followed.
Bureaucracies are rational and efficient however they are also impersonal.
Centralization and Decentralization
Decision-making can either be kept in the hands of a few people or spread out among the workforce.
- the vast majority of decision making is performed by a very small number of people. The decision makers (usually senior management) hold on to all of the decision-making and responsibility. There is NO communication with the others.
better sense of direction
possible delays in decision-making due to the many decisions that have to be made.
increased pressure and stress for senior management
demotivating for employees as they do not feel valued
- some decision-making authority is passed on to others in the organization. For example departments or regional offices may be empowered to make decisions. Key decision-making is still centralized.
input from workforce
speedier day-to-day decision-making
higher staff moral
encouragement of teamwork
loss of control
greater chance of mistakes
greater reliance on effective communication
duplication of functions
Unison Case Study
the internal, formal framework of a business that shows the way in which management is organized and linked together and how authority is passed through the organizations.
The most common form of representing the structure of an organization is through an organizational chart. An organizational chart is a diagram that outlines the formal roles, responsibilities and reporting lines.
This helps businesses to function more effectively due to:
- this shows who is responsible for a particular job
- the shows who is in charge of whom and in what role.
Levels of hierarchy
- this term refers to how many levels of responsibility are in a business. Each level of hierarchy indicates
- people who have the authority to make decisions and who are responsible for the outcome of the decisions.
Chain of command
- this is the line down which instructions are passed through the layers in the hierarchy.
Span of control
- this refers to how many subordinates are directly under the authority of a manager.
How many levels?
Span of control? a? b? c?
Chain of command?
- this occurs when a manager gives authority for a particular decision but not the responsibility for the outcome of that decision.
+ gives senior management more time to focus on important strategic roles.
+ shows trust in subordinates and this can motivate and challenge them
+ develops and trains staff for more senior positions
+ helps staff to achieve fulfillment through work (self-actualization)
+ encourages staff to be accountable for their work based activities.
- if the task is not well defined or if inadequate training is given, then delegation will be unlikely to succeed
- delegation will be unsuccessful if insufficient authority (power) is given to the subordinate who is performing the tasks
- managers may only delegate the boring jobs that they do not want to do - this will not be motivating
Tall and Flat organizations
tall organizational structure
is the traditional organizational form of a business and is common in well-established businesses. It has the following features:
many levels of hierarchy
narrow spans of control
centralized decision making
long chains of command
flat organizational structure
is a modification of the more traditional structure. Flat organizations have the following features:
few levels of hierarchy
wider spans of control
decentralized decision making
shorter chains of command
Organizational Structure by
Another way to show an organizational structure is by hierarchy. Individuals at the top have more authority than those below them. This is the traditional way of presenting an organizational structure.
An organizational structure can be presented by function - indicating what employees do. Employees are grouped by department. Then they will be organized by seniority.
Another way of presenting an organizational structure is by what the business produces (ie by product).
Organizational Structure by
A further way of presenting an organizational structure is according to where the business operations are located geographically. Often used for multinational corporations.
Changes in organizational structure
Some businesses have attempted to adapt their structure to take account of changes in business environment. Two examples of this are:
project based organization
Project based organization
This structure is designed to be more flexible and responsive to market demands. A business's human resources are organized around many projects. Project managers run teams of employees focusing on individual projects. After a project is complete the team is split up and reassembled to begin another project . Each team "borrows' Members of different departments to complete the project such as accountants, operations managers and marketing specialists.
This is based on a model suggested by Irish management theorist Charles Handy. He argued that businesses can be more flexible by taking advantage of the changes in the external environment and its impact on workforce planning. The model suggests that businesses can reduce costs, gain competitive advantage and increase response time by trimming their workforce to retain only a
All other supporting non-central functions are outsourced to the periphery.
The first leaf of the shamrock represents the
core managers, technicians and employees
essential to the business.
The second leaf Handy calls the
because non-core activities are subcontracted out to specialist businesses.
The third leaf consists of a
made up of part-time, temporary and seasonal workers.
This is common in construction or IT where businesses are under contract to run a number of different projects at the same time. It is also known as a
and teams are set up in a matrix.
Holacracy is a self organizing system.
How Zappos will run with no job titles
Zappos embraces holocracy
Now part of the Amazon empire, Zappos is a high-performing online retailer with a distinctive corporate culture that has been encouraged by its enigmatic founder and CEO Tony Hsieh.
Zappos has taken this unconventional approach to organisational design a step further in recent months through the introduction of a style of
organisational structure called "holacracy"
Holacracy - at Zappos
- delegation, span of control, levels of hierarchy, chain of command, bureaucracy, centralization, decentralization, de-layering
- flat/horizontal, tall/vertical, hierarchial, by product, by function, by region
Changes in organizational structure
(project based organizations and Handy's "Shamrock" organizations
- how cultural differences and innovation in communication technology may impact communication
Key concept links: change, culture, innovation.
What is happening to organizational structures?
Traditionally, head offices housed all key personnel and made all important decisions. Now, more and more firms such as Microsoft are using "flatter" and more decentralized structures where decisions are make anywhere else but head office! Instead of all power being focused at the top of an organization there is now much more involvement and collaboration in decision-making. Why are these changes happening?
Employees are becoming better qualified and more knowledgeable.
Centrally made decisions means local factors are not taken into account.
Communication technologies are becoming quicker and more mobile.
Today's world needs organizations that encourage and promote leaders who can push, convince and lead people to work in collaborative teams.
Points to consider:
Has ISU got an organizational structure. Draw and describe its main features.
Why would making all decisions at head office be a "safe" but inflexible organizational structure?
Do you think that businesses might need to change the structure of their organization due to business growth and the need to cut costs and be more flexible? Explain your answer.
Traditional Hierarchical structure
- the structure has different layers of the organization with fewer and fewer people on each higher level.
The traditional structure is often presented as a pyramid.
An important element of the organizational structure is how a business communicates with its stakeholders. Communication is integral to how a business functions.
Communication is only
if the message has been received and understood by the receiver and the sender knows that it has been understood.
The key features of effective communication are:
sender of the message
appropriate medium (way in which message is sent)
to confirm receipt and understanding
If the message has been sent but there is no feedback, then the effectiveness of the communication cannot be judged. Businesses communicated externally - with suppliers, customers, shareholders and the government. Internal communication is between different people or groups within the organization.
The most common forms of communciation are:
communication that relies of the spoken word.
Formal = interviews, meetings, lectures, presentations, recorded telephone conversations.
Informal = face to face conversations, gossiping.
Verbal communication can be quick, direct and effective. It allows for immediate feedback. However the message can be misunderstood if the sender uses the wrong language, does not speak clearly or does not allow for feedback.
Visual communication relies on sight.
Formal = presentations, videos, notice boards, signs, symbols, maps
Informal = body language, gestures
Visual communication can be effective as it can be permanent, recognizable and immediate. It can be less effective if the image or picture requires interpretation as some cultures may respond differently to the same image.
- messages sent and received without verbal information such as facial expressions, eye contact, tone of voice, body posture, gestures and position within a group.
Communication can be hindered when nonverbal cues seem to contradict what’s being said.
Written communication requires the written word.
Formal - reports, letters, memos, emails*, notices, bulletins, forms, press releases
Informal - texts, blogs (*email could be considered informal in some organizations)
Written communication can be effective. Records of the message may be kept and written communication can be amended or revised. However, it can be considered impersonal and often the "tone" of the message may be lost. In addition, feedback is not immediate.
Two million emails are sent every minute in the UK
alone. Office staff can spend up to half of each working
day going through them. This makes workers tired, frustrated and unproductive. A recent study showed that one-third of office workers suffer from email stress - too many, too long and poor clarity of language used.
Companies actually hire email consultants to advice staff on best email practice and some firms now insist on an email-free day each week.
Emails are ruining my day!
- Is this happening at ISU? What is the average amount of time staff spend each day on reading and sending emails. Is this form of communication effective at ISU?
By completing this research we can make recommendations on how to the use of IT at ISU could be more effective.
safety notice on board a cruise ship
sales order from a customer sent to the production department
official warning to a staff member about quality of work
sending of detailed architectural plans from one office to another abroad
need to solve a work problem with a team of staff
30 members of staff in different regional offices need to be given essential information
need to check some details of a product order with the customer
list of emergency telephone numbers in case of accident in the factory
your manager needs to tell all staff that the office will be closed tomorrow for emergency maintenance
you want to persuade your manager that your new product idea is a good one. You have done lots of research and have figures and data to back up your arguments
a new product is launching globally in two months's time. It will be the first of its kind and you want it to sell well
Be reflective. What would be the most appropriate method of communication in the following situations:
Importance of effective communication
The effectiveness of communication can impact on many areas of business:
Employee motivation and productivity
The number and quality of ideas generated by the workforce
The speed of decision-making
Speed of response to market changes
Reduces the risk of errors
Effective communication between departments
Poor communication will lead to demotivated workers, uncoordinated departments, poor customer service and a lack of overall direction for the organization.
Modern offices are becoming increasingly multicultural in a globalized world. In big financial centers like New York, London, Hong Kong and Singapore the offices of banks, insurance companies, and media outlets are made up of highly skilled and educated staff from all over the world. You can be sitting at a desk where the man next to you is from Rio, where the woman across the room who has just shouted out the latest share price is Australian and the Ghanaian team leader has jsut put a fresh cup of coffee in front of you. One common theme is that you all speak to each other in English.
Discuss the opportunities and threats associated with a globalized workplace, where the language of communication is increasingly English.
Culture and link to technological innovation
: Modern technology has facilitated more rapid communication around the world. While this does increase business opportunity for growth and profitability; it does increase the chance that a lack of cultural sensitivity during communication can result in an offended client or business partner and lead to the loss of partnership and contracts worth billions of dollars.
Ignoring culture in business communications can lead to problems and communication disruptions if workers do not share the same understanding of goals, expectations and processes as managers. Understanding a culture can help a business anticipate potential challenges or barriers in the adoption of new polices or processes before efforts break down.
Innovations in communication technology
The impact of new technology on how a business communicated internally - between managers and employees - has been changed forever by the latest technological devices. Mobile (cell) smartphones, iPads and other tablets, networks, intranets (internal computer networks) and cloud computing - these are just some of the recent developments that allow people within a business to keep in touch in ways that would, even 20 years ago, be unimaginable.
Networking allows collaboration between workers on reports, programming and other document production. If forms the core of how most business communication is performed today. Cloud computing allows businesses such as large multinationals to operate globally without sacrificing security or limiting user access. External communication with customers is now often focused on social media such as Facebook and Twitter.
Limitations of IT communication - Electronic media
Electronic media has the benefit of speed and are often combined with a written record. Internet and email use, intranets, video conferencing and internet linked mobile phones (which allow for oral communication) have all revolutionized business communication in recent years. However, these applications of electronic media have their drawbacks:
They require staff to be trained and the young are usually much more proficient than older employees.
They reduce social contact and can create a sense of isolation.
Staff may use company time to send personal messages.
There are security issues and hard copies of important messages are often kept in case of issues.
There is increasing evidence that IT can lead to
as a result of the speed and low usage costs of these methods. Information overload is when so much information and so many messages are received that the most important ones cannot be easily identified and quickly acted on.
A new type of organizational structure has been introduced and is currently used by Zappos.
Do: Holacracy - Zappos - Inquiry