CORPORATE ORGANISATION : AN

OVERVIEW OF THE CORPORATE ORGANISATION

MSc ISEP Session 2 7/12/2012
1

ORGANISATIONAL THEORY

What do you remember?

the seeds : Who? What?
The classical era : Who? What? Human behavioural theories : Who? What?

Mintzberg : Contingency factors? Organizational structure?

WHAT IS ORGANISATIONAL STRUCTURE?

An organisational structure defines how job tasks are formally divided, grouped and coordinates
Mintzberg defined organisational structure as "the sum total of the ways in which it divides its labour into distinct tasks and then achieves coordination among them".

One of the main task of management

DESIGNING THE ORGANIZATIONAL STRUCTURE

Some definitions
the degree to which tasks in the organisation are subdivided into separate jobs. the basis by which jobs are grouped together.

Work specialisation Departmentalisation

Chain of command

the unbroken line of authority that extends from the top of the organisation to the lowest echelon and clarifies who reports to whom.
the number of subordinates a manager can efficiently and effectively direct

Span of control

Centralisation and decentralisation

Formalization

the degree to which decision making is concentrated at a single point in the organisation
the degree to which jobs within the organisation are standardized
4

DESIGNING THE ORGANIZATIONAL STRUCTURE

6 questions to ask, and answers provided by...

1. Work specialisation
2. Departmentalisation 3. Chain of command

1. To what degree are tasks subdivided into separate jobs?

2. On what basis will jobs be grouped together? 3. To whom do individuals and groups report? 4. How many individuals can a manager efficiently and effectively direct? 5. Where does decision-making authority lie? 6. To what degree will there be rules and regulations to direct employees and managers?

4. Span of control
5. Centralisation and decentralisation 6. Formalization

DESIGNING THE ORGANIZATIONAL STRUCTURE

Work specialization : horizontal or vertical?

Horizontal differentiation : degree to which tasks are divided into distinct homogeneous groups function-wise geographic-wise product-wise production stage-wise => Departmentalization

CEO
Prod 1 Prod 2 Prod 3 Prod 4

CEO
Mkt
4

Mfg

Finance

R&D Logistics

DESIGNING THE ORGANIZATIONAL STRUCTURE

Work specialization : horizontal or vertical?

CEO
EVP
Sr. VP
VP
Asst. VP

Vertical differentiation : number of levels within the organization

EVP

EVP
Sr. VP
VP
Asst. VP

VP
Asst. VP
Branch Mgr.

Branch Mgr.

Asst. Branch Mgr

DESIGNING THE ORGANIZATIONAL STRUCTURE

Span of control : tall or flat?

DESIGNING THE ORGANIZATIONAL STRUCTURE

Centralization The degree to which decision making is concentrated at a single point in the organization. Decentralization The degree to which decision making is spread throughout the organization. Formalization

The degree to which jobs within the organization are standardized.

Source: S. Robbins Prentice Hall

MAIN ORGANIZATIONAL STRUCTURES N1

Functional

10

MAIN ORGANIZATIONAL STRUCTURES N1

Functional

Division of work based on functional specialisations (production, sales, administration, personnel, purchasing, research and development, etc...)
Aim to reach efficiency goals and permits exploiting scale economies

Suitable for high environmental and technical stability

Main characteristics:
o Everyone has a precise function and job o Procedures and formalisation are more important that direct contacts o Communication follows the chain of command o Functional structure follows centralized decision making model (decisions occurs at the top) o Control (process & norms) have a key role 4

o Disadvantage: siloing, poor communication/conflicts between departments 11

MAIN ORGANIZATIONAL STRUCTURES N2

Divisional

12

MAIN ORGANIZATIONAL STRUCTURES N2

Divisional

Division of work based on product type; market type; geographical area; type of technology; etc...
Aim to be adapted to strategic segmentation, and decrease the complexity of decision making

Suitable for high heterogeneity (products, market, technology) and high environmental instability (need for reactivity and decentralisation)
Main characteristics:
o Headquarter manage the whole, with global objectives (profit, margin,..), and usually measure results and distribute financial means o Divisions have large autonomy / elbow room o Better ability to respond to customers issues; more accountability o Disadvantage : redundant effort and resources 4
13

MAIN ORGANIZATIONAL STRUCTURES N3

Matrix

14

MATRIX STRUCTURE (COLLEGE OF BUSINESS ADMINISTRATION)

Employee

Source: S. Robbins Prentice Hall

15

MAIN ORGANIZATIONAL STRUCTURES N3

Matrix

Division of work based on the combination of two criteria (functional and divisional) Combination of needs for internal reactivity and the need to assure sophisticated specialized performance Suitable high environmental instability, high heterogeneity but with high interdependence Main characteristics:
o Everyone is belonging to a department, and depending on the time, is assigned to one of the other project or activity
o Dual reporting lines and functional o Extremely efficient, particularly when resources are scarce.

o Main disadvantage : whos the boss? confusion with chain of command; conflicts between project and department managers concerning deadlines 4 16

NEW DESIGN OPTIONS

Team Structure The use of teams as the central device to coordinate work activities.

Characteristics:
Breaks down departmental barriers. Decentralizes decision making to the team level. Requires employees to be generalists as well as specialists. Creates a flexible bureaucracy.

Source 2005 Prentice Hall Inc. All rights reserved.

15

17

NEW DESIGN OPTIONS (CONTD)

Boundaryless Organization An organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams.

T-form Concepts:
Eliminate vertical (hierarchical) and horizontal (departmental) internal boundaries. Breakdown external barriers to customers and suppliers.

Source 2005 Prentice Hall Inc. All rights reserved.

15

18

NEW DESIGN OPTIONS (CONTD)

Virtual Organization A small, core organization that outsources its major business functions. Highly centralized with little or no departmentalization.

Concepts:
Advantage: Provides maximum flexibility while concentrating on what the organization does best. Disadvantage: Reduced control over key parts of the business.

Source 2005 Prentice Hall Inc. All rights reserved.

15

19

A VIRTUAL ORGANIZATION

Source 2005 Prentice Hall Inc. All rights reserved.

15

20

VIRTUAL ORGANIZATION

A Virtual company resembles a normal traditional company in its inputs and its outputs. It differs in the way in which it adds value during the journey in between. Virtual Organization : read The Economist article

21

22
Source: S. Adams, Dogberts Big Book of Business, DILBERT

LEADERSHIP AND MANAGEMENT

Management is about coping with complexity

Good managers brings about order and consistency by drawing up formal plans, designing rigid organizations structures, monitoring results against plans Management consists of implementing the vision and strategy provided by leaders, coordinating and staffing organisation, and handling day-to-day problems

Leadership is about coping with change

Leaders establish direction by developing a vision of the future; they align people by communication this vision and inspiring them to overcome obstacles

(John Kotter Harvard Business School / Rober House University of Pennsylvania)

23

MANAGEMENT
Ten

Management Roles (Mintzberg) Informational (3 roles) : (1) MONITOR: gathers internal and external information relevant to the organisation; (2) DISSEMINATOR: transmits factual and value based information to subordinates; (3) SPOKESPERSON: communicates to the outside world on performance and policies.

24

MANAGEMENT
Ten

Management Roles (Mintzberg)

Interpersonal (3 roles) : (4) FIGUREHEAD: the manager performs ceremonial and symbolic duties as head of the organisation; (5) LEADER: fosters a proper work atmosphere and motivates and develops subordinates; (6) LIAISON: develops and maintains a network of external contacts to gather information;

25

MANAGEMENT
Ten

Management Roles (Mintzberg)

Decisional (4 roles) : (7) ENTREPRENEUR: designs and initiates change in the organisation; (8) DISTURBANCE HANDLER: deals with unexpected events and operational breakdowns; (9) RESOURCE ALLOCATOR: controls and authorises the use of organisational resources; (10) NEGOTIATOR: participates in negotiation activities with other organisations and individuals.
4
26

LEADERSHIP

The ability to influence a group toward the achievement of goals If you want to build a boat, do not drum up people to collect wood or assign them tasks or work, but rather teach them to long for the endless immensity of the sea
Antoine de Saint-Exupery

27

LEADERSHIP : THEORIES (1)

Traits of Leadership?
Commonalities : ambition, energy, desire to lead, honesty and integrity, selfconfidence, intelligence, job-relevant knowledge However too many limitations: no universal trait for all situations, trait predict behaviour in weak situations rather than strong, evidence not clear between cause from effect, trait better predict the appearance of leadership rather than the effectiveness

Behavioural theories
Theories proposing that specific behaviours differentiate leaders from nonleaders Based on behavioural theory => people can be trained to be leaders However is missing the consideration of situational factors

28

LEADERSHIP : THEORIES (2)

Contingency theories
Relationship between leadership styles and effectiveness depends on different factors key variables isolated by some models

Neocharismatic theories
Stress symbolic and emotionally appealing leader behaviours Attempt to explain how certain leaders are able to achieve extraordinary levels of follower commitment Deemphasise theoretical complexity

3 approaches : charismatic leadership, transformational leadership, visionary leadership

29

LEADERSHIP
What does a leader look like? I've met leaders all over the world, on several continents, and in every profession. I've met young leaders and old ones, leaders with big tribes and tiny ones. I can tell you this : Leaders have nothing in common. They don't share gender or income level or geography. There is no gene, no schooling, no parentage, no profession. In other words, leaders aren't born. I'm sure of it. Actually, they do have one thing in common. Every leader I've ever met share's one thing: the decision to lead. Seth Godin - Tribes: We Need You To Lead Us

30

LEADERSHIP : CONTEMPORARY ISSUES

Emotional intelligence and leadership

Primal leadership refers to the emotional dimension of leadership. We argue that a leaders primal task is an emotional oneto articulate a message that resonates with their followers emotional reality, with their sense of purposeand so to move people in a positive direction. Leadership, after all, is the art of getting work done through other people. Daniel Goleman Primal leadership

Team leadership
if we are together, nothing is impossible. If we are divided, all will fail Winston Churchill

Moral leadership
One of the things I noticed, as so many of us in business do, is that some of the hardest leadership decisions are the ones that have moral or ethical stakes Sandra J. Sucher, teaching the Moral Leadership at Harvard Business School

31

Source: House, R. H. (2004). Culture, Leadership, and Organizations: the GLOBE study of 62 societies. London: Sage.

LEADERSHIP EXPECTATIONS
France Charismatic

US/UK

ALL.

Sude

France

Team

Inde

Chine

Brsil

France

Participative

ALL.

US/UK

Sude

France

Humane

Inde

US/UK

Afrique

France

Autonomous Self protective

ALL.

Russie

Chine

France

Turquie

Chine

Inde
32

LEADERSHIP FRENCH EXPECTATIONS

Cross-cultural leadership : French position

Key words for Leadership for a French manager :

Charisma Vision Management

33 Source : Edhec Business School

TO BE CONTINUED...

Next course : Quiz Main stakeholders in a company

34