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Lecture note : Structure of Organisations

1. Definition: Structure is an arrangement of parts of a whole entity in which they are

differentiated and integrated according to function and level.

2. Function-based structure: The organisation is divided according to the basic function performed
and integrated through functional and organisational hierarchy.

• Know-how is emphasised in this structure to achieve high quality problem solving. Prevalent when
technical knowhow is important and scarce.
Organisation as a three-dimensional pyramid

Enactive Cognitive Emotive

Strategy Mission Vision

Plans Models, Principles Values

Key Results Procedures Meanings, Processes

Practices Performance Experience, Needs

If the mission is seen as Profit, then the vision could be of a Machine. The strategy then could be a
Business Strategy.
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The Viable System Model

Proposed by Stafford Beer, the VSM draws on the principles of organisation abstracted from the
human nervous system, which is regarded as a system dealing with most complex information
and activity flows leading to decision-making.

Viability is a property of the system to maintain its separate existence amidst a dynamic
environment. It is closely connected with the core character of the system. The viable system
engages with the environment in different ways without losing its core character. In other words,
it brings about changes in accordance with itself. The question, ‘what is good for, needed and
desired by the environment’ is always accompanied by another question, ‘what is good for,
needed and desired by the system’. This is called self-referencing. A mismatch would lead to a
deeper probing and creative responses.

Based on the above understanding, define the system and the environment for the following and
judge their viability.

A housewife Accounting dept in a company Front office in a hotel

Labour subcontractor Bhutan Client service dept

Types

Real viability means separate existence and independent functioning, whereas potential viability
means existence as a part and dependent functioning with a possibility of independent
functioning.
Apparent viability means separate existence but dependent functioning. The heart of viability
therefore lies in the freedom of choice, under given conditions of existence and functioning. The
former is concerned with Management and the latter with Operations. The two are connected by
self-regulation. Operations make the system real and Management can make it viable.

Components
Components Characteristics
Operations :Procurement, Conversion and Exchange Cyclicality, updation,
speed
absorption
Management Initiation, direction, coordination, intervention Stability, Change, Integration

Operations by their nature demand local autonomy and Management by its nature centralises the
outcomes towards the chosen direction. Viability is thus achieved by a constant interplay of
local autonomy and central command.

Central command is the unifying thread that holds together

a. diversity of functions and products ...systems and procedures
b. temporal movement from the past to the future through the present....values and
principles
c. needs of the environment with those of the environment....perspectives

Crucial is the ability of the Management to pick up signals from the operations and the
environment, to read their meaning, construct them into perspectives and translate them into
directions, which are inwardly accepted. Inward acceptance of norms leads to self-regulation.
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Central Command is not to be confused with the Senior or Top Management. Central Command
has conventionally been identified with a direction from outside. As organisations have
developed and as the environment has evolved making individuals more autonomous, it is
possible to internalise the mission and vision of the organisation and to generate commands from
inside. In that case, the Central Command would be seen as the qualitative dimension of
everyday actions throughout the organisation.

The role of the Senior Management is to maintain self-regulation at all times and exercise
control, in exceptional situations. Senior Management is responsible for Legal and Corporate
requirements, Resource Allocation and Dealing with exceptions.

In viable systems there is a hierarchy of perspectives, which leads to distinct patterns of

information processing and decision-making. This is shown below:

System Focus Information Need Decision-making

Five Self-referencing Internal instability, external change Function mode

Four Adaptation Environmental trends and current Changing capability

inadequacies
Three Stability Purpose, Plan and Consequences Utilising capability

Two Variation Resource utilisation Matching resources

One Cyclicality Variety in Demand and supply Planning operations.

The vertical two-way information flow is expected to result in regulation. Whenever control is
exercised, it means Sys 3 , 4 or 5 can directly intervene in the operations of Sys 1. What is
largely communicated upwards is the unabsorbed variety at the lower level. Each system enjoys
local autonomy in matters which lie within its focus. Here the system refers to the decision-
making process and not to departments or positions.

Sys 5 is concerned with strengthening the system amidst changing environment and finds its own
unique balance of stability and change. It operates the change of gear for the organisation: crisis,
survival, growth, retrenchment or moribund modes.

Sys 4 is concerned with external adaptation and is constantly monitoring where the organisation
stands vis-a-vis the changing environment. This is the externalist perspective. Sys 3 on the other
hand looks at the internal situation and assesses the steady state. Thus Sys 4 and 3 are engaged
in a dialectic process of potentiality and actuality. Both require models (representations) of
internal and external reality. Porter’s model is an example of what Sys 4 would need. DuPont
chart is a Sys 3 model.

Sys 2 monitors the resource utilisation so that internal variations and entropy are dealt with
promptly. The performance is measured in terms of different resource dimensions, such as cost,
inventory, manpower, safety, machine breakdown etc.

Sys 1 is concerned with matching Demand by Supply through operations.