Organisational Behaviour

ORGANISATIONAL DESIGN AND STRUCTURE

ORGANIZATIONAL BEHAVIOUR
The study and understanding of
individual and group behaviour
and patterns of structure in
order to help improve
organizational performance
and effectiveness.

Introduction

According to McShane and Von Glinow (2003):

- ORGANISATIONAL STRUCTURE refers to the
DIVISION OF LABOUR as well as the patterns of
COORDINATION, COMMUNICATION, WORK
FLOW, and FORMAL POWER that direct
organisational activities
- ORGANISATIONAL DESIGN refers to the process
of CREATING and MODIFYING organisational
structures

Objectives of Structure

Monitoring the activities of the organization.

Co-ordination of different parts of the
organization and different areas of work.
Flexibility in order to respond to future
demands and developments.
The economic and efficient performance of
the organization and the level of resource
utilization.

Organization structure and Culture

A major determinant of an organizations

structure is its culture.

External influences, common values, beliefs

and attitudes will have a significant effect on
organizational processes including the design
of the structure.

Division of Labour and Coordination

All organisational structures have two

fundamental requirements: - Division of labour
- Coordination

Division of Labor

Subdivision of work into

separate jobs assigned to
different people

Potentially increases work

efficiency

Necessary as company grows and

work becomes more complex

Forms of Work Coordination

Informal communication
Sharing information
High media-richness
Important in teams

Formal hierarchy

Direct supervision
Common in larger firms
Problems -- costly, slow,

Standardization

Formal instructions
Clear goals/outputs
Training/skills

less popular with young staff

Elements of Organizational Structure

Departmentalization

Span of
Control

Organizational
Structure
Elements
Formalization

Centralization

Span of Control
Number of people directly
reporting to the next level
Assumes coordination
through direct supervision
Wider span of control
possible when:
with other coordinating
methods
subordinates tasks are similar
tasks are routine

Flatter structures require

wider span (if same # of
people in the firm)

Span of Control at Ducks Unlimited

Ducks Unlimited Canada recently flattened its
organizational structure by removing layers of
management. The environmental conservation
group wanted the flatter structure to empower
employees, and let them make decisions quickly
without having to go up the hierarchy.

Centralisation

CENTRLISATION means that formal decisionmaking authority is held by a small group of

people

DECENTRALISATION happens when decision

making authority and power are dispersed
throughout the organisation

Forces for (De)centralization

Centralization
Organizational crises
Management desire for control
Increase consistency, reduce costs

Complexity -- size, diversity

Desire for empowerment

Decentralization

Formalisation

FORMALISATION is the degree to which

organisations standardise behaviour through
rules, procedures, formal training and related
mechanisms (McShane and Von Glinow, 2003)

It is the establishment of standardisation as a

coordinating mechanism

May reduce flexibility

Mechanistic vs. Organic Structures

Mechanistic

Organic

High formalization

Low formalization

Narrow span of control

Wide span of control

High centralization

Low centralization

Effects of Departmentalization
Establishes work teams and
supervision structure
Creates common resources, measures
of performance, etc
Encourages informal communication
among people and subunits

Types of organization and

associated structures
Functional Organizational Structure
Organizes employees around skills or
other resources (marketing, production)
President

Finance

Production

Marketing

Product or Service based Structure

Organizes employees around separate,
semi-autonomous units with collective
responsibility for a major part of the
business process or for a complete cycle of
work. Eg: Hospital
President

Emergency Unit

OPD

Surgery Unit

Geographically
based Structures
Organizes employees around geographic areas,
products, or clients according to particular needs
or demands.Eg: Local Authority Services

Managing Director
Area A

Area B

Area C

Project-Based Matrix Structure

Employees are temporarily assigned to a specific
project team and have a permanent functional unit
President
Engineering
Manager
Project A
Manager
Project B
Manager
Project C
Manager

Marketing
Manager

Software
Manager

Features of Team-Based Structures

Self-directed work teams
Teams organized around work processes
Very flat span of control
Very little formalization
Usually found within divisionalized structure

Network Organizational Structure

Product
Development
Firm
(France)

Customer
Service
Firm
(Canada)

Marketing
Firm
(U.K.)

Core
Firm
(U.S.A.)
Production
Firm
(China)
Accounting
Firm
(U.S.A.)

Network Organizational Structure

A network structure is an alliance of several
organisations for the purpose of creating a product or
serving a client (McShane and Von Glinow, 2003)
This collaborative structure typically consists of
several satellite organisations beehived around a
hub/core firm (McShane and Von Glinow, 2003)
The core firm coordinates the network process and
provides one or two other core competencies such as
marketing or product development (McShane and
Von Glinow, 2003)

Contingencies of Organisational Design

Four contingencies of organisational design

are: - Organisational size
- Technology
- External environment
- Organisational strategy