Organisation
A consciously
coordinated social unit, composed of two or more people that functions on a
relatively continuous basis to achieve a common goal or set of goals. Groups of
people who work interdependently toward some purpose. A managed
system designed and operated to achieve a specific set of objectives.
Organizational Structure
Defines how
job tasks are formally divided, grouped and coordinated. The division
of labour as well as the patterns of coordination, communication, work flow, and
formal power that direct organisational activities. Reflects its
culture and power relationships (McShane & Glinow, 2000).
Fundamental requirements of
organizational structures
The division
of labour into distinct tasks. The
coordination of that labour so employees are able to accomplish common goals.
Fundamental Concepts
Differentiation
Internal
environment created by job specialisation and the division of labour. The work of
the organisation is subdivided into smaller tasks. Different
people or groups often perform specific parts of the entire task.
Integration
Differentiated
units are put back together so that work is coordinated into an overall
product. Coordination
would link the various parts of the organization to achieve the organization’s
overall mission.
Elements of Organizational Structure
Vertical
Structure
Authority in organizations
The
legitimate right to make decisions
and to tell other people what to do.
Authority resides in positions rather than in people
Top to bottom
Hierarchical levels
Span of control
Number
of people reporting directly to the next level in the hierarchy
Narrow
spans build a tall organization
Wide
spans create a flat organization
Delegation
Assignment
of authority and responsibility to a subordinate at a lower level.
Responsibility means the
assignment of a task that an employee is supposed to carry out
Accountability means the
expectation that employees perform a job, take corrective action when
necessary, and report upward on the status and quality of their performance.
Decentralization
The
delegation of responsibility and authority
In
a centralised organisation, important decisions usually are made at the top.
In decentralised organisations, more decisions are made at lower levels.
Horizontal structure
(departmentalisation)
As
the tasks of organizations become increasingly complex, the organization
inevitably must be subdivided or departmentalized. Departmentalization
specifies how employees and their activities are grouped together, such as by
function, product, geographic location, or some combination.
Functional
Jobs and departments are
specialized and grouped according to business functions and the skills they require:
production, marketing, human resources, research and development, finance,
accounting and so forth. Organizations with functional structures are typically
centralized to coordinate their activities effectively.
Divisional
Type of
departmentalization that groups employees around outputs, clients or geographic
areas. Divisional structures are sometimes called strategic business units
because they are normally more autonomous than functional structures and may
operate as subsidiaries rather than as departments of the enterprise.
Matrix
organizations
Matrix structures usually optimize the use
of resources and expertise, making them ideal for project-based organizations
with fluctuating workloads. Matrix structures focus technical specialists on
the goals of serving clients and creating marketable products.
