PowerPoint to accompany

Organisation Theory
CONCEPTS AND CASES

5e
Stephen Robbins Neil Barnwell

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Chapter four

Dimensions of organisation structure

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Aims of this lecture

Introduce and describe the three components of complexity Discuss formalisation techniques Discuss the centralisation-decentralisation debate Describe the five basic structural configurations

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Complexity
Comparing organisations is difficult because of their intangibility However some things we can measure and these form the basis of organisational complexity Complexity is the degree of horizontal, vertical and spatial differentiation in an organisation

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Horizontal differentiation
Horizontal differentiation refers to the degree of specialisation in the organisation It includes the number of different specialist tasks, departments and the orientation and skill background of members Groups of specialists are normally grouped into departments

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Vertical differentiation
Vertical differentiation refers to the number of layers of management in an organisation This can normally be easily counted

Span of control refers to the number of subordinates a supervisor can effectively control

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Spatial dispersion
Spatial dispersion is the degree to which an organisations facilities and personnel are geographically dispersed

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Formalisation
Formalisation is the degree to which jobs and procedures in the organisation are standardised High formalisation assists in regulating employees behaviour by reducing variability High formalisation can also assist in increasing productivity for standardised tasks

It can also simplify training and reduce job skills

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Formalisation
continued:

Formalisation techniques include:

Staff selection Defining role requirements Existence of rules, policies and procedures Socialisation where individuals absorb the norms and values of the organisation Training Participation in rites and rituals

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Centralisation
Centralisation refers to the degree to which decision making in made at a single point in the organisation In common usage, centralised decision making occurs when most decisions are made by top management

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

10

Centralisation
continued:

Centralisation also includes all steps in the decision making process being taken by one person or group Finding an appropriate balance between what to decisions to centralise and what to decentralise is an ongoing problem for organisations

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

11

Coordination
Coordination is integrating the objectives and activities of the organisation to achieve the organisations goals Programmed coordination relies upon standardised techniques to schedule repetitive tasks Individual coordination uses staff members to undertake coordination tasks

Informal coordination is where individuals coordinate through voluntary action

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

12

Organisation design options

There are not an infinite number of organisational options Organisations may be grouped into one of five configurations A configuration is a complex, cohesive clustering of elements which are internally consistent and which forms a repetitive pattern

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

13

Common organisational elements

All organisations have five common elements

Operating core where work related to the production of goods and services takes place Strategic apex which has overall responsibility for the organisation Middle line connects the operating core to the strategic apex Technostructure standardises the work of the organisation Support staff provide indirect support services

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

14

Common organisational elements

continued:

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

15

The simple structure

The simple structure is typical of a small organisation

It is low in complexity, has low formalisation and authority is centralised in one person
Operations are flexible, decision making is fast and accountability clear But its operations are limited by its small size and the capabilities of the manager
Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

16

The simple structure

continued:

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

17

Machine bureaucracy
The machine bureaucracy is a large organisation with very routine and formalised operating tasks and extensive rules and regulations The key part of the organisation is the technostructure Its key strength is in performing standardised activities in an efficient manner In this it achieves economies of scale
Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

18

Machine bureaucracy
continued:

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

19

Machine bureaucracy
continued:

The machine bureaucracys weaknesses are

Difficulties in adapting to change Subunit and departmental conflict Obsession with rule following Best adapted to a stable environment

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

20

Divisionalisation
The divisional structure consists of a set of autonomous self contained units reporting to a central headquarters The divisions may be based upon product, geographic area or sometimes customer Each division is run by separate management and is a profit centre

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

21

Divisionalisation
continued:

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

22

Divisionalisation
continued:

Divisionalisations strengths include

Identifies clear areas of accountability Decentralises decision making Frees headquarters to concentrate upon strategic matters Divisions may be added or disposed of relatively easily Enables participation in a number of different markets at the same time

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

23

Divisionalisation
continued:

Weaknesses include

Duplication of functions Cooperation between divisions often poor Difficult to balance the responsibilities between the head office and the divisions

Divisionalisation is only effective when the technical core can be divided into self contained parts A very common business form

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

24

Professional bureaucracy
A structural form which permits highly trained professionals to practice It is high in complexity and decentralised

Formalisation derives from the professionals training and professional standards

It is a form common to management consultancies, professional accounting firms, legal firms and similar
Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

25

Professional bureaucracy
continued:

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

26

Professional bureaucracy
continued:

Its strength is that it can undertake unique, specialised tasks on behalf of clients Its weakness is its difficulty in determining strategic direction and in coordinating tasks There are also no economies of scale, but rather economies in applying knowledge

The dominant part is the operating core

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

27

Adhocracy
An adhocracy handles unique tasks but is better coordinated than the professional bureaucracy It is very flexible, has high horizontal differentiation (many different skills), low vertical differentiation (few layers of management), low formalisation and is intensively coordinated It undertakes tasks which are difficult to formalise and to coordinate i.e. theatre productions, engineering construction, complex design

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

28

Adhocracy
continued:

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

29

Adhocracy
continued:

Adhocracy is a complex form which needs to be managed well. Poorly managed adhocracies have high levels of conflict, spend too much time in administration and are slow to make decisions

The matrix is a form of adhocracy which responds to two environmental pressures at once
Either the entire organisation, or only part of the organisation may conform to an adhocracy

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

30

Discussion questions
What are the challenges involved in managing complex organisations? How can these be overcome? How may the various formalisation techniques be applied? Why is important to get the balance between centralisation and decentralisation right? What is it like to work in a simple structure? A machine bureaucracy? A professional bureaucracy? An adhocracy?

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

31