Six Key Elements Of An Organisations Structure Business Essay


When any organisation is set up a structure of some sort is put in place. There are several elements that contribute to the structure of an organisation. These are that they must work with a system that contains a structure of some sort. They must make a conscious effort to plan which then enables the workforce to apply a co-ordinated and co-operative approach to achieving their goals. For any organisation to succeed there must be evidence of some, if not all, the above elements in the business. If these don't exist then there'll be no systematic way of dealing with everyday issues. There will be no structure, so no-one will know who has authority and responsibility. Without a plan the company loose direction, whereas with a plan the company will have small amounts of co-ordination and co-operation so people know whose doing what and when. Finally, goals are one of the most important aspects of business, because without these nobody has anything to head towards. There would be no incentives to work and achieve satisfaction.

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It is widely known that the bigger the firm the more co-ordination is present. When a firm comes into fruition with only a few departments, there won't be a formal structure. As the company grows so does its structure, new departments are created . There are several factors that each department has to have to function, not just the whole organisation. These are the division of labour within the department - who does what, when and how? There also needs to be a hierarchy within the department where issues like the span of control, authority, responsibility, accountability and the number of hierarchical levels must be addressed. All these contribute towards good co-ordination of departments.

The characteristics of Bureaucracy

Bureaucratic coordination of activities, he argued, is the distinctive mark of the modern era. Bureaucracies are organized according to rational principles. Offices are ranked in a hierarchical order and their operations are characterized by impersonal rules. Incumbents are governed by methodical allocation of areas of jurisdiction and delimited spheres of duty. Appointments are made according to specialized qualifications rather than ability criteria. This bureaucratic coordination of the actions of large numbers of people has become the dominant structural feature of modern forms of organisation. Only through this organisational device has large- scale planning, both for the modern state and the modern economy, become possible. Only through it could heads of state mobilize and centralize resources of political power, which in feudal times, for example, had been dispersed in a variety of centres. Only with its aid could economic resources be mobilized, which lay fallow in pre-modern times.

The six main features of bureaucracy are explained as follow:

"Hierarchy of authority- makes for a sharp distinction between administrators and the administered, or between management and workers. Within the management ranks there are clearly defined levels of authority. This detailed and precise stratification is particularly marked in the armed forces and in the civil service. "(Mullins.1999, Page. 55)

"Impersonally: means that allocation of privileges and the exercise of authority should not be arbitrary, but in accordance with the laid-down system of rules. In more highly developed bureaucracies there tend to be carefully defined procedures for appealing against certain types of decisions."(Mullins,.1999, Page. 55)

Promotion based on achievement: "Employment is based on technical qualifications and is protected against arbitrary. Similarly, promotions are based on seniority and achievement. Employment in the organization is viewed as a lifelong career, and a high degree of loyalty is engendered." ( Gibson, Ivancevich & Donnelly, 2000, page.375)

Specialized division of labour: "Applies more to the job than to the person undertaking the job. This makes for continuity because the job usually continues if the present jobholder leaves. ."(Mullins,.1999, Page. 55)

Written rules of conduct: aim to provide for an efficient and impersonal operation. The system of rules is generally stable, although some rules may be changed or modified with time. Knowledge of the rules is a requisite of holding job in a bureaucracy.

Recording: "Administrative acts and decisions are recorded in writing. Record keeping provides an organisational memory and continuity over time."( Huczynski & Buchanan , 2001, page, 489)

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Matrix Organisation

The origin of the matrix organisation can be expressed as a developmental variation in project management. After the American Ministry for Defence gained some beneficial experience in project management during the Second World War, for the development and the building of the first atomic bomb (project Manhattan), several government departments encouraged this type of organisational structure in the private industry sector stipulating, that all companies who would like to receive orders, needed to present one contact person who was competent in answering all necessary questions.

The matrix idea was originally limited to projects and, therefore, to a limited time period and purpose. In 1967, the Dow-Corning company attempted for the first time to transfer the basic idea of multi-dimensionality into a permanent organisation. Although the company could not fall back on other experiences apart from project management, the company management assessed this type of re-structuring to a 'multi-dimensional organisation' as a 'sweeping success in regard to productivity, export, turn-over and profit'.

The main reason for choosing this type of organisation for the above named companies was the expanding complexity of their management areas. Regarding efficiency and productivity, the classic forms of organisation offered insufficient solutions for existing problems such as increasing internal co-ordination (in particular between the functional and product-specific areas), the extension [in size] of companies or the alignment with international markets.

Advantages of matrix structures

A primary advantage of the matrix organisation can be found in the efficient allocation of organisational resources. Staff members who act as professionals/specialists in a certain area could be used for differing organisational overlapping projects at the same time. Through the integration into the different projects, this ensured that specialists and top performing people did not lose control of the actual project. The following points speak for the implementation of a matrix organisation:

efficient use of resources

flexibility during new challenges regarding changes and insecurities

co-ordination (integration)

releasing pressure on top management for long-term planning

increase of motivation and self-obligation

chance for personal development

In view of a re-organisation, which results in changes in various dimensions (in particular on markets and products), it should be said that the matrix organisation offers good conditions to deal with such changes without having basic changes in the structure. For example, for establishing a new matrix post for a new product, there are function-dimensional specialists available who can integrate the new product into existing structures and, possibly, avail themselves of personnel from other product groups. Most of the time, the implementation of the matrix organisation comes together in that it lightens the burden on the top management, or a delegation of decisions to lower levels. Using the matrix organisation, a lot of competencies are delegated to the matrix posts and the relevant 'interface' points. The matrix management is released from questions of co-ordination and advanced planning and can concentrate on important political decisions in the relevant area (company policy, section policy).

Having a two or three-dimensional structure, the responsibility of the individual staff member is upgraded. In this way, the staff member is interrupted in his/her routine and receives additional possibilities to develop his/her abilities. In addition, this form of organisation allows space for team-design in terms of problem solving; all this in a far stronger participating and democratic way, than with other functional hierarchies. By giving away a certain amount of decision-making, the involvement of the individual person to the project is increased, which in turn has an effect on their motivation.

Virtual Organisation Characteristics

The key characteristics of a virtual organisation have been cited by Aris (1998) as being dispersion, empowerment, restlessness and interdependence:

Dispersion - individual members of the virtual organisation are at least based at multiple locations, and moreover, have varying local cultures and languages.

Empowerment - devolution of power within the virtual organisation with responsibility being divided amongst the individual members.

Restlessness - the acceptance of change and organisational practices and customs in order to meet the needs and complexities of the global marketplace.

Interdependence - members must cooperate across company boundaries to create the organisation necessary to exploit a particular market need.

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The creation of a virtual organisation involves creating one face that the customer can interact with and relate to. Individual members of the Virtual Organisation and their associated interactions are kept hidden from the customers so that they have one point of contact. The core organisation can either be the face of the virtual organisation or it may create another brand/image to be the face of the virtual organisation. The partners are seen as satellite organisations that provide a core competency that the core organisation lacks and requires to meet the customer's needs, they will come and go depending on the need of the customer and core organisation. The Core Organisation directs change which the partners react to, pulling together to meet the specified goal. The Core organisation doesn't manage its partners, but manages the relationship between itself and its partners and the relationships between the partners where required.

Distributed Core Model is driving the virtual organisation, each of the members has a full part to play and is reliant on each other to fulfil the market or customer needs. Each member delivers a core competency in order to meet the needs of the customer and are involved in planning, procedures and management. Often a management board of people seconded from the member organisations is created to bring better-defined management and processes to the virtual organisation.

It should be noted that in each of the models above the member organisations do not necessarily have to be companies but could also be individuals working remotely. People with particular knowledge and skills can now broker themselves to the wider marketplace using technology as the communication medium. The advancements in Information and Communication technologies (ICT) have made it easy for many office tasks to be performed from remote locations. Companies now recognise the productivity improvements - and the savings in office space and services - that can be accrued by having a remote work force.

A Boundaryless Organisation: why managers create it?

Mechanistic and organic management systems are at opposite ends of the range of design systems that organizations adopt, firms can move along this range from one end to the other, or occupy positions in between (boundaryless organization) depending on the nature of their work, and changing circumstances. The kinds of practices organizations choose along the range vary according to whether the environment is stable, and the technological conditions are well understood (when mechanistic management is appropriate), or whether the environment is highly unpredictable, with rapid technological change and boundless market opportunities, (when organic management is appropriate).

Contrast mechanistic or organic structural models

The organic design structure also gives rise to the divisional approach where departments are grouped together to attain the specific goals of the organization whether it be a specific product or service provided by the organization. This approach is based mainly in large corporations who provide products or services for different markets or geographical locations and each department must be self sufficient. With this approach managers would not be delayed in their decision making process by the higher levels of management, the head office just acts as a support system and focuses more on strategic planning for the organization

Although they are several additives which can be derived from the divisional approach there are also obstacles that can arise as well. While this approach tends to be flexible and adaptable to changes surrounding the organization, since management has the freedom in there decision making process without unnecessary consultation with higher levels of management, this freedom sometimes tends to lead to repetition of time, efforts and energies on a hopeless project.

Traditional organizations can be cumbersome in their structure. The organizational structure can make communication difficult and, therefore, slow to respond to opportunities or threats. In a traditionally structured organization, control and management takes place at the upper levels of the organization. This can cause a lack of creativity and productivity for both the workers and upper management within the organization.

Factors that favour Organisational Structures

The size of an organization can play a significant role in the formation of structure. For example, size does not matter so much in small organizations, since there is little need for formal structure. Small organizations don't employ many workers; have simple tasks and limited resources. On the other hand, large organizations need formal structuring because they incorporate many departments, more formal rule and procedures, more staff etc.

There are different managers for different levels of the organization, and each one is concerned with a number of different functions necessary for the effectiveness of the organization. Since managers are developed rather being a product of nature, we might assume that some are more successful than others at achieving the best results from these functions. It is generally noted that managers are concerned with the functions of planning, organizing, leading, and controlling.

Each of the functions a manager uses involves creative problem solving. Creative problem solving is broader than problem finding, choice making, or decision making. The intended result is the use of the organization's resources in a way that accomplishes its mission and objectives.

Management success is gained though accomplishments of the missions and objectives. Managers fail when they do not accomplish mission and objectives. Success and failure are tied directly to the reasons for being in business, i.e., mission and objectives. However, accomplishing mission and objectives is not sufficient. Success requires both effectiveness and efficiency. Managers who accomplish their mission and objectives are said to be effective.

Behavioural Implications of Organisational Designs

Changes in the external environment may have dire consequences on the organisation's effectiveness. This is mainly due to the uncertainty and complexity that the environment may exhibit. From various studies (Burns & Stalker and Lawrence & Lorsch) it was concluded that in a stable environment, a mechanistic system would be implemented with a rigid structure somewhat resembling the bureaucratic model. In specific, there will be a clear chain of command and definition of goals, specialized activities and firm control over duties and responsibilities. In addition, less differentiation would be needed, although a considerable amount of integration would be demanded. Likewise, a dynamic environment requires an organic system that is flexible to changes. It would normally embody continuous adjustment of tasks and good technical knowledge. It would also necessitate high differentiation and high integration.