The Design of Organizations - Essay Example

?Explain the terms span of control and control loss. Are these concepts useful in understanding the design of organisations? The number of subordinates which a manager directly manages in an organisation is the span of control of manager (Hill & Jones, 2008, pp.215). Yasgoor and Bressler (2008, pp. 50) defines span of control as the direct number of employees which a manager supervises or who directly reports to the manager. The principle of span of control states that a limited number of subordinates should be overseen by the supervisors because monitoring the tasks of the subordinates is easier when number of subordinates is small (Meier & Bohte). The early researchers have given a great consideration towards the ideal specific number of span of control and it has been generally assumed that small span of control maintains close control. It is believed that if the manager fails to achieve the control over its subordinates, then the issue of control loss may arise. Control loss is another important concept in the organisations. Actually span of control gives a control to managers over their subordinates. When the span of control is wide and organisation has a decentralised structure, the managers have less control over their subordinates and they encourage their employees to work in more independence. Galbraith and Williamson argue that decentralisation in organisations reduces the information costs and enhance the organisational efficiency however; it can contribute to control loss (Stevens, 1993, pp. 10). In this essay, the importance of the concepts of span of control and control loss has been discussed to understand the organisational designs. Span of control is very important when it comes to design the structure of the organisations. Span of control is of the major determinants of the organisational structure. A relatively wide span of control and few hierarchical levels form a flat organisational structure. On the other hand, a relatively narrow span of control with many hierarchical levels forms a tall organisational structure (Hill & Jones, 2008, pp.215). The concept of control loss is also significant because when span of control is wide the control loss increases and when span of control is narrows, the control loss is small because the increase control of managers over the subordinates. It means that span of control, control loss and organisational design are interrelated concepts and organisations have to consider the role of span of control and control loss in the organisational designs. Ivancevich, Konopaske, & Matteson (2008, pp.540) argue that creation of organisational design involves four major decisions including the decision of division of labour, the decisions of delegation of authority, the decision of departmentalisation and decision of span of control. Actually span of control is a major determinant of organisational design because it creates the number of hierarchical levels in the organisations. Span of control not only defines the relationships of formally assigned subordinated but it also considers those who have access to manager. To achieve the defined organisation objectives, designing the right organisational design and structure if very important. The process of development of organisational design with setting the goals and objectives of organisational design and the next step is to group or relate the various functions, in which the concept of span of control is very important (Amrine, Ritchey, Moodie & Kmec, 1993, pp.88). For example, if few functions logically relate to each, they can be groups under one group and through span of control the reporting of the employees can be determined like who will report to whom. The researchers have always been interested in determining how an ideal span of control contributes to a good organisational design. Fisch (1963 cited in Dive, 2004, pp.115) argues that if the number of subordinated reporting to each manager is too small (in other words, if the span of control is narrow), the company will be too heavy, costly to run, oppressive to innovate and barriers of communication will be high. Organisations cannot directly select a specific span of control rather they consider the factors like required contracts, degree of specialisation and ability to communicate to determine span of control of a manager (Ivancevich, Konopaske, & Matteson, 2008, pp.540). Span of control is a contingency variable in an organisational design such as over the last few years; the span of control of managers at Hindustani Levers in India and General Electric has expanded. Argues that for an effective organisational design, span of control is determined through variables like similarity of tasks of employees, nature of tasks, physical reach of employees, degree of standardisation of processes, nature and complexity of management information system, value system of organisations and managerial style of the supervisor (Robbins, DeCenzo, Bhattacharyya & Agarwal, 2009, pp.136-137). Another aspect which can highlight the importance of span of control and control loss is that what happens if span of control is not considered while developing the organisational design? What does happen, if an organisation fails to select appropriate span of control? If an organisation fails to select suitable span of control or fails to acknowledge the importance of span of control in organisational design, then various issues can increase such as organisation conflicts. The design of an organisation needs to be in line with its current needs to manage the conflicts because when an organisation grows and differentiations, the hierarchical levels increase and the chain of command lengthens which results in control loss. This control loss appears to be a major source of conflict (Jones, 2008, pp.416). Jones argues that creating a good organisational structure to minimise the potential risk of conflict is possible, if a good organisational design is developed. Nowadays, organisations are aware of the importance of span of control and they know that span of control is important to understand the organisational design because it helps to determine the number of hierarchical levels and managers an organisation has. Therefore, it directly contributes to the organisational design and structure. Organisations have developed different span of control for their managers based on different assumptions. Some argue that a narrow small of control increases the accountability of the employees whereas, some argue that wider span of control enhances the interaction, reduces the cost and reduces the communication barrier. The Theory X and Y of McGregor (1960 cited in Meier & Bohte) states that under Theory X it is assumed that managers cannot trust their workers therefore, span of control should be low and under Theory Y, it is assumed that managers encourage the people to work at their full potential. A traditional view about span of control in organisational design is that the ideal span of control of a manager should be five or six employees (Robbins & Coulter, 2008, pp. 271). Simons (2005, pp.233) as compared the organisational designs through four span of control of two large organisations General Electric (GE) and Johnson & Johnson (J&J). The diagram shows that J&J has a highly decentralised organisational design whereas GE has a centralised organisational design. Although the span of accountability is wide in both organisations however, because of the narrower span of control, the entrepreneurial gap is wide and span of accountability is great than span of control. Moreover, the control loss is greater in the organisational design of Johnson and Johnson because the company has a decentralised structure whereas; General Electric has relatively low control loss because of a highly decentralised organisational structure. The example of GE and J&J shows that span of control is important for the organisational design and one cannot argue either the small or large span of control is suitable because both of the companies are performing well and both views have their own pros and cons. Span of Control at General Electrics Span of control at Johnson & Johnsons Source: Simons, 2005 Based on the above discussion, it can be concluded that span of control and control loss are actually important to understand the organisational design, regardless of the narrow or wide span of control. If the span of control is narrow the organisational design will be more centralised with more hierarchical levels and control loss will be low. On the other hand, if span of control is wider, the organisational design will be more decentralised with less hierarchal levels and more control loss. Bibliography Amrine, Ritchey, Moodie & Kmec, 1993. Manufacturing Organisation and Management. 6th Edition. Pearson Education. India. pp.88 Dive, B., 2004. The Healthy Organisation: A Revolutionary Approach to People and Management. 2nd Edition. Kogan Page Publishers. London. pp.115 Hill, C., & Jones, G., 2008. Essentials of Strategic Management. 2nd Edition. Cengage Learning. USA. pp.215 Ivancevich, M. J., Konopaske, R., & Matteson, T. M., 2008. Organisational Behaviour and Management. 7th Edition. Tata McGraw-Hill. India. pp.540 Jones, G., 2008. Organisational Theory, Design and Change. 5th Edition. Pearson Education. India. pp.416 Meier, J. K., & Bohte, J., n.d. Ode to Luther Gulick: Span of Contrl and Organisational Performance. [Online] Available on: http://teep.tamu.edu/pubs/gulick1.pdf [Accessed on 7th January 2011] Robbins, P. S., & Coulter, M., 2008. Management. 9th Edition. Pearson Education. India. pp.271 Robbins, P. S., DeCenzo, A. D., Bhattacharyya, S., & Agarwal, N. M., 2009, Fundamentals of Management. 6th Edition. Pearson Education. India. pp.136-137 Simons, R., 2005. Levers of Organisation Design: How Managers Use Accountability Systems for Greater Performance and Commitment. Harvard Business Press. USA. pp.233 Stevens, F. D., 1993. Corporate Autonomy and Institutional Control: The Crown Corporation as a Problem in Organisation Design. McGill-Queen’s Press. pp.10 Yasgoor and Bressler, 2008. Kaplan Human Resource Certification: Proven, Practical, Practice Tools to help you Pass the PHR and SPHR Exams. Kaplan Publishing. New York. pp.50 Read More