The Rudiments, Fundamental Requirements, Types of Organisational Structures - Assignment Example

Organisational Structures Introduction An organisational structure is the framework (mostly hierarchical), within which organisations arranges their outline of communications and authority, as well as allocates duties and rights. These organisational structures determines the extent and manner to which power, responsibilities, and roles are delegated, coordinated, and controlled, as well as how organisational information and communication flows between the various management levels. Organisational structures depend solely on the objectives of the organisation, as well as the chosen strategy for their achievement. In centralised structures, the power of decision-making is concentrated in top management layers. This fosters the exercise of tight control over divisions and departments. On the other hand, the power of decision making in decentralised structures is distributed with divisions and departments having varying levels of autonomy (BusinessDictionary 2012, Para 1-2). Organisational structures contain a variety of activities like allocation, supervision, and coordination of tasks directed towards the realisation of the various aims of organisations (Pugh 1990, p. 51). Jacobides (2007, p. 455) claims that organisational structure can be perceived as the perspective or viewing glasses through which people see their firm as well as its environment. Organisational structure could be formal or informal. Formal structures are the means in which the individuals charged with the responsibility of managing firms organise them. Such individuals create formal structures to facilitate realisation of stated objectives by organisations concerned. Quite often, these formal structures are laid down out on paper as organisational charts. In course of time, however, an informal structure crops up in majority of the organisations; due to the day-to-day interactions’ reality between the organisational members. Such an informal structure may differ from the laid down structure. They develop due to organisational members finding new means of carrying out things that they find easier as well as time saving. Another cause is the shaping of interaction patters by groups of friendship as well as other relationships. They also crop up due to the ease of working with such informal structures and the forgetfulness of individuals concerning what formal structures are. Literature Review The Fundamental Requirements of Organisational Structures There are two elementary requirements for organisational structure. One is the division of labour, which is concerned with splitting labour or work tasks into distinct tasks. It involves subdivision of big work tasks into simple jobs, which are assigned to various people. Division of labour is essential as it fosters specialisation in the organisation with individuals participating in the tasks in which they feel best positioned to accomplish. Thus, division of labour increases the work efficiency in organisations and it is necessary as firms grow with work becoming more complex (Jacobides 2007, p. 455). The other requirement is coordination of labour to enable the workers to carry out their roles in concert to realise the goals, missions, visions, and objectives of their organisations. Coordination occurs via informal communication, standardisation, as well as formal hierarchy. Informal communication involves sharing of information among the organisational members (especially the important teams) using high media-richness. Formal hierarchy involves direct supervision of the juniors by their managers and it is common in larger organisations. This mode of coordination has such problems as being slow, costly, as well as less popularity among the young staff. Standardisation coordinates organisational members via giving of formal instructions. This composes of establishing clear outputs or goals, which are enforced through training and acquisition of necessary skills (Walonick 1993, Para 3-4). For effectiveness in operations, every organisation requires an organisational structure. Organisational structure is the mode of structure, which determines the reporting or the hierarchical structure in an organisation. Sometimes, organisational structure is synonymously used with organisational chart. There exists a variety of organisational structures, which firms follow depending on some various things such as geographical regions, hierarchy, or product among others. To put it in simple terms, organisational structure is the plan, which shows the work organisation as well as the arrangement of work in some systematic forms. The purpose of this paper is to examine organisational structures and their effectiveness in organisational management (Hill & Jones 2008, p. 403). The Rudiments of Organisational Structures There are four important elements of organisational structures, which involve departmentalisation, span of control, formalisation, and centralisation. Span of control within a firm is the figure of the employees reporting to one supervisor directly (Lunenburg & Ornstein 2011, p. 27). Span of control, traditionally, has been termed as a number, which is between four and seven subordinates working under a single manager. It is a concept that developed during the nineteenth century for organisation of large armies of the Europeans into small subunits. Wider span of control in the management team increases efficiency of organisations (Loveridge & Cummings 1996, p. 3). Formalisation: Formalisation is the extent to which jobs in an organisation are standardised. At high levels of formalisation, organisations have minimum quantity of discretion over when, what, and how and organisation operates (Wang et al 2011, p. 40). Formalisation enhances consistent output due to the straightforward and explicit descriptions of jobs. It also ensures that organisations have clearly stipulated procedures as well as organisational rules to foster performance among the employees. An organisation could also be organised around low formalisation levels, in which behaviours are unprogrammed and illustrate a great deal of exercise discretion. This level has great freedom deals with less standardisation and organisations under this mode of formalisation tend to consider a number of alternatives (Hill & Jones 2010, p. 381). Departmentalisation: is the ground on which individuals or work are classified into some manageable units. Departmentalisation comes after reviewing of plans as the first stage of the process of organising. Jobs are classified via work specialisation and this facilitates coordination of the common tasks. There exist five traditional mechanisms of grouping work activities in organisations. The first is departmentalisation by function in which work is organised by roles to be performed. These roles or functions reflect the business nature. The benefit of this mode of grouping is that it obtains efficiencies from consolidation of similar specialties as well as individuals with common knowledge, orientations, and skills together into common units. The second is departmentalisation by product in which all needed functions are assembled to make as well as market a specific product placed under a single executive. For example, key departmental stores are ordered around groups of products such as appliances, men or women’s clothing, or the children’s clothing, or even home accessories (Hill & Jones 2008, p. 403). Departmentalisation by territories is the third form of departmentalisation in which jobs are grouped on grounds of the geographical area or territory. For instance, a major pharmaceutical firm by the name Merck has departmentalised its domestic sales by regions such as Southeast, Northeast, Southwest, Midwest, as well as Northwest regions. The fourth kind of departmentalisation is by process in which jobs are grouped on grounds of customer or product flow. Each process needs particular skills as well as offers a ground for harmonised categorisation of the work activities (Hill & Jones 2008, p. 403). Patients preparing for operations would initially slot in preliminary diagnostic tests, prior to going through the process of admission, go through a surgery procedure, get post-operative care, discharging, and maybe receive some outpatient attention. Such services are administered by independently operating departments. Finally is departmentalisation by customer in which job groups are classified on grounds of common sets of problems or requirements of particular customers. For example, a plumbing company may group its tasks according to the factors of the clients it is serving: private sector, government, public sector, or not-for-profit firms. A current trend of departmentalisation is structuring work tasks according to the customer, by use of cross-functional teams. Such a departmental group is selected from a number of functions in order to foster the harmonious working across different departments in order to foster interdependent creation of new commodities or/and services (Drucker 1974, p. 572). For instance, preparation of a technology plan calls for a cross-functional team comprising of managers from finance, marketing, as well as finance departments. Centralisation: This is power or authority retention by the upper management levels. The chief benefit of centralisation is that it fosters a closer company’s operations control in its practices and policies. Through retention of power and authority at the top levels, proper governing board makes the decisions directly affecting the organisation. Some organisations may, however, opt to decentralise their power and authority. Decentralisation involves the extent to which power is spread across the lower organisational levels. It is advantageous in that it allows making of decisions considerably quickly, without seeking the upper authority levels’ approval. It also acts as a tool of employees’ motivation to work their promotion through the ranks. In addition, decentralisation eases the busy executives’ workload (Shi 2006, p. 472). Types of Organisational Structures Organisations could have a mechanistic or organic structure. The two structures have some notable differences, which include the following. Mechanistic structures have high formalisation in their organisations while the organic structures have low ones. Mechanistic structures have a relatively narrow control span whereas the organic structures have broad spans of control. The mechanistic structures have high centralisation and they are hard to alter while the organic structures have low centralisation and are easier to change. Organisational structures are not just a one-size-fits-all thing. Some organisational structures could be tight while others are loose, some simple while others are hard, some glitter. In addition, some could be worn casually while others are all-business. Some organisations have trotted out structures, which are only for prescribed occasions. Thus, the best organisational structure is dependent on an individual organisation, its current position, as well as its target position in the future. This further implies that the organisational structure is subject to alterations and the most effective structure changes as dictated by the different phases in the life of an organisation (Drucker 1974, p. 572). Experts of management such as Marquis and Huston (2009, pp. 273-276) have highlighted six different organisational structures. They include: Functional Organisational Structure is a kind of structure in which each part of the organisation has its own functional purpose with respect to assisting its both internal and external clients. It is a mode of departmentalisation, which involves engaging the employees in a well-designed activity such as finance or marketing and grouping them into a single unit. Geographic Organisational Structure is the one in which parts are equally distributed over different places, which are usually not under a single roof. Form/product Organisational Structure is the organisational structure that groups individuals within an organisation based on the material they deal with. For instance, in a library, an individual may be charged with the responsibility of dealing with booking of material, or dealing with the audiovisual material, etc. User/market Organisational Structure in which customers are separated on grounds of user or market segmentation. The structure of most banks is an effective illustration of this. Hybrid Organisational Structure, which entail combining two independent organisational structures to form one. Most organisations tend to have this structure due to its simplicity. Matrix Organisational structure, which consists of repeating substructures in each unit or department under a single roof in which they are similar. This structure allows the staff to have a number of bosses with a number of different projects making it quite complex. The matrix structure is compared to an individual’s life in which one lives in a matrix structure propagated by the fact that people deal with a number of bosses such as the community, wife or husband, etc). Although matrix organisational structure may take long to maintain as well as make them work, they free up the management for other strategic planning initiatives. However, this structure encourages internal anarchy and power struggle. In addition, it is an expensive mode of management, which needs a lot of interpersonal skills. Effectiveness of Organisational Theories in Organisational Structures In choosing the structure of an organisation, the organisational members require determining the structure that would best shore up the realisation of the organisation’s mission, vision, objectives, goals, and activities. Adoption of some modes of organisational structures has become inevitable as the structure spells out the communication channel in organisations. Actually, organisational structures sets up the procedures for how individuals join the organisation (recruitment procedures), how they communicate with each other, the process of selecting the leaders, how decisions are made and implemented, the mechanisms of accomplishing work tasks, as well as how the whole organisation operates (Walonick 1993, Para 1). Almost all firms followed the bureaucratic structure concept of Weber until recently. However, the increased studies have paved way for creation of new organisational structures such as the federal decentralisation in which firms are organised in ways that foster multiple independent operations of units at the same time (Drucker 1974, p. 572). Organisational structure in project management has been vital in technological and highly dynamic environments (French et al 1985, p. 348). Project managers become focal points for activities and information related to particular projects with their goal being provision of effective organisational resources’ integration towards completion of a particular project. Implementation of an approach of project management entails dramatic changes in relationships of responsibility and authority. Project management led to evolution of matrix organisational structure (Kolodny 1979, p. 543). Matrix structure represents a concession between autonomous project management and bureaucratic approach and result into dual responsibilities and authority. Through the organisational theories, permanent departments’ functionality allocates resources for sharing among managers and departments. System organisational theory perceives organisational structure as established relationships patterns among the various organisational parts. Of particular significance are patterns in duties and relationships (French et al 1985, p. 348). These consist of such themes as integration (manner of coordination of activities), differentiation (how tasks are divided), authority systems (hierarchical relationships’ structure), and the administrative systems (formalised procedures, policies, and controls guiding an organisation). Relationship between organisational structure and environment is crucial. Firms are open systems depending for support on their environment with more complex environments leading to higher differentiation levels. A two-way energy flow characterises the relationship between the environment and an organisation as most firms try influencing their environment. This is through lobbying efforts and advertising campaigns among others. Starbuck (1976, p. 1069) posits that organisations invent environments and select them from an array of alternatives after perceiving their environments subjectively. Thus, strategic decisions regarding distribution channels and product lines contribute to selection of the environment and organisational structure. Individuals tend to be less satisfied with work in organisations with high structures. Organisational theories have fostered a number of studies aimed at examining the relationship between employee behaviour like satisfaction, turnover, and performance and organisational structure (Dalton et al 1980, p. 50). However, structural deficiencies can lead to low morale and motivation, decisions lacking in quality or timeliness, inefficient resources use, lack of conflict and coordination, and the inability of responding effectively to the environmental changes (French et al 1985, p. 348). One controversial and enduring debate about the organisational structure is on whether there exists an organisation’s desirable maximum size, after which there is reducing effectiveness. To answer this, a number of researchers such as Hedberg et al (1976, p. 42), Perrow (1979, p. 17), and Meyer (1977, p. 102) have hypothesised that growth of organisations is advantageous to a certain point. Most others support curvilinear growth perspective. Profitability rises with size but tapers off later (Pfeffer & Salancik 1978, p. 17). Warwick (1975, p. 75) observed that growth in the State Department of the US resulted into decreased responsiveness and flexibility, even though some specific measures were taken to abate such problems. An explanation for this phenomenon is that the size of an organisation tends to be usually correlated positively with age. Larger and older organisations have less ability and more rigidness in their ways of adapting to change (Filley & Aldag 1980, p. 280). These factors dictate the most effective organisational structure to enhance the performance and productivity of an organisation. Conclusion In conclusion, organisational theories are important models, which help organisations as well as scholars to understand how organisations functions in different parameters. Organisational structures are essential components of organisational theories and give a deep insight into how organisational functions and operations are divided among groups within an organisation. In simple terms, organisational structures play a key role in division of labour and in coordination of the same to fit various organisational objectives, mission, visions, and goals. In addition, organisational structures help in giving an understanding of the organisational power and authority control. Organisational structures are usually hierarchical as an organisation must have a chain of command and supervision as all organisational players cannot be left to operate as they wish. Thus, organisational structure is a basis of passing control to lower levels in an organisation. 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