Introduction• An organization is a system made of many sub- systems• Structural design is the way or method through use of hierarchy that a group, business, organizations, people or objects collaborate to achieve success on one common goal.• Complexity is an ever-present obstacle in any business. Managing complex systems is therefore a core competency to successfully run any business.
Factors cont’d3. Culture – most difficult. Organizations have many sub-cultures distributed through out the organization.4. Effectiveness – the measure of effectiveness within an organization. For instance, many organizations use balanced score card to measure both company and individual performance.
Factors to consider when designing a mgt structure1. Environment – in which the company operates. Both internal and external. External, all businesses are affected, e.g., taxation. Internal, specific to business’ day- to-day operations, e.g., capital adequacy.2. Technologies – used within the company. Relates to a range of infrastructure used to perform the day-to-day operations.
The Contingency Approach to Organization Design• Creating an effective organization-environment fit.• “organizations tend to be more effective when they are structured to fit the demands of the situation”• This model calls for using various organization design configurations to achieve an effective organization.
• Two classic contingency design studies:1.Differentiation and Integration: The Lawrence and Lorsch Study2.Mechanistic versus Organic Organizations
Differentiation and Integration: The Lawrence and Lorsch Study• Paul Lawrence and Jay Lorsch explained how two structural forces simultaneously fragment the organization and bind it together• Differentiation splits the organization apart• Integration binds the organization together• Concluded: As environmental complexity increased, successful organizations exhibited higher degrees of both differentiation and integration.• The more differentiated an organization, the more difficult it is to achieve integration
Mechanistic versus Organic Ogranizations• Tom Burns and G M Stalker drew a very instructive distinction between mechanistic and organic organizations.• Mechanistic organizations – rigid, command- and-control bureaucracies• Organic organizations – fluid and flexible networks of multi-talented people
Types of Structural Designs• Pre-Bureaucratic Structure These structures are simple and are usually referred to as horizontal organizations. They work well for small businesses and entrepreneurs. They are referred to as horizontal as employees report to a single owner or manager and there are no branches or specialized tasks among the employees. Everyone takes part in all the business activities.
Types cont’d• Bureaucratic Structure This structure is better suited for large scale complex organizations. There are clear defined roles, a hierarchical structure and respect for merit. This structure usually adopts a tall structure and is more vertical. Here production is all about efficiency, effectiveness and speed. Subordination is also strict.
Types cont’d• Functional Structures Within an organization there are divisions which are specialized in performing a set of tasks for example a computer engineering department would be staffed with only software engineers, making the group more efficient. This structure type is best suited for standardized good and services at large volume and low cost for example a car assembly plant. However functional structures may cause a lack of communication within an organization making it slow and inflexible.
Types cont’d• Matrix Structure In this structure employees are grouped by function and product. This structure is group oriented and uses groups of employees to achieve objectives. For example if an organization produces product “A” and “B” the company would take up a structure of product “A” sales department , product “A” accounting department, product “B” sales department, product “B” accounting department and so fourth.
Importance/adv of Structural design1. Organizational chart2. Distribution of Authority3. Departmentalization4. Flexibility5. Effectiveness and efficiency
Conclusion.• In conclusion the structural design of an organization is basically determined by the;• Environment.• Size of the organization.• Organization culture.• Technology.• Organizational goals.