1. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–19–1 CHAPTER 9 ORGANISATION STRUCTURE

2. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–29–2 LECTURE OUTLINE Nature of organisation structure Types of departmentalisation Methods of vertical coordination Promoting innovation (methods of horizontal coordination)

3. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–39–3 NATURE OF ORGANISATION STRUCTURE Formal pattern of interactions and coordination designed by management to link the tasks of individuals and groups in achieving organisational goals.

4. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–49–4 NATURE OF ORGANISATION STRUCTURE Four elements: 1. Assignment of tasks and responsibilities to individuals and units 2. Clustering these to form a hierarchy 3. Mechanisms for vertical coordination 4. Mechanisms for horizontal coordination

5. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–59–5 NATURE OF ORGANISATION STRUCTURE The organisation chart – Line diagram depicting broad outlines of an organisation’s structure The chain of command – Unbroken line of command ultimately linking each individual with the top organisational position

6. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–69–6 NATURE OF ORGANISATION STRUCTURE ABC INC.

7. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–79–7 DEPARTMENTALISATION Clustering individuals into units, and units into departments and larger units, to facilitate achieving organisational goals.

8. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–89–8 TYPES OF DEPARTMENTALISATION Functional Divisional Hybrid Matrix (covered in detail in Chapter 10)

9. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–99–9 DEPARTMENTALISATION Functional: based on expertise, skill & similarity of work activity Functional: based on expertise, skill & similarity of work activity Divisional: based on product or market similarities Divisional: based on product or market similarities Hybrid: some activities grouped by function, some by products or markets Hybrid: some activities grouped by function, some by products or markets Matrix: Superimpose horizontal divisional over hierarchical functional structure Matrix: Superimpose horizontal divisional over hierarchical functional structure

10. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–10 METHODS OF VERTICAL COORDINATION Linking of activities at the top of the organisation with those at the middle and lower levels to achieve organisational goals. Formalisation Span of management Centralisation versus decentralisation Delegation Line and staff positions

11. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–11 METHODS OF VERTICAL COORDINATION Formalisation: The degree to which written policies, rules, procedures, job descriptions and other documents specify what actions are (not) to be taken under a given set of circumstances Extent of formalisation tends to grow with age and size.

12. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–12 METHODS OF VERTICAL COORDINATION Span of Management: The number of subordinates who report directly to a specific manager or supervisor. Can vary widely in different industries and types of organisations.

13. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–13 METHODS OF VERTICAL COORDINATION Factors influencing span of management: – Low interaction requirements – High competence levels – Work similarity (between organisational peers) – Low problem frequency and seriousness

14. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–14 METHODS OF VERTICAL COORDINATION Factors influencing span of management (continued): – Physical proximity – Few non-supervisory duties of managers – Considerable available assistance – High motivational work possibilities

15. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–15 METHODS OF VERTICAL COORDINATION Levels in the hierarchy Tall structures: many levels, small spans of management Flat structures: few levels, wide spans The trend to downsizing - cutting middle- management layers, increasing spans of control, reducing overall organisation size Restructuring: reducing management levels, changing organisational components (e.g. divestitures or acquisitions)

16. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–16 Contrasting spans of control

17. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–17 METHODS OF VERTICAL COORDINATION Centralisation Extent to which power and authority are retained at the top organisational levels Decentralisation Extent to which power and authority are delegated to lower levels Factors favouring decentralisation Large organisational size Geographic dispersion Technological complexity Environmental uncertainty

18. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–18 METHODS OF VERTICAL COORDINATION Extent to which power and authority will be retained at upper levels. Influenced by: Large size: larger organisations likely to be more decentralised. Large size: larger organisations likely to be more decentralised. Geographic dispersion: more dispersed likely to be decentralised, to enable control at a number of sites. Geographic dispersion: more dispersed likely to be decentralised, to enable control at a number of sites. Technological complexity: with more complex technology, need to devolve authority to lower levels. Technological complexity: with more complex technology, need to devolve authority to lower levels. Environmental uncertainty: with rapid change, need for more employees to be involved in responding to challenges. Environmental uncertainty: with rapid change, need for more employees to be involved in responding to challenges.

19. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–19 METHODS OF VERTICAL COORDINATION Delegation Assignment of part of a manager’s work to others, along with both responsibility and authority necessary to achieve expected results Responsibility: Obligation to carry out duties or achieve goals Authority: the right to make decisions or direct others Accountability: requirement to give satisfactory reasons for deviations from duties or results

20. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–20 METHODS OF VERTICAL COORDINATION Factors restraining delegation Fear of subordinate failure Time to train subordinates Enjoying the tasks themselves Holding on to authority Concern for task performance Fear of subordinate competence

21. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–21 METHODS OF VERTICAL COORDINATION Line and staff positions: Line authority (Line departments) Authority following the chain of command established by the formal hierarchy Functional authority (Staff departments) Authority of staff over others in the organisation in matters related directly to their respective functions e.g. HRM dept

22. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–22 METHODS OF HORIZONTAL COORDINATION Linking of activities across departments at similar levels Need for information processing across the organisation Promotes innovation through dissemination of ideas and information - new ideas more likely with many views - awareness of problems sparks solutions - involvement means willingness to implement

23. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–23 METHODS OF HORIZONTAL COORDINATION Horizontal coordination promoted by: Slack resources Cushion of resources that facilitates adaptations to internal/external pressures, as well as initiation of changes Information systems One information source for many users Lateral relations Direct contact, liaison roles, task forces, teams, Managerial integrators

24. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–24 LECTURE SUMMARY The organising function: building organisational structure – Definition – Departmentalisation, methods for vertical coordination, methods for horizontal coordination – Organisation charts Types of departmentalisation – Functional, divisional, hybrid, matrix – Vertical coordination: formalisation, span of management, centralisation v decentralisation, delegation, line and staff positions

25. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma Slides prepared by Rob Lawrence, Victoria University (Australia) 9–25 LECTURE SUMMARY cont’d Methods of horizontal coordination – Slack resources – Information systems – Lateral relations: Direct contact, liaison roles,task forces, teams, managerial integrators - Helps with innovation through exchange of ideas