1. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.1 Understanding Organisational Context 2e Slides by Claire Capon Chapter 1 Inside organisations Organisational structures Handy’s cultures

2. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.2 Organisational structures The simple structure

3. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.3 Figure 1.2 The simple structure

4. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.4 Main features Centralised Organised around owner Small companies or small companies in early stages of development

5. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.5 Advantages Owner controls early growth and development of the business

6. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.6 Disadvantages Owner may lack specialist knowledge in some areas Appropriate up to a certain size only

7. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.7 Organisational structures The functional structure

8. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.8 Figure 1.3 The functional structure

9. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.9 Main features Centralised Small company producing limited range of products Organised around tasks to be carried out

10. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.10 Advantages Simple lines of control Efficient lines of communication and information flow - vertical and short

11. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.11 Advantages (cont.) Specialist managers heading up each function Improved decision making

12. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.12 Disadvantages Functional managers overburdened with operational duties Longer-term planning may be neglected

13. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.13 Disadvantages (cont.) Becomes stretched by growth and product diversification Difficult to co-ordinate and manage across different functions

14. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.14 Organisational structures The divisional structure

15. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.15 Figure 1.4 The divisional structure

16. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.16 Main features Product or geographical divisions Diverse range of products or services offered, or geographically-diverse markets served

17. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.17 Advantages Divisions are profit centres in their own right Decentralised structure - easier to manage diversity Divisional managers responsible for short-term and medium-term planning

18. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.18 Advantages (cont.) Top managers are free to concentrate on longer-term planning Profitability is spread across the divisions, products and markets

19. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.19 Disadvantages Potential conflict between divisions over resource allocation Overall co-ordination of divisions can be difficult

20. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.20 Organisational structures The holding company structure

21. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.21 Figure 1.5 The holding company structure

22. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.22 Main features Small head office - acts as an investment company Decentralised - operating companies are largely independent

23. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.23 Main features (cont.) Operating companies trade under own name, rather than holding company’s name

24. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.24 Main features (cont.) Operating companies are required to meet strict financial targets Financial and legal sections support head office, not the operating companies

25. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.25 Advantages Low central overheads Risk and profit are spread Ease of divestment of operating companies

26. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.26 Disadvantages Individual operating companies under risk of divestment by holding or parent company - may feel threatened No centralised skills

27. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.27 Disadvantages (cont.) Potential lack of overall co-ordination and direction of the whole organisation

28. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.28 Organisational structures The matrix structure

29. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.29 Figure 1.6 The matrix structure: multinational company

30. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.30 Main features Double definition of profit centres (two arms of the matrix) Found in different types of organisation: - large multinationals - university departments - sophisticated service companies

31. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.31 Advantages Decentralised and localised decision making in the matrix Growth and complexity controlled by people in the matrix

32. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.32 Advantages Direct contact between two arms of the matrix replaces bureaucracy Quality decision making and increased managerial motivation

33. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.33 Disadvantages In the matrix, potentially: - a high degree of conflict - a long time to make decisions - unclear job and task responsibilities

34. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.34 Disadvantages (cont.) Difficult to implement High overhead costs

35. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.35 Handy’s cultures The power culture The role culture The task culture The person culture

36. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.36 Figure 1.9 The power culture Source: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright Charles Handy 1976, 1981, 1985, 1993. Reproduced by kind permission of Penguin Books Ltd.

37. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.37 The power culture Usually found in small firms with simple structure Owners tend to recruit employees similar in character to themselves

38. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.38 The power culture The culture is like that of a club with all employees as members Power culture is very reliant on the owner

39. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.39 The power culture Work is divided by function or product Lines radiating from the centre represent functional or product areas

40. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.40 The power culture Concentric circles represent power and influence The further away from the centre, the weaker the power and influence

41. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.41 Figure 1.10 The role culture Source: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright Charles Handy 1976, 1981, 1985, 1993. Reproduced by kind permission of Penguin Books Ltd.

42. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.42 The role culture Often found in larger organisations with functional or divisional structure Built around defined jobs, roles and procedures

43. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.43 The role culture Strength of organisation is in the pillars or departments Designed for stability and continuity Not adaptive to change

44. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.44 Figure 1.11 The task culture Source: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright Charles Handy 1976, 1981, 1985, 1993. Reproduced by kind permission of Penguin Books Ltd.

45. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.45 The task culture Often found in organisations with the matrix structure Problem-solving organisations

46. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.46 The task culture People and resources drawn together into a temporary team for a specific project Once the project is completed, the team disbands and individuals move on to other projects

47. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.47 Figure 1.12 The person culture Source: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright Charles Handy 1976, 1981, 1985, 1993. Reproduced by kind permission of Penguin Books Ltd.

48. Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.48 The person culture Organisation exists to support the individual specialist and allow them to practise their profession Found in the professions, e.g. doctors, solicitors, dentists