1. D39BU – Business Management in the Built Environment
Company Organisation
Dr. Turker Bayrak

2. Learning Outcomes
Explain the meaning & nature of organisation structure.
Identify levels of organisation & debate the importance of the hierarchy.
Explore the factors to be considered in the design of organisation structure.
Explain the importance of good structure & consequences of a deficient structure.
Review the relationship between the structure of an organisation & the people who work within it.

3. Introduction
The intensification of research on organisational effectiveness by scholars in the fields of management, social anthropology and organisational development has led to the identification of several organisational factors that have influential roles on the determination of organisational performance.
(Becker, 2001)

4. Organisations are made up of complex & dynamic systems comprising:
Organisation Strategy,
Structure &
Culture
which affect the implementation of organisational goals & objectives

5. In order to achieve its goals & objectives, the work of an organisation has to be divided among its members.

6. Some structure is necessary to make possible the effective performance of key activities & to support the efforts of staff.

7. Organisation Structure
Structure provides the framework of an organisation & its pattern of management.

8. Organisation Structure
It’s by means of structure that the purpose & work of the organisation are carried out.

9. Organisation Structure
Who reports
To whom &
For what

10. Class Activity
Examine critically arrangements for the division of work & linking together of activities in your own/ some other organisation of your choice.
Design the organisation chart.
Comment on the apparent effectiveness of this organisation structure.
Give reasons, together with practical examples, in support of your comment.
Explain fully changes you would recommend in order to help improve organisational performance.

11. Organisation Structure is determined by Purpose of the group
People who make up the group
Tasks involved in goals of the group
Culture (values) of the group
Authority, formality, centralisation of decision-making
Degree of specialisation, standardisation
External environment

12. Design Process
The purpose and goals of the organisation must be very clear.
The design process of organisation structure consists of four elements:
Assignment of tasks and responsibilities for the individual job positions,
Grouping the individual positions into units and departments,
Determining various mechanisms for the vertical co-ordination, and
Determining various mechanisms for the horizontal co-ordination

13. Organisation Chart
An organisation chart is a simple line diagram showing the organisation’s structure.

14. Organisation Chart The organisation chart normally depict:
major organisation positions,
chain of command,
reporting relationship, and
communication channels

15. Chairperson,
M.D., and C.E.O.
Secretary’s Office GM
Marketing
General
Counsel
Operations
H.R.
Finance
Market Support
Communication
Field Mgmt Region 2
Field Mgmt Region 1
Actuarial
Insurance Operations
IMS
Health Unit
H.R. Develop
Training
Investment
Internal Audit
Financial Analysis
Real Estate
Tax

16. Types of Organisation Structure
Functional organisation
Product-based organisation
Geographical organisation
Divisionalised organisation
Matrix oranisation

17. Functional Organisation Structure

18. Functional Organisation
Advantages
Tasks are linked on basis of common functions (marketing, finance, etc)
Better opportunities for advancement
Disadvantages
Hierarchical chain of command
Particular functional groups are constrained by overall organisational goals

19. Product-based Organisation Structure

20. Product-based Organisation
Advantages
Each group has its own functional specialism
Can better cope with change/needs
Disadvantage
Each general manager may impede other sections by his own motivations

21. Geographically-based Organisation Structure

22. Geographical-based Organisation
Advantages
Located in/near regional decision-making centres
Disadvantages
Very decentralised
Can have control/communication difficulties

23. Divisionalised Organisation Structure

24. Divisionalised Organisation
Advantages
Divided into specialised divisions (product and/or geographical)
Each division has its own functional groups, in addition to HQ functional groups
Good for highly diversified groups in many regions
Disadvantages
Complex chain of command

25. Matrix Structure

26. Matrix Management
All resources and skills are equally shared across the organisation
Suits a project oriented organisation
Can be very efficient way of utilising resources
Provides variety of projects, and hence can be stimulating and satisfying for employees
It may result in overloading of some members
Allocation of resources between different projects can be challenging.

27. Matrix Structure

28. Matrix Organisations
A functional organisation with project-based structures
Advantages
Helps the functioning of highly complex industries, such as aircraft manufacture
Provides stability and efficiency of hierarchical structure with flexibility and informality of team work
Project manager has direct contact with clients

29. Project 3 4 1 2
Engineer
System
Installer
Tech

30. Division C D A B Human Resources Quality Assurance Finance Product
Management
Finance

31. Matrix organisation – some practical experiences
Enforces uniform policy application across divisions.
Facilitates sharing of specialised resources.
Brings together functional expertise and customer responsiveness.
BUT
Can result in responsibility conflicts and confusion in responsibilities and reporting. (Who’s my boss?)
Overall resource planning has to be effectively managed – otherwise overloads and/or poor utilisation.

32. Matrix Organisations Disadvantages
Potential conflict over resources and division of authority
Possibility of divided loyalties between project groups and functional groups

33. Informal Organisations
As well as formal structures, organisations do have informal structures not designed by management but emerging from common the interest or friendship.
Informal organisation elements also impact on how organisations behave.

34. Span of Management
Span of management, or span of control, is the number of subordinates reporting directly to a specific manager.
Managers should have neither too many nor too few subordinates.
Then, what is a “good balance” of the span of management?

35. Span of Control
"The nearer we approach the supreme head of the whole organization, the more we ought to work towards groups of three; the closer we get to the foot of the whole organization, the more we work towards groups of six.“
The Soul and Body of an Army
Arnold, London, 1922, p.229

36. Wider Span of Management
Research indicates spans of management can be wider under certain circumstances:
Subordinates' work is such that little interaction with others is required.
Managers and/or their subordinates are highly competent.
The work of subordinates is similar.
Problems are infrequent.

37. Subordinates are located in close physical proximity to one another.
Managers have few non-supervisory duties to perform.
Managers have additional help such as secretaries or assistants.
The work is challenging enough to motivate subordinates to do a good job.
(From GA’s experience, a critical factor is the individual manager’s ability to delegate. Refer P282 of text –’Guidelines for effective delegating’).

38. How span of control affects organisational structure
49 Positions
No of Levels = 3

39. How span of control affects organisational structure
49 Positions
No of Levels = 4

40. Hierarchical Levels
Organisational effectiveness is influenced by the number of its hierarchical levels.
Problems with very tall organisations:
high administrative overhead,
slow communication and decision making,
more difficult to pinpoint responsibility for various tasks, and
encouragement of formation of dull, routine jobs.

41. Centralisation Decentralisation
Allocation of authority
Authority:
Legitimate power to commit people, money and materials
Oranisations must decide how much authority to delegate
From the top (pyramid hierarchy)
From the centre (small entrepreneurial)

42. Critical Reflection
The trend is towards more horizontal structures, teamwork, empowerment, flexible working arrangements & informal relationship.
Do you believe this has reduced significantly the need for, & importance of formal organisational structures?
What do you see as the likely effects of developments in ICT for organisational structure design?

43. Centralisation Decentralisation
Highly centralised
Senior managers hold the authority
Highly decentralised
Authority is widely diffused at every level
What are the implications of each approach to organisations?

44. Decentralisation Advantages Disadvantages
Prevents top management overload
Speeds operational decisions
Contributes to staff motivation
Disadvantages
Requires good communication
Requires good managerial coordination
May result in conflict between departments

45. Terminology Authority Responsibility (accountability)
Legitimate power to commit people, money and materials
At the top or delegated from the top
Responsibility (accountability)
Obligation to perform
Can not be delegated

46. Terminology Power Empowered Ability to implement actions
May have authority but lack power
Empowered
Managing people such that team members are given authority to make decisions on day-to-day basis