Welcome to

MGW1010:
Introduction to Management
Topic 6:
Managing Organisational Design
(Theme: Managing)
Slides template credit goes to SlidesCarnival
Key question for this theme: What do managers do, and how do I become a good manager?
Learning Objectives for today:
1. Explain ‘organising’ as a management function and
key considerations in organisational design.
2. Describe the characteristics of mechanistic and
organic organisational designs.
3. Explore the nature of contemporary organisational
designs and their contributions to organisational
performance.
4. Discuss current challenges faced in today’s
organisational designs.
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 1.
Explain ‘organising’ as a management
function and key considerations in
organisational design.
 Organising as a
management function
□ Arranges people and resources to work together to
accomplish a goal
□ Organisation structure: The system of tasks, reporting
relationships, and communication linkages
□ When managers develop or change an organisation’s
structure they are engaged in organisational design.
□ Organisational design is the process of creating
structures that accomplish mission and objectives.

Source: Schermerhorn and Bachrach (2015): p. 216

Image credit: https://www.lucidchart.com/pages/organizational-charts
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 Organising in P-O-L-C

Source: Schermerhorn and Bachrach (2015): p. 216 5

Key considerations
 What tasks are to be done?
 Who will do them?
 How will the tasks be grouped?
 How will the activities be
coordinated?
 Where will decisions be made?
 Who will report to whom?
 Who is accountable for
decisions?

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 The division of Supervisory Communication Levels of
Major subunits
work relationships channels management

Organisation An organisation chart is a diagram

describing reporting relationships and the

Chart
formal arrangement of work positions
within an organisation.

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 2.
Describe the characteristics of mechanistic
and organic organisational designs.
 Contingency Perspective in
Organisation Design
Source: Schermerhorn and Bachrach (2015): p. 227

When is bureaucracy a good choice for an organisation?

When it isn’t, what alternatives are available?

Environment determines the most appropriate design:

• Mechanistic designs work in a stable environment
• Organic designs work in a rapidly changing and uncertain
environment
• Adaptive organisations operate with a minimum of
bureaucratic feature and encourage worker empowerment
and teamwork
 Mechanistic vs Organic Design
Mechanistic Organic Design
Robbins, S. & Coulter, M. (2016). Management (13th ed.), Harlow, UK: Pearson Education.

Design

1. High specialisation 1. Cross functional teams

2. Rigid departmentalisation 2. Cross hierarchical teams
3. High chain of command 3. Free flow of information
4. Narrow spans of control 4. Wide spans of control
5. High formalisation 5. Low formalisation
6. Centralised 6. Decentralised
Source: Schermerhorn and Bachrach (2015): p. 228
From bureaucratic to adaptive organisations
 3.
Explore the nature of contemporary organisational
designs and their contributions to organisational
performance.
Traditional
Structures
Functional structures, divisional
structures, matrix structures
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 Source: Schermerhorn and Bachrach (2015): p. 218
Functional Structures

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 Functional Structures
Potential advantages Potential disadvantages
• Economies of scale • Sense of cooperation and
• Task assignments consistent common purpose break down
with expertise and training • Narrow view of performance
• High-quality technical problem objectives
solving
• In-depth training and skill
development
• Clear career paths within
functions

Source: Schermerhorn and Bachrach (2015): p. 218-219 17

 Source: Schermerhorn and Bachrach (2015): p. 220
Divisional Structures

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 Divisional Structures
Potential advantages Potential disadvantages
• Group together people who work on • Duplication of resources and efforts
the same product or process, serve across divisions
similar customers, and/or are located in • Competition and poor coordination
the same area or geographical region across divisions
• Common in complex organisations • Emphasis on divisional goals at
expense of organisational goals

Source: Schermerhorn and Bachrach (2015): p. 219-220

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 Source: Schermerhorn and Bachrach (2015): p. 221-222
Matrix Structures

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 Matrix Structures
Potential Potential
advantages disadvantages
• Better cooperation across functions • Two-boss system is susceptible
• Improved decision making to power struggles, task
• Increased flexibility in restructuring confusion and conflict in work
• Better customer service priorities.
• Better performance accountability • Strong team loyalties cause a
• Improved strategic management loss of focus on larger
organisational goals.
Source: Schermerhorn and Bachrach (2015): p. 221-222
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Contemporary
Designs
Team structures, Network structures,
boundaryless structures
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 Source: Schermerhorn and Bachrach (2015): p. 223
Team Structures

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 Team Structures
Potential advantages Potential disadvantages
• Eliminates barriers between • Conflicting loyalties among
operating departments members
• Improved morale • Excessive time spent in
• Greater sense of involvement meetings
and identification • Effective use of time depends
• Increased enthusiasm for on quality of interpersonal
work relations, group dynamics,
• Improved quality and speed of and team management
decision making

Source: Schermerhorn and Bachrach (2015): p. 223-224 24

 Source: Schermerhorn and Bachrach (2015): p. 224

Network Structures

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 Network Structures
Potential advantages Potential disadvantages
• Firms can operate with fewer • Control and coordination
full-time employees and less problems may arise from
complex internal systems network complexity
• Reduced overhead costs and • Potential loss of control over
increased operating efficiency outsourced activities
• Permits operations across • Potential lack of loyalty among
great distances infrequently used contractors
• Excessively aggressive
outsourcing can be dangerous

Source: Schermerhorn and Bachrach (2015): p. 223-225 26

 Boundaryless Structures
A combination of team and network structures,
with the addition of “temporariness”
Source: Schermerhorn and Bachrach (2015): p. 226

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 Boundaryless Structures
Characteristics
• Absence of hierarchy
• Empowerment of team members
• Technology utilisation
• Acceptance of
impermanence
• Encourage creativity, quality,
timeliness, flexibility, and
efficiency
• Knowledge sharing is both a goal
and essential component
Source: Schermerhorn and Bachrach (2015): p. 226-227 28
 4.
Discuss current challenges faced in today’s
organisational designs.
• Keeping Employees Connected
Mobile computing and communication technology have given
organisations and employees ways to stay connected and to be
more productive. Need to consider employee isolation.
• Managing Global Structural Issues
o When designing or changing structure, managers may need to
think about the cultural implications of certain design elements
o Formalisation may be more important in less economically
developed countries and less important in more economically
developed countries where employees may have higher levels of
professional education and skills

Robbins, S. & Coulter, M. (2016). Management (13th ed.), Harlow, UK: Pearson Education. 30