IOPS 311

Study Division C: Study Unit 9

Foundations of Organisational Structure

Dr. J Bosman
ALL ORGANISATIONS ARE PERFECTLY DESIGNED TO GET THE RESULTS
THEY GET

(A. Jones)
Organisational structure defines how job tasks are divided, grouped or coordinated formally

(pp. 570 – 579)

Basic dimensions:
- Specialisation
- Departmentalisation
- Chain of command
- Span of control
- Centralisation
- Decentralisation
- Formalisation
 3 most common organisational structures
(pp. 579 – 584)
• Low degree of departmentalisation
• Wide span of control
Simple structure • Centralised structure
• Little formalisation

• Work specialisation structure

• Very formalised rules and regulations
Bureaucracy • Tasks grouped in functional departments
• Narrow span of control
• Centralised authority

• Create dual lines of authority

Matrix • Combine functional and product departmentalisation
New design options (p. 584)

• A small, core organisation that

outsources major business functions
Virtual • Highly centralised
• Little or no departmentalisation

• Eliminate the chain of command

• Limitless span of control
Boundaryless
• Replace departmentalisation with
empowered team
The use of leaner organisational structures (p. 587)

Downsizing is a systematic effort to make an organisation leaner by

closing locations, reducing staff or selling off business units that do not
add value

- Reducing the size of the workforce = lower wage cost

- Can improve strategic focus
- Companies that cut employee numbers but do not restructure = decline in profit
and stock prices
- Effect of downsizing on employee attitudes (job insecurity, commitment, stress
reaction, increased voluntary turnover, human capital loss)
Strategies for downsizing (p. 588)
• Investment
• Communication
• Participation
• Assistance
Why do structures differ? (p. 588)

Organisational strategy

Organisation size

Technology

Environment
Organisational designs and employee behaviour (p. 595)
• Individual preferences
• Work specialisation, productivity, job satisfaction

• Span of control and employee performance

• Decentralisation and job satisfaction
p. 597
END