Organisational Design & Structure Functional Links ( Week 2 )

Today's Topic is " Organisational Design & Structure Functional Links ".

O rganisational design can define by a step-by-step methodology which identifies dysfunctional aspects of work flow, procedures, structures and systems, realigns them to fit current business realities or goals and then develops plans to implement the new changes.

O rganizational structure is a system used to define a hierarchy within an organization. It identifies each job, its function and where it reports to within the organization. This structure is developed to establish how an organization operates and assists an organization in obtaining its goals to allow for future growth.

1. Culture

Organizational culture is the behavior of humans who are part of an organization and the meanings that the people attach to their actions. Also the ways that the business do to manage its staff and productions.

Businesses should set up corporate objectives which are the general objectives that refer to the business as a whole. Before achieving the corporate object, the company needs to set functional objectives for each department. They are more detailed and specific than corporate objectives to each department therefore they will help businesses to achieve their corporate objectives. For example, if the corporate objective of a business is increase profits, the functional objectives will be minimise the costs and increase sales.

Then, the business needs strategies to achieve the objectives. Strategies can only be formed once a business has decided what its objectives are. Ansoff's Matrix is one of the ways that using for strategic Decisions. For instance, a company wants to increase its sales, it goes for new product development to create a new product which is new product going to an existing market. However, there are risks to have new products develop to an exist market as the managers may not know if the products be acceptable for the existing customers, also, the new products may not be suitable for the market because of the changes of customers favorite. Here's is an unsuccessful business example, Oticon. It's a company that sells earphone, as it fail to follow the rapid grow of the technology and want to customer wants, it cause to a decline of its market share.

2. Structure

Each Business has its own ORGANISATIONAL STRUCTURE. The structure is the way in which positions within the business are arranged. It defines the workforce roles of employees and their job titles; the route through which decisions are made; who is accountable to whom and for what activities; the relationship between positions in a business and how employees communicate which each other and how information is passed on. 

Formal Organisation Charts :

Centralised Structures keep authority for decisions at the top. They make decision-making a lot easier and provide good motivations to the managers as they enjoy greater control over the organisation.
Advantages :

• easier to implement common policies and practices for the business as a whole

• prevents other parts of the business from becoming too independent
• easier to coordinate and control from the centre - e.g. with budgets

Disadvantages :

• more bureaucratic - often extra layers in the hierarchy
• local or junior managers are likely to much closer to customer needs
• lack of authority down the hierarchy nay reduce manager motivation

Real businesses examples, fast food restaurants like Pizza Hut, Burger King and Mcdonalds. They use a predominantly centralised structure to ensure that control is maintained over their many thousands of outlets.


Decentralised Structures share out the authority to make decision. They listen to the others ideas and the decision making is a form of empowerment. It can increase motivation and therefore staff outputs increase.
Advantages :

• decisions are made closer to the customer
• better able to respond to local circumstances
• improved level of customer service

Disadvantages :

• decision making is not necessarily " strategic "
• more difficult to ensure consistent practices and policies ( customers might prefer consistency from location to location )
• who provides strong leadership when needed?

Real businesses examples, supermarkets like Morrison and Tesco. Each supermarkets has a store manager who can make certain decisions concerning areas like staffing, sales promotions. 

Centralisation and Decentralisation

Chains of Command

Chain of Command is a group of people dedicated to carrying out orders "from the top", that is, of authority. It is part of a power structure: usually seen as the most vulnerable and also the most powerful part of it. Tall structures have a long chain of command. It is the path of communication and authority up and down the hierarchy. If the structure is too tall, it affects communication.

Spans of Control

Span of Control
means the number of subordinates that can be managed efficiently and effectively by a superior in an organization. It suggests how the relations are designed between a superior and a subordinate in an organization.
Span of control is of two types: 

1. Narrow span of control : Narrow Span of control means a single manager or supervisor oversees few subordinates. This gives rise to a tall organizational structure.  
2. Wide span of control : Wide span of control means a single manager or supervisor oversees a large number of subordinates. This gives rise to a flat organizational structure.
   

Businesses can also use delayering to reduce the size of an organisation hierarchy, especially in terms of a reduction in management. This creates a flatter ( less layered ) organisational structure. As a result of that, it makes the communication a lot easier and faster. It also motivates staff in having team work and fast responsibilities.

3. Human Resource Management

The Role of Human Resource Management ( HRM ) is to ensure that a business achieves the maximum benefit from its employees a the minimum cost. HRM objectives are influenced by the objectives of the business as a whole. For example, if the business is going to expand into a new market, the HR department might need to recruit new staff to suit the business needs.

There are two different types of HRM strategies. They are HARD HRM  and SOFT HRM.
Hard HRM means employees are ween as a resource like any other and they are hired on a short term basis. Managers believe that employees are mainly motivated by money. The managers of hard HRM tend to be Theory X managers, they think that staff will do as little work as possible. All the trainings are only done to meet production needs.
Soft HRM means employees are the most important resource and they are managed on a long term basis. Managers motivate employees through empowerment and development. They tend to be Theory Y managers because they think that working is natural for employees. All the trainings are mainly done to meet development needs.

Managers should also create a reward system or promotion to motivate the employees in providing high productivities such as bonus and trainings. Just take scientific management as an example, F.W. Taylor was the person who decided scientific management and he believed workers are almost entirely by pay and rewards given according to quality and quantity of output.

In conclusion, organisational design is the way of identifying its culture and workforce plan. Also show the clear structure about the organisation in what the actions are and the behavior of the staff and its objectives. Businesses should also select the most suitable structure and the type of human resource management because it's very important that organisations are using the right method in achieving their objectives.