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Introduction to Company Organisation in Business Management

Explore the meaning and importance of organisation structure, its design process, and the relationship between structure and organisational performance.

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Introduction to Company Organisation in Business Management

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  1. Schedule • W1-Intro to Bus Mgmt in BE & Leadership 10-Jan-17 • W2-Company Organisation 17-Jan-17 • W3-HR and Staff Development 7-Feb-17 • W4-Intro to Strategy 14-Feb-17 • W5-Strategic Analysis 28-Feb-17 • W6-Strategic Analysis and Choice 7-Mar-17 • W7-Strategic Implementation 14-Mar-17 • W8-Quality Management 28-Mar-17 • W9-Revision 4-Apr-17 • Exam Window Period 24-Apr to 19-May-17

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

  3. 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.

  4. 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)

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

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

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

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

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

  10. Organisation Structure • Who reports • To whom & • For what

  11. 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.

  12. 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

  13. 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

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

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

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

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

  18. Functional Organisation Structure

  19. 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

  20. Product-basedOrganisation Structure

  21. 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

  22. Geographically-basedOrganisation Structure

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

  24. DivisionalisedOrganisation Structure

  25. 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

  26. Matrix Structure

  27. 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.

  28. Matrix Structure

  29. 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

  30. Project 1 Project 2 Project 3 Project 4 System Engineer Project Engineer Tech Installer

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

  32. 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.

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

  34. EXISTING PROJECT ACTIVITIES ANALYSIS Board of The Changi Smart 2B BHL Land Comm BIRD SP Tower Parbury Directors Twins Heights House Complex Factories Design Comm 1 2 3 4 5 6 7 Co-Developer External Internal Mr Mr Lim Mr Mr Mr Developer's Mr Patrick Mr Chew Proj Review, Richard Chin Richard Richard Richard Representatives Koh Guan Lek Site Meetings Lim Ming Chng Lim Chng Accounts External Design Meetings Architects Lack of cohesion of Team due to individual disciplines External QS Contracts and in-ability to make decisions External Develp Technical Meetings Structural Rep Engrossed in Lack of Clear Ng M.H. Ng M.H. Ng M.H. Ng M.H. Ng M.H. Oliver K Ng M.H. Internal SPD Details Project Architects Responsibility Ong C.S. Marbel K. Tori Sim Tori Sim RoystonT. Brian Neil Ong C.S. Meetings Lack of Authority Ext M & E M & E Regular & Ad Hoc Technical & Technical Support Staff Project Meetings Develp Ext Hana Design Rep ID Engrossed in Construction Details Andrew Charles Henry Edwin Jonathan Simon Kwek Tsu Project Managers and Gibson Saunders Sim Loo Oh Wong Yong taking charge Sub-struct Sub-struct Sub-struct Sub-struct Sub-struct Sub-struct Sub-struct Super- Super- Super- Super- Super- Super- Super- Site Meetings structure structure structure structure structure structure structure Equipmt Equipmt Equipmt Equipmt Equipmt Equipmt Equipmt Finishes Finishes Finishes Finishes Finishes Finishes Finishes Marketing Sales Sales Sales Sales Sales Sales Sales

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

  36. 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?

  37. 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

  38. 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.

  39. 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’).

  40. How span of control affects organisational structure Span of control = 7 No of Levels = 3 49 Positions Wide Structure

  41. How span of control affects organisational structure Span of control = 3 No of Levels = 4 49 Positions Tall Structure

  42. 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.

  43. CentralisationDecentralisation • 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)

  44. 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 (Information and Communication Technologies) for organisational structure design?

  45. CentralisationDecentralisation • 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?

  46. Decentralisation • Advantages • 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

  47. Terminology • Authority • 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

  48. Terminology • Power • 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

  49. Company Organisation TASK 1: You are required to find 2 construction firm organisation structure in the internet web (Choose International companies and/or local construction companies). Identify if your organisation firm is Tall or Wide structure? Based on the above, Compare and contrast tall (vertical) management structures with Wide (horizontal) management structure. Unity of command, Authority, Responsibility, Delegation, Line authority, Staff authority, Span of control, Centralisation, Decentralisation, Formalisation

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