Organizational Analysis

Our society is made up of organisations, and we interact with them every day. These organisations are as diverse as the people who make them up and the goals to which they aspire.
This paper will establish a working definition of what an organisation is, and then outline the main designs of organisational structures. Using the information gained an analysis of the organisation structure of H. Troon will be undertaken with a view to establishing the organisation’s capacity to provide Total Quality Services.
An organisation is composed of people who interact with each other in a coordinated and structured manner with a view to achieving a common and identified set of outcomes. Gibson, Ivancevich and Donnelly (1991) characterize organisations as “Entities that enable society to pursue accomplishments that cannot be achieved by individuals acting alone” (p.7). Robbins and Barnwell (2006) expand on this concept and define an organisation as “a consciously coordinated social entity, with a relatively identifiable boundary, which functions on a relatively continuous basis to achieve a common goal or set of goals” (p.6).
All are agreed that there is a group of people directed toward a common goal. In order to achieve those goals there needs to be some structure in the organisation that will define how the tasks are divided, how the resources are allocated and how the departments are arranged and coordinated. Samson & Daft (2005)
This structure can take many forms, although contemporary management theory usually limits these to six or seven main design concepts. An early proponent, Henry Weber described his ideal bureaucratic structure as “ a hierarchy of authority, technically competent participants, procedures for work, rules for incumbents, and differential rewards”, (Hall, 1999, p.49) and all structural types are variations on this theme.
Robbins and Barnwell (2006) subscribe to the Mintzberg model that identifies the simple structure, the machine bureaucracy, the divisional structure, the professional bureaucracy and the adhocracy as the five basic configurations. Others, including Samson and Daft (2005) classify the structural types as vertical functional, divisional, horizontal matrix, team based and network.
While different terminology is used, the models cross correlate to a large extent as in the following table.

Mintzberg Samson and Daft

Simple
Vertical Functional
Machine Bureaucracy
Divisional Divisional
Professional Bureaucracy Horizontal Matrix
Adhocracy Team based
Network

The terminology used in the rest of this paper will be the three vertical configurations; the simple, functional and the divisional, and the horizontal matrix, the team based and the network. All of these configurations are represented by organisation charts.
The structural configuration adopted for the organisation will initially be a function of the size and ownership of the organisation, the management style employed, the strategic direction, operating and social environment, and organisational culture.
As the organisation develops, other factors will come into play such as complexity, span of control, centralization and formalization. The structural configuration of the organisation is dynamic and will change over time to suit the changed circumstances.
The four basic configurations, simple, functional, divisional and matrix can be represented dimensionally when related to the internal / external focus of the organisation against the level of functional specialization.

Four Basic Structural Configurations of an Organisation
(from Burton, DeSanctis and Obel, 2006, p.59)

The simple structural configuration is most common for small or fledgling organisations. It has only two levels with high centralization of power, low level of functional specialisation and a departmental base. The entire decision making rests with the owner or manager in control.
The efficiency and effectiveness of the organisation is dependent on the efficiency and effectiveness of that manager. Burton, DeSanctis and Obel (2006)

Owner / Manager

Employees

The Simple Structure

The functional structural configuration is common in organisations that have outgrown the simple structure, and also in medium sized organisations that have a well defined and limited range of products or services and a clearly identified customer base. There is still a centralized power structure, but with additional management levels to provide a higher level of specialisation. These organisations are segmented into departments such as Marketing, Finance or Production. The job roles are usually clearly defined, and the efficiency/effectiveness risk is spread wider. Capon (2000)

CEO

Department Manager

Employees

The Functional Structure

The divisional structural configuration is a more complex structure than the functional structure in that it adds a further level of management as an autonomous geographic or product/service based division. This structure has a greater level of decentralization in decision making and has a wider range of products/services and customers.
The divisional structure usually has a functional structure within the division, and also a corporate services function such as finance, legal and HRM advising and supporting all of the divisions.

CEO

Divisional Manager

Department Manager

Employees

The Divisional Structure

Another variation of the functional and divisional structures is the matrix structural configuration. In simple terms the matrix structure combines the product/geographic and functional forms of departmentalization. Robbins, Millett, Cacioppe and Waters-Marsh (2001) Employees in this structure report to two managers, functional and product/geographic. The benefits of the matrix are that there is a more efficient allocation of specialists and “the dual lines of authority reduce tendencies of departmental members to become so busy protecting their little worlds that the organisation’s overall goals become secondary.” (p. 600)
However as the unity of command concept is eroded, ambiguity and confusion can develop, leading to power struggles, stress and conflict, and unclear expectations of outcomes.

CEO
Corporate Services

Divisions

Employees

Products
or
Departments

The Matrix Structure

More contemporary structures have developed in recent times that do not follow the same rules as earlier classical approaches. One such structural configuration is the team structure. In order to be more responsive and flexible in the market place, organisations are “trying to find ways to delegate authority, push responsibility further down the organisation and create participative teams that engage the commitment of workers”. (Samson and Daft, 2005, p.357) The team structure encourages members to be generalists as well as specialists. Robbins et al. (2001)
The final and most recent structure to develop is the network structure, whereby the organisation subcontracts a large component of the activities required to specialist organisations and coordinates the various efforts from a centralized head office, using the latest methods of communication. This creates a very lean organisation that can respond to the product or market opportunities as they arise without maintaining all of the specialized departments on an ongoing basis. Samson and Daft (2005)

References
Burton, R.M., DeSanctis, G. and Obel, B. (2006). Organizational Design: A Step by Step Approach, New York: Cambridge University Press
Capon, Claire (2000). Understanding Organisational Context, Essex, England: Pearson Education Limited
Gibson, J.L., Ivancevich, J.M. & Donnelly, J.H. Jr., (1991). Organizations: Behavior, Structure, Process, Boston, MA: Irwin
Hall, Richard H. (1999). Organizations: Structures Processes and Outcomes, New Jersey: Prentice Hall
Peters, T.J. and Waterman, R.H. (1982). In Search of Excellence: Lessons from America’s best run Companies, New York: Warner Books
Robbins, S.P. and Barnwell, N. (2006). Organisation Theory: Concepts and Cases, Frenchs Forrest NSW: Pearson
Robbins, S.P., Millett, B., Cacioppe, R. & Walters-Marsh, T. (2001). Organisational Behavior: Leading and Managing in Australia and New Zealand, Frenchs Forrest NSW: Prentice Hall.
Samson, D. and Daft, R.L. (2005). Management: Second Pacific Rim Edition, South Melbourne, Vic: Thompson

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