Hello Respected Researchers and HR managers, In this section we will discuss about “Determines Organisational Structure“. It is very much important for a Researcher as well as HR Concern person/ manager to know the Determines Organisational Structure. If researcher or HR Manager could follow the Points accordingly,it would easier to reach the goal. Let’s have a look…
⊕ How do organisations determine structure:
While there is no definitive answer to this question, there are a number of considerations. One design principle suggests that form should follow function. Champy argues that this design principle be restated to ‘Form follows customers’ where structures should be a function of customer needs. Research has shown that there are four primary forces that act as causes or determinants of an organisations structure: This section will examine the effect of strategy, size, technology and environment on organisational structure.
- It has long been argued that structure is partly determined by the organisation’s strategy; and strategic objectives are pursued through a structural form that supports this strategy. There are three primary strategic dimensions: innovation, cost minimization, and imitation, and there is a structural design that is most appropriate with each.
- An innovation strategy requires flexibility and creativity. To a large degree, the organisation employing this strategy will focus on the introduction of new products and or services ongoing. In a cost minimization strategy, cost efficiencies must be maximised, and unnecessary innovation or marketing expenses are avoided. An imitation strategy attempts to capitalise on the strengths of both innovation and cost minimization strategies. These organisations will move into new products, but only after they have seen the product demonstrate success.
- It is logical to assume that organisational size shapes structure. Large organisations tend to be more structurally complex than small organisations. Large organisations tend to have more functional departments, and are often structured around multiple product lines. As a result, the need for integration and communication increases, and becomes more complex. This necessitates more management levels so that spans of control do not become unmanageable.
- Technology is defined as the activities, equipment and knowledge necessary to turn organisational inputs into desired outputs. For example, in a hospital, sick patients and interns represent inputs, while desired outputs include well people and experienced doctors. Research has established that the technology-structure relationship is somewhat dependent on the level of routineness in technology. Routine technologies are characterised by standardised and automated operations (for example, an assembly line). Non-routine technologies are customised (patient management, custom shirtmakers). There is a relationship between routineness and formalization in an organisation. Routineness is associated with rule manuals, extensive documentation, job designs, job descriptions, reporting structures. Often routine technology is a function of taller, departmentalised structures. There is also some support for a relationship between routine technology and centralised structures. With non-routine technologies, decision-making tends to be more decentralised.
- The impact of an organisation’s environment is substantial, and helps to shape the structure of an organisation. Environment is defined as those institutions or forces outside the organisation that potentially affect the organisation’s performance. Typically, organisational structures are shaped by the level of environmental uncertainty. Where environments are very stable (minimal technological change, predictable consumer behaviour, few innovations, static environment) structures tend to be mechanistic, with few departments, formalization and centralised decision-making. Where environments are highly uncertain and complex, organic structures tend to be more prevalent; decision-making is decentralised and cross-function teamwork is pervasive throughout the organisation. The complexity of the environment may necessitate numerous departments with a high degree of interdependence.
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