Organisation Structure

The two main types

What is an organisation chart?

This is a diagram showing the formal arrangement of its parts and their interrelationships. The interrelationships gives an indication of who does what and how activities are divided, organised and coordinated.

The diagram helps managers to show duplication in functions and whether it needs reorganising.

The problem with organisation charts

You should remember that an organisation structure diagram can never show every single link between all parts. For example, it does not show the informal structure of the organisation which is more powerful than the formal structure such as the friendships that develop between the parts.

What does the chart look like?

An organisational chart is normally drawn to look like a triangular/pyramid shape or upside-down tree-like structure. Within this structure, management is usually placed at the top or pinnacle, staff in the middle, and the customers at the bottom. This is known as a controlling (or hierarchical) structure.

Some of the more recent organisation charts coming out from service-oriented companies are showing the pyramid upside-down to emphasise the customers as being more important than the management team and their staff. This is called the supporting structure.

In other diagrams, the customer, the staff, the managers, and even the natural environment are kept to the same level to help emphasise the importance of all parts of an organisation.

Whatever we do, it seems the ultimate aim is to show all things as equal and one that does not create problems for the organisation. However, showing this in a diagram is extremely difficult (since everything can't be put on a single line on a page).

Types of organisational structures

Management experts have identified 6 different organisational structures:

The Functional Organisational Structure

Each part has a functional purpose with regard to helping its internal or external customers. This structure is easy to manage but can be difficult to find something quickly.

The Geographic Organisational Structure

Parts are distributed in different places (i.e. not under one roof).

The Form/Product Organisational Structure

You group people in the organisation by the type of material they are dealing with (e.g. in a library, a person deals with audiovisual material, or book materials etc), not by their position.

The User/Market Organisational Structure

The bank structure is an example. The separation of customers based on user/market segmentation.

The Hybrid Organisational Structure

Two separate organisation structures are combined into one. Most organisations are hybrids because of its simplicity.

The Matrix Organisational Structure

The matrix structure involves a repeating substructure within each department or unit under the one roof which are the same. In this structure, staff could have several bosses with several different projects. It is quite complex. But in life, you already have a matrix structure, because you deal with several bosses (e.g. wife, the community etc). While it can take time to maintain and make them work, it does free up management for strategic planning. But unfortunately it encourages internal power struggle and anarchy. Requires lots of interpersonal skills. Expensive.

Can organisation charts reveal management styles?

If you look closely at various organisation charts formulated by managers, you will notice something interesting. The diagrams tend to reveal two main management styles: (i) the hierarchical "mechanistic" management style or structure; or (ii) the flatter and more open "humanistic" management style or structure.

The traditional organisation structure or management style

The traditional organisation structure is one where a clearly defined boundary exists between management and employees. The boundary exists because managers have to be seen as at the top of a hierarchy as if the decision-making process is the most important task for an organisation whereas employees are kept at the bottom as if their work is less important than the managers.

The traditional organisation structure is a hierarchical structure consisting of the following levels:

Level 1 - Managers
(i) Top or higher management
(ii) Middle management
(iii) Lower management (i.e. the supervisor)

Level 2 - Employees

By defining these levels, certain people we call managers can show other people who is really the boss within an organisation and then to exercise that kind of authority on others by controlling employees and telling them what to do and the employees have to follow the orders very precisely irrespective of the problems that may exist in the organisation (e.g. lack of resources, training etc).

This management style is an ancient one. It has been around ever since humans began socialising on this planet in an attempt to improve their chances of survival. The style is a common one whenever a group of people have to work together to find and implement quick solutions to problems of a survival nature.

We see this management style in the Armed forces and hence it can be described as the "military" style of management. (1)

The new organisation structure or management style

The new organisation structure has no clearly defined boundary separating management from employees. It is a more flatter and open structure known as the "humanistic" or "organic" style of management whereby employees and managers are seen as equal partners working towards a common goal.

It is a more humane and "long-term thinking" style of management that permits the decision-making process to be distributed throughout the organisation as a way of tapping onto the creativity and experience of its staff. (2)

Among the more common aspects of this new style of management are as follows:

  1. Self-managing individuals and work teams.
  2. People become more multiskilled so there are fewer job classifications.
  3. Greater investment in learning and training for everyone.
  4. Few status distinctions.
  5. More goal-oriented and less emphasis on how people do the work.
  6. Incentives for employees to perform work are less financially-based (e.g. salary).
  7. Greater employment security.
  8. A policy that decisions will be made by consensus.
  9. Flexible outsourcing arrangements.
  10. A flexible (yet stable) management structure. Flexible to the point of learning from its employees and stable in the sense that it is developing long-term quality solutions for the organisation.

The only potential problem with this management style is what happens if the organisation suddenly finds itself in a survival situation. Would the staff be too complacent and happy achieving the goals of the organisation without finding ways of being able to quickly respond to the emergency? Perhaps they may expect other people to have the skills to handle the problem?

The third management - adhocracy

Organisations are said to be heading towards adhocracy. This is where organisations are more flexible, free flowing, non-hierarchical, participative, creative, entrepreneurial and so on.

The chief purpose of this approach is to ensure the organisation structure can survive in these tough times and at the same time be self-perpetuating with the help of self-managed and free thinking employees acting as their own managers. Think of adhocracy as a kind of balance between traditional and new management styles.

The relationship of span of management and structure

A flat organisational structure with lots of staff are likely to create a wide span of management. It occurs when top managers sack middle management, leaving behind a more flat structure.

The smaller the number of staff in each unit, the less span of management required by the manager to manage the staff in that unit. This one is based on a hierarchical structure in order to reduce the span of management. But it is more expensive to implement.

A flat structure tends to create overworked managers. While it can allow managers to be more autonomous, the decisions can be poor and the organisation can become chaotic.

To help solve this high stress and poor decision-making problem with managers, it is usually better to develop self-managed teams and/or individuals in such circumstances. In other words, let the employees be their own managers where they make their own reasonable decisions within the work they are doing leading to improvements. And if the decisions are likely to affect others, the employee should consult first among members of his/her self-managed team and a group management decision is made. Otherwise an employee should be able to approach management and make suggestions.

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