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.

  1. In a world where resources are limited and human population levels are high, and /or combined with the greediness of a few individuals and groups, our uncertain future is forcing many world governments to apply the traditional hierarchical style of management (including the current Australian Federal (Howard) Government with its hardline social policies and economic rationalist thinking).

    When the reality of how much things really do cost nowadays starts to hit hard among the senior and rational politicians in government, we have to be prepared for the fact that world governments will see only one way of solving the problem and that is by imposing this hierarchical, "mechanistic" and "do as I say" style of leadership and management among the people of a society.

    We can see this attitude from the statements made by numerous young, creative and ambitious candidates at around election time. For example, in The Canberra Times dated 6 October 2001, page 6, one can find the following interesting statements:

    1. Brett Graham, Liberal Democrat for Molonglo: "The burgeoning power of government to interfere in and determine people's lives is of major concern to me. The current policies being offered by the larger parties only seem to increase and reinforce the power of government over the individual."

    2. Duncan Spender, Liberal Democrat for Molonglo: "...concerns about how governments coerce the many because of the whims of a few."

    3. John Purnell-Webb, Liberal Democratic Party for Molonglo: "Government should exist to maintain an environment for us to operate in, not run a nanny care service for its citizens."

    4. Susan Morrissey, Liberal Democratic Party for Ginninderra: "...I believe the Government should not interfere with your freedom of choice."

    5. Bradley Brown, Liberal Democratic Party for Brindabella: "...I have become increasingly disillusioned with our current political representatives, many of whom continue to lecture us about what is in our best interests."

    While the traditional management style may often be used in times of limited resources or for an organisation struggling to survive in a tough environment, it is often used as a disciplinary measure should an employee be misbehaving or not doing his work. It can also be the preferred style of an employers (or manager) when he/she wants more control to "bully" an employee into doing something the manager wants.

    In Australia, the Fair Work legislation keeps disputes between employers/managers and employees simple by letting the employers decide how they wish to manage their employees. So, if the employer chooses to apply the traditional management style, no matter how inefficient or silly the decisions might seem from the employer, the employee must do as he/she is told. It is the quickest and simplest approach to resolving disputes. However, if the employee can show on the basis of probabilities, that the employer and his/her traditional style of management is being used as an unfair disciplinary measure and/or there is enough indirect evidence to show the employee is being discriminated by the employer in an unfavourable way compared to other employees, then the legislation is there to protect the employee.

  2. In a world where resources are seen as abundant and relatively low-cost or freely available (achieved through extensive use of "recycling" and giving our natural environment a high priority in all social and economic policies) and human populations are low or sustainable (achieved through good education and supporting people in whatever they want to achieve for society) combined with the unselfishness of a great many individuals and groups (by letting them know they will have food on the table at the end of the day), the great era of stability and certainty in our future would tend to promote the new "humanistic" and "you choose what's best" style of leadership and management among the people of a society by many world governments.

    Our yearning to reach this goal can be seen in the following statements made by the more creative, environmentally-aware and ambitious political candidates:

    1. John Purnell-Webb, Liberal Democratic Party for Molonglo: "It is time people started taking more control over their lives."

    2. Brett Graham, Liberal Democrat for Molonglo: "[I believe] that individuals have the right of self determination."

    3. Susan Morrissey, Liberal Democratic Party for Ginninderra: "I will always fight to preserve your right to choose what you do with your body and your life."

    4. Bradley Brown, Liberal Democratic Party for Brindabella: "My aim is to stop our elected representatives continuing to impose decisions upon Canberrans, and to redirect their efforts towards putting in place the necessary economic and social structures that will allow Canberrans to make their own decisions and achieve the best outcomes."