Monday, August 24, 2015

L14 : Organisation Design/Structure

Key concepts :

a) contingency factor to consider when designing org strcture.
b) the design elements .


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1)  Design elements.

1.1 ) Design element - formalisation
1.2) Design element - work specialisation.
1.3) Design element - chain of command
1.4) Design element - span of control
1.5) Design element - centralisation
1.6) Design element - departmentalisation.

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When we design an organisation structure , the factors we consider :






Macro environment
Dynamic/stable

Competition
Hostile/Munificient

Market
Diverse/integrated

Staff size
Large/small

Nature of work
Routine/non-routine, simple/complex

Biz strategy
Differentiation/Low cost

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Key design elements :

a) Work specialisation : high/low .

high specialisation : ie one job is divided into different tasks, each task done by different people.
eg : car assembly line : to assemble one car (a job), it is done by different people, each done a different task (eg : put in the car engine, put on the front screen, put on the back screen, put on the car doors).

Usually the task is repetitive.

b) low specialisation :

one job(serve the customer - with different tasks) is done by one person.

example : in a small cafe, the waiter may have to take order, help with preparing the food, serve the food, accept payment, clean the table.
compare this to a crew in McDonald.

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b) FORMALISATION - high/low

whether the job/task is highly structured/ have a standard/strict way of performing it.

Example :HIGH FORMALISATION : a door man at a 5 start hotel is usually highly formalised - ie the door man is trained to greet the guest with a standard greeting, bowing , receiving the guest.


EXAMPLE : LOW FORMALISATION : the sales executive in a small retail shop - different sales staff may greet, serve the customers in different ways.
Advantage : seem informal, homely, but service standard vary with staff experience/character/mood.

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CHAIN OF COMMAND : strict/flexible

in the organisation , who report to whom or how communication is done.

in Japanese/Korean company/culture, who report to who is strictly regulated/followed.


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SPAN OF CONTROL : wide/narrow.

-the number of people reporting to the manager.
- wide - more people reporting to the manager .
- narrow - less people reporting tot the manager.

Ideal span of control - 5 to 7 people.

Wider span of control - lower cost, but less time to help each staff, suitable if task is simple/routine.

Narrow span of control - high cost, more time for each staff, necc. if task is varied and complex ,more decision is needed to be decided by manager.

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CENTRALISATION - high or low.

the number of people who can make decision.

High - smaller number of people can make decision,
disadvantage : slower decision making process,
advantage : high control, more consistent decision made in the organisation.


Low - decision is made by a large number of people , at different level.
advantage - decision making is faster and customer is served better.
disadvantage - the same problem/issue may have different decision made because different people have different ways of making decision, it can be confusing for the customers.


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DEPARTMENTALISATION :

How the jobs are group together.

- by geographical (ie by countries or region) eg  Asia Pacific, Americas, South East Asia, US, China etc.


- by functions  (ie the work done by emloyees)

eg : finance, engineering, research and development, marketing.


-  by customers type (eg retail customers, corporate customers, government customers)

eg : all sales man selling to retail customers ( ie individual buying for own use) are group under one department - retail sales customer department.

all salesman selling to government division, department are group under one department - government business sales department.

Why : selling to retail, business and government have different process , needs.
eg : retail customer - interested in more discounts, more free gift,  business customer - look for reliability of product, support for product. etc.














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