LECTURE 4 : BASIC ELEMENTS OF

ORGANISATIONAL STRUCTURE

KNS 1472 Civil Engineering

Management
AP. Dr. Siti Halipah Ibrahim
Question:

 How many of you have had some

contact with any organisation (e.g.,
working in one, or receiving some
service or product)?
 Lecture outline
3

 Nature of organisation structure

 Types of departmentalisation

 Job design

 Vertical and horizontal

coordination
 Restructuring
What is a Consulting Engineer?

A consulting engineer
 is an independent contractor retained to work on a project-by-project basis.
A consulting engineer may work alone or as a member of a consulting firm.

 Can provide a high level of technical expertise and advice, direct personal
service
 Practicing consulting engineers must be licensed professional engineers.

 Responsible for working with clients to plan, manage, design and supervise
the construction of projects.
 Monitor the quality of work and safety on site in conjunction with
contracting engineers.
Forms of consulting engineering organizations

Consulting engineers may practice as:

• individuals,

• partnerships or

• corporations.
 Individual

 The simplest
 fewest legal complications - direct control over the
operation.
 limited due to the activity and efforts of the individual.
 several employees- has to handle the problems
associated with a business enterprise
 responsible of all their assets, business or personal.
 All profits, however are earned by proprietor
 Partnership

 Two or more professionals - to serve their clients comprehensive scale by

offering more services, to serve a wider clients.
 The management of the business, depending on its complexity is assigned
to one partner, the managing partner.
 A partnership retains the identity of the individual professional, and
basically its legal structure is similar to that of the individual
proprietorship.
 All contractual obligations, liabilities, and debts, and earning all profits
are shared by the partners.
 The partners - may not share equally in the business. Interest can be
worked out among the partners as desired. For instance, one partner may
own more than 50% and thus have a position comparable to that of the
majority stockholder of a corporation.
 What is organizing as a management function?
8

 Organizing and organization structure

 Organization
The process of arranging people and other resources to
work together to accomplish a goal.
 structure
 The
system of tasks, workflows, reporting relationships, and
communication channels that link together diverse individuals
and groups.

Management - Chapter 10
 Organizing viewed in relationship with the
other management functions.
9

Management - Chapter 10
 What is organizing as a management function?
10

 Formal structures 
 The structure of the organization in its official state.
 An organization chart is a diagram describing reporting
relationships and the formal arrangement of work positions
within an organization.
 An organization chart identifies the following aspects of
formal structure:
 The division of work.
 Supervisory relationships.
 Communication channels.
 Major subunits.
 Levels of management.

Management - Chapter 10
Definition of Organizations

are social units (or human groupings)

deliberately constructed and
reconstructed to seek specific goals.
 The nature of organisation
12
structure

The formal pattern of interactions

and coordination designed by
management to link the tasks of
individuals and groups in achieving
organisational goals.
 Design Process
13

 The purpose and goals of the organisation must be

very clear.
 The design process of organisation structure consists
of four elements:
 Assignment of tasks and responsibilities for the
individual job positions,
 Grouping the individual positions into units and
departments,
 Determining various mechanisms for the vertical co-
ordination, and
 Determining various mechanisms for the horizontal co-
ordination
 The nature of organisation
14
structure
The organisation chart
• Line diagram depicting broad outlines of an
organisation’s structure
The chain of command
• Unbroken line of command ultimately linking
each individual with the top organisational
position
 Chairperson,
M.D., and C.E.O.

Secretary’s Office

GM General GM GM GM
Marketing Counsel Operations H.R. Finance

Communic Insurance H.R. Internal

ation Operations Develop Audit

Market
Actuarial Health Unit Investment
Support

Field Mgmt
IMS Training Real Estate
Region 1

Field Mgmt Financial

Region 2 Analysis

Tax
15
 Departmentalisation
16

Clustering individuals into units, and

units into departments and larger
units, to achieve organisational
goals.
 Types of departmentalisation
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• Functional structure
• Team structure
• Divisional structure
• Hybrid structure
• Matrix structure
• Emerging structures
 Functional structure
18

A structure in which positions are

grouped according to their main
functional (or specialised) area.

CEO

Manager, Manager, Manager,

Engineering Marketing Procurement
 Functional structures
19

 Functional structures
 People with similar skills and performing similar tasks
are grouped together into formal work units.
 Members work in their functional areas of expertise.
 Are not limited to businesses.
 Work well for small organizations producing few
products or services.

Management - Chapter 10
 Functional structures in a business, branch bank, and community
hospital.
20

Management - Chapter 10
 Functional structure
21

Advantages:
 In-depth expertise development
 Clear career path within function

 Efficient use of resources

 Possible economies of scale

 Ease of coordination within function

 Potential technical advantage over

competitors
22
Functional structure
Disadvantages:
 Slow response to multifunction problems
 Decision backlog at top of hierarchy
 Bottlenecks due to sequential tasks
 Inexact measures of performance
 Narrow training of future managers
 Divisional structure
23

A structure in which positions are

grouped according to similarity of
products, services or markets.
 Divisional structure
24

 Divisional structures
 Group together people who work on the same product
or process, serve similar customers, and/or are located
in the same area or geographical region.
 Common in complex organizations.

 Avoid problems associated with functional structures.

Management - Chapter 10
 Divisional structure
25

 Types of divisional structures and how they group job

and activities:
 Product structures focus on a single product or service.
 Geographical structures focus on the same location or
geographical region.
 Customer structures focus on the same customers or clients.
 Process structures focus on the same processes.

Management - Chapter 10
 Divisional structures based on product, geography,
customer, and process.
26

Management - Chapter 10
 Divisional structure
27

Advantages:
 Fast response to environmental change
 Simplified coordination across functions

 Simultaneous emphasis on organisational

goals
 Strong customer orientation

 Accurate measurement of performance

 Broad training in management skills

 Divisional structure
28

Disadvantages:
 Resource duplication in each division
 Reduction of in-depth expertise
 Competition amongst divisions
 Limited sharing of expertise between divisions
 Innovation restricted to each division
 Neglect of overall goals
 Team Structure
 A team is composed of members who are ‘on loan’ from their respective functional
departments and are thus assigned to work full time for the team leader in tackling
high-priority, short duration tasks or projects.
 Since all team members report to the team leader only, conflicts arising from dual
reporting are eliminated.
 Advantages: simple, fast, cohesive and cross-functional integration
 Disadvantages : Expensive, limited technology expertise and difficult post-project
transition.

Team Functional control

Leader

Member A

Member B

Member C

Engineering Production Logistics Design

 Matrix structure
30

A structure superimposing a horizontal set

of divisional reporting relationships onto a
hierarchical functional structure.
Appropriate when:
 need a strong focus on both functional and
divisional dimensions.
 need to quickly process information and
coordinate activities.
 pressure for shared resources.
Matrix Organization
 Advantages: Efficient, strong project focus and flexible
 Disadvantages: Infighting, Stressful and slow

Functional control

Project A

Project –Based
Control
Project B

Project C

Engineering Production Logistics Design

 Matrix Management/Projects
32

 All resources and skills are equally shared across the

organisation
 Suits a project oriented organisation
 Can be very efficient way of utilising resources
 Provides variety of projects, and hence can be stimulating and
satisfying for employees
 It may result in overloading of some members
 Task involving both functional group employees and project
managers
 Manager of functional groups supervise technical capable
people who have valuable skills and know how.
 Project managers- responsible to accomplish specific project
 Matrix structure
33

Advantages:
 Decentralised decision-making
 Strong product coordination

 Improved environmental monitoring

 Flexible use of human resources

 Efficient use of support systems

 Fast response to change

 Strong Project Focus

 Matrix structure
34

Disadvantages:
 High administrative costs
 Confusion over authority and responsibility
(potential)
 Excessive focus on internal relations
 Overemphasis on group decision-making
(Stressful)
 Slow response to change (possible)
 Matrix organisation –
35
some practical experiences
 Enforces uniform policy application across divisions.
 Facilitates sharing of specialised resources.
 Brings together functional expertise and customer
responsiveness.
BUT
 Can result in responsibility conflicts and confusion in
responsibilities and reporting. (Who’s my boss?)
 Overall resource planning has to be effectively managed –
otherwise overloads and/or poor utilisation.
 Matrix structure in a small multiproject business firm.
36

Management - Chapter 10
 Matrix structure
37

 Potential advantages of matrix structures:

 Better cooperation across functions.
 Improved decision making.
 Increased flexibility in restructuring.
 Better customer service.
 Better performance accountability.
 Improved strategic management.

Management - Chapter 10
 Matrix structure
38

 Potential disadvantages of matrix structures:

 Two-boss system is susceptible to power struggles.
 Two-boss system can create task confusion and conflict in
work priorities.
 Team meetings are time consuming.
 Team may develop “groupitis.”
 Increased costs due to adding team leers to structure.

Management - Chapter 10
Network Structure
 An alliance of several organisations for the purpose of
creating services/product for customers
 Consist of several satellite organisation around the core
firm.
 Advantages: cost reduction-no maintainance for contract
service, high level of expertise and flexible
 Disadvantages : loss of control and conflict
Masonry
Materials
Plasterer suppliers
Client

Plumber Electrician
 Job Design
40

 As different job types require different skills and

activities it is necessary to determine the areas of
work specialisation.
 Job design involves the specification of tasks
associated with a particular job.
 Work specification includes a collection of jobs
necessary for achieving organisational goals.
 A well done job design is important for the efficient
performance of the organisation and motivation of
its members.
 Job Design Trends
41

 Move from efficiency-driven highly defined, repetitive,

(boring) jobs to -
 More varied approaches to job design featuring -
 Job rotation
 Multi-skilling

 Job enrichment

 Greater autonomy – especially for groups of workers

Methods of vertical coordination
42

Linking of activities at the top of the

organisation with those at the middle and
lower levels to achieve organisational goals.
 Formalisation
 Span of management
 Centralisation vs. decentralisation
 Delegation
 Line and staff positions
 Formalisation - Policies & Procedures
43

 Formalisation is the degree to which written policies,

rules, procedures, job descriptions, and other
documents specify what actions are (or are not) to
be taken under a given set of circumstances.
 Most organisations need some degree of
formalisation so that fundamental decisions do not
have to be made more than once and so inequities
will be less likely to occur.
 Span of Management
44

 Span of management, or span of control, is the

number of subordinates reporting directly to a
specific manager.
 Managers should have neither too many nor too few
subordinates.
 Factors influencing span of
45
management:
 High competence levels
 Low interaction requirements
 Work similarity (between organisational peers)
 Low problem frequency and seriousness
 Physical proximity
 Few non-supervisory duties of managers
 Considerable available assistance
 High motivational work possibilities
 Delegation
46

The assignment of part of a manager’s work to

others, along with both responsibility and authority
necessary to achieve expected results.
Factors restraining delegation:
 Fear of subordinate failure
 Time to train subordinates
 Enjoy doing tasks
 Release of authority
 Concern for task performance
 Fear subordinate competence
47
Line and staff positions
 Line authority
- The authority following the chain of command
established by the formal hierarchy.
 Functional authority
- The authority of staff over others in the
organisation in matters related directly to their
respective functions (e.g. HRM dept).
 Horizontal co-ordination
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 Linking of activities across departments at

similar levels
 Need for information processing across the
organisation
 Promotes innovation through dissemination of
ideas and information
 Hierarchical Levels
49

 Organisational effectiveness is influenced by the

number of its hierarchical levels.
 Problems with very tall organisations:
 high administrative overhead,
 slow communication and decision making,

 more difficult to pinpoint responsibility for various tasks,

and
 encouragement of formation of dull, routine jobs.

 each level must add value

 Restructuring
50

 Restructuring an organisation is the process of making

a major change in the structure, often involving:
 reducing management levels, and
 changing major organisational components through
acquisition.
 Centralising/decentralising activities
 Downsizing
51

 Downsizing is the process of:

 significantly reducing the layers of middle management,
 expanding spans of control, and
 shrinking the size of the work force.

 Downsizing must be planned and implemented

carefully.
 Done poorly, downsizing may result in loss of valuable
employees, demoralised survivors, and an ultimate
decline in productivity.
 Done well, downsizing may result in reduced costs,
faster decision making, more challenging jobs, fewer
redundancies, and increased innovation.
52

Thanks for your attention

 References
53

 Bartol, K.M., Martin, D.C., Tein, M., & Matthews, G.,

“Management A Pacific Rim Focus”, McGraw-Hill,
2002.
 Bartol, K.M., Tein, M., Matthews, G., Ritson, P., Scott-
Ladd, B.,“Management Foundations - A Pacific Rim
Focus”, McGraw-Hill, 2006.
 Morse, L.C. and Babcock,D.L. (2007)Managing
Engineering and Technology ( 4th Ed) Prentice Hall,
New Jersey