Improving organisational design

As organisations became larger and more complex, early management thinkers such as Taylor and Fayol considered how to structure an organisation. Both saw the function of organisations as converting inputs, such as money, materials, machines and people, into output. 

Taylor and Faloy based their thoughts largely on the way an army is organised. The key features of the hierarchy would be:

• To break the orgainsation up into divisions with a common purpose. In business, this was usually the business functions: marketing, finance and so on.
• Every individual would answer to one person: their line manager. 
• No manager would be overloaded with too many subordinates, so the span of control was kept low. 
• To achieve low spans of control, it was necessary to have many layers of management. 

In the early stages of a new business, there are often only one or two people involves. When the business is so small the day-to-day tasks are carried out by the owner/s. No formal organisation is needed as communication and co-ordination will be carried out on an informal basis. 

However, as the business grows and more people become involved, the firm will need to develop a more formal organisational structure. This will show the roles, responsibilities and relationships of each memberof the firm. This is often illustrated through an organisational chart. This is a diagram that shows the links between people and departments within the firm. They also show communication flows/channels, lines of authority and layers of hierarchy. 

Levels of hierarchy - Show the number of different supervisory and management levels between the bottom of the chart and the top of the hierarchy. 

Span of control - Describes the number of people directly under the supervision of a manager. The ideal span of control will depend on the nature of the tasks and the skils and attitudes of the workforce and manager. If managers have very wide spans of control, they're directly responsible for many staff. In this case they may find that there are communication problems, or the workers may feel that they are not being given enough guidance. 

+ of narrow span of control:

• Close management supervision - vital if staff are inexperienced
• Comms maybe excellent in small immediate teams
• Many layers of hierarchy means many rungs on the career ladder

- of narrow span of control :

• Over-supervision
• Comms suffer
• Restricted scope for initiative and experiment.

Chain of command - Shows the reporting system from the top of the hierarchy to the bottom; that is the route through which information travels throughout the organisation. In an organisation with several levels of hierarchy the chain of command will be longer and this could create a gap between workers at the bottom of the organisation and managers at the top. If information has to travel via several people there is also a chance that it may become distorted. 

Delegation - Passing authority down the hierarchy, to give greater responsibility to junior managers or staff. Seen as a democratic process. 

Influences on delegation include the attitude of management towards the workforce. If there is mistrust, then delegation will never be genuine. Assuming trust exists, it may still be important that the junior staff are highly trained. No one wants to be delegated power without the knowledge and therefore confidence that they are able to get the job done. 

Centralisation and decentralisation 

Describes the extent to which decision-making power and authority is delegated within an organisation.

A centralised structure is one in which decision-making power and control remain in the hands of the top management. 

A decentralised structure delegates decision-making power to workers lower down the organisation. 

Many organisations will use a combination of these approaches, depending on the nature of the decision involved. 

Influences on centralisation v decentralisation are primarily internal. Often they represent alternatives that look rosier if the opposite approach has proved disappointing. Therefore there is a risk that a company in difficulties will lurch from one approach to the other. 

Herzberg believed that worker motivation would improve only when vertical barriers were broken down with hierarchies. His idea of job enrichment was that jobs should be redesigned to give poeple a range of activities and responsibilities at work. He wanted 'self-checking', meaning scrapping supervisory roles and therefore cutting a tall hierarchy down. 

His work was developed further by Hackman and Oldham. In the 70s they described Herzberg's two factor theory as 'the most influential behavioural approach to work redesign' and set to build on it. They developed a model that looked beyond the analysis of job-related factors to consider three aspects of the 'job characteristics model'.

• Core job characteristics - the factors involved at the heart of the job, inc. skill variety, task variety, task significance, autonomy and feedback. All 5 characteristics could be measured against a scale from a scale from very low coverage to very high. 
• Psychological states - focuses on people rather than the job. Hackman & Oldham suggest that meaningfullness in the job itself, responsibility for work outcomes and knowledge of the results all affect the workers psychological state. The greater the level of one or more, the more relaxed will be the individual's psych state.

• Outcomes - Unlike Herzberg, Hackman and Oldham build the consequences into the theory. The core job characteristics and the psych states both impact upon the workplace outcomes. These outcomes can and should be measured. They consist of:
  • employee motivation
  • employee performance, for instance productivity 
  • employee job satisfaction
  • plus the practical measurements: absenteeism and labour turnover. 

An important result of improved job design is that stress levels are reduced. Stress is associated with lack of control of the employees's environment; so improved job control is an important target. With lower stress levels, absenteeism and labour turnover figures tend to improve. 

Changng organisational design is a much more difficult problem - it affects everyone. Some companies lurch from decentralisation to centralisation and then back again. Every large business suffers severe problems of communication, co-ordination and motivation. The occasional change to the organisational design may improve things temporarilt, but there is no magical solution to the problem of size.