ORGANISING EFFECTIVE DEPARTMENTS Clyde Stewart Organising Effective Departments

ORGANISING EFFECTIVE DEPARTMENTS Clyde Stewart

Organising Effective Departments Objectives � Identify steps for organise departments � Discuss the objectives of organisational structures � Identify and discuss categories and types of organisational structure � Explore the two categories of functions as part of the organisational structure � Identify the elements in the design of organisational structure. � Explore ways of organising employees for high level performance.

Organising Effective Departments What does Organising Effective Departments Mean? � To organise effective departments or organisations for that matter, we are engaging in an effort that is designed to deliver results to internal customers and external customers in a timely manner, and that management and employees are responsible for outputs.

Organising Effective Departments Steps for Organising Departments � Define your Department’s Value Proposition Most companies have defined Vision and Mission statements while other organisations do include value statements, which have trickled down to various departments. Here is a useful process for defining a value proposition. The value proposition is the intersection of the answer to three critical questions: What are we passionate about? What are we “best” at? What drives our economic engine?

Organising Effective Departments Steps for Organising Departments � Define your Department’s Value Proposition The value proposition provides the direction and ultimately the “bar” against which the department can be assessed. A value statement explains what you believe in and it’s really a set of values as you would expect, 5 -7, that articulate what your team, the people in your organisation, believe in and hold true. I really like the analogy if we take the bus analogy

Organising Effective Departments Steps for Organising Departments � Define Core Processes A Core Process represents HOW the group currently (and in the future) will achieve its Value Proposition � Name Jobs Needed Identify of the jobs needed to execute those Core Processes. Here, we identify which jobs or positions are needed to complete each step of each process.

Organising Effective Departments Steps for Organising Departments � Collect Culture (Work Support) Data The information for the culture can be collected and identified while doing the process and job model definition described above. Workers and managers are asked, as the core processes and jobs are being defined, “What exists that gets in the way of doing work? ” and, “What needs to be added to help get the work done better? ”

Organising Effective Departments Steps for Organising Departments � Collect Culture (Work Support) Data: Such data when graphically arranged , according to where and how it impacts inputs, conditions, process steps, and feedback, becomes a powerful tool in communicating employees’ needs for organizational support to management for establishing, maintaining, or improving. It also helps to reinforce what management is already currently doing well, so they will continue doing it even during the changes that are imminent.

Organising Effective Departments Steps for Organising Departments � Develop Organisational Structure � Assess the Effectiveness of the organising Process

Organising Effective Departments Organisational Structure � What is an Organisational Structure? Organisational structure is a system used to define a hierarchy within an organisation. It identifies each job, its function and where it reports to within the organisation. This structure is developed to establish how an organisation operates and assists an organisation in obtaining its goals to allow for future growth. The structure is illustrated using an organisational chart.

Organising Effective Departments Organisational Structure What is an Organisational Structure? It is the pattern of relationships among positions in the organisation and among members of the organisation It allows the application of process of management It creates a framework or order and command through which the activities of the organisation can be planned, organised, directed and controlled.

Organising Effective Departments Organisational Structure � Why Organisational Structure? There are several objectives: To aid the efficient performance of the organisation To monitor the activities in the organisation including the accountability areas To coordinate the different parts of the organisation To respond to future demands and developments in the environment To aid the social satisfaction of its members.

Organising Effective Departments • Organisational Structure � Categories of Organisational Structures: Organisational Structures fall under two categories: Mechanistic structures are typified by narrow spans of control; high centralisation, specialisation, and formalisation; as well as by rigid departmentalisation. And the chain of command, whether long or short, is always clear.

Organising Effective Departments • Organisational Structure � Categories of Organisational structures: Organic structures (also known as “flat” structures) are typified by wide spans of control; decentralisation; low specialisation and formalisation; and loose departmentalisation. And the chain of command, whether long or short, can sometimes be difficult to decipher.

Organising Effective Departments Organisational Structure � Functional Organizational Structure is best for smaller companies or those that focus on a single product or service. Not designed to change quickly, functional structure works well in a stable environment where your business strategies are less inclined to need changes or updating. Functional structures are the most common type of structural design and have evolved from the concept of high specialisation and high control framework.

Organising Effective Departments Organisational Structure � Functional Organisational Structure A functional organization structure is a hierarchical type of organisation structure wherein people are grouped as per their area of specialisation. These people are supervised by a functional manager who has expertise in the same field, which helps him to effectively utilise the skills of employees, which ultimately helps him in achieving the organisation’s business objectives.

Organising Effective Departments Organisational Structure � Functional Organisational Structure Advantages: Employees are grouped as per their knowledge and skills, which helps achieve the highest degree of performance. Employees are very skilled and efficient because they are experienced in the same work and hence they perform very well. Their role and responsibility is fixed, which facilitates easy accountability for the work

Organising Effective Departments Organisational Structure � Functional Organisational Structure Advantages: The hierarchy is very clear, and employees don’t have to report to multiple bosses. Each employee reports to his functional manager, which reduces the communication channels. There is no duplication of work because each department and each employee has a fixed job responsibility.

Organising Effective Departments Organisational Structure � Functional Organisational Structure Advantages: Employees feel secure, and therefore they perform well without any fear. Since there is a sense of job security, employees tend to be loyal to the organization. Employees have a clear career growth path. Within the department, cooperation and communication is excellent.

Organising Effective Departments Organisational Structure � Functional Organisational Structure Disadvantages: Employees may feel bored due to the monotonous, repeated type of work and may become lazy. The departments have a self-centered mentality. The functional manager pays more attention to only his department; he usually doesn’t care about other department Communication is not good among the departments, which causes poor inter-department coordination

Organising Effective Departments Organisational Structure � Functional Organisational Structure Disadvantages: The functional structure is rigid, and therefore is slow to adapt to changes. Due to bureaucratic hierarchy, delays happen in decision making. When the organization becomes larger, functional areas can become difficult to manage due to their size

Organising Effective Departments Organisational Structure � Divisional Structure A divisional organisational structure gives a larger business enterprise the ability to segregate large sections of the company's business into semiautonomous groups. These groups are mostly selfmanaged and focused upon a narrow aspect of the company's products or services.

Organising Effective Departments Organisational Structure � Divisional Structure A divisional organisational structure usually consists of several parallel teams focusing on a single product or service line. Examples of a product line are the various car brands under General Motors or Microsoft's software platforms. One example of a service line is NCB Wealth Management arms. Divisions are more autonomous, each with its own top executive--often a vice president--and typically manage their own hiring, budgeting and advertising.

Organising Effective Departments Organisational Structure � Divisional Structure Advantages: Divisions work well because they allow a team to focus upon a single product or service, with a leadership structure that supports its major strategic objectives. Having its own president or vice president makes it more likely the division will receive the resources it needs from the company. Also, a division's focus allows it to build a common culture and esprit de corps that contributes both to higher morale and a better knowledge of the division's portfolio.

Organising Effective Departments Organisational Structure � Divisional Structure Disadvantages: A company comprised of competing divisions may allow office politics instead of sound strategic thinking to affect its view on such matters as allocation of company resources. Thus, one division will sometimes act to undermine another. Divisions can bring compartmentalization that can lead to incompatibilities. For example, Microsoft's divisional structure contributed to a situation where its own products were incompatible across internal business units.

Organising Effective Departments • Organisational Structure � Bureaucratic Structure: The Webster dictionary's definition of a hierarchy is, “a system in which people or things are placed in a series of levels with different importance or status”. � Hierarchy describes reporting levels and the status of people in the structure.

Organising Effective Departments • Organisational Structure � Bureaucratic Structure: The hierarchical organisation structure is pyramid-shaped. At the top of the pyramid is one person with a small number of people reporting to them. These staff members have others who report to them. The number of people at each level increases as you move down the structure.

Organising Effective Departments • Organisational Structure � Bureaucratic Structure Advantages of hierarchical structure-A hierarchical structure has clear reporting lines. It is easy to see what each team is called, the size of the team, and how teams relate to each other. Disadvantages of hierarchical structure -People can feel stuck and miss opportunities for cooperation. This can limit individuals and the organisation.

Organising Effective Departments • Organisational Structure � Matrix Structure A matrix organisation structure is usually defined as one where there are multiple reporting lines – that is, people have more than one formal boss. Strictly speaking, matrix management is the practice of managing individuals with more than one reporting line but it is also commonly used to describe managing cross functional, cross business group and other forms of working that cross the traditional vertical business units – often silos - of function and geography.

Organising Effective Departments • Organisational Structure � Matrix Structure A matrix type of organisational structure combines the traditional departments seen in functional structures with project teams. In a matrix structure, individuals work across teams and projects as well as within their own department or function. For example, a project or task team established to develop a new product might include engineers and design specialists as well as those with marketing, financial, personnel and production skills.

Organising Effective Departments • Organisational Structure � Matrix Structure These teams can be temporary or permanent depending on the tasks they are asked to complete. Each team member can find himself/herself with two managers - their normal functional manager as well as the team leader of the project.

Organising Effective Departments • Organisational Structure � Matrix Structure Advantages: Resources can be used efficiently, since experts and equipment can be shared across projects. Products and projects are formally coordinated across functional departments. Information flows both across and up through the organization.

Organising Effective Departments • Organisational Structure � Matrix Structure Employees are in contact with many people, which helps with sharing of information and can speed the decision process. Employees have to work autonomously and do some self-management between their competing bosses; this can enhance motivation and decision making in employees who enjoy it

Organising Effective Departments • Organisational Structure � Matrix Structure Disadvantages: Members of project teams may have divided loyalties as they report to two line managers. Equally, this scenario can put project team members under a heavy pressure of work. There may not be a clear line of accountability for project teams given the complex nature of matrix structures. Difficult to co-ordinate

Organising Effective Departments • Organisational Structure � Matrix Structure Disadvantages: It takes time for matrix team members to get used to working in this kind of structure Team members may neglect their functional responsibilities

Organising Effective Departments • Organisational Structure � In organisational structures there are two categories of functions: Line Functions: These are the basic activities of the organisation related to the actual completion of the production process and directed towards specific and definable results. Examples of Line functions are: developing a good/service, marketing the good/service, financing the organisation

Organising Effective Departments • Organisational Structure � In organisational structures there are two categories of functions: Staff Functions: Supportive of the line functions. These are employees who are not directly involved in product creation or engaged in the actual service delivery. the actual Examples of this are – Human Resource Management, Public Relations, registry personnel

Organising Effective Departments Organisational Structure � Six Elements of Organisational Structure Organisational design is engaged when managers develop or change an organisation's structure. Organisational Design is a process that involves decisions about the following six key elements:

Organising Effective Departments • Organisational Structure 1) Departmentalisation involves dividing an organisation into different departments, which perform tasks according to the departments' specialisations in the organisation. Departmentalisation as a means of structuring an organisation can be found in both public and private organisations. An organisation can structure itself into departments in the following ways.

Organising Effective Departments Organisational Structure 1) Departmentalisation: There are five types (a) Functional Departmentalization: -In functional departmentalization, an organization is organized into departments based upon the respective functions each performs for the organization. For example, a manufacturing company may create a production department, sales and marketing department, an accounting department, and a human resources department.

Organising Effective Departments Organisational Structure 1) Departmentalisation: Functional departmentalisation may be advantageous because it can increase efficiency and expertise since all related activities are performed in one place by one group of people that specialize in that activity.

Organising Effective Departments Organisational Structure Departmentalisation: (b) Product: jobs are grouped by product line. In this approach, each major product area is placed under the authority of a manager who’s a specialist in, and is responsible for, everything having to do with that product line.

Organising Effective Departments Organisational Structure Departmentalisation: (c) Process Departmentalisation: In process departmentalisation, departments are separated based on their role in a production process. Best example of process departmentalisation can be seen in a textile mill where we may have a spinning department, weaving department, dyeing department, printing department, etc. Here, inside a textile mill, all activities, which are directly or indirectly related with spinning are grouped together to make a spinning department.

Organising Effective Departments Organisational Structure 1) Departmentalisation: (d) Geographic: In geographic departmentalisation, an organisation is organized along geographic lines. This is often a good idea for large multinational firms with offices around the world. All activities related to the organisation's activities in each region are handled by a department in that region.

Organising Effective Departments Organisational Structure Departmentalisation: (e) Customer Departmentalisation - Grouping activities on the basis of common customers or types of customers. Jobs may be grouped according to the type of customer served by the organization. The assumption is that customers in each department have a common set of problems and needs that can best be met by specialists

Organising Effective Departments Organisational Structure (2) Work Specialisation Describes the degree to which tasks in an organisation are divided into separate jobs. The main idea of this organizational design is that an entire job is not done by one individual. It is broken down into steps, and a different person completes each step. Individual employees specialise in doing part of an activity rather than the entire activity.

Organising Effective Departments Organisational Structure (3) Chain of command It is defined as a continuous line of authority that extends from upper organisational levels to the lowest levels and clarifies who reports to whom. There are three important concepts attached to this theory:

Organising Effective Departments Organisational Structure � Chain of command Authority: Refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it Responsibility: The obligation to perform any assigned duties Unity of command: The management principle that each person should report to only one manager.

Organising Effective Departments Organisational Structure (4) Span of Control It is important to a large degree because it determines the number of levels and managers an organisation has. Also, determines the number of employees a manager can efficiently and effectively manage.

Organising Effective Departments Organisational Structure (5) Centralisation In Centralisation decisions making takes place at the upper levels of the organisation – senior management level.

Organising Effective Departments Organisational Structure Centralisation: The advantages are (1) easier implementation of a common policy for the organisation (2) allows for a consistent strategy across the organisation (3) Prevents sub-units becoming too independent (4) Improved economies of scale and reduction in overhead costs (5) Greater use of specialisation (6) Improved decision making.

Organising Effective Departments Organisational Structure Centralisation: Disadvantages: Centralisation can suffer from the negative effects of several layers of bureaucracy. Lack of authority down the hierarchy may reduce the manager motivation Centralised structure can limit the quality of communication up and down the hierarchy – employees prefer to share with their manager only

Organising Effective Departments Organisational Structure Centralised Organisation: Disadvantages: Customer service misses the flexibility and speed at decision making

Organising Effective Departments Organisational Structure Decentralisation An organisation wherein the decision- making authority does not sit with a central figure or group. Some decentralised organisations empower all levels within the hierarchy with decision influence.

Organising Effective Departments Organisational Structure Decentralisation: Advantages: - Empowering Employees: Employees can be empowered by having more autonomy to make their own decisions, giving them a sense of importance and making them feel as if they have more input in the direction of the organization. It also allows them to make better use of the knowledge and experience they have gained and implement some of their own ideas.

Organising Effective Departments Organisational Structure Decentralisation: Advantages -Relieving the Burden: Decentralising takes some of the burden of daily business operations off the director or owner. When the director of owner allows others to perform such tasks as hiring new employees or ordering supplies, this frees him/her up to spend more time on big-picture items, such as planning for expansion or meeting with important clients

Organising Effective Departments Organisational Structure � Decentralisation: Advantages - Preparing for Emergencies: A situation may arise where the business owner must be away from the business for an extended period time because of illness or another type of emergency. A decentralised structure provides a better chance that the organisation will maintain self-sufficiency because managers and employees are accustomed to working autonomously.

Organising Effective Departments Organisational Structure � Decentralisation: Advantages - More Efficient Decision-Making: A decentralized organisation is able to make decisions more quickly than one with a centralised structure. A manager often can make a decision without having to wait for it to go up a chain of command, allowing the organisation to react quickly to situations where fast action can mean the difference between gaining

Organising Effective Departments Organisational Structure � Decentralisation: Advantages - Ease of Expansion: For a growing business, decentralisation can facilitate the process of expansion. For example, if expansion results in opening a new business unit in a different geographic area, decentralisation allows the new unit to operate as an independent entity, meaning it can react more easily to the specific needs of the area, such as deciding to sell products that appeal to the local market.

Organising Effective Departments The Organisation Structure � Decentralised Organisation: Disadvantages: Uniform policies not Followed: Under decentralisation, it is not possible* to follow uniform policies and standardised procedures. Each manager will work and frame policies according to his talent Problem of Co-Ordination: Decentralisation of authority creates problems of co-ordination as authority lies dispersed widely throughout the organisation.

Organising Effective Departments The Organisation Structure � Decentralised Organisation: Disadvantages: More Financial Burden: Decentralisation requires the employment of trained personnel to accept authority, it involves more financial burden and a small enterprise cannot afford to appoint experts in various fields. Require Qualified Personnel: Decentralisation becomes useless when there are no qualified and competent personnel

Organising Effective Departments The Organisation Structure � Decentralised Organisation: Disadvantages : Conflict: Decentralisation puts more pressure on divisional heads to realise profits at any cost. Often in meeting their new profit plans, bring conflicts among managers.

Organising Effective Departments Organisational Structure � (6) Formulisation: Defined The final element of organisational structure It is the extent to which rules and procedures are followed in an organisation. The degree to which organisations standardise behaviour through rules, procedures, formal training, and related mechanisms.

Organising Effective Departments Organisational Structure Formulisation: � Advantages: Formalisation makes the process of succession routine. Increase the rationality of organisation. Make explicit and visible the structure of relationships among organisational participants.

Organising Effective Departments Organisational Structure Formulisation: Disadvantages : Employees are not allowed to exercise their own judgment Discrimination of work load between employees Formal structures are the norms and behaviours that exist regardless of individuals involvement.

Organising Effective Departments Organising Employees � A critical success factor in organisation has to do with organising employees. The questions that should be considered are: Why organise employees and How do one go about organising employees for efficiency? � We will explore these questions in a moment.

Organising Effective Departments Organising Employees � Why organise employees? You will put customers at ease: your clients will be at the mercy of your employees' ability to process information fast. When your workers have their tools within easy reach, they can impress your clients with faster service.

Organising Effective Departments Organising Employees � Why organise employees? Employees Will Work More Efficiently: Your employees need an organised space to perform their jobs efficiently. When your employees have easy access to their workplace essentials, they can spend more time on tasks that increase profitability. Having a clean work area minimises distractions and allows your employees to focus on the duties at hand. In this way, you get a bigger return on your labour investment, improving your bottom line.

Organising Effective Departments Organising Employees � Why organise employees? Employees Will Feel Happier Coming to Work: When your employees are greeted by an organised workspace, they feel more organised and have an easier time getting a start on the day. As deadlines loom, your employees have enough stress without having to search for the right tools to get the job done. You can help avoid mental breakdowns by encouraging employees to create a clean, well-put-together workspace at the end of each day.

Organising Effective Departments Organising Employees � Why organise employees? Employees Will Be Prepared: When a client shows up unexpectedly for an emergency meeting, your employees need to know where their files are fast. Employees should be able to just grab the files they need without making clients wait.

Organising Effective Departments Organising Employees � Why organise employees? Employees Will Be Prepared: Employees need quick access to emergency supplies. Keeping your first aid kit, extinguisher or portable ECG machine in a consistent location is important for employee safety. Supplies must not just be in a predictable location, they must also be easily accessible.

Organising Effective Departments Organising Employees � When organising employees the Human Resource Management unit has to take a number of things into consideration because each decision it makes has to be in sync with the end game of the organisation - profit or and others objectives , such as poverty alleviation, customer satisfaction, etc.

Organising Effective Departments Organising Employees � How do you organise employees? Be clear about the vision A mission statement sets out the purpose of an organisation. A vision goes further. It paints a picture in clear language of where the organisation is going, linked to the behaviours it expects of everyone in the organisation and

Organising Effective Departments Organising Employees � How do you organise employees? Be clear about the Mission: A mission statement defines what an organisation is, why it exists, its reason for being. At a minimum, your mission define who your primary customers are, identify the products and services you produce, and describe the geographical location in which you operate.

Organising Effective Departments Organising Employees � How do you organise employees? Get a feel of the climate of the unit – have an up- front close-up talk with each employee to ascertain what the unit has accomplished, what has not been completed, the strength and weakness of the unit, what can each employee do to advance the unit

Organising Effective Departments Organising Employees � How do you organise employees? Enquire about employees’ expectations of you the supervisor. As soon as you have assumed responsibility of the unit, check out what are the training needs and career goals of employees. This encounter supply you with significant tools with which to organise employees.

Organising Effective Departments Organising Employees � How do you organise employees? Know where the jobs/positions are: Discussions with the supervisors must take place to ascertain the need/urgency for the vacancy to be filled Ensure that Job Descriptions are up-to-date: Job descriptions speak to the specifics of the work in terms of point of operation, grade, reporting relationship, job purpose, general and technical aspects of the work.

Organising Effective Departments Organising Employees � How do you organise employees? Recruitment/Selection of Employees: This is a critical area of organising and to ensure the best selection of employees the Human Resource Management unit along with the managers/supervisors of the different units must engage a selection process called Assessment Centre. This process is more than the traditional interview. It involves a number of activities to check out employees’ suitability and may include interview, tests, case study, etc.

Organising Effective Departments Organising Employees � How do you organise employees? Placement: Putting the employee in the position (job) for which he/she is most suited is both a social and economic strategy – less stress for the employee, less management by the supervisor and greater efficiency

Organising Effective Departments Organising Employees � How do you organise employees? Performance Management System: Use this system to assist you in making decisions about training, delegated arrangements, acting appointments, promotion and special assignments. It allows you to communicate with employees thus understanding what they will like to do and where they can perform at their best.

Organising Effective Departments Organising Employees How do you organise employees? Establishing Work Plans: Current trend at the workplace is to plan what employees will do for a particular period of time. Work plans are developed by the supervisor and employee.

Organising Effective Departments Organising Employees � How do you organise employees? Group Activity What organising decisions can be made based on performance appraisal information? Choose a decision and say how you will implement it in terms of organising employees. Time: 12 minutes Group Share with the class your decisions and implementation of decision.

Organising Effective Departments Organising Employees � How do you organise employees? Team-working: Team work involves organising employees into teams based on a distinct product, part of a process, or service – often cutting across existing functional divides.

Organising Effective Departments Organising Employees � How do you organise employees Team-working: Why move to team-working? Teamwork can increase competitiveness by: Improving productivity Improving quality and encouraging innovation Taking advantage of the opportunities provided by technological advances Improving employee motivation and commitment.