Chapter 21: Organisation Structure

Learning objectives

After studying this chapter, students should be able to describe:

• what is meant by organisation structure;

• management issues in organisation structure;

• the main factors that influence the structural design;

• centralisation, decentralisation, span of control, unity of command and delegation;

• the flexible firm;

• the advantages and disadvantages of different types of organisation structure.

21.1 Why do we have structures?

In order to achieve their goals and objectives, organisations need to arrange the work into manageable segments and align the segments so that individual efforts are co-ordinated for optimum organisational effectiveness. These alignments form the organisation structure and this chapter describes various models of structure, and examines the advantages and disadvantages of adopting particular structures.

21.2 What is structure?

Organisation structures have been the subject of much interest by management scholars over the years, and, as we saw in Chapter 1, Taylor ^[1] described the need for structures of control while Max Weber s view of bureaucracies ^[2] called for authority structures . The rapid growth of organisations and the increasing complexity and their environments stimulated the contingency school of management theory which studied the relationship of the environment and structure. The contingency ^[3] approach concludes that organisations are most effective when their structures are appropriately designed to match the relationships of the particular nature of the business, the external environmental factors, and the market conditions.

According to Henry Minzberg, ^[4] an organisation s structure is the sum total of the ways in...