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ORGANISATIONS AND STRUCTURES 1. The Nature of Organisations All organisations have some function to perform.

. Organisations exist in order to achieve objectives and to provide satisfaction for their members. Organisations enable objectives to be achieved that could not be achieved by the efforts of individuals on their own. Organisations are structures of people. Through co-operative action, members of an organisation can provide a synergistic effect.

2. Common Factors in Organisations There are at least three common factors in any organisation: i. ii. iii. People Objectives Structure

It is interaction of people in order to achieve objectives which forms the basis of an organisation. Some form of structure is needed by which peoples interactions and efforts are channelled and co-ordinated. iv. Management

Some process of management is required by which the activities of the organisation and the efforts of its members, are directed and controlled towards the pursuit of objectives. The actual effectiveness of the organisation will be dependent upon the quality of its people, its objectives and structure and the resources available to it.

1. The Formal Organisation The difference between the formal and the informal organisation is a feature of the degree to which they are structured.

Formal Organisation (Schein)

The planned co-ordination of the activities of a number of people for the achievement of some common, explicit purpose or goal, through division of labour and function and through a hierarchy of authority and responsibility. The formal organisation is: i. ii. Deliberately planned and created Concerned with the co-ordination of activities

iii. Hierarchically structured with stated objectives iv. Based on certain principles such as the specification of tasks and defined relationships of authority and responsibility. The Organisation as a Coalition The formal organisation can be seen as a coalition of individuals with a number of sub coalitions.

Membership of the coalition will be dependent upon the type of organisation but could include for example, managers, administrators, workers, volunteers, shareholders, suppliers, client, customers etc.

Basic Components of an Organsiation Any organisation can be described broadly in terms of; 1. Operating component comprises the people who actually undertake the work of producing the products, or providing services. Administrative component comprises managers and analysts and is concerned with supervision and co-ordination. basic components of work


There are 5 organisation i.

Operational Core

The operational core is concerned with direct performance of the technical or productive operations and the carrying out of actual task

activities of the organisation for example, people ii. Operational Support

Concerned indirectly with the technical or productive process but closely related to the actual flow of operational work for example people working in quality control, work study, progress planning, store keeping, works maintenance, technical services. iii. Organisational Support

Concerned with provision of services for the whole organisation, including the operational core, but which are usually outside the actual flow of operational work. For example people working in personnel, medical services, canteen, management accounting and office services. iv. Top Management

Concerned with broad objectives and policy, strategic decisions, the work of the

organisation as a whole and interactions with the external environment for example managing director, governors, management team, chief executive, board of directors, council members. v. Middle Management

Concerned with co-ordination and integration of activities and providing links with operational support staff and organisational support and between the operational core and top management. Private and Public Sector Organisations Organisations can be distinguished in terms of two generic groups: 1. 2. Private enterprise organisations Public sector organisations

Private Enterprise Organisations: Owned and financed by individuals, partners or shareholders in a joint stock company

Accountable to their owners or members Vary widely in nature and size and the type and scope of goods and services provided. The main aim is of a commercial nature such as profit, return on capital employed, market standing or sales level. Public Sector Organisations: Created by government Profit is not the goal Example: Local authority Has political purposes The main aim is a service to and the wellbeing of the community. Production and Service Organisations Compared with production industries, services tend to display a number of characteristic features, including the following:

i. ii.

The customer is a participant in the service process. Services cannot be stored, they are time perishable and if they are not used they are likely to be wasted. For example: the income lost from a hotel room unsold on one day is lost forever. Unlike physical products, services are less tangible and more difficult to explain or communicate. Benefits derived from services tend to be associated with feelings and emotions. In service operations work activities are people-oriented and the characteristics of the workforce are particularly important in determining organisational effectiveness. Measurement of output is difficult and there is unlikely to be a single, important criterion by which to measure effective performance.




Differences between products and services Product The customer receives a tangible product in the form of goods which can be seen and touched The goods remain with the customer The production and delivery of goods are usually separated Few producers deal with customers The customer is rarely involved with production Goods can be serviced Goods are subject to liability but the producer has more opportunity to ameliorate the effect on the customer and Services The customer receives an intangible service which may or may not satisfy. Services are consumed at the moment of delivery Production, delivery and consumption of services are often at the same time Most producers deal with customers The customer is often closely involved with production Services have already been consumed and cannot be serviced Services which do not meet the requirements are difficult to replace the financial impact is usually total.

thus the financial penalty Goods can be purchased to store in inventory to satisfy the customers needs. Goods can be transported to the point of sale The quality of goods is relatively easy for customers to evaluate Goods are often technically complex the customer therefore feels more reliant on the producer.

Services cannot be stored but must still be available on customer demand Some services are transportable (e.g. information through communication lines) The quality of services is more dependent on subjective perception and expectation Services appear less complex the customer therefore feels qualified to hassle the producer


2. The Informal Organisation Arises from the interaction of people working in the organisation, their psychological and social needs and the development of groups with their own relationships and norms of behaviour. The informal organisation is flexible and loosely structured Relationship may be left undefined Membership is spontaneous and with varying degrees of involvement

Functions of the Informal Organisation The informal organisation can serve a number of important functions: It provides satisfaction of members social needs and a sense of personal identity and belonging. It provides for additional channels of communication for example, through the grapevine information of importance to particular members is communicated quickly.

It provides a means of motivation for example, through social interaction, variety in routine or tedious jobs and informal methods of work. It provides a feeling of stability and security and through informal norms of behaviour can exercise a form of control over members. It provides a means of highlighting deficiencies or weaknesses in the formal organisation for example, areas of duties or responsibilities not covered in job descriptions or outdated systems and procedures. The informal organisation may also be used when formal methods would take too long, or not be appropriate, to deal with an unusual or unforeseen situation. Whatever the type or nature of an organisation or its formal structure, an informal organisation will always be present.


The informal organisation arises from the interactions of people and their psychological and social needs. The informal organisation serves a number of important functions and has an influence on the morale, motivation, job satisfaction and performance of staff. Organisations of the future will be characterised by technology and complexity. It is important to emphasise the importance of people and the need for authentic human relationships and the humanisation of organisation.

3. The Organisation as an Open System Organisations can be viewed as open systems which take inputs from the environment (outputs from other systems) and through a series of activities transform or convert these inputs into outputs (inputs to other systems) to achieve some objective.


Open Systems Model for example business organisation takes in resources such as people, finance, raw materials and information from its environment; ---transforms or converts these----and returns them to the environment in various forms of outputs such as goods produced, service provided, completed processes or procedures in order to achieve certain goals such as profit, market standing, level of sales or consumer satisfaction.

Example: The Open Systems model applied to the environment systems division of a major heating and ventilation company.