4-Structures and Management of Organisation

Organizational Models in IT/Business

At the highest level, these models explain how groups of people work together in a formal way within an organization. The key factors are:

• Rules → Who does what.
• Work distribution → How tasks are shared.
• Authority & responsibility → Who reports to whom.

1. Bureaucratic Model

• Definition: An organization that is structured with clear hierarchy, formal rules, and specialized tasks.
• Structure: Like a tree → top-down hierarchy.

Features

1. Specialization: Tasks split into smaller roles, employees become experts.

   • Example: In a software company, one team only does testing, another only UI design.

2. Rules & SOPs: Everything governed by standard operating procedures (SOPs). No variation → ensures consistency.

3. Accountability: Each employee answers to only one manager (unity of command).

4. Formality: Employee-to-employee and employee-to-customer interactions are formal.

5. Merit-based HR: Recruitment based on qualifications, promotions on seniority + performance, job security against unfair firing.

Advantages

• Central Authority → ensures order and control.
• Expertise → hiring specialists leads to higher quality output.
• Efficiency & Predictability → standard procedures minimize errors.
• Fairness → merit-based hiring & no favoritism.
• Policy-making → helps governments & big companies make consistent policies.

👉 Example in IT: Government IT department, bank IT teams, large corporations like IBM.

Disadvantages

• Slow decision-making → rules and approval processes take time.
• Boredom & low productivity → repetitive tasks make employees disengaged.
• Rigid culture → little creativity, freedom, or innovation.
• Passive workforce → employees follow rules instead of thinking independently.
• Inefficiency risk → fixed salary regardless of performance may reduce motivation.

👉 Example in IT: Helpdesk staff in a strict hierarchy, where innovation is discouraged.

2. Organic Model

• Definition: A flexible, adaptive organizational structure where roles are fluid, communication is open, and employees are empowered.
• Context: Works well for small, professional, innovative companies (like startups).

Features

1. Adaptive & Flexible: Changes quickly with environment.

   • Example: A small IT startup adjusting roles when new technology arises.

2. Less rigid roles: Employees take on tasks as needed, not just fixed jobs.

3. Multidirectional communication: Employees talk freely across teams & hierarchy.

4. Manager’s role: More of a coach/mentor than a boss.

Characteristics

• Cross-functional teams → different expertise combined (e.g., developers, designers, testers working together).
• Cross-hierarchical teams → no strict boss-to-employee gap.
• Free flow of information → open discussions, Slack channels, stand-up meetings.
• Wide span of control → one manager for many employees.
• Low formalization → fewer rules.
• Low standardization → tasks are not repetitive.
• Decentralized decision-making → employees have more say.
• Emphasis on expertise over authority → “knowledge wins, not job title.”

👉 Example in IT: Google, small startups, Agile software development teams.

Advantages

• Flexibility → responds to market changes.
• Employee motivation → workers feel valued and involved.
• Innovation → creativity is encouraged.

Disadvantages

• Role confusion → lack of clear boundaries can cause overlap.
• Hard to control in large orgs → works better in smaller teams.
• Decision-making may take longer if everyone is consulted.

3. Matrix Management Model

• Definition: A hybrid model that combines bureaucratic and organic elements.
• Employees work on multiple projects at the same time and may report to multiple managers.

Features

• Project-based structure.
• Employees may have to balance between their functional manager (e.g., Head of IT) and project manager (e.g., AI Project Lead).
• Requires rules to manage conflicts since multiple managers give instructions.

Advantages

1. Combines skills & competencies → more expertise available per project.
2. Collaboration → different departments work together.
3. Innovation → cross-team ideas improve creativity.
4. Flexibility → can adapt resources based on project needs.

👉 Example in IT: A software engineer working under both the Mobile App Project Manager and the Cloud Systems Manager at the same time.

Disadvantages

1. Loss of accountability → who is responsible for mistakes?
2. Conflicts → dual reporting can cause power struggles between managers.
3. Employee stress → answering to multiple bosses can be confusing.

✅ Practice Questions for You

Basic Recall

1. What is the main structural difference between the bureaucratic and organic models?
2. In the bureaucratic model, why does recruitment focus on qualifications and seniority?
3. Give two advantages and two disadvantages of the matrix model.

Application

4. Which model (bureaucratic, organic, or matrix) would you recommend for:

   • (a) A government IT department maintaining citizens’ data.
   • (b) A small startup launching an AI-based app.
   • (c) A multinational company developing a large software project with multiple teams. Explain why for each.

Critical Thinking

5. If you were a manager in an IT company and noticed low employee motivation due to repetitive tasks, which organizational model would you suggest shifting towards, and why?
6. In a matrix model, how can an IT company reduce conflicts between managers?

Structuring Principles

1. Structure by Function

• Definition: Grouping activities/tasks according to broad organizational functions.

• Typical Functions:

  • Operations → Core business (e.g., software development in an IT company).
  • Administration → Payroll, HR, legal, general management.
  • Sales & Marketing → Attracting customers, branding, partnerships.
  • R&D (Research & Development) → Innovation, new products/services.

👉 Key Point: While operations differ (e.g., car manufacturing vs. IT consulting), administration is largely similar across industries. 👉 Sales & Marketing are universal — not only for commercial companies but also for non-profits, universities, and governments.

Example in IT: A medium-sized software company might have:

• Operations Division → programmers, testers, system analysts.
• Sales & Marketing Division → client outreach, contracts.
• R&D Division → AI/ML research.
• Administration Division → HR, accounts.

2. Structure by Geography

• Definition: Dividing operations by location when a company operates internationally.
• Reason: Language, culture, regulations, and customer needs vary across regions.
• Example: CGI (a big IT services company in Montreal) operates in 40+ countries with 6 geographic divisions.

👉 Typical in: Multinational companies like IBM, Google, Amazon → sales and support tailored for each region.

3. Product Line Structure

• Definition: Organizing divisions based on different types of products offered.

• Examples:

  • Automobile Industry:

    • Cars & vans
    • Heavy trucks
    • Spare parts

  • IT/Software Industry:

    • Development
    • Maintenance & Support
    • Training services

👉 Benefit: Each division focuses on its product → deeper specialization.

4. Market Sector Structure

• Definition: Dividing based on customer type / industry served.

• Example in IT:

  • Banking clients division
  • Healthcare clients division
  • Education clients division

Advantages

• Staff become familiar with customers’ problems (sales + technical).
• Easy for sales/marketing to target specific customers.

Disadvantages

• Divisions may become isolated, not sharing expertise.
• Risk of ignoring new opportunities because focus is too narrow.

5. Structure by Technology

• Definition: Grouping according to technological expertise.

• Example:

  • AI Division
  • Web Systems Division
  • Communication Systems Division
  • Real-time Systems Division

Problems

• Customers don’t care about technology — they care about solutions.
• Hard for marketing to match customers with the right technology.
• Engineers may work across multiple technologies anyway.

👉 So, this structure is more inward-focused and less customer-focused.

6. Operational Structure

• Two main types:

  1. Project-based → temporary teams formed for specific projects.

     • Custom software development, system integration, R&D.
     • Teams dissolve after project completion.
     • Employees constantly face new colleagues, clients, environments.

  2. Product-based (Production-based) → long-term teams for ongoing operations.

     • Automobile manufacturing, oil refining, data processing (payroll, accounts).
     • Change is slow and gradual.

👉 Key Difference: Project-based = dynamic, short-term; Product-based = stable, ongoing.

7. Depth of Structure

• Layers: Number of management levels from top to bottom.
• Span of Control: Number of employees reporting to one manager.
• Preference: Professionals often prefer flatter structures (fewer layers, wider control) → more autonomy.

👉 Centralization vs. Decentralization

• Centralized → Decisions made at the top. Common in manufacturing, traditional companies.
• Decentralized → Decisions pushed down to lower levels. Found in hi-tech, software companies where agility matters.
• Flexible Centralization → A mix depending on situation.

8. Structure in Practice

• Medium-sized UK software company:

  • Could choose Market Sector Structure → each division handles sales & operations for its industry clients.
  • Could choose Functional Structure → one operations group (developers, analysts, managers) and one sales & marketing group.
  • Within operations, projects could be grouped by market sector (if client needs dominate) or by technology (if technical challenges dominate).
  • Regardless, an admin/finance division is always needed.

👉 Example:

• Banking client with complex regulations → structure by market sector.
• High-tech AI project → structure by technology.

9. Case Study: Cadbury Schweppes

• Functional Units: HR, Legal, Finance, Supply Chain, Strategy, R&D.
• Operating Units: Based on geography + product lines (beverages & confectionery).

👉 Shows mixed structuring → large companies often combine principles.

10. Mixed Structure

• Definition: Combination of function, geography, product line, etc.

• Example: Microsoft

  • Product Line based divisions:

    • Windows
    • Servers & Tools
    • Online Services (MSN, Bing)
    • Business (MS Office)
    • Entertainment (Xbox, Skype)

  • R&D: Spread geographically but structured on project basis.

  • Support Services (HR, Finance, Legal): Structured by function.

👉 Takeaway: No single structure is perfect. Large companies usually mix models for flexibility.

✅ Practice Questions for You

Basic Recall

1. Name four primary functions common to most medium-sized companies.
2. What’s the key difference between project-based and product-based structures?
3. Why do multinational companies often adopt geographic structuring?

Application

4. If a software company provides custom solutions for banks, hospitals, and universities, which structure would you recommend — by product line, technology, or market sector? Why?
5. Microsoft uses a mixed structure. Can you explain why it cannot rely only on a product line structure?

Critical Thinking

6. Imagine you are the CTO of a growing software startup. You started with a functional structure, but now you’re entering foreign markets and building multiple product lines. How would you evolve your company’s structure?
7. In an IT services company, what risks come with structuring by technology instead of market sector?

Job Design

1. Project-Based Organizations

• Definition: In project-based companies, jobs are designed once a project plan is developed.
• Implication: Job roles may change from project to project depending on needs.

2. Bureaucratic Model & Job Design

• In bureaucratic organizations:

  • Jobs are narrow and tightly defined.
  • Example: “You only test module A” or “You only check syntax errors.”

• Problems:

  • Boring → low job satisfaction.
  • Employees feel like “cogs in a machine.”
  • High turnover because people leave for more interesting work.

3. Solutions to Bureaucratic Job Problems

• To counter dullness, organizations use job redesign techniques:

(a) Job Rotation

• Workers switch roles periodically to reduce monotony.
• Example: A programmer might also test, then document, then do maintenance.
• Benefit: Variety, more skills.

(b) Job Enlargement

• Expanding the scope of a job by adding more tasks at the same level of responsibility.

• Example: A programmer who usually only codes is also asked to:

  • Analyze requirements,
  • Write design notes,
  • Perform testing.

• Benefit: More challenging, broader skill set.

(c) Job Enrichment

• Adding more responsibility and autonomy (not just more tasks).
• Example: Instead of just coding, the programmer also makes design decisions and interacts with clients.
• Benefit: Increases motivation, ownership, and personal growth.

👉 Key Difference:

• Enlargement = more tasks.
• Enrichment = more decision-making authority.

4. Job Design in the IT Industry

• Problem: Jobs in IT can swing between two extremes:

  • Highly specialized (e.g., “only write test cases for backend system”).
  • Very broad roles in project-based work.

• Result:

  • Specialization often → high turnover (boring, repetitive).
  • Example: Maintenance jobs are unpopular.

5. Case: Software Maintenance

• Maintenance involves:

  • Analyzing user requests.
  • Specifying required changes.
  • Implementing code changes.
  • Testing changes.
  • Documenting modifications.

• Problem: Often only one narrow task (e.g., just coding bug fixes) is given → seen as dull and dead-end.

• Solution → Job Enlargement in Maintenance: Instead of only implementing changes, the programmer:

  1. Analyzes change requests.
  2. Specifies the changes.
  3. Gets approval from the Change Control Board (CCB).
  4. Implements modifications.
  5. Tests the updated system.

👉 Now the programmer handles the full cycle of change management, making the job:

• More meaningful,
• More engaging,
• Better for skill development.

✅ Practice Questions for You

Basic Recall

1. What are the three main job design solutions to dull, narrow bureaucratic jobs?
2. Define job enlargement vs. job enrichment with an IT example.

Application

3. Why is software maintenance considered an unpopular task in IT companies?
4. How does job enlargement improve motivation in IT maintenance roles?

Critical Thinking

5. Imagine you are managing a software development team where developers complain about boring, repetitive tasks. Which job design techniques would you use, and why?
6. Job rotation, job enlargement, and job enrichment all increase employee engagement. Which one do you think is most effective in the IT industry, and why?