Structure & Culture - Jamesford Management Consultants Ltd

Structure

People are one of the most important resources of any company. How they are organised is crucial to the effectiveness of strategy. Other influences on organisational structure are business process, technology, size, stakeholders, culture, management style and the environment, to name but a few.

Structural types vary from…..

• Simple (no formal allocation of responsibilities)
• Functional
• Product
• Matrix
• Project/programme based
• Divisional
• Holding Company

…or intermediate variations of the above. They may also be centralised or decentralised and subject to mechanistic or organic management styles.

The interrelationship of some of these variables and their influence on structure includes the following generally accepted principles :-

1. Strategic
   1. Cost leadership – favours a mechanistic management style
   2. Differentiation – favours decentralisation and an organic management style
   3. Limited product/market – favours functional form and centralisation of operations
   4. Market development - favours functional form
2. Technology
   1. Separate technical process – favours divisional form
   2. Integrated technical process – favours functional form
   3. Mass production – favours centralisation and a mechanistic management style
   4. Non standardised production – favours decentralisation and an organic management style
   5. Complex technology – favours an organic management style
   6. Level of innovation - favours an organic management style
3. Type of organisation
   1. Size – favours divisional form and decentralisation
   2. External accountability – favours centralisation and a mechanistic management style
   3. “Defender” – favours functional form, centralisation of operations and a mechanistic management style
   4. “Prospector” – favours divisionalisation, decentralisation and an organic management style
4. Environment
   1. Simple/stable – favours centralisation of operations
   2. Dynamic – favours an organic management style
   3. Complex – favours a matrix structure and decentralisation
   4. Hostile – favours centralisation of operations
   5. Multinational – favours a matrix structure and decentralisation

Hence a number of factors influence structure. However, in our experience structural efficacy follows several basic tenets:-

1. The structure should be so designed to facilitate the efficient operation of the business processes and in so doing facilitate the achievement of the business strategy. Easy to say, but organisations often develop structures in isolation of process or without considering the end to end business processes. Hence delineate the strategy, design the organisational processes to deliver the strategy and then organise the people resources around the processes.
2. Structure should be flexible. As the business processes change so should the facilitating structures.
3. Maintain clarity of roles and responsibilities.
4. Ensure the solution is workable and easily understood
5. There is no formulaic “right answer.” A balance should be drawn between the structural influences (as outlined above) and the need to find a workable and easily understood solution.

Culture 

How people work together can have a significant impact on organisational effectiveness and the ability to deliver the strategy. As often quoted “the way we do things around here” (a concept developed by Mckinsey) can mean the difference between a strategy well executed and a dysfunctional business.

We use the “Cultural Web” (developed by Johnson & Scholes) as an analytical tool (amongst others). The interaction between organisational structure, control systems, power structures, routines, rituals/myths and organisational symbols creates a unique recipe of how people work together.

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Analysing the cultural impact on the business model would include understanding the responses to these typical questions:-

The outcome of the analysis yields important information in terms of which elements of the culture either support or hinder the deliverance of the business strategy.