Organisational structure and systems

<< previous page

The classic view of the structure of an organisation is drawn on the opposite page.  On the left side there are hard technical factors, such as operating systems and processes; on the right side there are softer, behavioural characteristics, including leadership and learning.  In the centre, these components are arranged around a vertical cascade of policies, goals, strategies and programmes which translate the organisation’s intangible vision into a sequence of explicit, operational activities.  The diagram shows three levels of management hierarchy, which operate in the following ways:

- Normative management deals with the institutional arrangements which must be in place for the organisation to operate legitimately.  These fundamental rules and principles concern the relationship between the organisation and its owners, senior directors, legislative requirements and society, all of which are regulated through codes or guidelines for corporate governance.  Normative issues are by definition relatively slow changing - the enduring ethos or identity of the organisation is translated into explicit, long-term goals and mission statements which are diffused through the organisation’s culture and values. 

- Strategy formulation is carried out by top management, either directly or facilitated by functional staff.  Its purpose is to bring about a desired future through a series of programmes and projects which deliver the organisation’s goals.  Strategic plans are normally prepared on a five to ten-year time horizon and revised every three to five years; these decisions guide the development of a more detailed set of objectives and targets.  The strategic layer of the organisation co-ordinates and regulates the subordinate operational processes and activities through relevant business management systems and standards.

- Operational management realises the strategic objectives of the organisation through its day-to-day business activities or throughput, starting with the identification of customers and ending with the delivery of the finished product.  Networks which depend upon customer satisfaction are known as core processes, and they often span across internal, functional interfaces and include external supply chains.  Other networks of activity support the core processes, for example finance, information technology, human resources management, procurement, as well as property and facilities management. [8]

Business management systems are shown in the diagram on the opposite page as part of the technical infrastructure of the enterprise at the level of strategic management.  They are based upon the normative aspects of the business and guide its operational processes and procedures.  At the normative level, Turnbull guidance and government codes for corporate governance emphasise the need for organisations to identify and manage risk in a systematic way through the design and implementation of internal processes and controls.   Effective management systems benefit the organisation by linking corporate policies with strategic programmes, enabling organisational learning, and co-ordinating operational processes and activities.

next page >>