It has been suggested that a proper organisation structure releases energy and creativity, rationalises productivity and im proves m orale (Jacques 1990: 127). Studies of organisation structure also suggest that organisations should adapt and fit their structures to the environm ent (Burns & Stalker 1961; Lawrence & Lorsch 1967). They highlight that the organisational effectiveness suffers w henever the organisation design does not fit its m ission, environm ent and resources or w henever the o rg an isatio n fails to develop m ore decentralised, specialised and form alised adm inistration (Blau 1974; Child 1975; Donaldson 1985: 157). For instance, the w ork of M intzberg shows that an effective organisation depends on developing a cohesive set of relations betw een structural design, age, size and technology, the condition of the firm and the conditions of the industry in w hich it is operating (Morgan 1986: 56). It also stresses that an organisation structure is one of the m echanism s that influences the strategic behaviour of an organisation.
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Recent structural changes in m any SEDCs including expanding and decreasing the num ber of departm ents reflect the m anagers' personal choices about w hat they consider to be an appropriate structure. There are a num ber of examples of the restructuring process that has done in an ad hoc way w ithin the SEDCs since 1989. In some cases, a new departm ent has been created by integrating a num ber of other departments. At the same time, some SEDCs have expanded their structure and recruited more staff. Others have not changed w ithout restructuring the organisation, creating new positions or prom oting people. For instance, in September, 1989, one small SEDC in the north east of Malaysia expanded its organisation from 7 to 10 departm ents by establishing 3 new departm ents nam ely corporate planning, investm ent and industrial developm ent. A nother SEDC in the north, how ever, has shrunk its 6 departm ents to 4 by m erging the technical departm ent into the land and property departm ent and placing corporate planning in the adm inistration department.
It was also reported (early 1990) that a less successful SEDC has taken measures to im prove the performance of its eighteen subsidiary com panies. Such measures include reducing m anager's salaries and dismissing w orkers, stopping and suspending non-pro fit able activities, freezing annual salary increments and organising other efficiency and productivity programmes. Such ad hoc restructuring program m es have affected personnel practices such as employee career planning, promotion, training and development. Since m ost of the SEDCs did not have specialised personnel departm ents or personnel specialists, the hum an resource planning and development of employees that were necessarily required to meet the structural changes of the organisations
176 were neglected. The research discovered that the organisation design of the SEDCs did not take into consideration the need for control, coordination and its contribution to organisational efficiency and performance.
It is based on these prem ises that the following discussions focus on organization structure w hich vary from one organization to another. Four dim ensions of organisational structure, viz. functional structure, hierarchical levels, divisionalisation and specialisation (see Child 1984; Pugh & Hickson 1976) are examined. These structural dimensions were found to be barriers to personnel practices particularly on prom otion opportunities and performance appraisals. 7. 2.1 Functional Structure
W ith respect to organisation structure, it has been suggested that there are four form s of organisation structure, nam ely bureaucratic, entrepreneurial, m atrix and independence (Torringtion and Hall 1987: 51-54). Each form of structure has its ow n advantages and disadvantages. The contingency theory suggests that there is no one best way to organise and not all the ways to organise are equally effective (see Burns and Stalker 1961; Lawrence and Lorsch 1967). The bureaucratic form , for instance, em phasises the distribution of pow er and responsibility rather than its centralisation. Responsibility is devoted through the structure and it is a m ethod of organisation well suited to stable situations, m aking possible economies of scale and the benefits of specialisation. But there is seldom the flexibility to deal w ith a volatile environm ent and a tendency to be self-sufficient (Torrington and Hall 1987: 52). The research found that all SEDCs are functionally structured. Each departm ent and unit reports to its respective
functional manager who is then answerable to tlie deputy general manager and the general manager. It reflects w hat Torrington and Hall (1987) describes as a simple structure of decision making and as a bureaucratic form of organisation. Among the SEDCs, there are two forms :
i. A simple flat structure in many small SEDCs like Terengganu, Kelantan, Perak, Kedah, Negeri Sembilan, Perils and Melaka Relatively. All functional managers reporting to the general manager. This low degree of differentiation and specialization indicate a high degree of centralization (see Figure 7.1)
ii. A functional structure w ith several specialised units and divisions. The roles and responsibilities of senior m anagers (e.g. General Manager, D eputy General M anager and Financial Controller) are clearly more defined. This is the case of a few larger SEDCs like Selangor and Johor (see Figure 7.2).
There are m ore disadvantages than advantages of simple functional structures which have been much discussed in the management literature. For instance, this research found that a sim ple function structure of SEDCs is relevant, particularly, for smaller organisations engaging in a single activity in a stable environment. This simple form of organisation structure has also been said to be econom ical on m anagerial m anpow er because coordination, supervision, formalisation and standardisation are left to the superiors. O n the other hand, this research found that this simple form of structure found in m any SEDCs has restricted the career mobility of managers in these SEDCs. The importance of specialised personnel departm ent was not seriuously considered because of the centralised personnel decisions made by the general managers. At the same time, a functional structure is not suitable for organisations like SEDCs which are involved in diversified products and services across industries and economic sectors as I mentioned below.
178 In the case of all SEDCs, a simple functional structure is inappropriate for
reasons that they are involved in a large num ber of various types of economic and socio-econom ic activities w hich require a considerable degree of decentralised decision making at specialised product (service) group units or divisions. M oreover, a simple functional structure w hich cannot distinguish between revenue-centred units and cost-centred units creates serious problems in dealing w ith perform ance evaluation of each individual m anager or unit. Consequently, it was found that managerial accountability, such as commitment and p ro fit responsibility cannot be m onitored and evaluated by the management. These problems were more prevalent in m any SEDCs w hich did not have specialised personnel departm ents that were needed to form ulate personnel policies on perform ance standards and appraisal, job evaluation, rew ard system, training and promotion policies.
7.2.2 Hierarchical Levels
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The shape of organisation can either be flat or tall depending on the num ber of hierarchical levels. An organisation w ith a tall structure has m any levels in relation to size w ith a low average span of control while an organisation w ith a flat structure has few levels, with an average span of control. The highest level w ill be the chief executive. The deputy m anagers, departm ent heads, supervisors and non-managerial employees are counted as another hierarchical level. However, the personal assistants are not considered. One argum ents in favour of a tall structure is that it facilitates m anagerial accountability, perform ance, recognition and rew ard on m erit. In other w ords, a tall organisation structure provides m ore em ployee opportunity for career
advancem ent w ithin the organisation (Child 1984 :61), increased em ployee morale and job satisfaction.
SEDC organisation charts reflect the standardised feature of public sector organisations. There are little variations of hierarchical structures among SEDCs. It shows that most SEDCs have a flat structure of four hierarchical levels: the general manager, deputy general manager, departm ental managers and officers (Table 7.8). They are organised in a simple functional form in which departm ent heads usually report to the deputy general manager and general m anagers respectively. The sm allest SEDC like M elaka and Perils have only three m anagerial levels, i.e. the general m anager, the departm ental m anagers and officers. The kind of hierarchical structure is found to be a common feature of SEDCs which is in line with traditional administrative principles. The structures of m any SEDCs reflects their m anagem ent's deem phasis of group perform ance appraisal and the limited opportunities for career advancement. The absence of specialised personnel departm ent in many SEDCs have hindered the fôrniufation and implemention of personnel policies and procedures in the SEDCs.
The m ain problem raised on any organisation having many supporting staff was that senior executives were likely to spend m ost of their tim e in supervising and coordinating support staff, thus moving away their tim e and attention to long-term policy and strategic matters. It also means that the . organisations are burdened by their adm inistrative costs (Child: 1988: 62; 67). This research tend to support the above argument. It was found that there is a narrower span of control at middle managerial level (department manager level) in the SEDCs. At senior managerial level (chief executive), the span of control is wider because of m any supporting (staff) units under their supervision
180
D issatisfaction and disagreem ent about an excessive num ber of supporting staff was raised by many SEDC line m anagers. As one senior manager said, "Look at the Investment department. It has about nine to twelve officers which they do not have the power over the companies' affairs. We don't need a large num ber of these officers. Indirectly, the subsidiaries are being burdened w ith their payroll." This remark suggests that the finance manager is aware of the additional costs incurred and the corporation is recruiting non productive officers who, in the first place, are not necessarily needed. A senior manager in another SEDC gave almost the same remark :
"Personally, I feel that it is unnecessary to have a Corporate Planning departm ent w hen there is already an Investm ent departm ent w hich can sim ultaneously look after the corporate planning and investm ent of the corporation."
Table 7.8 M anagerial Levels
SEDC Size Manag
(number of employees) levels
Johor 522 6 Selangor 1651 4 Penang 428 4 Pahang 322 4 Perak 278 4 Terengganu 257 4 Kelantan 161 4 Kedah 142 4 Negeri Sembilan 132 4 Melaka 97 3 Perils 45 . 3
A lthough many organisations seem to be moving to flatter structures as part of attem pts to become more flexible, a need to coordinate a large-scale activities of SEDCs requires them to have a hierarchical authority (Downs*1967). A relatively tall hierarchical level is usually preferred than a flat liierarchical level for the SEDCs because they are involved in various economic and social activities including plantation, property, manufacturing, services, tourism and other joint- ventures. As I m entioned earlier, a simple and flat functional structure w hich cannot distinguish between revenue-centred units and cost-centred unit creates a serious problem in dealing w ith perform ance evaluation of each individual m anager or unit. Therefore each of these profit, revenue, investm ent and expenditure centres and specialised personnel departm ent should be created so that perform ance and reward can be easily assessed and determined. A m ore structured and hierarchical specialised unit facilitates greater accountability and com m itm ent and provides career opportunities for m anagers w ithin each product or service division.
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7.2.3 Divisionalisation and Specialization
In most SEDCs, their organisation structures are not divisionalised. Only a few relatively larger SEDCs divide their functional areas into divisions or sub groups. The advantage of divisionalised organisation and its positively affect the personnel practices will be discussed in the following chapter.
Inappropriate grouping or segmenting of departments, in fact, creates a certain degree of conflict, tension and frustration among existing functional managers, especially in organisations which do have a clear defined authority structure. The research found that the organizational structures of the SEDCs
182 were less specialised. It was found that 8 out of 11 SEDCs'have their functional
m anagers reporting directly to the D eputy General m anagers (Table 7.9). However, since the sole decision maker is the general manager, most im portant decisions were directly referred to the general manager, thus by-passing the deputy general manager. In some cases, the task of monitoring the departm ents and units are equally divided among the general manager and two deputy general m anagers As a m atter of formality, the organisational structure is divided into three functional departments of which each department has three or four units. In fact, there is no demarcation of authority and all departm ents and divisions are directly controlled by top executives. These include the personnel function such as selection, promotion and appraisal (the personnel departm ent was not given a considerable status as a specialised unit) :
Table 7.9
Spans of Control of General Manager & Deputy General manager No. of general manager Selangor 1 Johor 1 Penang 1 Pahang 1 Perak 1 Terengganu 1 Kelantan 1 Kedah 1 Negeri Sembilan 1 Melaka 1 Perils 1 No, of No. of deputy functional manager managers ( DGM ) report to DGM 3 10 Spans of Control 4,4,3 4,1 3,3 5 6 7 6 6 6 2 3