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6.1 The terminology of organisational design

There are a number of terminologies associated with organisational design and structure. The following reading introduces you to the 'jargon' associated with the area and will assist you in understanding our discussions. Take note of the following key concepts as you work through the reading:

Be certain that you can discuss these concepts in general terms, as they will assist you in understanding the changing approaches to organisational design.

Clarifying some of those buzzwords...

Restructuring and re-engineering

Restructuring and re-engineering are becoming commonplace on the corporate landscape. Restructuring - also called downsizing, rightsizing, or delayering - involves reducing the size of the firm in terms of number of employees, number of divisions or units, and in the number of hierarchical levels in the firm's organisational structure. This reduction in size is intended to improve both efficiency and effectiveness. Restructuring is concerned primarily with shareholder well being, rather than employee well-being.

In contrast, re-engineering - also called process management, process innovation, or process redesign - involves reconfiguring or redesigning work, jobs, and processes for the purpose of improving cost, quality, service, and speed.

Reengineering does not usually affect the organisational structure or chart, nor does it imply job loss or employee layoffs. Whereas restructuring is concerned with eliminating, shrinking, and moving organisational departments and divisions, the focus of reengineering is changing the way work is actually carried out.

Reengineering is characterised by many tactical (short term; business-function-specific) decisions, whereas restructuring is better described as strategic (long-term; affects all business functions) decisions.

Taken from David ,F R (1997). Concepts of Strategic Management . Prentice Hall: USA .

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