Organisation refers to a group of people working together for achieving a particular common goal or purpose, such as, governmental activities or business or community work (Pittz et al. 2017). Organisations are of various types and they all have different purposes. The structures of the organisations are also different with distinct functionalities. This report will highlight different aspects of three types of organisations with real examples and will explain the relationship of the organisational functions with its objectives and structure. It will also present a critical analysis of the complexities of the relationship.
There are three major classifications of organisations, namely, public, private and voluntary. These organisations also operate with different types of motives such as for profit and for non-profit. As the names suggest, public organisations are dedicated for public services and those are mostly government organisations. The private organisations are under private ownership and they follow mostly profit motive and the voluntary organisations are mostly charities, which can be non-governmental organisations working for non-profit (Manuel 2015). Thus, these organisations also have different type of legal structure as per their operation type and objectives.
The purpose of public organisations is to serve the public of the nation than to increase sales and profits. Thus, the public sector organisations mostly focus on providing good service for the betterment of the entire community than to target some sections of the society and make profits (Nikolova 2015). For example, National Health Service (NHS) in the UK is a public sector organisation. It is a publicly funded healthcare organisation that was established in 1948 to provide the highest quality healthcare services to the citizens of the UK and also to the visitors. It is also the largest healthcare institution in the UK (Nhs.uk 2018). As the organisation is funded by the government, it operates under the Department of Health and Social care. Hence, the purpose of this organisation is not to make profit but to the serve the people of the country with the best and affordable healthcare so that the nation gets healthier citizens.
On the other hand, the private sector organisations operate with the motive of earning profit to survive. The private organisations provide goods and services to the clients with the aim of earning revenue and substantial profit and hence, they compete against their competitors by employing various means (Bolman and Deal 2017). Thus, the private organisations mostly operate for profit. John Lewis Partnership is a Private Limited Company in the UK, operating in the retail sector. It is owned by a trust, on behalf of the employees, who are known as Partners. They are shareholders of the organisation and thus, receive a portion of the annual profit. The JLP Group is one of the largest private companies in the UK by sales as of 2016 and thus, its purpose of business is to make profit. It competes in the market quite aggressively to capture the target market. As a private limited company, the profits of JLP Group are subject to corporation tax of 19% to the government. This tax rate is lower than that for sole trader or proprietorship for individuals (Johnlewispartnership.co.uk 2018). Thus, the private limited companies are legal entities in their own rights and the assets of the company and the owner are separate. These have protection from the personal liabilities and hence the risk of losses is reduced, and these also have added credibility in the market. These organisations also have a constitution to guide the shareholders and directors.
Lastly, the voluntary organisations, as the name suggests, are the organisations which are independent, autonomous, democratic and non-profit. These organisations work for the welfare of the society and governed by themselves only (Shafritz, Ott and Jang 2015). The membership is also voluntary and there is no external control. Majority non-governmental organisations (NGOs) fall under the category of voluntary organisations. These work with a non-profit motive, and operate mostly with donations and charity funds. Voluntary organisations are mostly focused towards performing welfare activities for the communities. These organisations are not taxed as they do not have any fixed earnings and profits. For example, there are many large voluntary organisations in the UK and one of such organisation is the National Trust, whose annual expenditure for the welfare activities were £450 million in 2011-12 (Data.ncvo.org.uk 2014). The organisation was established in 1895 with the purpose of preserving the places of historic interest or the natural beauty of the regions of England, Northern Ireland and Wales. The National Trust is headed by H.R.H. The Prince of Wales and is privately funded. As of 2014-15, it had 5899 staff members and 62,000 volunteers and earned revenue of around £494 million (Nationaltrust.org.uk 2018). Being supported by the royal member, the trust was able to gain many large donations, membership subscriptions, and bequests and over the years, the members voluntarily came forward to protect the heritage places. Unlike the other two types of organisation, the voluntary organisations, like, the National Trust, are completely governed by the trustees and also operates independently.
There are various types of sizes and scopes for the organisations, such as, micro enterprise, SMEs (small and medium enterprise), large scale, global or multinational etc. Size of the organisations is decided by its number of employees, number of owners and/or shareholders, its market share and the legal status (Goffee and Scase 2015). For a micro organisation, the usual staff headcount is less than 10 employees with a turnover of less than EUR 2 million, for a small organisation, the headcount is usually less than 50 with an annual turnover of less than EUR 10 million and for the medium-sized enterprises, the employee count is generally less than 250 with a turnover of less than EUR 50 million (Roche 2016).
In the case of above mentioned organisations, that is, National Health Services (NHS), JLP Group and National Trust, all of these are large scale organisations, as the number of employees are more than 250 in each and the annual turnover is also far more than EUR 10 million. Although these organisations belong to different types of operations, yet, none of these are micro or small or SME.
Scope of organisations refers to the role, range and nature of the business. Sole proprietorship, partnership, joint stock company, limited companies are some of the organisational scopes that is widely used. A sole proprietorship is owned and controlled by a single person and hence is personally liable for debts, profits as well as loss of the business. These are mostly small and medium scale organisations. Partnerships are collaborations between two or more parties with joint responsibility and there are formal guidelines about how the profits are to be distributed. There is unlimited as well as limited liabilities where there are limitations about the responsibilities of the partners. Under joint stock companies, the scope of the organisation is quite wide and also complicated. There are defined rules about the duties, responsibilities and operational procedures in this type of organisations. Lastly, for the public and private limited companies, the shareholders have some control on the business. The scope is much wider for these limited companies (Scott 2015).
In the above example, as all these organisations are large in size, its scope is also wider. NHS operates in the public health care sector and the scope is much larger. JLP Group operates in the private retail sector and one of the largest companies in the UK in terms of scale of operations, employee strength and profits. Lastly, the National Trust is operating in England, Northern Ireland and Wales, with a large number of employees and volunteers and hence, it also quite a large scope.
Relationship between different organisational functions and their link to the objectives and structure
As stated by Haigh et al. (2015), organisational structure is of various types, such as, functional, divisional, and matrix. These structures help the organisations to define their job profiles and responsibilities. Using the organisational charts, these structures represent the organisational functions, which are mostly designed to accomplish the organisational objectives. In a functional structure, separate departments have one higher authority and the departmental divisions are based on functions. Under divisional structure, each of the company divisions works as a separate independent company. Matrix structure creates various interrelated divisions within the organisation. The functions of the organisations are reflected in the organisational structure.
For example, in the public and voluntary organisations, the organisational functions include services, while the private organisation is involved in goods manufacturing and retailing. However, in all these organisations, the functions are undertaken to fulfil the organisational objectives. Organisational functions include production, financial, administrative, sales and marketing, and research and development. NHS is engaged in service production and related financial, administrative and marketing functions. JLP Group is engaged in all the above mentioned organisational functions, while the National Trust is engaged in service and research and development of the conservation techniques in three different regions. Thus, it can be said that NHS and JLP Group follow the functional organisational structure while National Trust follows the divisional structure as per their organisational operations and objectives.
Critical analysis of the complexities of different types of business structures and interrelationships of different organisational functions
For a critical analysis of the organisational structure and interrelationships between the functions, the National Trust of the UK is chosen below. As stated earlier, it is a voluntary non-profit non-governmental organisation. Although over the years, the scale and scope of this trust has expanded considerably, yet the organisational functions remained same, that is, conservation services to the historic places across three regions, England, Wales and Northern England, and conducting fund raising activities. The organisation thus follows the divisional organisational structure which has geographic divisions. It has three distinct divisions to handle the functions in three different regions. Under this structure, there are horizontal divisions. The organisational structure for the National Trust is shown in the image below.
Figure 1: Divisional organisational structure
(Source: Author)
It can be said that this structure is different from the other structure followed by the other two organisations, that is, NHS and JLP Group. These organisations have multiple departments and each has their own independent responsibilities. Thus, there is a higher authority, such as, CEO, to whom the supervisors of other departments report. Each of the department, such as, production, finance, administrative and marketing, have their own independent operations, which is monitored and controlled by the supervisors of those particular departments and they report to the highest authority. This is the functional organisational structure (Shafritz, Ott and Jang 2015).
Under geographic division, each of the functions exist under each of the regional division, such as, services and fund raising programs are undertaken under each of the regional division of the National Trust, while under functional structure, the division of the departments is done on the basis of their functions, like, productions, sales and marketing, administrative etc. and under these main classification, each of these departments have same functional operations.
Conclusion
From the above analysis, it can be concluded that there is a direct relationship between the organisational functions and its objectives and structures. The functions are based on the organisational objectives and on the basis of the functions, the structures are designed. In the example of the NHS, JLP Group and the National Trust, it is seen that each of these belongs to three different categories of organisation and perform different functions with different objectives. Thus, they follow different type of structures that help them to fulfil the objectives in the optimum manner. While the private and public sector organisations follow the functional structure as they need to focus on different types of activities and objectives, the voluntary organisation needs to monitor same functions and objectives across three different regions, and hence, follows the divisional organisational structure. Thus, these concepts are interrelated and have significant impact on each other.
References
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