Organisational Structure
The internal formal framework of a business that shows the way in which management is organised and liked together and how authority is passed through the organisation.
Organisation chart Advantages
- Clear identification of each individual
- Can spot communication problems
- Shows Chain of command
- Shows Span of control
Organisation chart Disadvantages
- Difficult to identify extent of manager’s authority
- Doesn’ t show informal relationships
Hierarchial (tall) Structure
A tall pyramid with many layers of management. Most common in organisations:
- Decisions and instructions passed down
- Information passed back up
Hierarchial Structure Benefits
- Narrow span of control
- Closer supervision
- Staff specialisation
- Greater chance of promotion
Hierarchial Structure Costs
- Long chain of command
- Reduced effectiveness and communication
- Slow down of decision making
- Costly to run
Flat structure
Low pyramid with few layers of management.
Flat Structure Advantages
- Fewer levels of management which saves costs
- Short chain of command
-> Quick decision making
-> Good communication from top to bottom - Wide span of control
-> Better motivation (empowerment)
Flat Structure Disadvantages
- Employee workload likely to increase
- Employees may need to take further training
- Fewer opportunities for promotion
Chain of Command
Shows the way instructions and authority are passed down vertically through an organisation. More layers of management = loger chain of command.
Span of Control
Number of subordinate employees a manager has responsibility for. A tall hierarchy has a narrow span of control and a flat has a wide span of control.
Narrow Span of Control
- Manager can supervise staff closely
- Subordinates can ask for help more often
- Manager may not have enough staff to share ideas with
- It may put workers under pressure
Wide Span of Control
- Manager is responsible for a large number of employees
- Empowement for subordinates, greater decision making and responsibility as manager isn’t around often
- Manager has higher workload and less time for each employee
Delegation
Passing authority down the organisational hierarchy meaning workers are accountable for their work which can help motivate them. The wider the span of control, the greater the degree of delegation.
Delayering
Reducing staffing levels through cutting out levels of management and flattening the structure. Creates a smaller hierarchy and each manager has a bigger span of control.
Bureaucracy
System most commonly found in government organisations. Discourages initiative and enterprise as decisions are taken centrally and then put into effect by staff following set procedures. Higher costs as processes need to be followed and increases the time taken to complete each task.
Centralised Structures
All control and decisions depend on senior management in head office. Procedures are standardised throughout the entire business.
Centralised Structures Advantages
- Decisions benefit the business as a whole
- Fewer decision makers lead to better communication
- Easier to promote and enforce corporate culture
Centralised Structure Disadvantages
- Lower level staff may be demotivated due to lack of responsibility
- Managers workload is high as they make all the decisions
Decentralised Structures
Control and decisions is delegated to individual departments. Relieves managers from day-to-day tasks.
Decentralised Structure Advantages
- Empowers and motivates employees
- Reduces stress and burdens from senior management
- More proactive approach
- Quicker more responsive decision making
Decentralised Structure Disadvantages
- Training may be required for staff to make decisions
- Corporate image is hard to cultivate when each department is making their own decisions
Different types of Organisational Structures
Organisation by Function: departments where staff have similar skills and expertise and do similar jobs.
Organisation by Product: each division has its own fumctional staff and concentrate on the individual product it offers
Organisation by region: organise employees according to their geographical location
