2.2 Organisation structure

Question 1

Organisational structure:

Answer 1

It is a type of internal framework which shows how management is linked together and how authority is passed down.

Question 2

The organisational structure determines

Answer 2

how tasks are divided and coordinated,
who employees report to,
who has the authority to define tasks to employees and
what the role of each employee is in the organisation

Question 3

Delegation

Answer 3

Delegation: a line manager entrusts and empowers a subordinate with authority to successfully complete a particular task, project or role.
Passing on the control and authority to others
Staff are accountable for their actions but the line manager is still responsible.
Authority: a line manager gives orders and instructions to his/her subordinates.
Responsibility: duties and obligation assigned to a person in the organization. Managers are held responsible for the work and tasks they delegate.

Question 4

Disadvantages of delegation

Answer 4

Confusion and inadequacy
Business have to invest in training
Doesn’t motivate everyone, boring jobs demotivated staff
Insufficient power

Question 5

Advantages of delegation

Answer 5

Motivate employees as they feel valued and empowered
Can improve the quality and speed of decision-making
Helps reduce the workload of senior managers

Question 6

Span of control:

Answer 6

Span of control describes the number of subordinates that a manager or supervisor can directly control. This number varies with the type of work: complex, variable work reduces it, whereas routine, fixed work increases it.
Number of people directly accountable to a manager

Question 6

Wide span of control

Answer 6

More people under the control of one manager (Flatter structure)
Flatter structure
Many people under a manager’s control
Fewer layers

Question 7

Narrow span of control:

Answer 7

Less people under the control (Taller Structures):

Question 8

Advantages of wide span of control

Answer 8

Delegation becomes very important
Communication should be faster
It is cheaper to operate because there are fewer levels of management – requires strong leadership
Smaller ‘psychological distance’ between those at the top and those at the bottom of an organisation
Workers have a better degree of independence
Smaller teams might be more productive, better team spirit

Question 9

Disadvantages of wide span of control

Answer 9

Tends to be more costly

Question 10

Advantages of narrow span of control:

Answer 10

Quicker communication between smaller teams
Clearer (but longer) lines of communication between the different layers of management
Smaller teams are easier to control and manage
Greater specialisation and division of labour can help increase efficiency and productivity
There are greater opportunities to earn promotion - more levels exist in the hierarchy

Question 11

Wide or narrow span of control depends on

Answer 11

Employee competencies - This refers to the skills, qualifications, training, and experience of employees.
Managerial competencies - This refers to the attitudes and beliefs of managers, and hence their management styles.
The business context - This refers to the nature of the organization and the market(s) in which it operates as well as the activities under consideration

Question 12

Levels of Hierarchy

Answer 12

Refers to the number of layers of formal authority.
Hierarchy: Organizational structure based on ranking systems
Top: CEO, Board
Bottom: The most unskilled employees
Hierarchy: is a pyramid-like structure where each level (except the top and the bottom levels) has one higher and one lower level. The higher a level is in the hierarchy the greater the authority or importance.

Question 13

Chain of command

Answer 13

Formal line of authority through which orders are passed down in an organization – it can be seen through the firm’s organization chart.
Organizational chart shows the path commands and decisions are communicated
Few levels of hierarchy have short chain of command
Many levels of hierarchy have long chain of command

Question 14

Bureaucracy

Answer 14

Bureaucracy refers to the administrative system within an organization including formal policies and procedures. The prescribed rules, policies, and procedures that an organization has.

Question 15

Bureaucracy advantages

Answer 15

Associated with organizations that are well-established.
Clear hierarchical structures – many layers of management
Centralised decision making
employees doing specific roles and being held accountable for their areas of responsibility.
helps managers to ensure they have control of their business and its operations.

Question 16

Bureaucracy disadvantages

Answer 16

Lack of flexibility
slow responding to changes in the external environment
Creativity and innovation are discouraged
slows down decision making
causes operational inefficiencies.

Question 17

Centralisation

Answer 17

Centralization: Keeping all of the important decision-making powers within the head office or the centre of the organisation.
Decision making centralized
Lack of delegation (Morale and productivity lower)
Narrow spans of control

Question 18

Centralisation advantages

Answer 18

Rapid decision-making: No need to consult employees.
Senior managers maintain better command and control
Efficiency: Instructions are clear
Better sense of direction: Decisions are made by senior leaders

Question 19

Centralisation Disadvantages

Answer 19

Added pressure for senior staff
Inflexibility: workers had little autonomy
Demotivating: employees can’t contribute, feel less valued
Unsuitable for industries that rely on creativity and autonomous decision-making

Question 20

Decentralisation

Answer 20

Decentralization: Decision-making powers are delegated throughout the organization.
Decision making is delegated to middle and junior level managers.
Strategic decision-making is made by the group of senior managers.
Flatter hierarchical structure, with fewer levels in the organizational hierarchy.
Wider spans
Leadership style: more democratic.

Question 21

Decentralisation advantages

Answer 21

Input from the workforce: skills, expertise and efforts of their employees
Decision-making is more flexible, a lot quicker, planning and execution are more efficient
Improved morale: empowered staff
Improved accountability: workers are held accountable
Teamwork
reduces the workload on senior executives and directors

Question 22

Disadvantages of decentralisation

Answer 22

Costly: Sometimes requires financial incentives for middle managers
Inefficiencies: supplicate functions
Greater chances of mistakes: Empower workers have to be competent and skilled.
Some loss of control: Decision-making authority is diluted. More difficult for senior managers to know about all of the decisions that are made
Communication issues: decentralized decision making requires efficient communication.

Question 23

Factors affecting the level of centralization and decentralization:

Answer 23

The size of the organization
The importance of the decision
The level of risk
The corporate culture
Management attitudes and competencies
The use of ICT

Question 24

Delaying

Answer 24

Definition: Process of removing one or more levels in the hierarchy to flatten the structure Reduces numbers of layers Widens span of control

Question 25

Delaying advantages

Answer 25

Reduces costs by moving levels of management Improves communication Encourage delegation and empowerment

Question 26

Delaying disadvantages

Answer 26

Create insecurity and anxiety Can increase workload of the existing workforce Cost implications – upgrade skills Longer decision making

Question 27

Matrix structure

Answer 27

A matrix structure is the method of organizing individuals from different departments to temporarily work together on a particular project. Individuals may report to multiple managers and be part of multiple teams. A matrix structure involves organizing or assigning individuals to multiple roles, so they are placed in multiple reporting lines.

Question 28

Matrix advantages

Answer 28

Improved communication Maximizes skills set of the workforce: Using experts from across the organization helps to generate new and creative ideas Cost effective The flexibility enables organizations to overcome limitations.

Question 29

Matrix disadvantages

Answer 29

Can isolate members Added workload –demoralized workforce Difficult to coordinate Time consuming Conflict of interest between departments additional resources and finance are required to fund the different teams in a matrix structure