1.4.3 Organisational Design Flashcards
What is Hierarchy?
The series of levels in a business, organised by the amount of authority and responsibility that workers have.
How is an organisation divided up?
Board of Directors
- -> Gives direction to the business - -> Managing Director, Finance Director, Marketing Director, Production Director
Managers
- -> Make sure targets are met - -> Sales Managers, Finance Managers, Human Resources Manager, Production Managers
Team Leaders
–> Responsible for a team of supervisors and shop-floor workers
Supervisors
–> Oversee things on a day-to-day basis
Shop-floor Workers
- -> Do the actual work - -> Sales Representative, Market Researchers, Production Workers
What are the three types of organisational structure
- Tall
- Flat
- Matrix
What are organisations with lots of levels in their hierarchy called?
Organisations with lots of levels in their hierarchy are called tall structures
Note: Tall structures have long chains of command
What is an advantage of a tall structure?
There are lots of layers of management so there are more opportunities for promotion –> this can be motivating for employees –> motivated employees tend to be more productive –> producing more means more profit
What is a disadvantage of a tall structure?
Tall structures can negatively impact communication and efficiency Vertical communication (getting messages between the different levels) can take a long time, especially for messages going from the very top to the very bottom of the structure.
What are organisations with only a few levels in their hierarchy called?
Organisations with only a few levels in their hierarchy are called flat structures
Note: People are given more responsibility and freedom, which can be motivating for employees
What is a disadvantage of a flat structure?
Horizontal communication (getting messages throughout one level) can be slow in a flat structure due to the relatively large number of people at each level.
What is the Chain of Command?
The path of communication and authority up and down the hierarchy
What is a Span of Control?
The number of people who report directly to a manager
Note: Managers in a flat structure have wide spans of control –> This means they hot lots of workers
answering to them
What is a Wide Span of Control?
When a manager has many subordinates
What is a Narrow Span of Control?
When the manager has a few subordinates
Which structure has a wide span of control?
Flat structures tend to have a wide span of control
What happens if the span of control is too wide?
If the span of control is too wide, managers find it hard to manage effectively and can become demotivated.
Which structure has a narrow span of control?
Tall structures have a narrow span of control
Note: They aren’t responsible for many people –> This allows them to monitor the people below
them more closely.
A hierarchical structure example
Director
|
Manager
|
———————————————————————————
| |
Team Leader Team Leader
| |
—————————– —————————
| | | |
Supervisor Supervisor Supervisor Supervisor
| | | |
—————- —————— —————- —————
| | | | | | | | | | | | | | | | | | | |
Workers Workers Workers Workers
Here, the manager has a span of control of two people.
Each supervisor has a span of control of five people.
What type of organisational structure is a small business most likely to have?
A small business is likely to have a flat structure and a centralised organisation
What is Centralisation?
A type of business organisation where decisions are made by senior managers at the top of the business (hierarchy)
What is Decentralisation?
A type of business organisation in which the authority to make most decisions is shared between people (branch managers and junior managers) at different layers of the organisational structure
What are the advantages of a centralised structure?
- Quicker Decision Making
- -> Top layer = fewer staff
- -> Senior managers don’t have to consult anybody else - Business leaders have lots of experience of making business decisions
- Consistency
–> Managers get an overview of the whole business, so decisions are consistent throughout
the business - Senior managers aren’t biased towards one department so they can make the best decisions for
the business as a whole.
What are the disadvantages of a centralised structure?
- Not many people are expert enough to make decisions about all aspects of the business
- Excluding employees from decision-making can be demotivating
- Middle / Junior managers lack authority
- -> They feel less empowered –> so they lack motivation –> results in decrease in productivity
What are the advantages of a decentralised structure?
- Involvement in decision-making motivates employees
- -> Lower levels of management more empowered –> more motivation –> Increased productivity
- Employees can use expert knowledge of their sector
- Day-to-day decisions can be made quickly without having to ask senior managers
What are the disadvantages of a decentralised structure?
- Junior managers/employees may not have enough experience to make decisions
- Inconsistencies may develop between divisions in a business
- Junior managers/employees may not be able to see the overall situation and needs of the whole
organisation
What is a Matrix Structure?
A way of organising staff by two different criteria
Note: Businesses might use matrix structures if their operations tend to be project-based
What are the advantages of using a matrix structure?
- Matrix structure is ideal for a business that works on a project-by-project basis
- Very flexible structure means that staff from different departments can jump in and out of different
job roles - Perfect to exploit the specific skills of staff
- Clear objectives –> this increase motivation –> which will lead to an increase in productivity
What are the disadvantages of using a matrix structure?
- Conflict of interest across projects
- This structure could lead to conflict because department managers might have different ideas
about how a strategy could be implemented
