1.4.3 Organisational Design

Question 1

Organisational design

Answer 1

• Organisational design refers to a diagram or chart which shows the lines of authority and layers in the hierarchy of the business.

Question 2

Hierarchy

Answer 2

• A hierarchy is a system in a business where employees are ranked due to their status and authority
• Traditionally those at the top of the hierarchy are more important than those at the bottom
• Employees during their career will seek to move up the hierarchy to improve their salary and working conditions

Question 3

Chain of command

Answer 3

• The chain of command in a business is the flow of information power and authority through the organisation
• Those at the top have more power and authority
• They can delegate tasks to those subordinate to them in the hierarchy (below them)
• Complaints and status reports flow up the chain, orders flow down the chain. Both need to be handled at the lowest level possible

Question 4

Span of control

Answer 4

• This is a number
• An employee that works as a Head of Department in a school may have 6 teachers working for them. Their span of control is therefore 6.
• This is the number of subordinates that they can delegate to

Question 5

Decentralisation

Answer 5

where a business divides up the organisation of its business into areas for example: north, south, east, west or UK, Europe, and Africa. The business will have separate budgets for each area

Question 6

Centralisation

Answer 6

where a business has its organisation of management and administration at one central head office. The business has one central shared budget

Question 7

Tall structure

Answer 7

• In a tall structure there maybe lots of opportunity for promotion
• Information takes a long time to get from the bottom to the top of the organisation, it takes a long time for decisions to be made
• Work is shared among more people so less stress
• Everyone knows where they are in the hierarchy, so very orderly and organised

Question 8

Advantages of a tall hierarchical structure

Answer 8

• Supervisors normally have a small span of control so they can get to know their subordinates really well
• Knowing subordinates means they can delegate the right tasks and make sure their team is well trained

Question 9

Disadvantages of a tall hierarchical structure

Answer 9

• Lots of layers and a long chain of command can mean that the business is very inflexible
• It can also mean that communications within the organisation are slow
• This is expensive as there are more managers and supervisors

Question 10

Flat structure

Answer 10

• Many restaurants and web design companies have a flat structure. They have a wide span of control and a short chain of command so information flows quickly throughout the organisation.

Question 11

Advantages of a flat structure

Answer 11

• Fewer layers of hierarchy between the bottom and the top of the organisation may mean that communication is fast
• Lots of delegation means that staff are given greater responsibility, which might mean more opportunities to use their abilities

Question 12

Disadvantages of a flat structure

Answer 12

• Staff can be overstretched or overworked in a flat structure as there is less supervision, this can cause stress and demotivation
• Can create a power struggle if the manager is rarely around as subordinates jostle for roles and responsibilities
• Wide span of control means managers have too many staff to manage and may lose touch with them

Question 13

Matrix explained

Answer 13

• In a business where there are more than one product or more then one project running at a time a matrix structure is more suitable than a standard hierarchy
• For example: Members of the production team sit on meetings for all 3 projects and advise on production matters – can it be built? Can it be built to the quality required? Have we got the materials to build it?

Question 14

Advantages of the matrix structure

Answer 14

• 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

Question 15

Disadvantages of a matrix structure

Answer 15

• Possible co-ordination problems between departments
• Conflict of interest across projects
• Staff stretched across different projects, not spending time in their own departments

Question 16

Impact of different organisational structures on business efficiency and motivation

Answer 16

Matrix and Efficiency:
• Matrix organisations are only suitable when the business works on a project by project basis.
• For a business that has a lot of projects running at the same time, this type of organisation is very efficient

Matrix and Motivation :

• Staff are involved in a series of projects which can be more interesting than just one job, which means it can be more motivating

Tall and efficiency:

• Communication is slow in a tall hierarchy as there are many layers for the information to pass through
• This can lead to delayed decision making

Tall and motivation:
• Staff can be motivated because there are lots of opportunities for promotion, with lots of layers in the hierarchy

Flat and efficiency:
• Flat structures can be very efficient because those employees that are most effected by a rota can be involved in the writing of the rota of who works when

Flat and motivation :

• Staff are motivated in a flat structure as they are given more responsibility
• Also staff are motivated because they have had a hand in managing and running the business e.g. waitresses take turns in organising the rota