1.4.3 Organisational Design Flashcards
Define organisational design
A diagram/chart which shows the lines of authority and layers in the hierarchy of a business
What are the components that make up structure in a business?
Hierarchy
Chain of command
Span of control
Define hierarchy
A system where employees are ranked due to their status and authority
Define chain of command
The route that orders travel down in an organisation and complaints travel up
Define span of control
Number of subordinates that a supervisor/manager is in charge of
What are the affects of a small span of control?
There will be a tall hierarchy and jobs will be specialised.
What are the affects of a wide span of control?
Creates a flat hierarchy and employees are given more responsibility and larger roles
Define centralisation
Where a business has its organisation of management and administration at one central head office.
Define decentralisation
Where a business divides up the organisation of its business into areas. Each area has separate budgets
What are the types of organisational structure?
- Tall
- Flat
- Matrix
Define tall structure
Hierarchy design which as a long chain of command but a short span of control
Advantages of a tall structure
- supervisors 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 ensure their team is well trained.
Disadvantages of a tall structure
- business is inflexible due to long chain of command.
- communication is slow.
- expensive as there are more mangers and supervisors.
Define flat structure
Hierarchy design which has few layers with a short chain of command but a wide span of control
Advantages of a flat structure
- fast communication as there’s fewer layers.
- staff have more responsibility and opportunities.
Disadvantages of flat structures
- staff can be overstretched as there’s less supervision.
- creates power struggle if manager is not around (subordinates jostle for roles).
- wide span of control means too many staff to manage.
Define matrix structure
Hierarchy design which groups by project and function.
When would a business use a matrix structure?
When there are more than one product/project running at a time.
Advantages of a matrix structure
- very flexible meaning staff can have different job roles.
- perfect to exploit the specific skills of staff
Disadvantages of the matrix structure
- coordination problems between departments.
- conflict of interest across projects.
- staff are stretched across different projects.
