2.2 - Organisational Structure Flashcards
organisational structure definition
the systems of relationships between the individuals of an organisation
types of organisational structures
- tall (vertical)
- flat (horizontal)
levels of heirarchy definition
the number of levels within an organisation
* employees at the same level have the same responsbilities and authority
* tall - many levels of heirarchy
* flat - few levels of heirarchy
span of control definition
the number of employees that a manager directly oversees
* tall - low span of control
* flat - high span of control
chain of command definition
the route that information and responsibilities move up and down the organisational structure of the business
* tall - long chain of command
* flat - short chain of command
pros of tall (vertical) organisational structure
- smaller teams - easier to control and manage
- smaller teams creates higher levels of motivation
- employees have many chances of promotion (motivating)
- clear heirarchy of structure
pros of flat (horizontal) organisational structure
- employees may feel more empowered because they feel like they are closer to the top of the heirarchy
- less managers required - lower management costs
- quicker communication and decision making - short chain of command
- more delegation of responsibility - fosters an environment of high trust
delegation definition
- passing on authority or responsibility of a task to an employee
- (usually passed from a higher level to a lower level in the heirarchy)
pros/cons of delegation
pros
* improves the motivation for lower-level employees
* increases the speed and quality of decision making
* reduces workload for senior and middle managers
* may lead to improved junior employee skill
cons
* cost of training
* may be innapropriate for authoritarian leadership style
* not suitable for managing a crisis
bureaucracy definition
a system under which an organisation uses complex rules and procedures, which may slow the functioning of the business which may reduce its efficiency
what is delayering within a business
when a business removes levels of its heirarchy in the organisational struture
(makes organisation flatter)
pros/cons of delayering
pros
* less salaries to pay
* quicker communication
* empowers lower standing employees
cons
* reduced chance for promotion
* damage brand image/motivation
* fewer chances for promotion
* greater workload for employees
* redundancy costs for managers unneeded
centralization definition
When a business’ key decisions are made in headquarters (HQ) - or at the center of the business
pros/cons of centralization
pros
* easier communication - quick and easy decision making
* more standardisation and control of brand
cons
* may not have good understanding of other markets - standardised (lack of flexibility)
* employees may be demotivated - further away from center where decisions are made
* employees at headquarters have all the pressure - making decisions for the whole business
decentralized decision making definition
when the main decisions of a businesness are passed down to middle or junior level managers within the business or other countries
pros/cons of decentralized decision making
pros
* decisions can be more tailored to the local culture
* empowers individual departments of the business (improves teamwork and morale)
cons
Decisions more tailored to the local culture
Empower other parts of the business
Improved morale and teamwork
what is an organisational chart?
a diagram showing the internal structure of a business
what are the different types of organisational charts?
- organisation by function
- organising based on products
- organising based on region
- matrix structure
- based on projects
- Handy’s Shamrock
what is organisation based on function?
what are its pros and cons?
when a business is organised by department - employees that perform similar tasks are grouped together
pros
* employees can become specialised and efficient at one task
cons
* managers may only consider their function within the business - neglecting overall running of business
what is organisation based on products?
what are its pros and cons?
when a business is organised by different products in its product portfolio
pros
* departments can specialise on only one product
cons
* may lead to a lack of coordination within different compartments - may lead to diseconomies of scale
what is organising a business based on region?
what are its pros and cons?
when a business is organised by the geographical location in which is operates
pros
* similar cultures within the department - communication is similar and efficient
cons
* departments may not communicate thier plans - diseconomies of scale
* lack of consistency across different areas - different customer perceptions
what is organising using the matrix structure?
what are its pros and cons?
orgnising a business into teams based on individual with suitable skills to respond to and supply customers needs
pros
* focuses on the tasks that are necessary for the success of a business
* encourages flexibility and ability to respond to the needs of customers
* motivation and development for employees by supplying varied and challenging tasks
cons
* may create confusion + conflict if teams are not well defined
* employees may have divided responsibilities
* heavy expenditure on support staff may be required
organising a business based on products definition?
what are its pros and cons?
organising of a business by project (a temporary objective which a business persues)
pros
* encourages creativity and innovation
* employees have the opportunity to develop new skills
* allows resources to be allocated in places where they will operate most effectively
* skills development
cons
* employee isolation (lack of belonging or company culture)
* limited communication between teams
* narrow skill use (employees hired for just one skill - may not grow)
* divided loyalties (lead to confusion, stress, conflicting priorities)
what is Handy’s Shamrock Organisational structure
when the business is divided into three main sections
* core workers (full time employees; teachers)
* temporary workforce (part time - per job or per hour; substitute teachers)
* subcontractor (outsourced employees -> external; building company for renovations)
what must you consider when deciding what organisational structure to use?
changes in the external environmnet (external factors)
eg.
* changes in technology
* changes in competition
* economic changes
