2.2 Organizational structure

Question 1

Organization chart

Answer 1

A diagrammatic representation of an organization’s formal organizational structure.

Question 2

Delegation

Answer 2

Occurs when a line manager entrusts and empowers a subordinate with authority to successfully complete a particular task, project or a role, it involves passing on control and authority but holding subordinates accountable for their actions.

Question 3

Advantages of delegation

Answer 3

• can motivate employees, as they feel validated and empowered
• can improve the quality and speed of decision-making, especially in large organizations
• helps to reduce workload of senior managers
• helps to improve the skills and qualities of employees throughout the business

Question 4

Disadvantages of delegation

Answer 4

• usually comes with additional pay or remuneration
• often requires the business to invest in prior training and development of employees

Question 5

Span of control

Answer 5

Refers to how many workers are directly accountable to a particular line manager
There is an inverse relationship between the span of control and the number of layers in the organizational hierarchy.

Question 6

Narrow span of control

Answer 6

• fewer workers report directly to the manager
• managers have a narrow span of control in the organizations that prefer to have a tighter control on decision-making
• can improve communications and control

Question 7

Wide span of control

Answer 7

• line manager has responsibility for many subordinates
• delegation is inevitable
• can help reduce cost

Question 8

Levels of hierarchy

Answer 8

Refers to the number of layers of formal authority, it is represented in an organizational chart.

Question 9

Tall structure

Answer 9

Has many levels of hierarchy, so the span of control is likely to be narrow, decision-making tends to be centralized and relatively quick.

Question 10

Flat structure

Answer 10

Has fewer levels in the organizational hierarchy, so the span of control is likely to be wide, decision-making is decentralized and takes relatively longer time
The hierarchical structures in an organization show when each worker fits within the firm, showing their level of seniority. The organizational hierarchy also indicates lines of communication, decision-making authority, accountabilities and responsibilities.

Question 11

Chain of command

Answer 11

The chain of command is the vertical lines of authority through which orders are passed down the hierarchy. Organisation charts show the employees who managers are responsible for and which managers employees are accountable to.

Question 12

Bureaucracy

Answer 12

Refers to the administrative systems within an organization
This includes the formal policies and procedures of the business. A bureaucratic organization is one that has a lot of formal rules, regulations and procedures. There is a lack of flexibility as the organization is set in the way it does things. Typically, bureaucratic organizations involve a lot of paperwork to get tasks approved and accomplished.

Question 13

Centralization

Answer 13

Where authority and responsibility for decision-making rests with those at the top of the business hierarchy. In a centralised structure:
- control rests with senior managers who have access to more information and better appreciate the wider implications of decisions than those further down the chain
- senior management are given more control over the decision-making process
- power is concentrated in the hands of a few senior managers

Question 14

Decentralization

Answer 14

Delegates responsibility to those lower down the chain of command, e.g. to individual departments:
- encourages greater empowerment and motivates those lower down
- offers greater personal development for all employees
- increases the speed of decisions

Question 15

De-layering

Answer 15

Reducing staff numbers and costs by removing layers of authority.

Question 16

Types of organisation chart

Answer 16

• Flat
• Tall
• By product
• By function
• By region

Question 17

Tall (vertical) organisation structure

Answer 17

When an organisation has many levels of authority or hierarchy, it is called a tall organisation. This type of structure has:
- many levels of hierarchy
- narrow spans of control
- centralised decision-making
- autocratic leadership
- limited delegation

Question 18

Flat (horizontal) organisational structure

Answer 18

When an organisation has few levels of authority or hierarchy, it is called a flat organisation. This type of structure has:
- few levels of hierarchy
- wide spans of control
- decentralised decision-making
- democratic leadership
- widespread delegation and empowerment

Question 19

Hierarchical organisations

Answer 19

A hierarchical organisation is arranged with the senior management at the top and each subsequent level of power below them. This is the dominant form in large organisations.

Question 20

Functional organisations

Answer 20

In most businesses, jobs are grouped together into functions (departments), e.g. the firm has separate marketing and finance departments. Within each department there are clear channels of communication and a recognised hierarchy with employees having defined roles and responsibilities. The decision-making is focused on a few ‘at the top’, operating as a centralised structure.

Question 21

Advantages of functional organisations:

Answer 21

• Accountability – managers are responsible for the work of their department.
• Clarity – it is clear to all employees who is responsible for each function.
• Specialisation – each department has specialist personnel, increasing productivity.

Question 22

Disadvantages of functional organisations:

Answer 22

• Bureaucracy/lack of flexibility – departments have set rules and procedures and may do things ‘the department way’.
• Communication problems – departments may not communicate well with each other.
• Departments may be resistant to change.

Question 23

Organisation by product

Answer 23

Large firms often have an extensive product range and may organise by type of product. Each product may be organised as a separate company owned by the main holding company. Within each product line, the firm may be organised by function.

Question 24

Organizational structures

Answer 24

• Matrix structures/project teams
• Charles Handy’s shamrock organisation

Question 25

Matrix structures/project teams

Answer 25

Based on the specific needs of a particular project or a business venture, suitable for getting experts together for short-term or temporary projects.

Question 26

Advantages of a matrix structure:

Answer 26

• flexibility
• combines individuals from different disciplines with different skills
• encourages creative thinking
• decentralised form of organisation
• managers focus on strategic planning
• encourages cooperation between different functional areas
• used within traditional bureaucratic structures to encourage creativity

Question 27

Disadvantages of a matrix structure:

Answer 27

• possible power struggles between departments
• team members have two managers – the project team manager and their functional line manager, which may lead to conflicts
• can lead to slower decision-making because of the need for agreement and cooperation

Question 28

Charles Handy’s shamrock organisation

Answer 28

• the professional core workers - full time experts who are vital for the organization’s operations and survival
• the contingent workforce (peripheral workers) - temporary staff hired by the organizations, it is made up of portfolio workers, part-time staff, seasonal workers, and workers on flexible hours, these workers perform routine jobs
• outsourced vendors - individuals or other organizations hired on a contract basis to carry out a specific, but non-core role, they mainly consist of self-employed professionals and contractors who are hired on flexible and project-based terms

Question 29

Communication methods

Answer 29

• Verbal/oral communication
• Visual communication
• Written communication
• Non-verbal communication (NVC)

Question 30

The impact of innovation on communication

Answer 30

New technology gives the sender and receiver more control over the communication process. As technology evolves, choosing communication channels and appropriate language becomes more important and context-driven.
The volume of information is increasing rapidly and computers and other mobile devices can capture, store and deliver information as required, which can be personalised and filtered. The rapidly changing technological environment must be recognised by HR departments in their planning, policies and training.