6.3a Organisational design Flashcards
Organisational design definition
Process of shaping an organisation’s structure
What do organisational chart’s show?
- The management hierarchy in a business
- Span of control
- Line management
- Chain of command
Span of control definition
Number of subordinates for whom a manager is directly responsible
Effects of a narrow span of control
- Allows for closer supervision of employees
- More layers may be required
- Helps more effective communication
Chain of command definition
The lines of authority within a business
Advantages of a short chain of command
- Better communication
- Easier to keep control over the staff
Advantages of a long chain of command
- Clear lines of promotion
- Responsibilities can be delegated around
What is a tall hierarchy also known as?
A traditional or mechanistic structure
Advantages of tall hierarchy
More opportunities for promotion
Disadvantages of tall hierarchy
- Takes longer for communication to pass through the layers
- More layers = more staff = higher costs
Advantages of a flat structure
- Vertical communication is improved
- Fewer layers = less staff = lower costs
Disadvantages of a flat structure
- Fewer opportunities for promotion
- Can lead to managers getting overwhelmed by too many people reporting to them
What does a matrix structure do?
Combines the traditional departments seen in hierarchical structure with project teams
Advantages of matrix structure
- Improves communication
- Individuals get to use their skills
- Likely to result in greater motivation amongst team
Disadvantages of matrix structure
- Members of project teams may have divided loyalties
- May not be a clear line of accountability for project teams
- Difficult to co-ordinate
Delegation definition
The assignment to others of the authority for particular functions, tasks and decisions
Advantages of delegation
- Reduces management stress and workload
- Subordinates are empowered and motivated
- Good method of on-the-job training
Disadvantages of delegation
- Business should not delegate responsibility at all times
- Depends on quality of subordinates
Business structure decision depends on
- Size of business
- Work involved
- Hard or soft HRM
Centralisation definition
Small number of senior managers in a business take all the important decisions
Decentralisation definition
Employees working in all areas of the business make decisions
Advantages of centralisation
- Easier to co-ordinate and control
- Economies of scale
- Quicker decision making
- Experienced leaders
Disadvantages of centralisation
- More bureaucratic
- Lack of authority down hierarchy may reduce motivation
- Customer service lacks flexibility
- Organisation reacts slowly to change because senior managers don’t spend time on shop floor to notice consumer trends
Advantages of decentralisation
- Increased staff motivation
- Employees use expert knowledge of their sector
- Day-to-day decisions made quickly without having to ask senior manager
Disadvantages of decentralisation
- Decision is not strategic
- Harder to ensure consistent practices at each location
- Diseconomies of scale
Delayering definition
Removing parts of the hierarchy to create a flatter structure
Advantages of delayering:
- Lower costs
- Improved communication
Disadvantages of delayering:
- Costs of retraining
- If overdone managers can have too wide spans of control
Factors influencing whether a centralised or decentralised approach is used:
- Size
- Nature of business
- Objectives
- Culture
