6.3a Organisational design

Question 1

Organisational design definition

Answer 1

Process of shaping an organisation’s structure

Question 2

What do organisational chart’s show?

Answer 2

• The management hierarchy in a business
• Span of control
• Line management
• Chain of command

Question 3

Span of control definition

Answer 3

Number of subordinates for whom a manager is directly responsible

Question 4

Effects of a narrow span of control

Answer 4

• Allows for closer supervision of employees
• More layers may be required
• Helps more effective communication

Question 5

Chain of command definition

Answer 5

The lines of authority within a business

Question 6

Advantages of a short chain of command

Answer 6

• Better communication

- Easier to keep control over the staff

Question 7

Advantages of a long chain of command

Answer 7

• Clear lines of promotion

- Responsibilities can be delegated around

Question 8

What is a tall hierarchy also known as?

Answer 8

A traditional or mechanistic structure

Question 9

Advantages of tall hierarchy

Answer 9

More opportunities for promotion

Question 10

Disadvantages of tall hierarchy

Answer 10

• Takes longer for communication to pass through the layers

- More layers = more staff = higher costs

Question 11

Advantages of a flat structure

Answer 11

• Vertical communication is improved

- Fewer layers = less staff = lower costs

Question 12

Disadvantages of a flat structure

Answer 12

• Fewer opportunities for promotion

- Can lead to managers getting overwhelmed by too many people reporting to them

Question 13

What does a matrix structure do?

Answer 13

Combines the traditional departments seen in hierarchical structure with project teams

Question 14

Advantages of matrix structure

Answer 14

• Improves communication
• Individuals get to use their skills
• Likely to result in greater motivation amongst team

Question 15

Disadvantages of matrix structure

Answer 15

• Members of project teams may have divided loyalties
• May not be a clear line of accountability for project teams
• Difficult to co-ordinate

Question 16

Delegation definition

Answer 16

The assignment to others of the authority for particular functions, tasks and decisions

Question 17

Advantages of delegation

Answer 17

• Reduces management stress and workload
• Subordinates are empowered and motivated
• Good method of on-the-job training

Question 18

Disadvantages of delegation

Answer 18

• Business should not delegate responsibility at all times

- Depends on quality of subordinates

Question 19

Business structure decision depends on

Answer 19

• Size of business
• Work involved
• Hard or soft HRM

Question 20

Centralisation definition

Answer 20

Small number of senior managers in a business take all the important decisions

Question 21

Decentralisation definition

Answer 21

Employees working in all areas of the business make decisions

Question 22

Advantages of centralisation

Answer 22

• Easier to co-ordinate and control
• Economies of scale
• Quicker decision making
• Experienced leaders

Question 23

Disadvantages of centralisation

Answer 23

• 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

Question 24

Advantages of decentralisation

Answer 24

• Increased staff motivation
• Employees use expert knowledge of their sector
• Day-to-day decisions made quickly without having to ask senior manager

Question 25

Disadvantages of decentralisation

Answer 25

• Decision is not strategic
• Harder to ensure consistent practices at each location
• Diseconomies of scale

Question 26

Delayering definition

Answer 26

Removing parts of the hierarchy to create a flatter structure

Question 27

Advantages of delayering:

Answer 27

• Lower costs

- Improved communication

Question 28

Disadvantages of delayering:

Answer 28

• Costs of retraining

- If overdone managers can have too wide spans of control

Question 29

Factors influencing whether a centralised or decentralised approach is used:

Answer 29

• Size
• Nature of business
• Objectives
• Culture