6.3a - Organisational Design

Question 1

Organisational design definition

Answer 1

The process of shaping an organisation’s structure

Question 2

Delayering definition

Answer 2

Removing layers in the hierarchy to create a flatter structure

Question 3

Advantages of delayering:

Answer 3

• Lower costs

- Improved communication

Question 4

Disadvantages of delayering:

Answer 4

• Cost in short term as staff need to be retrained

- If overdone managers can have too wide spans of control

Question 5

What does an organisational chart show?

Answer 5

• Management hierarchy
• Span of control
• Line management
• Chain of command

Question 6

Span of control definition

Answer 6

The number of subordinates for whom a manager is directly responsible

Question 7

What are the effects of a business having a narrow span of control?

Answer 7

• Closer supervision of employees
• More layers required
• More effective communication
• Workers may feel demotivated if micromanaged too much

Question 8

What are the effects of a business having a wide span of control?

Answer 8

• Subordinates have the chance for more independence

- More appropriate if labour costs are significant (reduce number of managers)

Question 9

Chain of command definition

Answer 9

The lines of authority within a business

Question 10

Advantages of a short chain of command:

Answer 10

• Better communication

- Easier to keep control over staff

Question 11

Advantages of a long chain of command:

Answer 11

• Clear lines of promotion

- Responsibilities can be delegated

Question 12

What is a tall hierarchy also known as?

Answer 12

• Traditional structure

- Mechanistic structure

Question 13

Advantages of a tall hierarchy:

Answer 13

More opportunities for promotion

Question 14

Disadvantages of a tall hierarchy:

Answer 14

• Takes longer for communication to pass through layers

- More layers means higher costs

Question 15

Advantages of a flat structure:

Answer 15

• Vertical communication is improved

- Fewer layers means lower costs

Question 16

Disadvantages of flat structure:

Answer 16

• Fewer opportunities for promotion

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

Question 17

Matrix structure definition

Answer 17

An organisational structure that combines the departments with project teams

Question 18

Advantages of matrix structure:

Answer 18

• Breaks down department barriers (improves communication)
• Individuals get to use their skills
• Greater motivation among team
• Sharing of good practice

Question 19

Disadvantages of matrix structure:

Answer 19

• Members of project teams may have divided loyalties - May not be a clear line of accountability
• Difficult to co-ordinate
• Team members may neglect functional responsibilities

Question 20

Delegation definition

Answer 20

The assignment of authority to others

Question 21

Advantages of delegation:

Answer 21

• Reduces management stress and workload
• Subordinates are motivated
• Method of on-the-job training

Question 22

Disadvantages of delegation:

Answer 22

• Business should not delegate responsibility at all times

- Depends on quality of subordinates

Question 23

What are the influences on the structure that a business chooses?

Answer 23

• Size of business
• Work involved
• Views of management
• Hard or soft HRM
• Culture

Question 24

Centralisation definition

Answer 24

When a small number of senior managers take all the important decisions

Question 25

What are the features of a centralised structure?

Answer 25

• Hard HRM
• Long chain of command
• Narrow span of control
• Tall structure

Question 26

What are the features of a decentralised structure?

Answer 26

• Soft HRM
• Short chain of command
• Wide span of control
• Flat structure

Question 27

Decentralisation definition

Answer 27

When employees working in all areas are able to make decisions

Question 28

Advantages of centralisation:

Answer 28

• Easier to implement common policies
• Easier to control
• Economies of scale
• Quicker decision making
• Business leaders have experience

Question 29

Disadvantages of centralisation:

Answer 29

• More bureaucratic
• Lack of authority down hierarchy may reduce motivation
• Organisation reacts slowly to change (senior managers don’t spend time on shop floor to notice consumer trends)
• Not many are expert enough

Question 30

Advantages of decentralisation:

Answer 30

• Better able to respond to local circumstances
• Improved customer service
• Good way of training and developing
• Motivated staff
• Employees use expert knowledge of their sector

Question 31

Disadvantages of decentralisation:

Answer 31

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