6.3a - Organisational Design Flashcards
Organisational design definition
The process of shaping an organisation’s structure
Delayering definition
Removing layers in the hierarchy to create a flatter structure
Advantages of delayering:
- Lower costs
- Improved communication
Disadvantages of delayering:
- Cost in short term as staff need to be retrained
- If overdone managers can have too wide spans of control
What does an organisational chart show?
- Management hierarchy
- Span of control
- Line management
- Chain of command
Span of control definition
The number of subordinates for whom a manager is directly responsible
What are the effects of a business having a narrow span of control?
- Closer supervision of employees
- More layers required
- More effective communication
- Workers may feel demotivated if micromanaged too much
What are the effects of a business having a wide span of control?
- Subordinates have the chance for more independence
- More appropriate if labour costs are significant (reduce number of managers)
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 staff
Advantages of a long chain of command:
- Clear lines of promotion
- Responsibilities can be delegated
What is a tall hierarchy also known as?
- Traditional structure
- Mechanistic structure
Advantages of a tall hierarchy:
More opportunities for promotion
Disadvantages of a tall hierarchy:
- Takes longer for communication to pass through layers
- More layers means higher costs
Advantages of a flat structure:
- Vertical communication is improved
- Fewer layers means lower costs
Disadvantages of flat structure:
- Fewer opportunities for promotion
- Can lead to managers getting overwhelmed by too many people reporting to them
Matrix structure definition
An organisational structure that combines the departments with project teams
Advantages of matrix structure:
- Breaks down department barriers (improves communication)
- Individuals get to use their skills
- Greater motivation among team
- Sharing of good practice
Disadvantages of matrix structure:
- 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
Delegation definition
The assignment of authority to others
Advantages of delegation:
- Reduces management stress and workload
- Subordinates are motivated
- Method of on-the-job training
Disadvantages of delegation:
- Business should not delegate responsibility at all times
- Depends on quality of subordinates
What are the influences on the structure that a business chooses?
- Size of business
- Work involved
- Views of management
- Hard or soft HRM
- Culture
Centralisation definition
When a small number of senior managers take all the important decisions
What are the features of a centralised structure?
- Hard HRM
- Long chain of command
- Narrow span of control
- Tall structure
What are the features of a decentralised structure?
- Soft HRM
- Short chain of command
- Wide span of control
- Flat structure
Decentralisation definition
When employees working in all areas are able to make decisions
Advantages of centralisation:
- Easier to implement common policies
- Easier to control
- Economies of scale
- Quicker decision making
- Business leaders have experience
Disadvantages of centralisation:
- 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
Advantages of decentralisation:
- 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
Disadvantages of decentralisation:
- Decision is not strategic
- Harder to ensure consistent practices at each location
- Diseconomies of scale
