Chapter 13 Organisational structure

Question 1

Why do businesses need organisational structure?

Answer 1

indicates who has overall responsibility for decision making

formal relationships
the way in which accountability and authority may be passed down
number of subordinates reporting to each senior manager
formal channels of communication - vertical or horizontal
identity of supervisor and managers

Question 2

Define matrix structure

Answer 2

an organisational structure that creates project teams that cut across traditional functional departments

Question 3

Advantages of matrix structure

Answer 3

• Allows total communication between all members of the team,
• It cuts across traditional boundaries between departments in a hierarchy
• There is less chance of people focusing on just what is good for their department. This is replaced with a feeling of what is good for the project and business as a whole
• Crossover of ideas between people with specialist knowledge in different areas tends to create more successful/innovative solutions
• This system is well designed to respond to changing markets or technical conditions

Question 4

Disadvantages of matrix structure

Answer 4

Less direct control from the top => this passing down of authority to more junior staff could be difficult for some managers to come to terms with
Team members may have two leaders if business retains levels of hierarchy but allows cross departmental teams => cause conflict of interests which can result in inefficiency
Workers are frequently chosen to participate on cross-functional teams because they possess a broad and diverse skill set. However, in general, the wages earned by an individual increase in relation to the skills he or she possesses

Question 5

What are the key principles of organisational structure?

Answer 5

Level of hierarchy
Chain of command
Span of control
Delegation

Question 6

Level of hierarchy

Answer 6

A stage if the organisational structure at which the personnel on it have equal status and authority

Question 7

Chain of command

Answer 7

the route through which authority is passed down an organisation
taller organisation, longer the chain of command

Question 8

Span of control

Answer 8

the number of subordinates reporting directly to a manager

Question 9

Delegation

Answer 9

passing authority down the organisational hierarchy

Question 10

Advantages of delegation

Answer 10

gives senior managers more time to focus on important, strategic roles
shows trust in subordinates and this can motivate and challenge them
develops and trains staff for more senior positions
helps staff to achieve fulfilment through their work (self-actualisation)

Question 11

Disadvantages of delegation

Answer 11

if the task is not well defined or if inadequate training is given, delegation is unlikely to succeed
delegation will be unsuccessful if insufficient authority is given to the subordinate who is performing the tasks
managers may only delegate boring jobs that they do not want to do - this will not be motivating

Question 12

Define centralisation

Answer 12

keeping all of the important decision-making powers within head office or the centre of the organisation

Question 13

Define decentralisation

Answer 13

decision making powers are passed down the organisation to empower subordinates and regional/product managers

Question 14

Advantages of centralisation

Answer 14

A fixed set of rules and procedures in all areas, lead to rapid decision making
consistent policies throughout the organisation. prevents any conflicts between divisions, avoids confusion of consumers
Senior managers take decisions in the interest of the whole business
Central buying should allow for greater economies of scale
Senior managers at central office will be experienced decision makers

Question 15

Advantages of decentralisation

Answer 15

More local decisions can be made that reflect different conditions - the managers who take the decision will have local knowledge and are likely to have closer contact with customers
More junior managers can develop and this prepares them for more challenging roles
Delegation and empowerment are made easier and these will have positive effects on motivation
Decision making in response to changes should be quicker and more flexible as head office wil not have to be involved every time

Question 16

Define delayering

Answer 16

removal of one or more of the levels of hierarchy from an organisational structure

Question 17

Links between level of hierarchy and chain of command

Answer 17

greater levels, longer chain of command
consequences:
communication ineffectiveness
smaller spans of control
delegation likely to be limited
reduced motivation

Question 18

Links between delegation and accountability

Answer 18

Delegation gives subordinates the authority to perform certain tasks => have power to undertake jobs and make decisions necessary for these jobs to be completed
If job is done poorly then the worker is accountable to his or her immediate manager - they can be held to account and be disciplined for inadequate performance
However, responsibility for the work of the department (including subordinates performance) rests with the manager
Control of work is achieved by means of appraisals, monitoring against targets
Manager delegates AUTHORITY not RESPONSIBILITY

Question 19

Define line managers

Answer 19

managers who have direct authority over people, decisions and resources within the hierarchy of an organisation

Question 20

Define staff managers

Answer 20

managers who, as specialists, provide support, info and assistance to line managers

Question 21

Conflicts between staff managers and line managers

Answer 21

Staff managers can be economists, special market researchers,…etc. Due to their professional status and experience, they can be well paid but often accused of

Question 22

Conflicts between staff managers and line managers

Answer 22

Staff managers can be economists, special market researchers,…etc. Due to their professional status and experience, they can be well paid but often accused of having less loyalty as their services might be demanded by other firms. Line managers, thus, might resent them

Example sentence: Staff managers can sometimes clash with line managers due to differences in roles and responsibilities.

Question 23

Define informal organisation

Answer 23

the network of personal and social relations that develop between people within an organisation

Question 24

factors influencing organizational structure

Answer 24

styles of managers centralized or decentralized(manager x or y)

no. of employees arrange them in a way which is easy to manage

corporate long term short term objectives of business

tech employed sending emails rather then letters

Question 25

Advantages of delaying

Answer 25

• It reduces business costs
• It shortens the chain of command and should improve communication through the organization.
• it increases spans of control and opportunities for delegation.
• It may increase workforce motivation due to less remoteness from top management and greater chance of having more responsible work to perform

Question 26

Disadvantages of delayering

Answer 26

• There could be one-off cost of making managers redundant (redundancy payments).
• Managers who remain have increased workloads, which could lead to overwork and stress.
• fear that redundancy and might be used to cut cost could reduce the sense of security of the whole workforce

Question 27

Advantages of a functional structure

Answer 27

• Employees often display a high level of departmental loyalty in pride in their work of their department.
• It encourages employees to become specialist and this can increase efficiency and productivity.
• Departments are led by managers who are specialist in the function area.

Question 28

Disadvantages of a functional structure

Answer 28

• The structure is a vertical one and this often does not allow for good connections between departments.
• Coordination between departments is therefore difficult, for example, when developing a new major product.
• Communication flows through the department heads to the top management, so employees may feel remote from senior managerment.
• There might be competition between departments, which may not benefit the whole Organization. For example, competition for financial resources is based on getting the most for the department and not necessarily considering what is best for the business as a whole

Question 29

Benefits of a flat organisational structure with wide spans of control

Answer 29

• Each worker is delegated more authority as there is less Direct control from a manager who is responsible for many other employees.
• Employee empowerment can be important motivational force.
• A short chain of command results in vertical communications: there is clearly between the number of hierarchy levels and the spans of control.
• There are few levels of hierarchy so fewer middle managers are needed, reducing business cost. This increases the average size of each span of control. This helps the demonstrate clearer links between the number of levels of hierarchy and spans of control.

Question 30

Advantages of a tall hierarchical structure

Answer 30

• Has delegated decision making
• Employees can progress in steps
• Narrow span of control
• Burden of decision making is shared

Question 31

Disadvantages of a tall hierarchical structure

Answer 31

• Loss of control
• Poorer decision making at lower levels
• Bureaucratic decision making
• Higher management gets distanced
• Communication is ineffective

Question 32

Other elements - Factors determining structure

Answer 32

• Style of management
• Retrenchment = causes delayering
• Corporate objectives
• Adopting new technologies

Question 33

Important links between organizational principles

Answer 33

1. Greater number of levels of hierarchy, the longer than chain of command
2. Problems associated with tall structure - delayering?
3. Delegation - Conflicts and Benefits
4. Accountability, authority and responsibility
5. Centralization versus Decentralization
6. Line and stuff relationships

Question 34

Structure by Product or Geographic Area. Advantages and Disadvantages

Answer 34

Product structure Advantages

• Focus on the marketing segments
• Respond to market changes quicker
• Measures performance individually

Product structure drawbacks

• Duplication of roles
• Rivalries between divisions
• Loss of central control

Question 35

How does accountability work?

Answer 35

Responsibility stays with the manager

• Gives clear expectations before employees that the job.
• Make sure the employee has appropriate skills, provide training if necessary.
• Establish two-way communication to provide feedback on how the employees performing while doing the job, not just at the end of the task
• Agree a clear measurement of performance so that the worker knows when they will be assessed as having a job done well or poorly.
• The consequences of good or poor performance need to be made clear to the employee