Chapter 2: Organisational structure and stakeholders (Task 1) Flashcards
Organisational structure
This is the shape of an organisation.
Some organisations have a lot of departments with many levels of management.
The structure of the organisation depends on a number of things:
Communication lines
Chains of command
Responsibilities
Teams
Centralisation
Key decisions are concentrated in one place and are made up by top levels of management, for example strategy making, planning, decision-making and policies.
Adv of centralisation
Increased level of control and co-ordination.
Experienced people make decisions.
Ensures consistent policies throughout the company.
Ensures quick decisions are made without the need for consultation.
Procedures are standardised throughout the company leading to economies of scale.
Disadvantages of centralised control
Reduces the level of input from day-to-day experts (shop floor staff) from decision making.
Risks demoralising branch managers who do not feel trusted to make their own decisions.
Very bureaucratic and led from the top (dictatorship).
Decentralisation
Key decisions are distributed and delegated away from top management to lower levels in the organisation’s hierarchy
Advantages of decentralised control
Reduced stress and burdens of senior management.
Empowers local managers, increasing motivation and innovation.
Lower levels of management have a better knowledge of local conditions.
Middle management are encouraged to take over higher positions.
Faster decision making as there is no need to “ask for permission”.
Disadvantages of decentralised control
Head office sees the big picture and their instructions made be more profitable than the local manager’s suggestions.
Duplication of roles across the organisation.
Sometimes customers expect every Sainsbury’s to look the same. It can be unsettling for them. - reduction in uniformity
Scalar chain
A scalar chain refers to a chain of command from the top of the organisation to the bottom.
If it defined as the number of layers of management from the top to the bottom of the organisation.
Tall organisation - A tall organisation has a large number of layers in the hierarchy:
What are features of a tall organisation:
More managers with a narrow span of control.
Can suffer by having too many managers.
Expensive to run.
Decisions take a long time to reach the bottom levels of the organisation.
Good opportunities for promotion due to the large number of layers.
Managers do not spend as much time managing staff because of their narrow span of control.
Flat organisation - A flat organisation has few managers, but each has a wide span of control.
What are features of a flat organisation:
A flat organisation has few managers, but each has a wide span of control.
This enables quick decisions.
More susceptible to fraud or error.
An example would be the pharmaceutical industry where research and development are prominent.
Teamwork and innovation are essential.
Span of control
This is the number of subordinates that each manager has under their control.
For example, a manager with 6 subordinates has a span of control of 6.
The more people under the control of a manager, the wider the span of control.
Fewer people under one manager means a narrower span of control.
Factors influencing the span of control:
Ability of the individual as a manager to supervise and guide subordinates. An experienced manager can control a greater number of people.
Geographical location - If subordinates are spread around the country, it is harder for the manager to supervise.This means their span of control would be small. Meetings would be virtual and face to face meetings would need a lot of travel time and so take place rarely.
Level of supervision required. A high level of supervision would need a narrow span of control. This is because it is time consuming.
Type of product. Products which are easy to make or deliver will need less supervision and therefore a wider span of control.
Advantages of a wide span of control:
Fewer levels of management to pass information through, meaning it reaches employees faster.
Costs less money to run a wider span of control because there are fewer managers required.
Managers delegate more as there are more subordinates and there is no micro-management.
Advantages of a narrow span of control:
Managers communicate quickly with employees because there are fewer subordinates.
Controlling staff is easier because less time is taken up with routine problems and supervision, more time can be spent planning.
Feedback of ideas from workers will be more effective because small groups encourage participation.
Less management skills required.
Organisational culture styles:
Power Culture:
-Small group or a central figure
-Control radiating from its centre
-Only need a few rules and little bureaucracy but swift decisions can ensue
Role Culture:
-Authorities are delegated within a highly defined structure. These organisations form hierarchical bureaucracies, where power derives from personal positions
Task Culture: Teams are formed to solve particular problems. Power is derived from the team with the expertise to execute a task.
Person Culture: Formed where all individuals believe themselves superior to the organisation. It can become difficult for such organisations to continue to operate, since the concept of an organisation suggests that a group of like-minded individuals pursue organisation goals,
