Organisation Flashcards
Organisational structure
The way in which the business is arranged to carry out its activities
Organisational chart
A diagram that shows the hierarchy in a business, usually from top to bottom in terms of seniority.
Span of control
The number of employees (or subordinates) for who a manager is responsible for.
Advantage of a narrow span of control
Manager gets to spend more time giving staff clear / direct instructions.
Disadvantage of narrow span of control
Staff may feel ‘watched over’
Advantage of wide span of control
Independence and less supervision may be more motivating for staff
Disadvantage of wide span of control
Staff members may perform badly as manager loses control
Chain of command
The order of authority and delegation within a business
Levels of hierarchy
The number of layers in a business organisation
Line relationships
The vertical relationships (in the organisational hierarchy) between managers and subordinates
Staff relationships
The horizontal relationship between a manager and another organisational member to/from whom the manager gives or receives information or advice
Reasons for tall structures
Employees know who to report to
Managers know who they are responsible for (clear lines of communication)
Leadership and guidance for employees
Reasons for flat structures
More empowering - employees feel greater sense of control
Better sense of teamwork and trust
Ideas are more likely to be shared - quicker improvement
More accurate communication
Leaner -> less staff -> saving costs
Centralised structure
When businesses keep decision-making firmly at the top of the hierarchy (amongst the most senior management)
Decentralised structure
Some (not all) decision-making is spread out to include more junior managers and lower levels of the hierarchy
Benefits of centralisation
Easier to implement common policies and practices for the whole business
Prevents other parts of the business from becoming too independent
Easier to co-ordinate and control from the centre (eg with budgets)
Economies of scale and overhead savings are easier to achieve
Quicker decision-making (usually) - easier to show strong leadership
Drawbacks of centralisation
More bureaucratic - often extra layers in the hierarchy (often tall structures)
Local or junior managers are likely to be much closer to customer needs
Lack of authority down the hierarchy may reduce manager motivation
Customer service - lost flexibility and speed of local decision-making
Benefits of decentralised structures
Decisions are made closer to the customer
Better able to respond to lack circumstances
Improved level of customer service
Can enable a flatter hierarchy
Good way of training and developing junior management
Facilitates empowerment - should improve staff motivation
Drawbacks of decentralised structures
Decision-making is not necessarily ‘strategic’
Harder to ensure consistent practices and policies at each location
May be some diseconomies of scale (eg duplication of roles)
Who provides strong leadership when needed (eg in a crisis)?
Harder to achieve tight financial control - risk of cost overruns
Organisation by function/system
The business is arranged into specialist/functional areas.
This means that each function has some input into the output of the business’ product(s)/service(s)
Advantages of organisation by function
Specialists can concentrate on what they do best and share ideas with each other
Less duplication (ie multiple teams/employees are not recruiting staff)
Disadvantages of organisation by function
Conflict may occur over goals, budgets etc
Segregation of functions means that communication about products different functions are working on is ineffective
It can be difficult to accredit success and/or blame about product performance
Departments are often doing a lot of work, but can’t really identify the outcome of their work
Organisation by product
The business is organised according to the different products made.
Each product becomes a ‘mini company’ with its own finance, marketing, HR departments etc
Advantages of organisation by product
Easy to see which products and ‘profit centres’ are performing well
Each centre has a lot of autonomy (independence), which increases motivation
Teams can see the direct result of their work
Communication barriers are broken down for specialists
Disadvantages of organisation by product
Different products compete for resources (ie finance), which can cause conflict
Duplication of departments (ie HR) can waste resources
Teams may lose sight of the overall direction of the business
Matrix structure
Individuals work across teams and projects as well as within their own department or function.
Each team member will have two managers - their normal functional manager as well as the team leader of the project
Advantages of matrix structures
Can help to break down traditional barriers, improving communication across the entire organisation
Can allow individuals to use particular skills within a variety of contexts
Avoid the need for several functional departments to meet regularly, so reducing costs and improving coordination
Likely to result in greater motivation amongst the team members
Encourages cross-fertilisation of ideas across departments (eg helping to share good practice and ideas)
A good way of sharing resources across departments - which can make a project more cost-effective
Disadvantages of matrix structures
Members of project teams may have divided loyalties as the report to two line managers
Can put team members under a heavy pressure of work
Difficult to coordinate / communication can be problematic
It takes time for matrix team members to get used to working in this kind of structure and to build relationships with the colleagues that they are working with
Team members may neglect their functional responsibilities
Organisation by division
Usually refers to a large or multinational organisation where there are divisions which can be geographically separated or by the product/service the company procures.
Advantages of organisation by division
Each region has a lot of autonomy, which increases motivation
Easy to see which regions are performing well
Have a better understanding of customers in that region
Disadvantages of organisation by division
Regions may lose sight of overall direction of the business
Might be difficult to adapt to different cultures in each region
Conflict for resources
Losing consistency with your brand
Duplication of roles
