Organisation design

Question 1

Define organisational design.

Answer 1

A diagram or chart which shows the lines of authority and layers in the hierarchy of the business.

Question 2

Explain a hierarchy in business.

Answer 2

A hierarchy is a system in which employees are ranked due to their status and authority with employees seeking to move up the hierarchy to improve their salary and working conditions.

Question 3

Explain the chain of command in a business.

Answer 3

The flow of information power and authority through the organisation. Those at the top have more power and authority and can delegate to those subordinate to them. Complaints and status reports flow up the chain, orders flow down the chain. Both need to be handled at the lowest level possible.

Question 4

Explain span of control in a business.

Answer 4

This is a number that represents the number of subordinates an individual can delegate to.

In a hierarchy it’s the number of people that a manager is responsible for. Where there are small spans of control there will be a tall hierarchy with highly specialised jobs and a wide span of control will mean employees are given larger roles and more responsibility.

Question 5

Explain decentralisation in a business.

Answer 5

When a business divides up the organisation into business ideas and has separate budgets for each area. eg north UK and west UK

Question 6

Explain centralisation in a business.

Answer 6

When a business has its organisation of management and administration at one central head office. The business has one central shared budget.

Question 7

What are the features of centralisation in a business?

Answer 7

• Branches follow direction from Head office. They all receive deliveries of stock bought by HO buying department.
• Less delegation, management at HO will make decisions
• All recruitment and accounts is done at HO and decisions about product lines, sales and stocks are made here
• Only small decisions such as rotas and stock merchandising can be made at branch level

Question 8

What are the features of decentralisation?

Answer 8

Authority and power are given to the divisions to make decisions that will affect that division. This allows quicker decisions to be made as they don’t have to go through a central office for approval which helps especially in dynamic markets.

Question 9

List the different types of organisational structure.

Answer 9

Tall structure
Flat structure
Matrix structure

Question 10

What is an organisational structure chart.

Answer 10

A chart that shows the employees and who they report to and are responsible for.

Question 11

What does an organisational chart show?

Answer 11

• Departments
• Job roles
• Responsibilities and
  accountability
• Lines of authority
• Lines of communication
  flow
• Chains of command

Question 12

Explain a tall hierarchal structure.

Answer 12

Information takes a long time to get from the bottom to the top and so it takes a long time for decisions to be made. Work is shared among more people so there is less stress and there is lots of opportunity for promotion. Everyone nows where they are in the hierarchy so it is orderly and organised.

Question 13

What are the advantages of a tall hierarchal structure?

Answer 13

+ Supervisors have a small span of control so they can get to know their subordinates ell

+ Knowing subordinates means they can delegate the right tasks and make sure their team is ell trained

Question 14

What are the disadvantages of a tall hierarchal structure?

Answer 14

• Lots of layers and a long chain means the business can be inflexible
• Communications are slow
• It is expensive as there are more managers and supervisors

Question 15

Explain a flat hierarchal structure.

Answer 15

Often used by restaurants and web design companies. They have a wide span of control and a short train of command so information flows quickly throughout the organisation.

Question 16

What are the advantages of a flat hierarchal structure?

Answer 16

+ Fewer layers means communication is fast

+ Lots of delegation means staff are given greater responsibility which might mean more opportunities to use their abilities

Question 17

What are the disadvantages of a flat hierarchal structure?

Answer 17

• Staff can be overstretched or overworked as there is less supervision which can cause stress and demotivation
• Can create a power struggle if the manager is rarely around and subordinates jostle for roles and responsibilities
• Wide span of control means managers have too many staff to manage and may lose touch with them

Question 18

What is a matrix organisational structure?

Answer 18

When individuals work across teams and projects as well as within their own department or function. Eg a project or task team established for a particular project might include engineers and those working in marketing.

Question 19

What are the advantages of using the matrix structure?

Answer 19

+ Ideal for a business that works on a project by project basis

+ Flexible structure means that staff from different departments can jump in and out of different job roles

+ Exploits specific skills of staff

Question 20

What are the disadvantages of the matrix structure?

Answer 20

• Coordination problems between departments
• Conflict of interest across projects
• Staff stretched across projects not spending time in their own departments

Question 21

Explain the impact of a matrix organisational structure on business efficiency and motivation.

Answer 21

Efficiency: Matrix organisations are only suitable where the business works on a project by project basis. For this type of work this type of organisation is very efficient.

Motivation: Staff are involved in a seres of projects which can be more interesting than just one making it more motivating.

Question 22

Explain the impact of a tall organisational structure on business efficiency and motivation.

Answer 22

Efficiency: Communications slow in a tall hierarchy as there are many layers which can lead to delayered decision making.

Motivation: Staff can be more motivated because there is lots of opportunity for promotion as there are lots of layers n the hierarchy.

Question 23

Explain the impact of a flat organisational structure on business efficiency and motivation.

Answer 23

Efficiency: Flat structures can be very efficient because employees most effected by the rota are involved in making it

Motivation: Staff are motivated as they are given more responsibility and have a hand in managing and running the business. Staff can be demotivated as there are less opportunities for promotion.