Organisational Design

Question 1

Organisational design

Answer 1

Organisational design refers to a diagram or chart which shows the lines of authority and layers in the hierarchy of the business.

Question 2

Structure hierarchy

Answer 2

A hierarchy is a system in a business where employees are ranked due to their status and authority
• Traditionally those at the top of the hierarchy are more important than those at the bottom

Question 3

Chain of command

Answer 3

The chain of command in a business is the flow of information power and authority through the organisation
• Those at the top have more power and authority

Question 4

Span of control

Answer 4

This is a number
• An employee that works as a Head of Department in a school may have 6 teachers working for them. Their span of control is therefore 6.
• This is the number of subordinates that they can delegate to

Question 5

Span of control- numbers

Answer 5

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

Question 6

Décentralisation/centralisation

Answer 6

• Decentralisation – where a business divides up the organisation of its business into areas for example: north, south, east, west or UK, Europe, and Africa. The business will have separate budgets for each area
• Centralisation – where a business has its organisation of management and administration at one central head office. The business has one central shared budget

Question 7

What does an organisational chart show

Answer 7

1. Names of departments e.g. production, finance, marketing and HR
2. Job roles e.g. Directors, Managers, supervisors
3. Responsibilities and accountability e.g. definition of duties
4. Lines of authority (who is the boss)
5. Lines of communication flow (horizontal and vertical) in the organisation
6. Chains of command in the organisation

Question 8

Different types of organisational structure

Answer 8

There are three main types of organisational structure that you need to know for the Edexcel exam:
1. Tall Structure
2. Flat Structure
3. Matrix Structure
• You will not need to be able to draw them but you need to know the differences and which businesses they are most suitable for
• Get ready to make some notes on these from the next few slides

Question 9

Tall structure

Answer 9

In a tall structure there maybe lots of opportunity for promotion
• Information takes a long time to get from the bottom to the top of the organisation, it takes a long time for decisions to be made

Question 10

Advantages of a tall hierarchical structure

Answer 10

• Supervisors normally have a small span of control so they can get to know their subordinates really well
• Knowing subordinates means they can delegate the right tasks and make sure their team is well trained

Question 11

Disadvantages of a tall hierarchical structure

Answer 11

• Lots of layers and a long chain of command can mean that the business is very inflexible
• It can also mean that communications within the organisation are slow
• This is expensive as there are more managers and supervisors

Question 12

Flat structure

Answer 12

• Many restaurants and web design companies have a flat structure. They have a wide span of control and a short chain of command so information flows quickly throughout the organisation.

Question 13

Advantages of a flat structure

Answer 13

• Fewer layers of hierarchy between the bottom and the top of the organisation may mean that communication is fast
• Lots of delegation means that staff are given greater responsibility, which might mean more opportunities to use their abilities

Question 14

Disadvantages of a flat structure

Answer 14

• Staff can be overstretched or overworked in a flat structure as there is less supervision, this can cause stress and demotivation
• Can create a power struggle if the manager is rarely around as subordinates jostle for roles and responsibilities

Question 15

Matrix explained

Answer 15

• In a business where there are more than one product or more then one project running at a time a matrix structure is more suitable than a standard hierarchy

Question 16

Advantages of the matrix structure

Answer 16

• Matrix structure is ideal for a business that works on a project-by-project basis
• Very flexible structure means that staff from different departments can jump in and out of different job roles
• Perfect to exploit the specific skills of staff

Question 17

Disadvantages of a matrix structure

Answer 17

• Possible co-ordination problems between departments
• Conflict of interest across projects
• Staff stretched across different projects, not spending time in their own departments