Organisational Design

Question 1

What is organisational design?

Answer 1

how the internal structure is designed that established levels of hierarchy within the organisation

Question 2

What are key features of a hierarchy?

Answer 2

1) To break organisation up into divisions with a common purpose (marketing, finance, HR resource, operations)
2) every individual is answerable to a line manager
3) try to keep subordinates or span of control narrow so managers wouldn’t be stressed
4) to achieve low span of control for managers, necessary to have many management layers

Question 3

What is the correlation between growth and organisational design?

Answer 3

as a business grows the complexity of a business increases.

This is because the number of managers increase and staff numbers increase

Question 4

What is delayering?

Why is it done?

Answer 4

removing the management layers in the hierarchy, this is done to cut fixed costs and to reorganise a business

Question 5

What are levels of hierarchy?

Answer 5

shows number of different supervisory and management levels between top and bottom.

Question 6

What can many levels of hierarchy cause?

Answer 6

communication problems
unreliability
inflexible
expensive
chances of promotions

Question 7

What is span of control?

Answer 7

describes the number of people directly under a managers supervision. (subordinates)

Question 8

How can a span of control vary?

Answer 8

It can be Narrow or wide
Narrow - a few subordinates to one superior
wide - many subordinates to one superior

Question 9

What is a chain of command?

Answer 9

The reporting system from the top to the bottom of the hierarchy. The way information is transferred around an organisation

Question 10

What is a centralised structure?

Answer 10

It is where the decision-making, power and control remains in the hands of top management levels

Question 11

How can business make decisions?

Answer 11

A business can make decisions as a centralised business or decentralised.

Question 12

What is a decentralised structure?

Answer 12

a structure that delegates decision-making power to junior managers further down the hierarchy, that can make decisions based off of their input

Question 13

What are positives and negatives of a narrow span of control?

Answer 13

+ follow CEOs accordingly, good communications, chances of promotion, experience, good mentor ship, increased manager effectiveness, better personal contact, better health and safety, less CEO input to every decision, better feedback
- more expensive, longer chain of command, may demotivate staff as they are monitored closely, mis-trust,

Question 14

What are types of structure?

Answer 14

Tall(mechanistic) and flat(organistic) and matrix

Question 15

What is a tall, flat and matrix structure

Answer 15

Tall = lots of levels of management
Flat = when lots of workers all report to one manager and have less levels of management
Matrix = when employees are cross function in different teams working on different projects reporting to 2 line managers

Question 16

What are positives and negatives of tall structures?

Answer 16

+ more opportunities/advancements , specialised managers, close supervision, distinct roles, clear to business to secure finance, less intraprenuership
- long chain of command, distorted messages, slow to adapt to economic variables, expensive, freedom restricted,

Question 17

What are positives and negatives of a flat structure

Answer 17

+ cheaper, quicker vertical communication, better teamwork, more freedom, gives flexibility, managers can delegate work, less geronotcracy
- more intraprenuership, less control, potential more industrial action, hard to change, less motivation

Question 18

What are positives and negatives of a matrix structure?

Answer 18

+ working together = more input, avoids obstacles, enriches members experience, motivational,
- two bosses - confusion, distract priorities struggle to agree in deparments,

Question 19

What does each structure link to in leadership style?

Answer 19

tall = authoritarian
flat = laissez-faire
matrix = authoritarian/paternalistic

Question 20

What are positives of a decentralised structure?

Answer 20

• Decisions are catered for local customers,
• Better ability to respond to local circumstances,
• Improved customer service,
• Consistent with aiming for a flatter hierarchy,
• Good way to train/develop junior management,
• Should improve staff motivation

Question 21

What are negatives of a decentralised structure?

Answer 21

• Decision-making is not always strategic,
• Harder to ensure consistent practices and policies at each location,
• May be dis-economies of scale eg role duplication,
• Faults over who the strong leader is in a crisis,
• Harder to achieve tight financial control - chance of cost overruns

Question 22

What are positives of a centralised structure?

Answer 22

• Easier to implement common policies and practices across the business,
• Prevents other parts of the business becoming too independent (dis-economies of scale),
• Easier to coordinate and control from centre ie: budgets
• Economies of scale and overhead savings easier to achieve
• Quicker decision-making (usually) easier to show strong leadership
• Easier to implement motivational theory

Question 23

What are negatives of a centralised structure?

Answer 23

• More bureaucratic - often extra layers in the hierarchy, this leads to problems with many hierarchical levels
• Local or junior managers are likely to be closer to customer needs
• Lack of authority down the hierarchy may reduce manager motivation
• Customer service does miss flexibility and speed of local decision-making

Question 24

What are some factors that influence type of organisation structure chosen?

Answer 24

skills of workers - how trained and suitable they are
size of organisation - more managers
level of demand - responsive, productivity (quick/slow)
leadership style - tall=authoritarian, flat=democratic/paternalistic, matrix=laissez-faire
industry the business is in - scale and purpose
nature of business/products - different sectors have different demands, dynamic need to flat
competitive environment - development of market

Question 25

How does a business analyse staffing structure?

Answer 25

Using skills audit and a workforce plan.

Question 26

What is included in a workforce plan?

Answer 26

recruit, redeploy, redundancies, training this ensures that employees are on track to meet expectations and future aims.

Question 27

What is skills audit?

Answer 27

a process that helps an organisation determine where they are lacking skills within the internal structure.

Question 28

Why would a business change their organisational design?

Answer 28

• expansion
• change legal structure
• market trends/dynamics -> flatter
• delayering if potential financial issues
• encourage consultation -> paternalistic
• flat -> intraprenuership
• change in leadership/vision/ownership
• competitive action -> response
• widen product range
• cut costs overall

Question 29

What are the challenges that a business faces when changing the organisation design?

Answer 29

Takes Time
- adapt time, resistance (collective bargaining), access right approach (assess all stakeholders), consultation with staff/board/trade unions
Funding Issues
- flat to tall requires managers, tall to flat requires redundancies
Could create workplace disruption
Could impact customer service/quality

Question 30

What does bureaucratic mean?

Answer 30

when a business has many functions operating inside a business at the same time.