Organisational Design Flashcards
What is organisational design?
how the internal structure is designed that established levels of hierarchy within the organisation
What are key features of a hierarchy?
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
What is the correlation between growth and organisational design?
as a business grows the complexity of a business increases.
This is because the number of managers increase and staff numbers increase
What is delayering?
Why is it done?
removing the management layers in the hierarchy, this is done to cut fixed costs and to reorganise a business
What are levels of hierarchy?
shows number of different supervisory and management levels between top and bottom.
What can many levels of hierarchy cause?
communication problems unreliability inflexible expensive chances of promotions
What is span of control?
describes the number of people directly under a managers supervision. (subordinates)
How can a span of control vary?
It can be Narrow or wide
Narrow - a few subordinates to one superior
wide - many subordinates to one superior
What is a chain of command?
The reporting system from the top to the bottom of the hierarchy. The way information is transferred around an organisation
What is a centralised structure?
It is where the decision-making, power and control remains in the hands of top management levels
How can business make decisions?
A business can make decisions as a centralised business or decentralised.
What is a decentralised structure?
a structure that delegates decision-making power to junior managers further down the hierarchy, that can make decisions based off of their input
What are positives and negatives of a narrow span of control?
+ 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,
What are types of structure?
Tall(mechanistic) and flat(organistic) and matrix
What is a tall, flat and matrix structure
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
What are positives and negatives of tall structures?
+ 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,
What are positives and negatives of a flat structure
+ 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
What are positives and negatives of a matrix structure?
+ working together = more input, avoids obstacles, enriches members experience, motivational,
- two bosses - confusion, distract priorities struggle to agree in deparments,
What does each structure link to in leadership style?
tall = authoritarian flat = laissez-faire matrix = authoritarian/paternalistic
What are positives of a decentralised structure?
- 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
What are negatives of a decentralised structure?
- 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
What are positives of a centralised structure?
- 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
What are negatives of a centralised structure?
- 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
What are some factors that influence type of organisation structure chosen?
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
How does a business analyse staffing structure?
Using skills audit and a workforce plan.
What is included in a workforce plan?
recruit, redeploy, redundancies, training this ensures that employees are on track to meet expectations and future aims.
What is skills audit?
a process that helps an organisation determine where they are lacking skills within the internal structure.
Why would a business change their organisational design?
- 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
What are the challenges that a business faces when changing the organisation design?
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
What does bureaucratic mean?
when a business has many functions operating inside a business at the same time.
