Organisational Design

Question 1

What is organisational structure?

Answer 1

Shows how employees and management are organised in a business

Question 2

Why is the organisational structure important?

Answer 2

It determines:

• authority and responsibility
• individual job roles and titles
• the people to whom others are accountable
• the formal routes through which communication flows in the business

Question 3

What does the organisational structure illustrate?

Answer 3

• span of control
• line management
• chain of command

Question 4

What is hierarchy?

Answer 4

Refer to the number or layers within an organisation

Question 5

What is span of control?

Answer 5

Number of subordinates for whom a manager is directly responsible

Question 6

What does the span of control depend on?

Answer 6

• experience and personality of the manager
• nature of the business
• skills and attitudes of the employees
• tradition and culture of the organisation

Question 7

Narrow span of control

Answer 7

• allows for closer supervision of employees
• more layers in the hierarchy may be required
• helps more effective communication

Question 8

Wide span of control

Answer 8

• gives subordinates the chance for more independence

- more appropriate if labour costs are significant- reduce numbers of managers

Question 9

What is chain of command?

Answer 9

Describes the lines of authority within a business

Question 10

Tall structure

Answer 10

• key features- many layers of hierarchy + narrow spans of control
• allows tighter control (less delegation)
• more opportunities for promotion
• takes longer for communication to pass through the layers
• more layers = more staff= higher costs

Question 11

Flat structure

Answer 11

• key features- few layers of hierarchy + wide spans of control
• less direct control + more delegation
• fewer opportunities for promotion, but staff given greater responsibility
• vertical communication is improved
• fewer layers = less staff =lower costs

Question 12

Why change the structure?

Answer 12

• growth of the business means a more formal structure is appropriate
• reduce costs and complexity
• employee motivation needs boosting
• customer service and/ or quality improvements

Question 13

Challenges of changing the structure

Answer 13

• manager and employee resistance
• disruption and de- motivation = potential problems with staff retention
• costs (e.g redundancies)
• negative impact of customer service of quality

Question 14

Delayering (from fall to flat)

Answer 14

Involves removing layers of management from the hierarchy of organisation

Question 15

Benefits of delayering

Answer 15

• low management costs
• fasted decision making
• shorter communication paths
• stimulating employee innovation

Question 16

Drawbacks of delayering

Answer 16

• wider spans of control- too wide?

- potential loss of management expertise

Question 17

What is a matrix structure?

Answer 17

Individuals work across teams and projects as well as within their own department or function

Question 18

Advantages of matrix structure

Answer 18

• helps to break down traditional department barriers, improving communication
• individuals get to use their skills within a variety of contexts
• likely to result in greater motivation amongst team members
• encourages sharing of good practice and ideas across departments
• good way of sharing resources across departments

Question 19

Disadvantages of a matrix structure

Answer 19

• members of project teams may have divided loyalties as they report to two line managers
• may not be a clear line of accountability for project teams
• difficult to co ordinate
• team members may neglect their functional responsibilities
• it takes time for matrix team members to get used to working in this kind of structure

Question 20

Centralised decision making

Answer 20

Keep decision making firmly at the top of the hierarchy (amongst the most dentist management)

Question 21

Benefits of centralisation

Answer 21

• 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
• economies of scale and overhead savings easier to achieve
• quicker decision making- easier to show strong leadership

Question 22

Disadvantages of centralisation

Answer 22

• more bureaucratic- often layers in the hierarchy
• local or junior managers are likely to much closer to customer needs
• lack of authority down the hierarchy may reduce manager motivation
• customer service does miss flexibility and speed of local

Question 23

Decentralised decision making

Answer 23

Decision making is spread out to include more junior managers in the hierarchy as well as individual business units or trading locations

Question 24

Advantages of decentralisation

Answer 24

• decisions are made closer to the customer
• better able to respond to local circumstances
• improves level of customer service
• good way for training and developing junior management
• improve staff motivation

Question 25

Disadvantages of decentralisation

Answer 25

• decision making is not necessarily strategic
• harder to ensure consistent practices and policies at each location
• who provides strong leadership when needed?

Question 26

Two ways in which organisational design improves motivation

Answer 26

Delegation

Job empowerment

Question 27

What is delegation?

Answer 27

Where responsibility for carrying out a task or role is passed onto someone else in the business

Question 28

Advantages of delegation

Answer 28

• reduces management stress and workload
• allows senior management to focus on key tasks
• subordinates are empowered and motivated
• better decisions or use of resources
• good method of on the job training

Question 29

Disadvantages of delegation

Answer 29

• cannot/ should not delegate responsibility
• depends of quality/ experience of subordinates
• harder in a small firm
• may increase workload and stress of subordinates