Organisational Structure Flashcards
Organisational structure
Organisational structure refers to the levels of management and division of responsibilities within an organisation. This structure is often presented in the form of an organisational chart with several levels of hierarchy.
Flexibility
When these objectives change, as they often do over time or in new circumstances, then the structure needs to change.
The division of responsibilities and the relationships between different sections of the business change considerably in different circumstances.
Advantages of functional structure
• Employees often display a high level of departmental loyalty and pride in the work of their department.
• It encourages employees to become specialists and this can increase efficiency and productivity.
• Departments are led by managers who are specialists in the functional area.
Disadvantages of functional structure
• The structure is a vertical one and this often does not allow for good connections between departments. Coordination between departments is therefore difficult, for example, when developing a new major project.
• Communication flows through the department heads to the top management, so employees may feel remote from senior management.
• There might be competition between departments, which may not benefit the whole organisation. For example, competition for financial resources is based on getting the most for the department and not necessarily considering what is best for the business as a whole.
Advantages of hierarchical structure ( flat and narrow)
- Decision making starts from the top and
gets passed down - The vertical divisions do not need to be
based on functional dept like marketing or
finance but could be regional - Ambitious employees can climb the
corporate ladder - The role of each indiv will be clearly defined
- Used in org. which use “role culture”
Disadvantages of hierarchical structure
- A hierarchical structure tends to indicate that one-way (top downwards) communication is standard practice. This is rarely the most efficient type of communication.
- There are no horizontal links between the departments or the separate divisions, and this can lead to lack of coordination between them.
- Managers are often accused of having a narrow vision because they are not encouraged to look at problems in any other way than through their experience of their own department.
- This type of structure is very inflexible and often leads to change resistance. This is because all managers tend to defend both their own position in the hierarchy and the importance of their own section or department.
Advantages of a matrix structure
• It allows good communication between all members of the team.
• There is less chance of people focusing on just what is good for their department as the aim is to focus on the project and the business as a whole.
• Crossover of ideas between people with specialist knowledge in different areas tends to create more successful and innovative solutions.
• New project teams can be created quickly so this system is well-designed to respond to changing markets or technological innovations.
Disadvantages of a matrix structure
• There is less direct control from senior managers as the teams may be empowered to undertake and complete a project.
• Passing down of authority to more junior employees can be difficult for some senior managers to accept.
• Team members may have two managers to report to. If the business retains levels of hierarchy for departments but allows crossdepartmental teams to be created, each team member has two bosses. This could cause a conflict of interests.
Structure by product or geographical area
When the structure of a business is based on the different ranges of products that it makes or areas that it operates in, it can be referred to as a divisional organisational structure.
Examples of structure by product
An IT hardware manufacturer structured into divisions for business computers, consumer electronics, laptops and tablets.
The reasons why structures change
- The style of management a Theory Y manager would adopt very few levels of hierarchy and may prefer a matrix teambased structure.
- Retrenchment caused by increased competition or increased competition might lead to delayering to reduce overhead costs - reduced levels of hierarchical and shorten the chain of command.
- Corporate objectives. For example, if one of the long-term objectives of the business is to expand in other countries, then the organisational structure must be adapted to allow a regional market department.
Ways structure change
Delayering - the removal of one or more levels of hierarchy from an organisational structure
Can be used to change tall structures
Advantages of delaying
Reduced business costs
Shortens the chain of command and improves communication through the organisation.
Increases span of control and opportunities for delegation
Disadvantages of delayering
Managers who remain have increased workloads, which could lead to overwork and stress
Fear that redundancies might be use to cut costs could reduce the sense of security of the workforce.
Redundancy payments
Chain of command
The route through which authority is passed down an organisation
