Organisational Structure Flashcards
Define Organisational Structure
An internal formal framework of a business which shows how management is organised and linked together and how authority is passed through the organisation
What is the importance of an Organisational Structure?
- It makes roles and responsbilities of employees clear to one another which allows division of tasks
- Employees understand who they report to in the business which can speed decision making
- It makes personal accountability easier
What is a Functional Organisational Structure?
Employees in departments have clearly defined roles and responsibilites in specialist areas, such as HRM, marketing, operations, finance..
What are the benefits of a Functional Organisational Structure?
- Employees display high level of loyalty and pride in their department of work which is likely to increase motivation
- Employees can be encouraged to become specialists in their department, which can increase productivity
- Departments are led by specialist managers which can bring expertise and knowledge in the functional area
What are the disadvantages of a Functional Structure?
- The structure is vertical, which may not allow the best communication and coordination between departments which can delay decision making
- Employees may feel remote from senior managers as messages are passed down from the department head to top management etc.
- There could be competition between departments which could create a disconnect from united focus on business objectives
What are some Evaluation points to consider for a Functional Structure?
- Competition between departments
- Conflict between departments
- Reduced innovation between departments as they could be focused on their own function
- Slower decision making considering information has to go through managers and departmental heads
Define Hierarchical Organisational Structure
A structure containing multiple levels in which all members of the organisation, except one, are subordinate to someone else
What are some benefits of a Flat Organisational Structure?
- Employees are delegated more authority, which increases their autonomy, empowerment and responsibilities which can act motivating
- Easier and better communication as a short chain of command is present - it better identifies the span of control
- Lesser need for middle managers as there is a short chain of command - this can reduce business costs
- Managers can focus on other aspects of the business like strategic planning
What are some drawbacks of a Flat Organisational Structure?
- Limited promotion oppurtunities as the levels of hierarchy are less, which can demotivate ambitious employees
- Risk of poor decision making / performance if employees do not have adequate training
- Managers could feel overloaded with responsibilites as many subordinates report to them
What are some benefits of a Tall Organisational Structure?
- More promotion oppurtunities as there are more levels of hierarchy, which could motivate employees
- Closer supervision as managers oversee fewer employees, this could encourage employees to work harder as performance is monitored
- Clear chain of command with narrow span of control which could ensure accountability and performance evaluation
What are some drawbacks of a Tall Organisational Structure?
- Slower communication as messages need to be passed through many levels of hierarchy which can delay decision making
- Limited flexibility as the structure is rigid, which can limit innovation and adaptability to market changes
- Employees can feel isolated and less involved from top managers which can be demotivating
- Higher administrative costs as more managers are required
Define Divisional Organisational Structure
A structure that organises business activities around geographical areas or product groups
What are some benefits of a Divisional Organisational Structure
- Enhanced connection with different markets: Each division can focus on specific market segments and are more knowledgeable with the demographics, psychographics and geographical factors of the area
- Enhanced flexibility as customer needs and wants can be identified quickly and responded to immediately
- Managers have accountability and responsibility in their division which can enhance motivation as performance targets can be set
What are some drawbacks of a Divisional Organisational Structure?
- Duplication of roles as each divison will have their own functional departments which can increase the overall costs of the business given that similar tasks are performed
- Working in Silos : This can create competition between departments as they focus only on divisional objectives rather than collaborating to achieve overall business objectives
Define Matrix Structure
An organisational structure that contains project teams which cut across different functional departments
What are some Benefits of a Matrix Organisational Structure?
- Improved Communication: employees from different functions collaborate on projects together
- Crossover of ideas: Specialist knowledge can be shared which can enhance innovation and intrapreneurship
- Flexibility : New project teams can be created quickly which aligns with the dynamic business environment
What are some Drawbacks of a Matrix Organisational Structure?
- Conflicts : Employees have a dual-manager reporting system which can create conflicts of interest or biases, which can be stressful and affect decision-making
- Less direct control : Employees may not recieve enough support or guidance to make decisions, which can impact accountability and alignment with business objectives
What are some Evaluation Points to consider about a businesses organisational structure?
- Scale of business : Larger businesses may benefit from a tall or divisional structure as everyone has clearly defined roles and responsibilities which improves efficiency
- Business Goals: Innovation and Flexibility or Operational efficiency and control?
- Type of product: Standardised or Customer focused?
- Business Growth: Structure may need to be adapted if the business wants to expand
- Business Environment : Competitve markets require a flexible and hands on organisation to respond to changes
Define Delayering
The removal of one or more layers of hierarchy from the organisational structure
What are the Benefits of Delayering?
- Shortens the chain of command which can improve communication through the business
- Reduces business costs as fewer middle managers are needed
- Increased delegation: as the span of control has widened, which can act like a form of job enrichment
- Workforce Motivation: Employees feel less remote from senior managers and may feel more connected to the vision of the business which can improve communication and decision making
What are the Drawbacks of Delayering?
- Redundancy Payments: Act as a one-off cost as some employees may not be required anymore
- Job Security: Delayering can create fear of redundancies between employees which can go against Maslows need of security
- Increased Workload for Managers: As span of control has widened, managers may need to overlook many employees which could make them feel overworked
Define Delegation
The passing down of authority in the organisational structure
What are the Benefits of Delegation?
- Managers can focus on other strategic aspects of the business
- Subordinates may feel trusted which can act motivating
- Employees can find fulfillment in their job as they feel more important and responsible
- Employees can be trained and enhance skills for senior positions in the business
What are the Drawbacks of Delegation?
- Requires training
- Needs sufficient authority to be given, otherwise decision making can be slower and accountability is not fostered
- Managers may not delegate well-defined tasks which can act demotivating
- Trust needs to be fostered as Managers are responsible for the outcome of delegation
What is Accountability?
The obligation of an individual to account for and explain their actions to disclose the results of their work in a honest manner
What is Centralisation?
Keeping all important decision making powers within the head office or center of the organisational structure
What are the benefits of Centralisation?
1.Experienced Decision Making: Reduced confusion, risks and increased efficiency
2.Prevents Conflict : consistent policies throughout the business reduce misunderstanding and disagreements
3.Economies of Scale: Centralised buying allows greater economies of scale compared to separate purchases from each department
What are the drawbacks of Centralisation?
- Senior managers may feel overworked
- Employee morale may be low
- Slower decision making
- Lower scope of innovation
What is Decentralisation?
Decision making authority is passed down the hierarchy to empower subordinates
What are the benefits of Decentralisation?
- More localised decisions can be made
- Junior managers and employees can develop skills
- Empowerment and motivation
- Flexible decision making
