Organisational Structure and Governance Flashcards
Elements of Organisation Structure
> Worker Speciallsation: Division of Labour
> Departmentalisation: grouping of employees E.G HR or Marketing
> Chain of Command: Helps clarify job roles, who reports to who and communication flows
> Span of Control: Number of Subordinates
> Degree of Centralsiation or Decentralsiation :
> Formalisation: is the process standardisation
Impact of the Hierarchy
> Tall ( vertical)Structure - High number of authority levels and a small number of subordinates which are tightly supervised.
> Flat (horizontal) Structure- Low number of authority levels and many subordinates more loosely supervised
Impact of Span of Control
BENEFIT:
- Mangers not overloaded with subordinates
- Mangers can spend more time training subordinates
- improved communication and less remoteness
- Increased likelihood for subordinates to be promoted
Drawbacks:
- increased cost of management
- Tight control can demotivate subordinates.
Types of organisational structure
1) Functional Structure
2) Divisional Structure
3) Project Based structure
4) Small entrepreneurial structure
1) Functional Structure
Characteristics:
- Centralisation of decision making
- Clear lines of authority and vertical communication
- Hight levels of polices and procedures
- Standardisation of the work processes
- Specialisation of workers and business activities
Divisional Structure
- Is a separate business (Subsidiary) and can address the different products or markets
- Allows quicker decision making so mangers don’t have to go through chain of command
-enables better customer focus
HOWEVER
- Requires more resources and higher cost to support its divisions.
Small Entrepreneurial Structure
Characteristics:
- Flat structure
- no formal job description for staff
- informal polices and procedures
- innovative, creative and flexible
- lack of organisiational control
Project based (matrix) structure
Characteristics:
- Flat organisational structure
- Communication and reporting across all functional boundaries
- Flexible team culture and working practices
- Culture of fully integrated” teams rather then islands
Centralised and Decentralised Control
- Centralised: Concentrates decision making in the hands of senior management (Strategic level)
- Decentralsied: Delegates decision making to the tactical level.
3 Levels of hierarchy
1) Strategic (Corporate) level
2) Tactical (managerial) level
3) Operational (Functional) Level
Role of Strategic Level
- Concerned with overall scope and long-term direction of organisation
> Were the organisation is now
Where the organisation wants to be
How the organisation will get there
Role of the Tactical level
- Coordination and control of operational resources
> Middle management and supervision
Concerned with coordination and control of the operational level
Role of the Operational level
- concerned with the routine and regular nature of running the organisation on a day to day basis
Examples of Functions (departments)
- Finance department
- Information technology
- Operations
-Marketing and Sales - Human resource
Finance Function
-Satisfy the legal requirements of financial reporting:
> Managing Funds effectively
Management Accounting
Financial accounting
Corporate social Responsibility
Financial Accounting
- Is useful information mainly for external stakeholders of accounts
> Statement of Profit or loss
Statement of Financial Position
Statement of Cash Flows
Management Accounting
- Is for internal stakeholders of the business such as directors and mangers
> Information includes the preparation of budgets (forecasts), monitoring business (variance analysis), costing and long-term investment decisions.
Auditors
Discharge some of the legal responsibilities of senior management and can improve business efficiency and effectiveness
IT
- Installation and maintenance of computer network systems
- Facilitates sharing of information by integrating technology and networks
- maintains the integrity of data security
- improves data processing efficiency
- improves customer service
- integrating the organisation externally with its suppliers
Marketing and Sales Function
- Product management
- Pricing decisions
-Promotion ideas
- Placement of products or services
Operations Function
-Production
- Performing services
- Customer Support
- Logistics
- Merchandising
Contrasting services with goods
- Intangibility
- Inseparability
- Instant Perishability
- Heterogeneity (variation)
- legal ownership
HR
-Recruitment of Staff
- Preparing new staff
- Training and Development
- Motivating employees
- Appraisal of staff
- Managing Staff Discipline
- Ensuring Compliance with the law
- Managing personnel records, pensions and payroll
- Internal staff communication
Types of Risk
Business risk- events that potentially reduce profits cause losses or lead to business failure
- Strategic risk- the risk of failing to achieve business objectives
- Financial risk- risk of loss of capital invested by shareholders
- Operational Risk- Risk of losses resulting from ineffective or failed internal process
- Reputational risk- the risk of negative publicity that adversely impacts on the brand
- Legal risk- GDPR risks
- Economic risks - such as macroeconomic factors
-Political Risk- risk of war, terrorism and corruption
- Technological Risk- risk of new emerging technologies
Societal risk- risk of changes in population and values in society
TARA Framework
- Transfer Risk- Strategies that pass on the risk to an insurance company
- Accept Risk- tolerate risk and take no action to avoid it
- Reduce risk- taking action to implement controls to ensure the risk is reduced
- Avoid risk- Strategies that do not take the risk and terminate any risky activities
