Theme 1 - 1.4.3 - Organisational Design

Question 1

What is organisational design ?

Answer 1

Organisational design refers to a diagram or chart which shows the lines of authority and layers in the hierarchy of the business

Question 2

What is a hierarchy ?

Answer 2

A hierarchy is a system in a business where employees are ranked due to their status and authority - traditionally those at the top are more important than those at the bottom

Employees during their career will seek to move up the hierarchy to improve their salary and working conditions

Question 3

What is the chan of command ?

Answer 3

The chain of command in a business is the flow of information, power and authority through the organisation - those at the top have more power and authority - they can delegate tasks to those subordinate to them in the hierarchy ( below them )

Complaints and status reports flow up the chain and orders flow down the chain - both need to be handled at the lowest level possible

Question 4

What is Span of Control ?

Answer 4

This is a number

For e.g. an employee that works as a head of department in a school may have 6 teachers working for them - so their span of control is 6

This is the number of subordinates that they can delegate to -OR- the number of people that a manager is responsible for

Question 5

Whats happens if there is a small span of control ?

Answer 5

If there is small spans of control - then there will be a tall hierarchy and jobs will be specialised

Question 6

What does a wide span of control mean ?

Answer 6

A wide span of control means - a flat hierarchy and employees will be given more responsibility and larger roles

Question 7

What does decentralisation mean ?

Answer 7

It’s where a business divides up the organisation of its business into areas for e.g. north, south, east, west - the business will have separate budgets for each area

Question 8

What is Centralisation ?

Answer 8

Where a business had its organisation of management and administration at one central head office - The business has one central shared budget

Question 9

Whats the difference between centralisation and decentralisation ?

Answer 9

In centralisation - all recruitment is carried out at head office, all accounts are made at head office and all decisions about product lines, sales, stock are made here

Divisions operate without a head office and each division manages its own budget

Question 10

Whats one good thing about decentralisation ?

Answer 10

Quicker decisions can be made as ideas dont have to go through the head office and they dont need the head offices approval

Question 11

What are the characteristic of the Hierarchal structure ?

Answer 11

• many layers of management
• long chain of command
• narrow span of control

Question 12

What are the pros and cons of the hierarchal structure ?

Answer 12

Pros:
- Motivation via promotion
- Clear accountability - clearly shows which person is accountable for which perosn

Cons:
- Higher cost
- Slower communication - because of the longer chain

Question 13

What are the characteristics of the flat structure ?

Answer 13

• Few layers of management
• Wide span of control
• Short chain of command

Question 14

Pros and cons of Flat Structure ?

Answer 14

Pros:
- faster communication
- engagement - the staff at the bottom are more valued as there ideas are more respected and used in the overall decisions
- Lots of delegation means that staff are given greater responsibility which means that more opportunity’s to use their abilities
- save money on salaries

Cons:
- Little or no progression
- Reduced motivation
- power struggle

Question 15

What are the characteristics of the matrix structure ?

Answer 15

• Traditional departments
• Project teams across functional areas
• Temporary or permanent

Question 16

What are the pros and cons of the Matrix structure ?

Answer 16

Pros:
- utilises skills within the organisation
- effective communication
- increased morale

Cons:
- split across 2 managers / departments - power struggle between the 2 managers - employees don’t know which tasks to do first - don’t know which managers work to prioritise
- Takes time to gel as a new team

Question 17

What does delegation mean ?

Answer 17

The managers give their subordinates full trust to do something and this empowers the employee and gives them motivation to work

Question 18

What does quick decisions mean for a large business ?

Answer 18

For a dynamic market you want to have quick communications and a more flat organisation as then the messages dont have to go up the chain of command.

Question 19

How does the matrix structure impact the business on efficiency and motivation ?

Answer 19

Efficiency:

• Matrix organisations are only suitable when the business works on a project by project basis.
• For a business that has a lot of projects running at the same time, this type of organisation is very efficient

Motivation:

• Staff are involved in a series of projects which can be more interesting than just one job, which means it can be more motivating

Question 20

How does the tall structure impact on business efficiency and motivation ?

Answer 20

Efficiency:
• Communication is slow in a tall hierarchy as there are many layers for the information to pass through
• This can lead to delayed decision making

Motivation:
• Staff can be motivated because there are lots of opportunities for promotion, with lots of layers in the hierarchy

Question 21

What impact does a flat structure have on a businesses efficiency and motivation ?

Answer 21

Efficiency:
• Flat structures can be very efficient because those employees that are most effected by a rota can be involved in the writing of the rota of who works when

Motivation:
• Staff are motivated in a flat structure as they are given more responsibility
• Also staff are motivated because they have had a hand in managing and running the business e.g. waitresses take turns in organising the rota