Types of Organisational Structure

Question 1

What is the definition of an organisational structure?

Answer 1

• the way in which management is organised, both horizontally (levels of hierarchy) and vertically (by function, by operation or by matrix)

Question 2

What is an organisational chart?

Answer 2

• a diagram showing the levels of hierarchy and lines of authority within an organisation

Question 3

What are levels of hierarchy?

Answer 3

• they refer to the number of layers of authority within an orgnaisation

Question 4

What is the span of control?

Answer 4

• the number of subordinates reporting directly to a manger

Question 5

What is centralisation?

Answer 5

• it places decision making powers firmly in the hands of senior personnel

Question 6

What is decentralisation?

Answer 6

• it gives decision making powers to those at lower levels in the organisation and to employees in branch offices and other locations

Question 7

What is delayering?

Answer 7

• the removal of one or more layers of hierarchy from the organisational structure

Question 8

What is a tall structure?

Answer 8

• an organisation with many levels of hierarchy and a narrow span of control

Question 9

What is a flat structure?

Answer 9

• a management structure based on a wide span of control, therefore requiring relatively few layers of hierarchy

Question 10

What are the advantages of a flat structure?

Answer 10

• cuts costs (lower wages)
• junior employees become empowered
• better communication of instructions
• more competitive
• improves motivation

Question 11

What are disadvantages of a flat structure?

Answer 11

• wide spans of control give staff a heavy workload which may impair efficiency
• experience & knowledge of middle managers missed
• increased training costs
• not possible for managers to monitor work closely

Question 12

What are the advantages of a tall structure?

Answer 12

• a narrow span of control enables managers to keep close control over subordinates
• less training costs
• easier to get promoted
• easier workload
• useful in more complex, difficult or diverse jobs

Question 13

What are disadvantages of a tall structure?

Answer 13

• doesn’t give junior employees as much independence
• reduces competitive nature
• expensive wage/salary costs
• communication is more difficult
• less opportunities to prepare for promotion

Question 14

What are the advantages of delayering?

Answer 14

• can improve competitiveness of a business
• gives junior employees a wider range of tasks & greater responsibility
• easier to communicate

Question 15

What are the disadvantages of delayering?

Answer 15

• fear of job losses
• increased training expenditure
• heavier workload
• impaired efficiency
• experience and knowledge of middle managers may be missed

Question 16

What are the advantages of centralisation?

Answer 16

• rapid decision-making
• ensures the business pursues the objectives
• less people needed = costs reduced
• uniformity
• economies of scale

Question 17

What are the disadvantages of centralisation?

Answer 17

• lack of experience lower down
• head office doesn’t have local knowledge
• miscommunication
• poor motivation

Question 18

What are the advantages of decentralisation?

Answer 18

• improve motivation as junior employees are given greater authority
• reduces workload of senior managers
• junior employees get better understanding of operational matters
• improve communication
• decision made closer to customers

Question 19

What are disadvantages of decentralisation?

Answer 19

• senior managers need to be told of decisions to keep the business coordinated
• lack of communication and coordination
• loss of uniformity
• company objectives not followed
• loss of economies of scale (costs increased)

Question 20

What is a matrix structure?

Answer 20

• the organisation’s individuals work across teams and projects as well as within their own department or function.

Question 21

What are the advantages of a matrix structure?

Answer 21

• flexible & can use best skills for each task
• allow additional dimension to job = improved motivation
• team members have clear objectives and responsibilities
• clear identities

Question 22

What are the disadvantages of a matrix structure?

Answer 22

• difficult with 2 managers because of divided loyalties

- can be made more expensive as more admin & support are needed