1.4.3 Organisational Design

• What is an organisational structure?


  Shows how people and management are organised in business
• Organisation determines...

  • Authority and responsibility
  • Individual job roles/titles
  • People to whom others are accountable
  • Formal routes through which communication flows in the business
• Factors that influence organisational design

  • Size of the business
  • Type of business
  • Management and leadership style
  • The competitive environment
• Size of the business


  Small businesses tend to have informal/flat hierarchical structures while larger businesses are complicated with departments and functions
• Type of business


  Locations? Service or manufacturing sector? Oversea operations or outsourcing? How skilled are the workforce?
• Management and leadership style


  Autocratic leadership is different to a leader who prefers to delegate responsibility
• The competitive environment


  Influenced by developments in the market like competitors actions, distribution channels and suppliers
• How can we understand a structure?

  By an organisation chart which shows management hierarchy in a business. It shows span of control, line management and chain of command.

  
• What is span of control?


  The number of employees for whom a manager is responsible for
• Wide span of control:


  WIDE

  
• Narrow span of control:

  NARROW

  
• The span of control depends on...

  • Personality
  • Skill
  • Experience of being a manager
  • Use of clear objectives throughout a business
• Wide span of control?

  • Gives subordinates a chance for more independence
  • More appropriate if labour costs are significant-reduce number of managers
• Narrow span of control?

  • Allows closer supervision of employees
  • More layers in the hierarchy may be required
  • Helps more effective communication
• What are chains of command?


  Describes the lines of authority within a business
• What are levels of hierarchy?


  The number of layers of management or supervision in the organisation structure
• Example of a tall structure:

  TALL

  
• What is a tall structure?


  Traditional or mechanistic structure. There are many layers in hierarchy and narrow spans of control. Allows tighter control (less delegation), more opportunities for promotion, longer communication.

  More layers = more staff = higher costs
• Example of flat structure:


  FLAT

  
• What is flat structure?


  Flat hierarchy, wide spans of control and delegations is encouraged. Less opportunities for promotion, staff are given greater responsiblity, vertical communication is improved

  few layers = less staff = lower costs
• What is a matrix structure?


  Individuals who work across teams and projects as well as within their own department or function
• What are matrix structures helpful?

  • For teams developing new products as they could include engineers, designs specialists with marketing, financial, personnel and production skills.
  • Teams can be temporary or permanent. Each team member will have 2 managers, their normal functional manager as well as the team leader of the project
• Benefits and drawbacks of a matrix structure:

  MATRIX

  
• Why change structure?

  • Growth of business
  • Reduce costs and complexity
  • Employee motivation needs boosting
  • Customer service and quality improvements
• Challenges with structures?

  • Manager and employee resistance
  • Disruption and demotivation could lead to potential problems with staff retention
  • Costs like redundancies
  • Negative impact of customer service/quality
• What is delayering?


  Removing layers of management from the hierarchy of the organisation.

  Benefits:

  • Lower labour costs
  • Fast decision making
  • Shorter communication paths
  • Employee innovation
  • Widening spans of control so greater emphasis on teamworking and empowerment
• What does delegation mean?


  The assignment to others of the authority for particular functions, tasks and decisions
• What are the benefits and drawbacks of delegation?


  DELEGATE

  
• What is employee empowerment mean?


  Giving employees the power to do their job. This links to motivation and customer service as employees need to feel that their actions count.
• Connotations of the word empowerment

  • Giving authority to make decisions to front-line staff
  • Encouraging employee feedback
  • Showing more trust in employees
• Centralised


  Authority with senior management at the centre of a business
• Decentralised


  Authority delegated further down the hierarchy
• Example of centralised and decentralised


  BOTH

  
• What is centralised decision making?


  Keep decision-making firmly at the top of the hierarchy
• Benefits and drawbacks of centralised decision making


  CENTRALISED

  
• Example of a matrix structure:

  MATRIX

  
• What is decentralised decision-making?


  Decision making is spread out to include more junior managers in the hierarchy, as well as individual business units or trading locations
• Benefits and drawbacks of decentralised decision making?


  DECENTRALISED