2.2 Organisation Structure

• A centralized organisational structure is when a very small number of people at the top control decision making.
• A decentralized organisational structure is when decision making is shared with a greater number of people.
• Organizational structures arrange employees in order to show information about job titles, accountability and responsibility at a glance.
• Delegation is the passing of control and authority to others in a firm.
• The span of control refers to the number of people who are directly accountable to a manager.
• Hierarchy in a business refers to the organizational structure based on a ranking system. The most skilled/most senior employees will appear at the top of the hierarchy.
• The chain of command refers to the formal line of authority through which orders are passed down in an organization.
• Bureaucracy is the execution of tasks that are governed by official administrative and formal rules of a firm. It can be a source of inefficiency and frustration.
• Delayering is the process of removing one or more levels in an organisational hierarchy.
• Matrix structures organise employees from different departments to temporarily work together on a particular project. Each member of the matrix is responsible to two managers: their department/line manager and the project manager of the matrix.
• Flat organisational structures have fewer levels in the heirarchy. Managers usually have a wider span of control.
• Tall organisational structures have many levels in the hierarchy. Managers tend to have a narrower span of control.
• Most businesses are organised in their hierarchy by function (ie. Vice President (Production) followed by region underneath (ie. Vietnam Plant Manager) and finally by product (ie. Consumer products)
• Organisation restructuring is the reorganising of human resources of a firm into a new organisational structure.
• Reasons for organisation restructuring may include: to incorporate new job roles and eliminate redundant roles, to reduce costs/debt, to concentrate on key business activities, to incorporate new technology, to ensure the skills and expertise of employees are used effectively, to sell a part of the firm’s business activities or to merge with another company.
• Project based organisations organise human resources around a project.
• Handy's Shamrock Organisation suggests that human resources should be organised into core staff, peripheral workers and outsourced workers.