1.4.3 organisational design

• hierarchy


  • levels of authority within an organisation
  • describes ranking of positions from top to bottom
  • the higher the position, the more authority
  • the hierarchy usually includes top-level management, middle-level management and lower-level employees
• chain of command


  • is the line of authority from the top of an organisation (directors) to lower-level employees
  • it defines who reports to whom
  • who is responsible for making decisions
  • helps to establish a clear communication channel
  • maintain accountability
• span of control


  • refers to the number of employees that a manager or supervisor can effectively manage
  • narrower span of control means manager has few employees to manage
  • wider span of control means there are more employees manager is responsible for
• centralised


  decision making is made at the top of the organisation with senior management making most of the decisions.

  promoted consistency and control
• decentralised structures


  decision making is distributed throughout the organisation. lower level employees have more decision making power.

  promotes flexibility and innovation
• tall/hierarchical structure - key features


  • centralised decision making
  • narrow span of control
  • long chain of command
  • lots of layers
• tall/hierarchical structure - benefits


  • more opportunities for promotion = more motivated employees
  • narrow span of control = less workload = less stress
  • clear roles in hierarchy = orderly and organised - clarity
• tall/hierarchical structure - drawbacks


  • communication takes longer due to lots of layers = info can get distorted
  • less power in decision making for employees
• tall/hierarchical structure - industry examples


  military

  police
• Flat structure - key features


  • Shorter chain of command
  • Wider span of control
  • Decentralised decision making
  • Fewer layers
• Flat structure - benefits 


  • Communication is faster because of shorter chain of command
  • Faster decision making = more dynamic - employees have more power in decisions
• Flat structure - drawbacks


  • Less costs as there are not that many employees
  • Wider span of control = more workload
  • Less prospects for promotion
• Flat structure - industry examples


  Small businesses

  Start-ups
• Matrix structure 


  • Usually built around specific products/projects eg. Kitkat has its team within nestle
  • Combine functional areas of a business (HR, finance, sales, marketing) with a specialist team that operates inside the business
• Matrix structure - benefits 


  • Move along through projects = more excited = more motivated
  • Better communication
  • Multiple projects running independently
  • Allows for more job rotation
  • Better allocation of people
• Matrix structure - drawbacks 


  • Requires extensive admin support
  • Difficult to coordinate different departments
• Matrix structure - industry examples 


  Construction companies

  Marketing agencies