1.4.3 - organisational design

• • Organisational structure outlines the reporting relationships, roles, and responsibilities of employees in the organisation
  • Businesses must determine what the best structure is for them to effectively implement their ideas and achieve their objectives
• • A hierarchy refers to the levels of authority within an organisation
  • It describes the ranking of positions from top to bottom
  • The higher the position in the hierarchy, the more authority and power it holds
  • The hierarchy usually includes top-level management, middle-level management, and lower-level employees
• • The chain of command is the formal line of authority that flows down from the top management to lower-level employees
  • It defines who reports to whom and who is responsible for making decisions
  • The chain of command helps establish a clear communication channel and helps to maintain accountability within the organisation
• • Span of control refers to the number of employees that a manager or supervisor can effectively manage
  • It is based on the principle that a manager can only effectively manage a limited number of employees
  • A narrower span of control means that there are more layers of management
  • A wider span of control means that there are fewer layers of management
• • In a centralised structure, decision-making authority is concentrated at the top of the organisation
  • In a decentralised structure, decision-making authority is distributed throughout the organisation
  • Decentralisation can promote flexibility and innovation, while centralisation can promote consistency and control
• • Tall structures are characterised by multiple levels of management and a more centralised decision making process
  • A long chain of command
  • Common in large organisations with complex operations
• Advantages of tall structures:

  • Provides a clear hierarchy of authority and defined roles and responsibilities
  • Promotes specialisation and expertise within each department or function
  • Offers opportunities for career advancement and promotion within the organisation
  • All of the above increases efficiency and motivation
• Disadvantages of tall structures:

  • Can create communication barriers between the upper and lower levels of the hierarchy
  • Decision-making can be slow as information must pass through multiple layers of management
  • This can lead to bureaucracy and excessive levels of management
  • All of the above reduce efficiency and motivation
• • Flat structures are characterised by fewer levels of management and a more decentralised decision-making process
  • A short chain of command
  • Common in small organisations or start-ups
• Advantages of flat structures:

  • Promotes a culture of collaboration and open communication
  • Decision-making can be faster and more efficient
  • Encourages creativity and innovation as employees have more autonomy and flexibility
  • All of the above increases efficiency and motivation
• Disadvantages of flat structures:

  • This can lead to role ambiguity and a lack of a clear hierarchy
  • May not provide clear opportunities for career advancement or promotion
  • This may require employees to take on multiple roles and responsibilities, leading to burnout and overwhelm
  • All of the above reduce efficiency and motivation
• • Matrix structures are usually built around specific products or projects
  • They combine the functional areas of a business with a specialist team that operates inside the business
• Advantages of a matrix structure:

  • Promotes cross-functional collaboration and communication
  • Allows for specialisation and expertise within each functional area
  • Enables efficient allocation of resources and coordination of multiple projects
  • All of the above increases efficiency and motivation
• Disadvantages of a matrix structure:

  • This can lead to conflicts over priorities and resources
  • This can create confusion over roles and responsibilities, particularly when multiple managers are involved
  • Requires a high degree of communication and coordination, which can be challenging
  • All of the above reduce efficiency and motivation