Chapter 48 - Improving Organisational Design

• What is Organisational Structure?

  Organisational Structure is the arrangements of roles, responsibilities + relationships of each member of the firm. Shows how the differing teams could work towards the overall goal. Establishing a structure could allow co-ordination + efficiency, as everyone can understand their roles. Its shown through an organisational chart.
• What are "Levels of Hierarchy"?

  Levels of Hierarchy shows the different number of supervisory + management level between the top + bottom of the hierarchy. There are 2 types of Hierarchies:

  • Hierarchical structures - "Tall" ones have many layers, long chains of command, narrow span of control, less delegation and higher costs + promotions.
  • Flat Structure - ones that have few hierarchies, wide SofC, more delegation, short CofC's, lower costs + promotion, vertical communication improved.
• What is Span of Control?

  SofC is the number of staff that a manager has responsibility for, this depends on the nature of tasks + culture of workforce + managers:

  • Narrow SofC's - Closer supervision, more effective communication
  • Wide SofC's - More independence, more appropriate if labour costs are significant (less managers)

  If there are poor communications, wide SofC's should not be used
• What are Chains of Command?

  CofC's is the route that instructions flow from the top to the bottom, throughout the whole organisation:

  • In firms with loads of hierarchies, CofC's will be longer, leads to gaps in information from top to bottom + become distorted.
• What is Delegation?

  Delegation means passing authority (power) down to the hierarchy, gives greater responsibility to junior staff/managers. The +ve and -ve:

  • + Reduce management stress
  • + Workers empowered
  • + Seniors focus on key tasks
  • - Harder in a small firm
  • - Depends on experience of subordinates
  • - Increase workload of others
• What is Delayering?

  Delayering is a process where a business removes layers of its management to make its structure more flat. The Benefits of Delayering are:

  • Lower Labour Costs
  • Faster Decision Making
  • Shorter Communication Paths
  • Stimulate Employee Innovation
• What is a Centralised Structure?

  Is where the firm's decisions are made at the top of the hierarchy and are passed down (chain of command), they are often more slower to changes in environment or local changes, the +ve and -ve:

  • + Consistency across firm (Allows Policies + Practices implemented throughout firm + means other parts will not become independent)
  • + Operations + decisions are controlled + managed (easier to control + co-ordinate)
  • - Demotivates employees (Lack of Delegation)
  • - Standardised approach may not fit all locations (More Bureaucratic= more layers + not respond to local changes)
• What is a De-Centralised Structure?

  Is where a firms decisions are made by managers and Subordinates further down the chain, gives more responsibilities, are often more responsive to changes in environment + local changes, the +ve and -ve:

  • + Better employee motivation (good way pf training + development)
  • + Allow managers down the chain to make decisions more suited to local firms (+ customers needs)
  • - Make in-effective decisions (not strategic)
  • - No consistency + lower performance (quality of decision making + ensure consistent practices/Dis E.O.S)
• What are the Influences on Job Design?

  Professor Herzberg believed that worker motivation would only improve when some vertical barriers were broken down within hierarchies, specifically, he wanted "Self-Checking", effectively meaning supervisory roles and therefore cutting a tall hierarchy down to size:

  • An Important result of Job design is that stress levels are reduced (associated with lack of control of their working environment; thereby improving job design is needed
  • Absenteeism + labour turnover fig's tend to improve
• What are the Influences of Organisational Design?

  Changing Organisational Design is much harder and a difficult problem, to an extent, job design can be approached one job at a time - a change in organisational design affects everyone, all at once.