Organisational Design

• Organisational Structure

  • Organisational structure outlines the reporting relationships, roles, and responsibilities of employees in the organisation
  • They should consider how the structure may affect the management and effectiveness of operations and communications
  • A well-designed organisational structure helps to promote clarity, efficiency, and accountability
• Hierarchy

  • 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
• Chain of Command

  • 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

  • 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
• Centralised and Decentralised structures

  • In a centralised structure, decision-making authority is concentrated at the top of the organisation, with senior management making most of the decisions
  • In a decentralised structure, decision-making authority is distributed throughout the organisation, with lower-level employees having more decision-making power
  • Decentralisation can promote flexibility and innovation, while centralisation can promote consistency and control
• Types of Organisational Structure

  • Businesses typically structure their organisation in one of three ways
  • Tall organisational structures
  • Flat organisational structure
  • Matrix organisational structure
• Tall Organisational Structures

  • 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, e.g. government agencies and universities
• Advantages / Disadvantages of Tall Structures

  + Provides a clear hierarchy of authority and defined roles and responsibilities

  + Offers opportunities for career advancement and promotion within the organisation

  -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
• Flat Organisational Structures

  • 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 e.g. tech start-ups and small businesses
• Advantages / Disadvantages of flat structures

  +Promotes a culture of collaboration and open communication

  +Decision-making can be faster and more efficient

  -May not provide clear opportunities for career advancement

  -This can lead to role ambiguity and a lack of a clear hierarchy
• Matrix Organisational Structures

  • Matrix structures are usually built around specific products or projects, e.g. KitKat has its team within Nestlé
  • They combine the functional areas of a business (HR, finance, marketing, sales) with a specialist team that operates inside the business
• Advantages / Disadvantages of Matrix structures

  +Promotes cross-functional collaboration and communication

  +Allows for specialisation and expertise within each functional area

  -Requires a high degree of communication and coordination, which can be challenging

  -This can lead to conflicts over priorities and resources