Organisational Design

• What does organisational structure mean?

  Outlines the reporting relationships, roles and responsibilities of employees in the organisation

  • Businesses must determine the best structure to implement their ideas and achieve objectives
  • Well designed structure helps promote clarity, efficiency and accountability
• What is a hierarchy?

  The levels of authority within an organisation, describes the ranking of positions from top to bottom

  • Higher the position the more authority and power it holds
  • Usually includes: top level management, middle level management and low level employees
• What is the chain of command?

  Formal line of authority that flows down from top management to lower level employees

  • Defines who reports to whom, and who is responsible for making decisions
  • Helps establish a clear communication channel, helping to maintain accountability within organisation
• What is the span of control?

  Number of employees that a manager or supervisor can effectively manage

  • Based on principle that manager can only manage limited number of employees
  • Narrower span of control - means more layers of management
  • Wider span of control - means fewer layers of management
• What are centralised and decentralised structures?

  • Centralised - decision making and authority concentrated at the top of organisation/hierarchy, senior management make most decisions —> promote consistency and control
  • Decentralised- decision making distributed throughout organisation, low level employees having more decision making power —> promote flexibility and innovation
• What are the 3 different types of organisational structures?

  Tall

  Flat

  Matrix
• Explain what a tall organisational structure is?

  • Multiple levels of management and more centralised decision making process
  • Long chain of command
  • Common in large organisations with complex operations; universities and gov agencies
• What are pros and cons of tall/hierarchical organisational structures?

  Advantages:

  • Clear hierarchy of authority and defined roles/responsibilities
  • Opportunities for career advancement and promotion -> increases efficiency and motivation
  • Promotes specialisation and expertise within each department

  Disadvantages:

  • Communication barriers between upper and lower levels of hierarchy
  • Decision making can be slow, info must be passed through multiple layers of management -> reducing efficiency and motivation
  • Can lead to bureaucracy, excessive levels of management
• What is a flat organisational structure?

  • Fewer levels of management and more decentralised decision making process
  • Short chain of command
  • Common in small organisations/businesses or start ups
• What are pros and cons of flat structures?

  Advantages:

  • Promotes collaboration and open communication
  • Faster and more efficient decision making
  • Encourages creativity/innovation, as employees have more autonomy and flexibility -> increased efficiency and motivation

  Disadvantages:

  • Can lead to role ambiguity, and lack of clear hierarchy
  • No clear opportunities for career advancement/promotion
  • Employees may have to take on multiple roles, leading to burnout - reduced efficiency and motivation
• What is a matrix organisational structure?

  Usually built around specific products or projects eg: KitKat has its team within Nestle

  • Combine functional areas of business (HR, finance, marketing, sales) with specialist team that operates within business
• What are pros and cons of matrix structure?

  Advantages:

  • Promotes cross functional collaboration/communication
  • Specialisation and expertise within each functional area
  • Efficient allocation of resources and coordination of multiple projects - increase effecting and motivation

  Disadvantages:

  • Conflict over priorities and resources
  • Confusion over roles/responsibilities particularly when multiple managers are involved - reduced efficiency and motivation
  • Requires high degree of communication/coordination to ensure directions are aligned