Structure and Organisation

• Organisational design is the framework that provides a business with a structure to achieve its objectives.
• Organisational structure is the way in which the workforce within a firm is organised, including job roles and communication flows.
• Organisational charts provide a visual representation of the organisational structure.
• Hierarchy is the structure of the workforce within an organisation showing who is accountable to whom.
• The levels of hierarchy within firms will differ:
• Tall and Thin:

  -Structures occur where each superior is responsible for a few subordinates.

  -This allows for closer supervision and communication between the two levels.
• Wide and Flat:

  -This means each superior is responsible for many subordinates.

  -This requires greater delegation but fewer levels allowing for quicker communication through the firm.
• Chain of command:

  The way authority and power is passed down the levels of hierarchy.

  The chain of command will be from the top of the organisation structure downwards.

  The longer the chain of command the slower communication and potentially decision making.

  It is however important that communication can flow in both directions.
• Span of Control:

  The span of control shows the number of subordinates that a manager or supervisor is directly responsible for.
• If a manager has many subordinates this is called a wide span of control.

  If they have few subordinates this is called a narrow span of control.
• The size of a manager's span of control is likely to influence the amount of supervision i.e. with a narrow span of control a manager only has a few subordinates and can therefore supervise them closely.
• Authority:

  The power of an employee to instruct subordinates, make decisions and control the use of resources.
• Authority can be:

  -Centralised i.e. maintained by a few at the centre of the organisation

  -Decentralised i.e. spread across the organisation

  Authority can act as a motivator.
• Centralisation:

  When the responsibility for decision making is maintained, by a limited number of senior managers, at the top of the hierarchy.

  -Few decision makers

  -Decisions are made by those at the top of the hierarchy

  -Speeds up decision making

  -Maintains tight control

  -Bureaucratic
• Decentralisation:

  When the responsibility for decision making is delegated to several middle managers throughout the hierarchy.

  -Delegates decision making

  -Decisions made at many levels within the hierarchy

  -Frees up management time

  -Provides motivation

  -Reduces bureaucracy
• A matrix structure is one where teams are put together from different functional areas to work on specific projects.
• Advantages of MS:

  -Communication across functional areas

  -Range of viewpoints considered

  -Functions support and understand each other
• Disadvantage of MS:

  -Potential loss of control

  -Teams may take time to work together effectively

  -Can cause conflict
• A holacratic structure is one where authority and responsibilities are shared amongst the workforce.

  -A holistic approach where no one is the leader

  -Teams will be formed to focus on specific projects.
• Advantages of HS:

  -Shared responsibility and authority

  -Supports a skilled and innovative workforce

  -Greater flexibility and ability to respond quickly to change

  -Motivational
• Disadvantages of HS:

  -Dependent on trust

  -Many decision makers can pose a threat of conflict
• Functional/Operational areas:

  Departments within a business with responsibility for a specific area of business activity.

  For example, the production and quality function, also known as the operations management or resource management function, will be responsible for the activities that meet customers' orders.
• Responsibilities of this function will include:

  -Turning raw materials into finished goods or services

  -Checking quality

  -Maintaining machinery

  -Receiving, storing and monitoring stock

  -Distribution of finished goods
• Functional areas include:

  -Human resources

  -Research and development

  -Sales

  -Marketing

  -Purchasing

  -Production and Quality

  -Finance

  -Customer Service

  -IT

  -Administration