organisational design

• Organisation Design:

  The process of aligning the structure of a business with its aims and objectives, in order to improve efficiency and effectiveness.
• Organisation Structure:

  Organisational structure is the way in which all the people within a business are organised. It shows the links between workers and managers, showing lines of authority.
• organisational chart

  A visual illustration used by the businesses to organise themselves and to view how the different departments relate to the whole organisation.
• Factors affecting the choice of internal structure

  All but the smallest businesses will have a recognisable internal structure and there are a wide variety of structural types that could possibly be adopted by any business.

  These factors include:

  • The size of the business
  • The scale of the business’ operations
  • The skills of the workforce
  • The industry within which the business operates
  • The views and philosophy of the owners and managers
  • The need for effective communication
• Different Job Roles Within A Business - Leaders / owners / directors

  • Establish the business’s overall goals.
  • Set long-term plans and targets for the business.
• Different Job Roles Within A Business- Managers

  • Work to achieve the short- and long-term targets set by the owner or directors.
  • May be responsible for a function within the business, e.g. marketing or
  • finance.
  • Use employees and other resources in the best way possible.
• Different Job Roles Within A Business- Supervisors / team leaders

  • Help managers to achieve their targets by reporting any problems and passing on instructions.
  • Take simple decisions such as allocating jobs among different employees.
• Different Job Roles Within A Business- Operatives / Shop floor workers

  Carry out the business’s basic duties or activities. These could be working on a production line, serving customers in a shop or office duties.
• Hierarchy

  An organisation in which power and responsibility are built up in layers. The most powerful being at the top.
• Chain of Command

  The path along which orders pass within a business from the management to the shop floor.
• Span of Control

  The number of people an individual is personally responsible for in a business organisation.
• Line Manager

  This is an employee’s immediate superior or boss.
• Subordinate

  The person below a worker who they are responsible for.
• Delegation

  Involves the passing of authority from a manager to a subordinate.
• Flat (Horizontal) Organisational Charts

  Small businesses with few employees will have a flat (horizontal) organisational chart.
• what is colins span of control

  3

  
• who is the kitchen assistant line manager

  colin

  
• how many levels are there in colins business

  2

  
• What are the benefits of having a short chain of command?

  Easier communication
• Tall (Hierarchical) Organisational Charts

  Most medium sized and large businesses tend to have tall (hierarchical) organisation charts. This is an organisation with many levels and job roles.
• how many levels are there in this business ?

  4

  
• what is the span of control of the sales manager

  6

  
• Tall (Hierarchical) Organisational Charts

  • suitable for businesses that employ many people and have a range of functions within the business.
  • The structure helps to keep control of the business as all employees fully understand who does what and which responsibilities individual employees have.
  • The chain of command is clearly defined and line mangers and subordinates clearly know who they are responsible for and to.
  • Tall organisational structures tend to have narrower spans of control at the top of the hierarchy and then will widen towards the bottom where a number of supervisors/team leaders will monitor operative performance.
• Tall organisations:

  • many levels of hierarchy
  • span of control is narrow
  • opportunities for promotion.
  • lines of communication are long
  • the firm unresponsive to change as takes longer to make decisions.
• Flat organisations:

  • few levels of hierarchy
  • lines of communication are short
  • firm is responsive to change.
  • a wide span of control means that tasks must be delegated
  • managers can feel overstretched.
• advantages of tall hierarchy ?

  • There is a clear management structure with a narrow span of control -Each manager has a small number of employees under their control so employees can be closely supervised.
  • There will be clear lines of responsibility and control-Workers will know where to go if they have any issues and to whom they report to so problems may get resolved quicker.
  • Clear progression and promotion ladders for employees -Motivates the workers to work harder to gain a promotion so productivity increases.
• disadvantages of tall hierarchy ?

  • Communication can be slow and difficult as it has to go through many layers of management - This means that messages can be distorted along the way and the correct information is not received.
  • Decisions can be taken slowly as information has to be passed through the organisation - This could mean that orders are lost if a decision is not made quickly enough.
  • High management costs - The could increase the business’ overall total costs which would impact on their overall profit margin.
• advantages of short hierarchy ?

  • Fewer managers are needed - This can help to reduce the wage bill, and this money can then be spent else where in the business.
  • Communication can be quick and effective as fewer levels of hierarchy - There is less chance of the wrong information being received and decisions can be acted upon quicker.
  • Workers are motivated as they can have greater responsibility and authority - This can help to raise their productivity levels. They may want to impress in the hopes of getting a promotion/pay increase.
• disadvantages of short hierarchy ?

  • High level of skills needed by the workforce - The business may have to spend heavily on training to give junior employees the necessary skills which could increase the costs to the business
  • Span of control is very wide so can be difficult to monitor workers - This could cause the managers to become stressed and take time off.
  • Limited promotion opportunities for workers so it is difficult to retain them - If these workers leave then money will have to be spent on recruiting and training new workers which costs time and money.
• How do you get from a tall to a flat structure?

  Delayering:

  • This is where a layer of middle management is removed saving the business money
  • It creates a flatter structure to the management hierarchy leading to wider spans of control.
• Evaluating Delayering - Advantages

  • By removing a layer of managers, considerable cost savings can be made on their salaries – overheads are reduced.
  • Communication may improve because the organisation is flatter – managers and subordinates may develop a greater understanding.
  • Some staff may now be empowered to make their own decisions and this could be motivating for them.
• Evaluating Delayering - disadvantages

  • cost savings can be made on their salaries – overheads are reduced.
  • Communication may improve because the organisation is flatter – managers and subordinates may develop a greater understanding.
  • Some staff may now be empowered to make their own decisions and this could be motivating for them.
  • However, those managers who remain may become demoralised and fearful that their job may be the next to go.
  • May lead talented managers to seek other jobs as they see less chance of promotion in the new flatter management structure.
  • Could lead to some managers being overburdened as they have to take on more subordinates – stress levels increase.

  Initially, this process can be very costly to implement if high redundancy payments have to be met.

  May result in the loss of some talented specialists within the management level that is removed.
• Matrix Structure

  An organisational structure in which people can work across team and projects as well as within their own department.

  
• Advantages of Matrix Organisations

  • It allows individuals with specific skills to contribute to a number of different projects.
  • It breaks down barriers to communication and ensures that projects can be better coordinated.
  • It helps ideas and innovation spread throughout the business.
  • There is more efficient use of human resources. The structure can improve flexibility and the motivation of employees.
• Disadvantages of Matrix Organisations

  • Defining what each employee’s main responsibilities are is difficult – being answerable to two bosses may put a lot of strain on individuals. Placing too great a burden on individuals may slow down decision-making.
  • Project management using a matrix structure can be expensive because extra support systems, such as ICT and office staff, may be required.
  • Coordinating a team drawn from a number of different departments may be difficult as the culture and methods of operation in each department may be very different.
• Centralised structure

  • One person/committee (e.g. head office or a few senior managers) will retain the major responsibilities and powers. E.g. Sole Traders, Partnerships, Ltd’s
  • Decision making is kept at the centre and not passed down.
  • Junior staff cannot complete tasks until managers give authority for them to do so.
• Decentralised structure

  • Responsibility for specific decisions is spread across various stores, departments and lower level managers. E.g. PLC’s, and Multinationals
  • Decision making is shared amongst employees
• Centralised Structures : Benefits

  • Decisions can be made quicker
  • Helps cost efficiency – bulk purchases
  • Useful for low skilled jobs
  • Consistency across the business
  • Chain of command and accountability are clear
• Centralised Structures : drawbacks

  • Workers may be demotivated
  • Higher labour turnover
  • Multinational firms are less responsive to local external pressures
  • Stifle creativity and innovation
• Decentralised Structures : drawbacks

  • Strong leadership is not established to give direction
  • Lack of coordination
  • Costlier operations - less likely to benefit from economies of scale as local managers will use different suppliers