Organisational Structures

• Internal Organisational Structures - how a business is organised in terms of communication and decision-making

  • identifies specific job roles and indicates who reports into whom and who's responsible for particular staff members
• Organisational Structure Determines:

  • authority and responsibility
  • accountability
  • line of communication
• Factors Influencing:

  • Business Size - Small = informal, flat hierarchy - Large = complicated, more layers
  • Business Type
• Span of Control - the number of employees for whom a manager is responsible
• Narrow Span of Control:

  + closer supervision of employees

  + more effective communication

  - more layers in the hierarchy may be required, so more expensive
• Wide Span of Control:

  + gives subordinates more chance for independence, increasing motivation

  + cheaper as it reduces the number of managers

  - harder to communicate
• Span of Control Depends On:

  • experience of the manager
  • business size and complexity
  • whether the business is centralised or decentralised
• Chain of Command - the lines of authority within a business
• Levels of Hierarchy - the number of layers of management in the organisation structure
• Hierarchy:

  • traditional organisational structure
  • hierarchy levels reflect the levels of seniority
• Tall Hierarchy:

  • many layers with narrow spans of control

  + and - tighter control = less delegation

  + more promotional opportunities, increasing employee motivation and retention

  - takes longer to communicate through the layers

  - more layers = more staff = higher costs
• Flat Hierarchy:

  • few layers with wide spans of control

  + communication is improved

  + fewer layers = less staff = lower costs

  + and - less direct control = more delegation

  - fewer promotional opportunities, but staff are given more responsibilities
• Matrix Structures - individuals work across teams and projects, as well as in their own departments

  + improves communication by breaking traditional department barriers

  + greater motivation due to more involvement with other employees

  + encourages sharing ideas across departments

  - confusing as employees have multiple line managers

  - not a clear line of accountability

  - difficult to co-ordinate
• Centralised - decision making is kept at the top of the hierarchy

  + easier and quicker to implement common policies and practices for the business as a whole

  + decisions are taken for the benefit of the whole business, not just a single department

  + consistency amongst branches, providing customers with a uniform experience

  - lack of authority down the hierarchy may reduce staff motivation

  - more layers, increasing costs

  - local managers more likely to be more aware of customer needs, so the best decisions for the local area may not be taken by the business
• Decentralised - decision making is spread out along the hierarchy

  + decisions are made closer to the custoemr and therefore are more likely to reflect their needs

  + good way of training and developing junior management

  + improves staff motivation

  - not necessarily looking at the business' long term future direction

  - more difficult to ensure consistent experience and policies

  - harder to control costs so business may overspend
• Delegation - when a manager chooses to give some of their workload to another less senior employee

  • the subordinate employee is given permission or authority to do the job that has been delegated, but doesn't take responsibility for the work
  • responsibility remains with the manager who delegated the job