Organisation

• Hierarchy


  The number of levels in an organisational structure
• Simple hierarchical structure


  • Levels of hierarchy
  • Chain of command
  • Span of control
• Levels of hierarchy


  The different levels in an organisational structure
• In larger organisations, as you move from the top to the bottom of the hierarchy, there are more and more people at each level
• Chain of command


  The route through which authority is passed down
• Span of control


  The number of subordinates reporting to each supervisor/manager
• A wide span of control can be described as when a supervisor is directly responsible for many subordinates
• A narrow span of control can be described as when a manager is only directly responsible for a few subordinates
• Factors affecting span of control


  • Difficulty of tasks
  • Experience and skills of employees
  • Size of the business
  • Levels of hierarchy
  • Management style
• Advantages of wide span of control


  • Less expensive
  • Less supervision improves employee motivation
  • Faster communication and decision-making
• Disadvantages of wide span of control


  • Fewer promotion opportunities
  • Less control over subordinates' work
  • Effective communication may be difficult
• Advantages of narrow span of control


  • Effective communication is easier
  • Better control over employees and their work
  • More promotion opportunities
• Disadvantages of narrow span of control


  • Communication and decision-making are often slower
  • More expensive because more managers are needed
  • More supervision may reduce employee motivation
• Delayering


  Reducing the size of the hierarchy by removing one or more levels, most often middle management
• Advantages of delayering


  • Reduces costs
  • Reduces the chain of command so communication and decision-making should be quicker and more effective
  • Wider span of control increases the opportunity for delegation
• Disadvantages of delayering


  • Increased workload for remaining managers
  • Redundancy payments to managers who lose their jobs
  • Employees may fear redundancy and reduced job security
  • Wider span of control may reduce effective management of subordinates
• Centralised organisation


  One where all the important decision-making power is held at head office, or the centre
• Decentralised organisation


  One where the decision-making powers are passed down the organisation to lower levels
• Advantages of centralised organisation


  • Decision-making is often quicker
  • Decisions are taken for the benefit of the whole business
  • Greater use of specialist staff improves decision-making
• Disadvantages of centralised organisation


  • Slower communication
  • Unable to respond quickly to changes in local markets
  • May reduce employee motivation
• Advantages of decentralised organisation


  • Decisions are made based on local needs
  • Can be used to train junior managers
  • Delegation helps to improve employee motivation
• Disadvantages of decentralised organisation


  • Decisions taken might not be in the interests of the whole business
  • Poor decisions might be made because managers lack skills and experience