1.4.3 Organisational Design

Hierarchy

A system in an organisation where people are ranked according to the authority that they have

Span of control

The number of subordinates that a supervisor or manager is in charge of

Chain of command

This is the route that orders travel down in an organisation and complaints travel up

Flat structure

This is a hierarchy design that orders travel down in an organisation and complaints travel up. Flat structures are characterised by fewer levels of management and there is a short chain of command.

Advantages of flat structures

• Promotes culture of collaboration and open communication

• Decision-making can be faster and more efficient

• Encourages creativity and innovation as employees have more autonomy and flexibility

• All of the above increase efficiency efficiency and motivation

Disadvantages of flat structures

• This can lead to role ambiguity and a lack of a clear hierarchy

• May not provide clear opportunities for career advancement or promotion

• This may require employees to take on multiple roles and responsibilities, leading to burnout and overwhelm

• All of the above reduce efficiency and motivation

Tall structure

This is a hierarchy design which is the opposite to a flat structure, it has a long chain of command but a short span of control

Advantages of tall structures

• Provides a clear hierarchy of authority and defined roles and responsibilities

• Promotes specialisation and expertise within each department or function

• Offers opportunities for career advancement and promotion within the organisation

• All of the above increase efficiency and motivation

Disadvantages of tall structures

• Can create communication barriers between the upper and lower levels of the hierarchy

• Decision-making can be slow as information must pass through multiple layers of management

• This can lead to bureaucracy and excessive levels of management

• All of the above can reduce efficiency and motivation

Matrix structure

Matrix structures usually built around specific products or projects. They combine the functional areas of a business (human Resources, finance, marketing, sales) with a specialist team that operates inside the business

Advantages of matrix structures

• Promotes cross-functional collaboration and communication

• Allows for specialisation and expertise within each functional area

• Enables efficient allocation of resources and coordination of multiple projects

• All of the above increase efficiency and motivation

Disadvantages of matrix structures

• This can lead to conflicts over proportions and resources

• This can create confusion over roles and responsibilities, particularly when multiple managers are involved

• Requires a high degree of communication and coordination, which can be challenging

• All of the above reduce efficiency and motivation

Authority

This is the power or right to give orders in an organisation

Delegation

This is the act of passing a job or order down to a subordinate

Centralised structure

Decision-making authority is concentrated at the top of the organisation

Decentralised structure

Decision-making authority is distributed throughout the organisation