organisational design

tall structure

Tall organisational structures will tend to have many layers of hierarchy but a narrow span of control.

This means that managers have fewer people to supervise but workers need greater supervision and have less autonomy to make their own decisions.

tall structure advantages + disadvantages

• Keep close control of subordinates due to narrow span of control

• More time to focus on strategic decisions at the top of the hierarchy

• Long chain of command which makes communication problems more likely

• De-motivation of workers lower down the hierarchy

flat structure

A flat organisational structure will tend to have few layers of hierarchy and a wide span of control. Managers tend to have a large number of staff under their supervision which makes monitoring more difficult. However, staff are likely to enjoy more autonomy.

• Subordinates have more independence

• Empowerment of workers

• Faster communication due to a shorter chain of command

• Wider span of control making monitoring more difficult

• Additional training costs

matrix structure

combines the traditional departments seen in functional structures with project teams. individuals work across teams and projects as well as within their own department or function.

• Can help to break down traditional department barriers, improving communication across the entire organisation

• Can allow individuals to use particular skills within a variety of contexts

• Likely to result in greater motivation amongst the team members

• Members of project teams may have divided loyalties as they report to two-line managers. Equally, this scenario can put project team members under a heavy pressure of work

• Difficult to co-ordinate

centralised structure

keep power, authority and decision- making firmly at the top of the hierarchy (among the most senior management).

• Prevents other parts of the business from becoming too independent

• Easier to co-ordinate and control from the centre – e.g. with budgets

• Economies of scale and overhead savings easier to achieve

• Greater use of specialisation

• More bureaucratic – often extra layers in the hierarchy

• Customer service does not benefit from flexibility and speed in local decision-making. Information on customers may be ignored

• Less motivation for workers lower down in the hierarchy

decentralised structure

In a decentralised organisational structure power, authority and decision-making is spread out to include more junior managers in the hierarchy, as well as individual business units or trading locations.

• Improved level of customer service

• Consistent with aiming for a flatter hierarchy

• Good way of training and developing junior management

• Should improve staff motivation

• May be some diseconomies of scale – e.g. duplication of roles

• Potential uncertainty of leadership in a crisis

• Harder to achieve tight financial control – risk of cost-overruns

The delegation of one or more business processes to an external provider, who then owns, manages and administers the selected processes to an agreed standard.

• IT functions

• Human Resource Management - outsourcing activities such as recruitment

• Finance - you can outsource the financial aspects of the business

• Sales and marketing - handle marketing communications.

• Catering

• Security

• Call centres

outsourcing advantages and disadvantages

• It may improve the quality of the service provided therefore give the business a competitive edge

• It can lead to an improved reputation

• Outsourcing can free up the business to focus on its strengths allowing staff to concentrate on their main tasks and on the future strategy

• Outsourcing could improve efficiency or customer service.

• It may be more expensive and lead to lower profits.

• Service delivery may fall below expectation and lead to customer

  complaints.

• Damage the reputation of the business and make it more difficult to achieve objectives.

• Management changes at the outsourcing company could lead to friction