2.2 Organisational structure

Organisational structure

The internal, formal framework of a business that shows the way in which management is organized, linked together and how authority is passed through the organisation

Delegation

Assigning responsibility for a task to someone further down the chain of command

Span of control

The number of people who report to a manager

Hierarchy

A system in which members of an organisation are ranked according to authority

Chain of command

The line of authority in an organisation, specifying who reports to whom

Bureaucracy

A system of administration that involves multiple layers of authority and complex approval processes, often resulting in slow decision making

Holacracy

A type of flat organisational structure where teams work autonomously to accomplish tasks and company goals

Centralisation

A situation where the decision-making authority of an organisation is held by one person or a small group of people

Decentralisation

A situation where the decision-making powers are passed down to the lower levels of the organisation

Delayering

The removal of unnecessary levels of hierarchy in an organisation

Matrix structure

An organisational structure that has 2/+ reporting structures:
employees working on a project report to both a project manager and to a functional manager.

Project-based organisational structure

An organisational structure that has two or more reporting structures; employees working on a project report to both a project manager and to a functional manager (see matrix structure).

Flat / horizontal organisation

A type of business organisation with few levels of hierarchy.

Tall / vertical organisation

A type of business organisation with many levels of hierarchy.

Hierarchal organisational structure

An organisational structure where the ranking of positions is based on the level of authority and power in a business.

Organisational structure by product

An organisational structure where the organisation is divided into different departments, each focused on a different product.

Organisational structure by function

An organisational structure in which the organisation is divided into smaller groups based on specialised functional areas, such as marketing, production, finance, IT and others.

Organisational structure by region

An organisational structure used by organisations with operations in different geographical locations.

Organisational chart

A visual representation of the structure of an organisation that shows reporting relationships within the organisation.