1.4.3 organisational design

Organisational design

• A diagram or chart which shows the lines of authority and layers in the hierarchy of the business

Organisational charts

• Provide a visual representation of the organisational structure

  1. Names of departments

  2. job roles

  3. responsibilities

  4. lines of authority

  5. lines of communication flow

  6. chains of command

hierarchy

• employees are ranked due to their status and authority

• tall and thin: occurs where each superior is responsible for a few subordinates

  • allows closer supervision and communication

• wide and flat: each superior is responsible for a large number of subordinates

  • adv: requires greater delegation but fewer levels allowing for quicker communication

  • disadv: employees cant move up the hierarchy

chain of command

• the flow of information power and authority

• longer chain = slower communication and potentially decision making

span of control

• shows number of subordinates that a manager or supervisor is directly responsible for

• narrow span of control = tall hierarchy and jobs are specialised

• wide span of control = flat hierarchy, employees will be given more responsibility

authority

• power of an employee to instruct subordinates, make decisions and control use of resources

• centralised: maintained by a few at centre of organisation

• decentralised: spread across organisation

decentralisation

• where a business divides the organisation of its business into areas

  • business will have separate budgets for each area

  • increased flexibility, quicker decision making

centralisation

• where a business has its organisation of management and administration at one central head office

  • business has one central shared budget

  • lead to more efficient resource management and streamlined operations

tall structure adv

• everyone knows where they are in the hierarchy so very orderly and organised

• opportunity for promotion = staff motivation

• staff gain more support from line manager

• higher degree of supervision as line manager has limited subordinates

• work is shared among people so less stress

• can get to know subordinates really well - can make sure team is well trained

tall structure disadv

• lots of layers and a long chain of communication can mean business is inflexible

• communication within organisation may be slow so may take long for decisions to me made

• expensive as there are more managers and supervisors (higher wage costs)

flat structure adv

• wide span of control

  • employees given more responsibility so more productivity

• short chain of command so information flows quickly

• fewer layers = faster communication

flat structure disadv

• staff can be overworked as there is less supervision leading to stress

• can create power struggles if manager is rarely around

• wide span of control = managers have too many staff to manage and may lose touch with them

matrix structure adv

• ideal for a business that works on a project by project basis

• flexible structure means that staff from different departments can jump in and out of different job roles

• perfect to exploit specific skills of staff

• provide staff with an opportunity to learn new skills

matrix structure disadv

• possible coordination problems between departments

• conflict of interest across projects

• staff stretched across different projects not spending time in their own departments

• team members may have priority issues when having to report to 2 bosses