Business Management Unit 2.2 (Organizational Structure)

Organizational Structure

Organizational Structure

organizational structure arranges employees in order to show the following information at a glance

Matrix structure

is a flexible organizational strucutre based on the specific needs of a particular task, assignment or business venture to meet chaning needs of the organization.

Types of organizational structures

1. delegation

2. span of control

3. levels of hierarchy

4. chain of command

5. bureaucracy

6. centralization

7. decentralization

8. de-layering

9. matrix structure

External elements affecting businesses

• Social - changes that pertain to demographics, culture, or trends

• Technological - elements that relate to the development in IT and technology

• Economic - Changes that relate to tax rates, levels of income, etc.

• Environmental - Changes that are brought about by pollution or natural disasters

• Political - Policies (fiscal and monetary) influence taxes and exchange rates

• Legal - Laws that are enforced by any given country

• Ethical - Society’s varying perspective on being ‘ethical’

common types of organizational charts

1. Flat/ horizontal

• has only a few layers of management

• hence, there is a wide span of control

1. tall or vertical organizational chart

• has many levels in the organization chart

• Therefore, managers tend to have a narrower span of control

CHANGES IN ORGANIZATIONAL STRUCTURE

project-based organizations

• These firms organize their firm's human resources around particular projects or development plans.

handy’s Shamrock organization

• Charles Handy, an organizational behavior and management expert, proposed that firms need to be able to adapt quickly to the dynamic changes that occur in the external environment.

• he proposed that human resources should be organized into core staff, peripheral workers, outsourced workers

The choice of organizational structure (such as centralized, decentralized, hierarchical or bureaucratic) depends on several factors, such as:

1. the corporate culture

2. the size of the workforce

3. the skills, qualifications, experiences, and talents of the workforce

4. the nature of the decisions (whether they are strategic or routine decisions).

Delegation

It involves passing on control and authority but holding subordinate for their actions.

Span of control

Refers to the number of people who are directly accountable to a manager, Hence, the higher up a person is in a hierarchy, the wider their span of control tends to be.

Levels of hierarchy

Refers to the number of layers of formal authority. It is represented in an organisational chart. Each horizontal level in the hierarchy shows the level of seniority in the organisation.

Bureaucracy

Refers to administrative systems within an organisation. This includes the formal policies and procedures of the business.

Centralisation

Refers to the situation in organisations where decision-making is predominantly made by a small group of senior managers at the top of the organisational hierarchy.

Decentralisation

Refers to the situation in organisations where decision-making authority is delegated throughout, rather from a central authoritative group.

Delayering

Is the process of removing one or more levels in the hierarchy.