1.4.3 - Organisational Design

What is organisational design?

The framework that provides a business with a structure to achieve its objectives

What is hierarchy?

The structure of the workforce showing who is accountable to whom

What are the levels of hierarchy?

• Tall and thin - each superior is responsible for a few subordinates, which allows for close supervision and communication

• Wide and flat - each superior is responsible for a large number of subordinates which requires greater delegation but fewer levels allowing for greater communication through the firm

What is chain of command?

The way authority and power is passed down the levels of hierarchy; the longer this is, the slower communication and potentially decision making

What is span of control?

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

• Wide = many subordinates

• Narrow = few subordinates

What is centralisation?

When the responsibility is maintained by a limited number of senior managers at the top of the hierarchy

What is decentralisation?

When the responsibility for decision-making is delegated to a number of middle managers throughout the hierarchy

What are some influences on delegation, centralisation and decentralisation?

• Attitudes and priorities of leader and their preferred leadership styles

• Organisational design

• Skills and attitudes of the workforce

• Nature of decisions to be made

• Legal form

• Business objectives

What is a matrix structure?

Where teams are put together from different functional areas to work on specific projects

What are advantages of a matrix structure?

• Communication across functional areas

• Range of viewpoints considered

• Functions support and understand each other

• Motivational

What are disadvantages of a matrix structure?

• Potential loss of control

• Dependent upon effective delegation

• Teams may take time to work together effectively

• Can cause conflict

What are some impacts on efficiency and motivation?

• Speed of decision making

• Flow of communication

• Degree of supervision

• Opportunities for promotion

• Cross functional relationships

• Clarity of roles

• Employee motivation