2.2 Organisational Structure

Heirarchy

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

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 (no more than 5)

Levels of Heirarchy

The number of layers of authority available within an organisation. The number of layers can change the communication within a business

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.

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 in the organisation.

Delayering

The removal of unnecessary levels of hierarchy in an organisation.

Organisational chart

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

A flat (horizontal) organisational structure

A type of business organisation with few layers of hierarchy, a short chain of command and wide span of control.

Tall (vertical) organisational structure

A type of business organisation with many levels of authority and a long chain of command. The span of control if typically narrow and communication flows from top to bottom.

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. Each location is overseen and directed by one or several managers

Effect of Economic changes For Organisational Structures

reduced staffing
delayering
centralise/decentralise
add specialists
offshoring/outsourcing
competition

Technological changes 

addition/elimination of departments
new positions
different chain of command

Sociocultural changes 

more flexible organisational structures
more distributed leadership
more autonomy
more collaboration

Project-based (matrix) structure

An organisational structure in which employees report to both a project manager and a functional manager, allowing teams to be flexibly assembled to complete specific projects.

Shamrock structure

An organisational structure in which a business divides its workforce into three groups, core employees, contract workers, and temporary workers, to increase flexibility and adapt to changing business needs.

Holacracy

An organisational structure in which authority is decentralised and employees self-organise into flexible roles and teams (circles) with little or no formal hierarchy.