2.2 Organisational Structure

Delegation

Entrusting and empowering of subordinates with tasks (division of tasks)

Span of control

Number of workers directly accountable to a particular line manager

Levels of hierarchy

Number of layers of formal authority

Flat/Horizontal Structure

• Few layers of management

• Wide span of control

• Typically found in start-up firms, small businesses and in organisation

Tall/Vertical Structure

• Many layers of hierarchy

• Narrow span of control

• Clear chains of command

Hierarchial Structure

• Has many layers

Pros and Cons of By Product Structure

• Pros

  • Team can focus on a single product

  • Builds a common culture

• Cons

  • Creates competition between divisions

  • Divisions can result in compartmentalisation

Pros and Cons of By region Structure

• Pros

  • Direct communication

  • Tracking Key Performance Indicators (KPI) is easier

• Cons

  • Duplication of personnel

  • Create unhealthy regional competition

  • Lack of consistency with core company beliefs

Factors influencing organisational structure

• Economic influences

• Corporate objectives

• New tech

• Style of leadership/culture of management

• Size of business # employees

Main roles of MD or CEO

• Act as a figurehead or ambassador

• Lead the team of directors

• Represent the desires, ideas and beliefs of the directors

• Formulate organisational objectives and policies with the BOD

Board of Directors

Responsible for the overall running of the business

Executive Directors

Work full-time at the organisation and make key decisions

BOD Duties (some)

• Target setting

• Devising long term plans

• Advising and supporting the CEO

• Advising/supporting the CEO Overseeing staff issues- recruitment, promotion, performance management + dismissal

Centralisation

Decision-making is predominantly made by a small group of senior managers

Decentralisation

Decision-making authority is delegated throughout

Delayering

Popular strategy to remove one/more levels of hierarchy from an organisational structure

Handy’s Shamrock Organisation

He argued a more flexible approach for firms to take advantage of the changes of the external environment

Matrix organisation structure

Reporting relationships are set up as a grid (matrix) instead of the traditional vertical hierarchy

Holocracy

Teams of people self-organise as needed to complete the necessary work for the organisation