business 2,2

Organisational structure

Formal hierarchical arrangement of human resources

Accountability

Who is responsible for the outcome/result of a task

Responsibility

Who is assigned the task/duty to complete

Delegation

Passing decision-making/control to employees while the manager remains accountable

SMARTER delegation

Specific / Measurable / Agreed / Realistic / Time-bound / Ethical / Recorded

Span of control

Number of people directly accountable to one manager

Wide span of control

Many employees → fewer managers → lower costs / potentially better communication

Narrow span of control

Fewer employees → more managers → higher costs / easier team communication

Factors affecting span of control

Manager / organisational culture / subordinates / task

Hierarchy

Organisational structure based on a ranking system

Advantages of hierarchy

Clear authority → better coordination / sense of belonging → motivation

Disadvantages of hierarchy

Departmental isolation / inflexibility when external environment changes

Chain of command

Formal line of authority through which orders and communication pass

Tall structure

Has a longer chain of command

Bureaucracy

Tasks carried out according to formal rules and procedures

Features of bureaucracy

Rules & regulations / hierarchical structure / written accountability

Disadvantages of bureaucracy

Reduces creativity & risk-taking / slows decision-making

Centralisation

Decision-making concentrated in the hands of a few senior individuals

Advantages of centralisation

Rapid decision-making / consistent direction

Disadvantages of centralisation

Pressure on senior staff / inflexibility / employee demotivation

Decentralisation

Decision-making authority distributed across different levels

Advantages of decentralisation

Workforce input / faster decisions / improved morale / greater accountability / teamwork

Disadvantages of decentralisation

Costly / more mistakes / loss of control / communication problems

Centralisation vs decentralisation depends on

Size / importance of decision / risk / corporate culture / management competencies / ICT

Delayering

Removing management levels to flatten the organisational structure

Advantages of delayering

Lower costs / improved communication / greater delegation & empowerment

Disadvantages of delayering

Worker anxiety / increased workloads / potentially slower decisions

Matrix structure

Employees from different departments temporarily work together on a project

Matrix employees report to

Departmental manager + project manager

Advantages of matrix structure

Improved communication / maximises skills / cost-effective sharing of resources

Disadvantages of matrix structure

Increased workload / coordination difficulties / conflicting managers / time-consuming

Organisation chart

Diagram showing a firm's formal organisational structure

Organisation chart shows

Departments / hierarchy levels / chain of command / communication channels / span of control

Flat/horizontal structure

Few levels of hierarchy between employees and CEO

Advantages of flat structure

Better communication / lower costs / less "them and us" culture / encourages creativity

Flat structure requires

Greater delegation

Tall/vertical structure

Many levels of hierarchy

Typical span in tall structure

Narrow

Tall structure is often associated with

Bureaucracy

Advantages of tall structure

Smaller teams easier to control / greater specialisation & division of labour / more promotion opportunities

Organisation by function

Employees grouped by roles such as Marketing / Production / Finance / HR

Organisation by region

Employees grouped according to geographical areas

Advantage of organisation by region

Responds to local & cultural differences

Organisation by product

Employees grouped according to the products produced

SMARTER

Specific / Measurable / Agreed / Realistic / Time-bound / Ethical / Recorded