Organisational Design

organisational design

Refers to how an organisation has structured itself. It will help determine how the roles, powers and responsibilities are assigned, controlled and co-ordinated and how info flows between different levels of management

Tall organisational structure

one with lots of layers of management

• narrow span of control

• long chain of command

• tall hierarchy

benefits of a tall organisational structure

ensures superior has tight control and supervision

better coordination of subordinates activities

gives managers time to think and plan

better communication

drawbacks of tall organisation structure

subordinates not motivated as little freedom

costly for the firm

flat organisational structure

short chain of command

wide span on control

flat hierarchy

communication should be speedy and direct

benefits of flat organisational structure

a wide span of control offers greater decision making authority for subordinates=job satisfaction

lower costs involved in supervision= delegation and job enrichment

drawbacks of flat organisational

too much responsibility

Formal organisational design

the way in which human resources is organised

takes into account:

• relationship between individuals

• who is charge of who

• who has authority to make decisions

• who carries out decisions

• how information communicated

the common features that organisational design should try and achieve

group activities into different departments

clearly show the relationship between employees

show channels of communication for organisation

the division of worm among employees

factors to consider when designing the organisation structure of a business

Hierarchy: the order of layers of management from lowest to highest

Chain of command: the path which instructions pass down through the hierarchy

Authority: the legitimate power to act in certain ways

Responsibility: the obligation to perform certain tasks on behalf of the organisation

Span of control: refers to the number of subordinates working directly under a superior

Delayering

refers to the removal of one or more layers from a hierarchy as organisations attempt to become flatter and more efficient

advantages of delayering

speed up communication and decision making

cuts out bureaucracy and overhead costs

motivates staff through delegation

overlap jobs are reduced or removed

disadvantages of delayering

widens span of control, reduce supervision= overwork and stress

unless managers have capacity to ‘manage’ more advantages are lost

cost business more in redundancy payments

may lose specialist + experienced staff

Centralisation and Decentralisation

this refers to the extent to which the organisation pushes decision making down to its lower levels of chain of command

Factors of centralisation and decentralisation

• cost

• uniformity

• size

• the method of growth

• history

• the philosophy of management

• the quality of junior management

• the influence of the external environment

Advantages of Centralisation

Retain control

Economies of scale may be achieved

Allows a balance to be achieved and can minimise conflict between departments

Higher quality decisions are made by more experienced people

Disadvantages of Centralisation

Puts heavy strain on a few senior managers

communication is difficult

Demotivating for all but those senior managers

Power may be abused

Advantages of Decentralisation

workload can be shared

subordinates motivated

subordinates in better position to make decisions

decisions are made more quickly

more managers involved in decision making process

sharpens management awareness of cost-effectiveness

junior management will gain experience

disadvantages of decentralisation

decision making viewed different by different managers

efforts may not be coordinated and conflict may arise

managers may not want authority

good system of control and communication needed to avoid making major errors