1.4.3 organisational design

organisational structure determines:

• authority and responsibility - who is responsible for who and who is in charge

• individual job roles and titles

• the people who are accountable

• the formal roles through which communication flows in thee business

hierarchy

refers to the number of layers within an organisation

span of control

the number of subordinates for whom a manger is directly responsible for

chain of command

the path of communication and authority up and down the hierarchy

centralised

all decisions are made by senior managers at the top of the business

decentralised

authority is shared out to more junior employees e.g. to branch mangers

pros and cons of centralisation

PROS

• businesses leader have lots of experience of making business decisions

• managers get an overview of the whole business, so decisions are consistent throughout the business

• senior managers aren’t biased towards one department so can make the best decisions for the business

• senior managers can make big decisions quickly because the don’t have to consult anyone

CONS

• excluding employees from decision making can be demotivating

• local or junior managers are more likely to have a better understanding of customer needs and understand consumer trends

Pros and cons of decentralisation

PROS

• involvement in decision-making motivates employees

• employees can use expert knowledge of their sector

• day-to-day decisions can be made without having to ask senior managers

CONS

• junior employees may not have enough experience oto make decisions

• inconsistencies may develop between the divisions of the business

• junior employees may not be able to se the overall situation and needs of the organisation

matrix structure

• organise staff by 2 different criteria

• used if their operations tend to be project-based

• ensures that staff are pursuing clearly defined objectives and encourages departments to build relationships with one another - increased motivation and efficiency

• could lead to conflict if different managers have different ideas about how a strategy should be implemented

delayering

the process of removing one or more layers from the organisational structure

reason for using centralisation

• in order to save money in a more competitive market

• can result in a flat and wide structure as levels of middle management are no longer needed

reason for using decentralisation

• if businesses are expanding and operating from a number of different locations

• will create more levels of authority and increase amount of delegation