Organisational Structures

1. Organisational Structures Internal Organisation

2. A Tall Structure (Hierarchy) Board of Directors Senior Managers Middle managers Junior Managers Supervisors Workers

3. Hierarchical (tall) structure • Decision and instructions passed down • Information passed back up • Clearly defined roles and procedures • Specialisation common

4. Hierarchical (tall) structure Long chain of command (the number of levels between the top and bottom of the organisation) • Many different layers of management can make organisations difficult to run • Reduce effectiveness of communication • Slow down decision making • Slow to respond to changes in market • Bureaucratic (policies and procedures) this means it reduces creativity and free thinking Narrow span of control(no of people a manager is directly responsible for) • Allows for tighter control • Closer supervision • Better communication WITHIN departments

5. Question Discuss the advantages and disadvantages of a tall organisational structure (4marks)

6. Excellent Answer [A tall organisational structure is good because it allows for better communication within departments], [it also allows there to be tighter controls and closer supervision]. There are some disadvantages though, [there is a slow decision making process as there are so many layers of management]. [It is also very bureaucratic which can stifle creativity.]

7. Flat Structures • Many organisations have restructured to form flatter hierarchical structures. The process of removing layers of management from a hierarchy is called ‘de-layering’- stripping out levels of management, thereby flattening the organisation. • Some multi-national companies operate on 3 or 4 levels (which is quite flat for a large organisation). This is designed to encourage better communication and team-working. Ikea famously has a flat structure. All workers are called ‘co-workers’ there is only one level of management above them at store level.

8. Flat Structure • All employees are trained to a very high standard to be able to give direct assistance to customers • Employees are flexible and can be moved round departments easily • Each morning team-briefings are given to update co-workers of any information needed and to motivate staff • A lot of attention is given to the recruitment process, as good quality workers need to be recruited who can work with minimum supervision • A democratic management approach is used (this encourages participation in decision making)

9. Flat Structure • Fewer levels of management • Short chain of command • Easier to control the business • Good communication • Quicker decision making • Faster processing of information • Wide span of control • Delegation of decisions to staff • Better motivation- empowerment • Lower supervision costs

10. Question • Discuss the advantages and disadvantages of a flat organisation (4 marks)

11. Excellent answer • [A flat organisation structure is good as it allows for quicker decision making as there are fewer layers of management.] [It also speeds up communication for the same reason]. [It has it disadvantages though as there are fewer chances for promotion.] [It may also increase spans of control to such an extent that they become unmanageable.]

12. Matrix Structure/Project Based • Project teams are created to carry out specific task ie develop a new product/service • Team members come from different functional areas • Each specialist would report to the project manager as well as their normal functional manager • Benefits include: • Increased experience, motivation and job satisfaction • Good for tackling complex problems • Disadvantages may include: • Costly to have many different teams • Co-ordination may be difficult as staff come from different functional areas • Confusion as each specialist reports to 2 managers

13. Question • Describe how working in project teams, using a matrix structure, might benefit An organisation An employee (4marks)

14. Answer - [The benefit to an organisation would be that the strengths/expertise of the individuals could be maximised thus increasing productivity.] [Projects can be planned to be completed by a certain date within a specified budget.] [The benefit for the employee would be an increase in motivation and job satisfaction as they feel part of a team.] [They also benefit as there skills are being developed.]

15. Entrepreneurial Structure • Common in small businesses where decisions need to be made quickly • Decisions made centrally • Very little input from staff • Reliance on a few key workers • As organisation grows, too much responsibility lies with too few individuals • This can lead to inefficiency

16. Centralised Structures • All control and decision making lies with senior management. This can have the following advantages: • strong leadership • more control over finance and budgeting • standardised procedures • decisions benefit the organisation as a whole rather than one department • managers more experienced/skilled therefore better quality of decisions • fewer decision makers lead to better communication • stronger corporate image

17. Decentralised Structures • Decision making and control are delegated to subordinates. This has the following advantages: • Empowers and motivates workers • Reduces stress and burdens on senior management • Frees up senior management to concentrate on more important tasks • Greater job satisfaction for subordinates • Subordinates may have better ‘local’ knowledge thus may take better decisions • More proactive approach and more flexibility • Quicker, more responsive decision making

18. 2006 Section 2 Question 4c • Local Managers are “empowered” to make decisions. Describe the advantages and disadvantages of decentralised decision making. (6marks)

19. Answer [Decentralised structures can be more motivating for staff therefore productivity will increase]. [There is also an improvement in communication} as [there are fewer managers required and decision making is speeded up]. [However not all managers are willing to be involved in decision making as there abilities may differ.] [Training may be required for staff which can be costly] and [it is often difficult to establish a corporate identity.]