2.2 Organisational Structure:The internal, formal framework of a business that shows the way in which management is organised and linked together and how authority is passed through he organisation

what organisation charts shows

  1. Who has overall responsibility for decision-making
  1. The formal relationships between people and departments
  1. The chain of command
  1. The span of control
  1. Formal channels of communication
  1. Identity of the supervisor or manager to who each worker is answerable and should report to

Advantages of Hierarchical (narrow span control)

There is quicker communication between smaller teams

  1. Feedback from subordinates should be more effective
  1. Clearer (but longer) lines of communication between the different layers of management
  1. Smaller teams are easier to control and manage
  1. Greater specialisation and division of labour can help increase efficiency and productivity
  1. There are greater opportunities to earn promotion - more levels exist in the hierarchy

Flat Hierarchical

An organisational structure that has few levels of hierarchy and a wider span of control where managers will be responsible for many subordinates and many management functions will be delegated

Advantages

  1. Delegation becomes a relatively important part of managing an organisation - extra responsibilities for subordinates and, therefore, faster career development
  1. Communication may be improved (it should be faster) overall since there are fewer layers in the hierarchy
  1. It is cheaper to operate a wider span of control because there are fewer levels of management (management functions will be eliminated or delegated)
  1. Smaller 'psychological distance' between those at the top and those at the bottom of an organisation - perhaps reducing an 'us and them' culture where workers feel alienated from senior management

Delegation :Passing authority down the organisational hierarchy


Advantages

  1. Gives senior managers more time to focus on important, strategic roles
  1. Shows trust in subordinates which can challenge and motivate them
  1. Develops and trains staff for more senior positions
  1. Helps staff to achieve fulfilment through their work (self-actualisation)
  1. Encourages staff to be accountable for their work-based activities

Delayering
The removal of one or more of the levels of hierarchy from an organisational structure


click to edit

Advantages of delayering:

  1. Reduces business costs
  1. Shortens the chain of command and should improve communication through the organisation
  1. Increases the span of control and opportunities for delegation
  1. May increase workforce motivation due to less remoteness from top management and greater chance of having more responsible work to perform

Centralisation
Keeping all of the important decision-making powers within head office or the centre of the organisation

advantages

  1. A fixed set of rules and procedures in all areas of the firm should lead to rapid decision-making.
  1. The business has consistent policies throughout the organisation. This prevents any conflicts between the divisions and avoids confusion in the mind of consumers.
  1. Senior managers take decisions in the interest of the whole business - not just one division of it.
  1. Central buying should allow for greater (purchasing) economies of scale.
  1. Senior managers at central office will be experienced decision-makers.