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1.4.3 Organisational Design - Coggle Diagram
1.4.3 Organisational Design
Hierarchy
A business structure with a series of levels, where each level has responsibility for, and authority over, the levels below.
Chain of command
The path of communication and authority up and down the hierarchy.
Span of control
The number of people who report directly to a manager.
If the span of control is too wide then managers may find it hard to manage effectively and can become demotivated.
If the span of control is too narrow then workers may become demotivated as they feel like they are micromanaged by their boss.
Centralised
Where all decisions are made by senior managers at the top of the business.
Advantages
Business leaders and senior management have a lot 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 decisions made are best for the business overall.
Senior managers can make decisions quickly as they don't have to consult anyone else.
Disadvantages
Not many people are expert enough to make decisions about all aspects of the business.
Senior managers don't spend time on the shop floor meaning they are slow to react to consumer trends, allowing conpetitors to get ahead.
May demotivate employees if they are excluded from the decision making process.
Decentralised
Authority is shared out to the more junior managers e.g. the brand managers.
Advantages
Involvement in decision making motivates employees.
Day to day decisions can be made quickly without having to ask senior managers.
Disadvantages
Junior employees may not have enough experience to make decisions.
Inconsistencies may develop between divisions in a business.
Junior employees may not be able to see the overall situation and needs of an organisation.
Tall structures
Because of the long chain of command communication may be slow especially with messages from top to bottom.
Lots of opportunity for promotion which can motivate employees.
Flat structures
Employees get more responsibilty and freedoms which is motivating.
Horizontal communication may be slow due to the large amount of people at each level.
Delayering
Removing part of the hierarchy, to create a later structure with wider span of control.
Can help to lower costs, as cutting management jobs can save a lot of money is salaries
Gives junior employees more responsibility and can improve efficiency and communication.
Can cost the business money in the short term and the remaining staff need to be retrained in their new roles. Also may have to give redundancy pay.
If there is too much delayering, managers can end up stressed and overworked with huge spans of control.
Matrix
Used if operations are project based.
For example a project may have workers from HR, operations, sales and finance.
Ensures staff are pursuing clearly defined objectives.
Encourages departments to build relationships with each other.