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AL Chapter 8 - Organisational Structure - Coggle Diagram
AL Chapter 8 - Organisational Structure
Organisational Structure
Structure refers to the way in which jobs are grouped within it , and the reporting relationships with the business
Structure shows who reports to whom, illustrates official channels of communication, shows different functional departments, shows progression
Authority is the power someone has to direct and control the actions of others
Responsibility is the accountability for any action taken
Organisational charts show the different roles and reporting relationships
Chain of command is the route in which orders are passed down from senior managers to employees on lower levels of the hierarchy
Relationship between business objectives and organisational structure
The structure affects the ability to meet objectives like profit, growth, encouraging intrapreneurship
Costs: the more levels of management the more costs there is
Responsiveness to change: if all decisions taken at the top, then the business may be less flexible
Quality of decisions: if the right roles within the organisation are grouped together, they may be able to share expertise when decision making
Growth: If the structure means that poor decisions are made and the business isn't responsible to local needs, this may prevent growth
Types of Organisational structure
Grouped into different ways, leading to different forms of structure
3 groups: Functional, Geographical and Matrix
Functional structure
Occurs when jobs within the business are grouped by a function like finance, production, HR, and marketing
When a business is first set up, they often don't have a formal structure, this clarifies who is responsible for what, and prevents duplication
Advantages are specialists employed, clear hierarchy, and employees know how to contribute to their function
Disadvantages are a breakdown of communication, lack of coordination, competition between departments
Geographical structure
A multi-product business might have a structure based around each product, whereas a geographical business might have different structures for each region
These structures are more common as a business grows, has more products or operates in more regions
Advantages: dedication to one region are more likely to understand the customers, better communication with local markets
Disadvantages: might not gain the maximum benefits from a divided region business, could encourage regions to move away from business image
Matrix Structure
Matrix structures is task orientated and based on the use of teams
Businesses using this put together teams of individuals with specialist kills that are necessary to complete a project
Advantages: best team chosen, improves coordination, structure improves flexibility
Disadvantages: Employees have more than one boss, difficult to prioritise, lack a clear line of accountability
Changes in organisational structure
Changes in many ways: change of managers, desire to increase efficiency
Growth causes an increase of numbers employed, increasing departmentalisation of business activities
Growth also causes an increase in different product lines
Increase in regions in which the business operates
Delegation
A manager delegates authority to a team in order to get tasks done
The team member is expected to complete the task efficiently and must answer for it, this means the team member accepts responsibility and is therefore answerable and accountable for what happens
However, the manager retains the overall responsibility and accountability for the work done
Advantages: Employees feel more valued, increased efficiently, manager has more time, tasks completed quicker
Disadvantages: managers fear loss of control, jealousy if not chosen, managers afraid that their employees with complete tasks more efficiently
Control and trust
If a manager delegates a task to someone, this shows a degree of trust that the person con do the job
however, given that the manager still remains some accountability, they still want to retain some control
The degree in which the manager wants control depends on: consequences if the task is done wrong, experience of team members, willingness of manager to hand over control
Levels of hierarchy and span of control
The span of control is the number of people who report directly to a manager, an increase reduces the levels of hierarchy needed
Narrow/tall organisational structure
A Narrow organisational structure occurs when an organisation has many levels of hierarchy and a small span of control
Advantages: several levels with delegated decision making, progression in small steps, close supervision, responsibility for others is reduced
Disadvantages: loss of control, poorer decisions made, little opportunity to contribute to decisions, communication is one way
Flat organisational structure
Has few levels of hierarchy and wide spans of control
Advantages: Aids fast decisions, closer link between senior staff and lower staff, some involvement in decision making, management costs saved
Disadvantages: limited opportunities for promotion, wider span of control, responsibility rests with smaller numbers of managers, large numbers of workers difficult to control
Centralisation vs Decentralisation
Centralisation
Advantages: faster decisions are made, clear goals will be given to those in charge, decisions are consistent, desired image maintained
Centralisation occurs when most decisions in an organisation are made by senior managers, decisions made at the centre
Disadvantages: only a few people are at the top of the organisation, doesn't allow all levels to maintain decision making skills
Decentralisation
Benefits: opportunity to fulfill needs, reduction in workload for senior managers, customers have more decisions locally
Line and staff managers
Line managers have authority over specified people within the organisation, they direct actions of team members
Staff management occurs when specialist support is offered to departments but without any managerial authority