16-Organisational Design
Authority : The right to command and make decisions
Centralisation: A type of business organisation where major decisions
are made at the centre of the centre of the organisation and then
delegated through the chain of command
Chain of command :The way authority and power is organised in an
organisation
Decentralisation : A type of business organisation where decision is
made by down of the command, not the centre of organisation
Delayering : Removing layers of management from the hierarchy of
organisation
Delegation : The passing of authority further down the managerial
hierarchy
Empowerment : Giving official authority to employees to make
decisions and control their own work activities
Formal organisation :Internal structure of a business as shown by an
organisational chart
Hierarchy : order of levels and responsibility in a chart
Organisational chart : A diagram that shows the different job roles in a
business and how they relate to each other
Span of control : Number of people a person is directly responsible for
in a business
Subordinates : People in the hierarchy people in hierarchy that work
under the control of a senior worker
Organisational structure :
A formal way of outlining the way that authority , responsibility and
information will flow in a business
By Function By product By Area
16-Organisational Design
A business which is Business which is separated by the Business which is separated
different products it makes according to the location of their
separated into branches
departments
Functional structure :
Separates a business by departments
Advantages Disadvantages
Specialisation Departments may have their own
agenda
Its clear who is responsible for Co-ordination may be complex
what
Everyone knows their role Decisions take longer
Agenda :a list of items to be discussed at a formal meeting.
Product structure :
Separates a business by the products it manufactures
Advantages Disadvantages
Focus on products Duplication of some services
16-Organisational Design
Encourages competition between functions Maybe too concerned with internal
competition
Devisions can separate devision centres
Area structure :
Separates the business by he locations it operates in
16-Organisational Design
Advantages Disadvantages
Can adopt to local costumers Possible conflict between local and
central managers
Encourages competition between Duplication of some services
fucntions
Organisation chart :
-Person with most authority is in the top
-Instructions are passed down through chain o command
-Orders are delegated down the chain of command
-Number of people manager is responsible for is the span of control (President has
a span of control of 4)
What affects organisation structure :
Structure of an organisation depends on :
-Objectives
-Culture
Structures that a business can adopt :
Matrix
Centralised
De-centralised
Flat structure
Tall structure
Tall structure :
-Common in large businesses
-Long chain of command
Adv :
-High chance of promotion
-Clear management structure
-Employees can be closely supervised
DisAdv :
-Employees may feel restricted
-High management costs
-Decisions take longer
16-Organisational Design
Flat structure :
-Short chain of command
-Small organisations
Adv
-Better communication
-Easy decision making
-Reduce costs
DisAdv :
-less chance of promotion
-can stop business growth
-Can lead to wasting time ( always connected to their work)
-Lack of work-life balance
-Limit productivity
Matrix structure :
For specific projects
Creating teams which contains specialists from each area of the
business
Employees are generally accountable to more than one boss
Adv :
-Efficient use of limited human resources
-Project management trains managers to become leaders in the
functional organisation
-Project structures develop team spirit and high morale
-Rapid information flow through the project
DisAdv :
-Two-boss problems can be confusing for the members
-Increase of organisational complexity
-Requires a high degree in co-operation between functional and project
management
16-Organisational Design
Centralised structure
Keeps all the major responsibilities in the centre of the organisation :
Adv :
-Senior management have more control
-Standard methods/procedures = cost
saving
-Decisions are made for the good of the
business
DisAdv :
-Branch managers have little responsibility
-Few promotion chances
-Workers don´t feel involved in decisions
Decentralised structure :
Decisions making powers is on individual branches of an organisation
Head office will set targets but individual branches are free to decide
these targets are met
Adv :
Workers are empowered to make decisions
Workers tend to be more motivated
Branches can respond to a change very quickly
Good way of training and developing junior management
DisAdv :
Decision making is not strategic
Expensive (employee has to work harder so has to be paid more)
Large number of managers are needed = expensive
Successful structure :
-Maximise efficiency
-Retain order and command
-Promote flexibility and creativity
Inappropriate organisation structure can hinder the growth of
business bcs of :
-Poor communication
-Decision making can be slow
16-Organisational Design
Problem with organisational charts :
Complicated for a large organisation
static, inflexible (unless updated regularly
Positive side of the organisational structures :
Shows who is in charge of what or whom
Make it clear that different people have different job descriptions