Handout 7: Organisation structures PowerPoint presentation Understand employer organisations Handout 7: Organisation structures

Organisation structures The way an organisation is structured depends on its purpose size objectives and strategy sector. The organisation’s structure means how it is organised, eg into branches, departments, team and has a direct effect on the way it operates. An organisation chart shows the structure of an organisation. It illustrates the relationship between those who work for the organisation. Each organisation is different in the way it is structured and operates and the organisation chart will reflect this. The organisation’s structures has a direct effect on the way it operates – on the chain/line of command, who is part of the decision-making process.

Types of organisation structure Organisations can be organised by function, eg operations, marketing, finance, HR region, eg South, London product, eg in an electrical manufacturer: electronics, white goods, health and beauty work teams, eg client groups, project X. Broadly speaking, structures are either hierarchical flat. And either centralised decentralised. In a functional structure, the functions/departments work together, eg where staff from various departments/functions work together on projects forming project teams; or a staff relationship where the staff support is available from other departments/functions, eg the most likely one being where the HR department offers support to other departments on for instance recruitment, training or disciplinary advice. Centralised organisations – the majority of decisions are taken by senior managers and then passed down the organisational hierarchy. Decentralised organisations – delegate authority down the chain of command, reducing the speed of decision making.

Hierarchical structures Hierarchical (often known as tall) structures resemble a pyramid with one person at the top and many workers at the bottom. There are usually many layers of managers etc. The levels reflect the status of the person, ie those at the same level have the same level of authority. The above illustrates a basic hierarchical structure where the relationship between those in the organisation is shown with a line, eg in the Sales Department the Sales Manager reports to the Sales Director who in turn reports to the CEO.

Flat structure There are fewer levels in the flat structure organisation. In this example structure, there is one person at the top with everyone else reporting into them on an equal level. Flatter structures reduce staffing costs by reducing the number of levels of management. The reduced number of levels allows each level to be more involved in decision-making. This means the organisation can respond to change more easily.

Public sector organisation structures These differ from other sector organisations as they are headed up by a government department. Most government departments are headed by a secretary of state or minister and reflect the functions the minister has to oversee. A department usually has executive agencies under it. Departments and executive agencies are staffed by civil servants. The organisation of central government is separated into separate government departments. Most government departments are headed by a secretary of state or minister and reflect the functions the minister has to oversee – eg the Secretary of State for Education will have ultimately control over any state educational organisations. Some departments are known as ‘Non-ministerial´ which means they are not headed directly by a minister but rather by a board, answerable to Parliament. A department usually has executive agencies under it – these have a defined business function and are headed up by a chief executive (often supported by a management board). They operate almost like a separate organisation from the main department.

Organisation charts indicate the roles and responsibilities of staff the line of reporting/chain of command the span of control.

Glossary of terms Hierarchy – the management levels within an organisation. Line managers – those managing the work of other staff. Subordinates – those under the line manager. Authority – the power to direct and make decisions. Delegation – giving over tasks or decisions to subordinates. Span of control – the number of subordinates reporting directly to a manager. Chain of command is the path of authority down which instructions are passed. Lines of communication are the routes messages travel along.