Organisational Structures Internal Organisation

A Tall Structure (Hierarchy) Board of Directors Senior Managers Middle managers Junior Managers Supervisors Workers

Hierarchical (tall) structure Decision and instructions passed down Information passed back up Clearly defined roles and procedures Specialisation common

Hierarchical (tall) structure Long chain of command (the number of levels between the top and bottom of the organisation) Many different layers of management can make organisations difficult to run Reduce effectiveness of communication Slow down decision making Slow to respond to changes in market Bureaucratic (policies and procedures) this means it reduces creativity and free thinking Narrow span of control (no of people a manager is directly responsible for) Allows for tighter control Closer supervision Better communication WITHIN departments

Question Discuss the advantages and disadvantages of a tall organisational structure (4marks)

Excellent Answer [A tall organisational structure is good because it allows for better communication within departments], [it also allows there to be tighter controls and closer supervision]. There are some disadvantages though, [there is a slow decision making process as there are so many layers of management]. [It is also very bureaucratic which can stifle creativity.]

Flat Structures Many organisations have restructured to form flatter hierarchical structures. The process of removing layers of management from a hierarchy is called ‘de-layering’- stripping out levels of management, thereby flattening the organisation. Some multi-national companies operate on 3 or 4 levels (which is quite flat for a large organisation). This is designed to encourage better communication and team-working. Ikea famously has a flat structure. All workers are called ‘co-workers’ there is only one level of management above them at store level.

Flat Structure All employees are trained to a very high standard to be able to give direct assistance to customers Employees are flexible and can be moved round departments easily Each morning team-briefings are given to update co-workers of any information needed and to motivate staff A lot of attention is given to the recruitment process, as good quality workers need to be recruited who can work with minimum supervision A democratic management approach is used (this encourages participation in decision making)

Flat Structure Fewer levels of management Short chain of command Easier to control the business Good communication Quicker decision making Faster processing of information Wide span of control Delegation of decisions to staff Better motivation- empowerment Lower supervision costs

Question Discuss the advantages and disadvantages of a flat organisation (4 marks)

Excellent answer [A flat organisation structure is good as it allows for quicker decision making as there are fewer layers of management.] [It also speeds up communication for the same reason]. [It has it disadvantages though as there are fewer chances for promotion.] [It may also increase spans of control to such an extent that they become unmanageable.]

Matrix Structure/Project Based Project teams are created to carry out specific task ie develop a new product/service Team members come from different functional areas Each specialist would report to the project manager as well as their normal functional manager Benefits include: Increased experience, motivation and job satisfaction Good for tackling complex problems Disadvantages may include: Costly to have many different teams Co-ordination may be difficult as staff come from different functional areas Confusion as each specialist reports to 2 managers

Question Describe how working in project teams, using a matrix structure, might benefit An organisation An employee (4marks)

Answer - [The benefit to an organisation would be that the strengths/expertise of the individuals could be maximised thus increasing productivity.] [Projects can be planned to be completed by a certain date within a specified budget.] [The benefit for the employee would be an increase in motivation and job satisfaction as they feel part of a team.] [They also benefit as there skills are being developed.]

Entrepreneurial Structure Common in small businesses where decisions need to be made quickly Decisions made centrally Very little input from staff Reliance on a few key workers As organisation grows, too much responsibility lies with too few individuals This can lead to inefficiency

Centralised Structures All control and decision making lies with senior management. This can have the following advantages: strong leadership more control over finance and budgeting standardised procedures decisions benefit the organisation as a whole rather than one department managers more experienced/skilled therefore better quality of decisions fewer decision makers lead to better communication stronger corporate image

Decentralised Structures Decision making and control are delegated to subordinates. This has the following advantages: Empowers and motivates workers Reduces stress and burdens on senior management Frees up senior management to concentrate on more important tasks Greater job satisfaction for subordinates Subordinates may have better ‘local’ knowledge thus may take better decisions More proactive approach and more flexibility Quicker, more responsive decision making

2006 Section 2 Question 4c Local Managers are “empowered” to make decisions. Describe the advantages and disadvantages of decentralised decision making. (6marks)

Answer [Decentralised structures can be more motivating for staff therefore productivity will increase]. [There is also an improvement in communication} as [there are fewer managers required and decision making is speeded up]. [However not all managers are willing to be involved in decision making as there abilities may differ.] [Training may be required for staff which can be costly] and [it is often difficult to establish a corporate identity.]