Organisational Structures

AS Business Unit 2

Aims

Be able to define the different types of organisational structure, delayering and span of control Be able to create an organisational structure and describe job roles given Be able to relate organisational structures to business examples

Organisational Structures

An organisational chart sets out the way in which a business is arranged to complete its activities Set out as an Organisational Chart, it sets out: The lines of communication Who has responsibility within the organisation The roles and titles of the employees The people employees are accountable to and responsible for

A Simple Organisational Chart

Chairman , Directors of various departments Accountability Authority may be delegated Managers

Supervisors / Team Leaders Production Operative / Support Staff

Workloads and Job Allocation

Fundamental decision of managers: who does what job(s)and how much work can be reasonably expected of one person Cost effective? As a small business grows, more staff need to be employed so that the entrepreneur can concentrate on managing the enterprise Using staff time fully is a way of cutting costs, workloads must be optimum to save money on wages

Levels of Hierarchy

Organisations with a large number of layers of hierarchy are called tall

There are a lot of people in between the top of the organisation and the bottom. There is a long chain of command

Chairman

Shop Floor Worker

Flat Organisational Structures

Why is it beneficial for junior staff to work in a flat organisation?

Managing Director

A flat organisational structure has few levels of hierarchy and a wide span of control
Shop Floor Workers

Matrix Structures
Chief Executive

Production

Marketing

Human Resources

Finance

Project A Manager Production Staff Project B Manager Production Staff Project C Manager Production Staff Project D Manager Production Staff

Marketing Staff Marketing Staff Marketing Staff Marketing Staff

H.R. Staff H.R. Staff H.R. Staff H.R. Staff

Finance Staff Finance Staff Finance Staff Finance Staff

Matrix Structures

Task Orientated Vertical chain of command from managers and superiors Horizontal organisation of project or product teams Used to develop teams of individuals with specialist skills

Spans of Control Supervisor

Manager A has a span of control of two B has the widest span of control
Manager A

Supervisor B

Supervisor C

Worker D

Worker E

Worker F

Worker G

Worker H

Spans of Control

A narrow span of control allows team leaders to keep closer control over the activities of the employees that they have responsibility over As the span of control widens, the worker is likely to have more independence The traditional view is that the span of control should not exceed six Realistically, where employees do a similar job it can reach twelve

Delayering / Downsizing

Delayering occurs when businesses remove one or more layers of hierarchy from the organisation Over the past 10 20 years many companies have implemented large scale delayering programmes Many middle managers have been removed

Advantages of delayering

Delayering reduces costs by removing a number of expensive middle managers Motivate employees lower down by giving them more empowerment Communication may improve as the number of layers decreases

Disadvantages of Delayering

Delayering can lessen organisational performance as valuable knowledge and experience may be lost Morale and Motivation may suffer Higher workloads may lead to stress and job dissatisfaction

Adjusting the Organisational Structure

The growth of the business Market conditions Ownership Customers needs The entrepreneurial culture within the company

Recap

Can you think of a business that is likely to have a hierarchical organisational structure? Can you think of a business that is likely to have a flat organisational structure? Name two advantages and disadvantages of a flat organisational structure. What is an advantage of delayering? Define Span of Control