Management Structure and Organisation

Content Management structure and design Organisational design Tall Flat Matrix Entrepreneurial Management by objectives Centralisation and decentralisation Delegation and consultation

Why Have a Structure? A clear structure makes it easier to see which part of the business does what An organisational structure is the way in which a business is arranged to carry out its activities

Management Structure and Design The choice of structure impacts the organisations culture – their ethos and beliefs If businesses are looking to change their direction they often look at restructuring

Organisational structure Includes: The routes through which communication pass through the business Who has authority and power and responsibility within the business The roles and titles of people within the business The people whom individual employees are accountable for and those for whom they are responsible

Key terms Hierarchy – the number of layers of levels within an organisation Subordinate – a worker Span of control – the number of subordinates who directly report into a manager Chain of command – the line of communication and authority from the top to the bottom of the hierarchy

Flat or Tall Structure? A Flat structure has few layers in the hierarchy, a wide bottom and a gentle slope to the top Lots of small companies have a flat structure

Flat Structures – Advantages and Disadvantages Traditionally an American structure Span of control is wider Less hierarchy – easier to make decisions More employee empowerment Can be cheaper as don’t have to pay expensive management salaries

Tall structures A tall structure has many layers in the hierarchy As there are many layers the chain of command is longer Managers have smaller spans of control and there is less delegation

Tall structures – Advantages and Disadvantages Traditional structure of European companies Clear hierarchy Smaller chains of command More control Clear communication

Tall to flat In the 1990s many people felt that traditional tall structures were not cost effective so delayering occurred Delayering is the process of removing layers ion the hierarchy Businesses saw delayering as a way of cutting costs and increasing efficiency

Matrix structure Matrix – this is where the business is organised by task Combines a vertical chain of command with project / product teams The focus is on the task Is a more flexible structure and allows the business to be more responsive to customer needs However it can cause conflict and employees may have divided responsibilities Extra costs may be generated by duplication of support staff

Entrepreneurial Structure Often found where businesses operate in competitive markets and especially where rapid decisions are needed Have a few core workers at the centre of the organisation and peripheral workers surrounding them Depends on how good the core workers are at managing and making decisions Can be difficult for larger organisations

Additional ways to structure 2 By function By product / activity By area By customer By process

Management By Objectives Druckers theory of management: Identified that managers should: Identify and agree targets for achievement with employees Agree on the level of support needed to achieve the targets Evaluate how well the objectives were met

Management By Objectives Need to agree objectives for each worker This can increase communication Can increase motivation as subordinates know what they need to achieve Can help to identify training needs If workers meet goals can allow them to achieve self actualisation needs (Maslow)

Management By Objectives It can also cause problems Some workers may be threatened by the target setting experience – managers can set targets which can be perceived as unachievable Needs commitment from everyone in the organisation Objectives may become outdated due to changes in the business environment

Centralisation and Decentralisation Centralised organisations are where most decisions are taken by senior managers at the top of the hierarchy. This leads to rapid decisions but low levels of consultation Decentralised businesses gives more authority to workers lower down the hierarchy by delegating decisions

Delegation Delegation is where managers give a portion of their work to their subordinates Delegation can allow subordinates to gain more autonomy and become empowered leading to an increase in performance This is a technique used by democratic managers

Consultation This is where managers ask for and take into account subordinates views Consultation allows a manager to keep more control of the situation This is a technique used by paternalistic managers

Summary Organisational design describes how a business is organised Tall or traditional structures have many levels in the hierarchy Flat structures have few levels in the hierarchy Matrix structures are organised by product / project Entrepreneurial structures have core workers at the centre and peripheral workers at the edges Management by objectives – is the idea that you set targets for all workers to increase performance Centralised organisations are where senior managers make key decisions Decentralised organisations are where workers have more authority to make decisions Delegation is where managers give employees some of their work increasing their responsibility Consultation where managers ask employees their opinions