ORGANISATION STRUCTURE PAGE 211 CHAPTER 12 UNIT:2

Organisational structure Organisational structure is the framework for identifying & organizing the tasks to be performed within an organisation. Structures can be illustrated by means of an organisational chart.

Organisational structure

This chart displays : Who has overall responsibility for decision making. Individual workers can identify their position. Chain of command  Span of control The identity of the supervisor to whom each worker should report to is made clear.  Formal channels of communication both vertical & horizontal. This aid the investigation of communication problems.

Different types of organisational structure: The hierarchical structure - The order of levels of management of a business from the lowest to the highest.

Advantages of hierarchical structure Decision-making starts at the top but may be passed to lower levels. The role of each individual will be clear & well- defined. Vertical divisions could based on region or country or any category. E.g.: Consumer goods & industrial goods. If staff know where they are in the organisation & what opportunities exist for promotion. This can be motivating to some employees who are ambitious as they can see the jobs they could do in the future.

Disadvantages of hierarchical structure: Few horizontal links & this can lead to lack of coordination between them. It is very inflexible & often leads to change resistance because all managers tend to be defending their own position.

  Matrix Structure The matrix structure is an structure that puts managers into project teams that cuts across the departmental lines & creates project team from all divisions. It enables workers from different functions to work together without constant need to refer up the hierarchy, so faster decision making. Matrix Structure The matrix structure is an structure that puts managers into project teams that cuts across the departmental lines & creates project team from all divisions. It enables workers from different functions to work together without constant need to refer up the hierarchy, so faster decision making.

This structure cuts across the departmental lines & creates project team from all divisions. This method of organizing a business is task or project focused. This emphasizes getting people with particular specialist skills together into project teams. Manager often argue that this is the BEST way of organizing people because it is based on the expertise & skills of employees & gives scope for people lower down the organisation to use their talents effectively.

Advantages of matrix structure It allows total communication between all members. Less chance of people focusing on just what is good for their department. Create more successful solution when ideas are shared between each other. This system is designed to respond to changing markets of technological conditions. It enables workers from different functions to work together with constant need. They need to refer up the hierarchy so faster decision making.

Disadvantages of matrix structure Less direct from the top as teams may be empowered to complete a project. It could be difficult for some managers when passing down of authority to more junior staff. Conflict of interests - Two leaders if the business retains levels of hierarchy for departments but allow cross-departmental teams to be created.

Key Principles Of Organisational Structure Levels Of Hierarchy is the order of levels of management of a business from the  lowest to the highest. Each level represents a rank of staff. Lower ranks are subordinates to superiors of a higher rank. The greater the number of levels, the greater the number of different rank. Tall organisational structure has a large number of levels of hierarchy.  This creates 3 main problems: a) Slow comm. or becoming distorted. b) Narrow span of control. c) Greater sense of remoteness, amongst those on lower levels from the decision-making power at the top.

Chain of command is the route which authority is passed down an organisational./The way authority & power are passed down in business. Span of control is the number of subordinates reporting directly to a manager. Span of control can be either wide or narrow.

LONG Chain Of Command & NARROW span of control

SHORT chain of command & BROAD span of control

Disadvantages of Short CoC & Broad SoC Increase the risk of wrong decision being made as subordinates may be less well trained or lack experience. It is very difficult for the manager to supervise subordinates & ensure they are working towards some common goal. Fewer promotional opportunities so can be de-motivating.

Delegation Delegation is passing down of authority to perform tasks & take decisions from higher to lower levels in the organisation. It is essential that the manager assign some DUTIES to subordinates so they are able to CONCENTRATE on these tasks. At the same time, the assignment of tasks trains & develops the skills of the next generation of managers.

Advantages of delegation: a) Releases managers to undertake a more strategic role. b) Show trust in subordinates & this motivates staff. c) Trains staff for more senior positions. d) Quicker decisions & resultant cost savings. e) Improved executive morale & efficiency. Disadvantages of delegation: a) Unsuccessful if the task is not made clear, if training is not provided & if sufficient authority is not transferred. b) Managers may delegate boring jobs to worker. This will not prove to be motivating.

CENTRALISATION & DECENTRALISATION Centralisation is keeping all of the important decision-making powers with head office. There will be minimum delegation to managers. Subordinates would not have no authority to take decision. A centralised organisation would insist on all sections of the business following the same procedure & gives the business a feeling of uniformity. Decentralisation is passing decision making power to managers in other areas, departments or division. This must involve delegation. Subordinates would have all the authority to take decision. Decentralised organisations will allow staff to be empowered.

Factor that influence the organisational structure a) The style of management / The culture of the managers · Managers adopted a Theory X approach then small spans of control would be adopted in a hierarchical structure. · A Theory Y manager would adopt very few levels of hierarchy & prefer a matrix team-based structure. b) Retrenchment caused by economic recession or increased competition might lead to delayering to reduce costs. This reduces levels of hierarchy & shorten the chain of command. c) Adopting new technologies can lead to a reduced need for employee.

Important links between organisational principles More levels --Longer chain of command communication efficiency spans of control are smaller in tall organisation. delegation - Narrow SoC, managers able to control a few people. motivation levels of junior staff business costs.

2.The organisational problems associated with the tall structure have forced many firms to reconsider the role and importance of middle managers.

3 important aspects to delegation  RESPONSIBILITY - In accepting the task. For delegation to be effective, responsibilities should be clearly defined.  AUTHORITY - The subordinates must have the authority to carry out these duties which include spending money, using other organisational resources, hiring & firing personnel. ACCOUNTABILITY - Manager are accountable for the duties that have been assigned to them & they are accountable for the actions of the subordinates.

Advantages of centralisation a) A fixed set of rules should lead to rapid decision making. b) The business has consistent policies which can prevent only conflict between the divisions & avoid confusion. (Consumer) c) Senior managers take decision in the interest of the whole business. Greater control. d) Central buying should allow for greater economies of scale. e) Senior managers at central office will be experienced decision makers. f) Senior management will have more control of business. E.g.: Budgets.

Advantages of decentralisation a) Allows more local decision to be made. Managers may have closer contact with consumers. b) Prepares junior managers for more challenging roles. c) Allows delegation & empowerment & these will have positive effects on motivation.(To worker) d) Decision making in response to changes. e) It reduces the stress or burdens of senior management. f) It provides subordinates with greater job satisfaction. g) Delegation should allow greater flexibility & a quicker response to changes.

Line managers and staff managers Line managers: managers who have direct authority over people decisions and resources with in the hierarchy of an organisation. Staff managers: managers who as specialists provide support ,information and assistance to the line managers.

Informal organisations The network of personal and social relations that develop between people with in an organisation.

Organisational structure –the future Group work –pg 222