Chapter 14

Definitions:
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Organisational structure: the internal, formal framework of a business that shows the way in which
management is organised and linked together and how authority is passed through the organisation.
Matrix structure: an organisational structure that creates project teams that cut across traditional functional
departments.
Level of hierarchy: a stage of the organisational structure at which the personnel on it have equal status and
authority.
Chain of command: this is the route through which authority is passed down an organisation – from the
chief executive and the board of directors.
Span of control: the number of subordinates reporting directly to a manager.
Delegation: passing authority down the organisational hierarchy.
Centralisation: keeping all of the important decision-making powers within head of ice or the centre of the
organisation.
Decentralisation: decision-making powers are passed down the organisation to empower subordinates and
regional/product managers.
Delayering: removal of one or more of the levels of hierarchy from an organisational structure.
Line managers: managers who have direct authority over people, decisions, and resources within the
hierarchy of an organisation.
Staff managers: managers who, as specialists, provide support, information, and assistance to line
managers.
Informal organisation: the network of personal and social relations that develop between people within an
organisation.
Organisational Structure
All organisations need structure, a normal business is one that is based on departmental lines, these depts.
Are divided according to function or the type of work carried out.
An organisational chart displays a number of important points about the internal org. of this business. It
indicates:
 Who has the overall responsibility for decision making
 Formal relationships between different people and depts.
 The way in which accountability and authority can be passed down the org. (chain of command)
 Number of subordinates reporting to each more senior manager (span of control)
 Formal channel of comms both vertical and horizontal
 Identity of the supervisor or manager to whom each worker is answerable and should report to is
made clear
Different types of organisational structure

Hierarchical/ Bureaucratic structure
This is where there different layers of the organisation with fewer and fewer people on each higher
level.
Advantages of Hierarchal/Bureaucratic structure

 Decision making starts at the top and may be passed down
 The vertical divisions do not have to be actual departments they can be based on region or country
 Role of each individual is clear
 Clear identifiable chain of command
Disadvantages of Hierarchal/Bureaucratic structure
 Not a good form of comms
 Few horizontal links between the depts. or separate divisions = lack of coordination
 Very inflexible and can lead to change resistance
The Matrix Structure

This approach to organising businesses aims to eliminate many of the problems associated with the
hierarchical structure. This type of structure cuts across the departmental lines of a hierarchical chart and
creates project teams made up of people from all departments or divisions. This:
 Aims to eliminate many of the problems associated with the hierarchical structure and creates
project teams
 This method is task+ project focused instead of one person doing all the work it gathers together a
team of specialists with the objective of completing a task or a project successfully
 It is important that an individual can contribute to the team
Advantages of The Matrix Structure
 Allows total comms between all members of the team,
 Less chance of people focusing on what is good for their department only, this is replaced with
what is good for the team and business as a whole
 The crossover of ideas between specialist’s knowledge in different areas tend to create more
successful solutions
Disadvantages of The Matrix Structure
 Less direct control from the top as the teams may be empowered to undertake and complete a
project
 Passing down of authority to junior staff can be difficult for managers to come to terms with
 Team members may have their own informal leader but when the overall manager has opinions,
they may not want to listen and this may cause a conflict of interests
Key Principles of Organisational Structure

Levels of Hierarchy
Each level in the hierarchy represents a grade or rank of staff. Lower ranks are subordinate to superiors of
a higher rank. The greater the number of levels, the greater the number of different grades or ranks in the
organisation. A tall (or narrow) organisational structure has a large number of levels of hierarchy, and this
creates three main problems:
1. Slow communication with distorted messages
2. Narrow spans of control
3. Greater sense of remoteness among those on lower levels, from the decision making power at
the top
Chain of command
Typically, instructions are passed down the hierarchy; information, for example about sales or output
levels, is sent upwards. The taller the organisational structure, the longer will be the chain of command –
slowing down communications.
Span of Control
Spans of control can be either wide – with a manager directly responsible for many subordinates – or
narrow – a manager has direct responsibility for a few subordinates
Delegation
Delegation – passing authority down the organisational hierarchy
 As Herzberg and other researchers pointed out, this process can be very beneficial to motivation
 The wider span of control, the more delegation that is handed out
 The manager has responsibility for the people he delegates jobs to however, the workers
themselves are accountable for doing the work
Advantages of Delegation
 gives senior managers more time to focus on more important roles
 shows trust in subordinates+ this can challenge and motivate them
 develops and trains staff for more senior positions
 helps staff to achieve fulfilment through work
Disadvantages of Delegation
 if the task is not done well, the delegation will not succeed
 delegation will be unsuccessful if insufficient authority is given to the subordinate who is dong the
tasks
 managers may only delegate the boring jobs- this will not be motivating
Centralisation & Decentralisation

Centralisation – keeping all the important decision-making powers within head office or the centre of the
organisation
Decentralisation- decision making powers are passed down the organisation to empower subordinates and
regional/ product managers
 With centralisation there will be minimum delegation to managers in other areas/ depts.
 With decentralisation there is the passing down of decision-making authority to managers in other
areas, depts. or divisions in the business allowing decisions to be taken away from head office, must
involve delegation
Advantages of Centralisation
 A fixed set of rules and procedures in all areas of the firm should = rapid decision making
 The business has consistent policies throughout the org. this prevents conflicts
 Senior managers take decisions in the interest of the whole business, not just one division
 Senior managers at central office will be experienced decision makers
Advantages of Decentralisation
 more local decisions can be made that reflect different conditions – the managers who make
decisions will have local knowledge and are likely to have closer contact with consumers
 more junior managers can develop and prepares them for more challenging roles
 delegation and empowerment are made easier, and these will have positive effects on
motivation
Organisational Structure - The Factors That Influence It

There are factors that could determine the internal structure of a business:
 Style of management/ culture of the managers
 Corporate objectives e.g. if a long term aim is to expand in other countries, then the org. structure
must be adapted to allow a regional market dept.
 Adopting new technologies – especially IT, can lead to reduced need for certain employee types e.g.
managers sending messages by email rather than letters typed by secretaries
Advantages
 Reduces business costs
 Shortens chain of command + improves comms
 Increases span of control + opportunities
 May increase workforce motivation due to less remoteness from the top
Disadvantages
 Could make managers redundant e.g., redundancy payments
 Increased workload for managers who remain = overwork and stress
 Fear that redundancies could be used to cut costs on security – one of Maslow’s needs
Important Links Between Organisational Principals

1. The greater the number of levels of hierarchy, the longer the chain of command
This will have serious consequences for:
 Delegation – when spans of control are narrow, managers are more able to control the work
of the few people, so delegation is likely to be limited
 Motivation levels of junior staff- as they are so far removed from senior management,
delegation will be limited
 Business costs- ranks of middle managers are expensive to employ and they take up costly
office accommodation
 Communication effectiveness
2. Delegation: conflicts that can arise and potential benefits

 Some managers don’t like giving up control, they may feel less important if they do so
 These managers do not make good delegators
 No trust shown
 A modern development of delegation is called ‘empowerment’. This approach not only
delegate tasks and to individuals and groups, but also allows them to decide the best method
to complete the job
 This gives subordinates a chance to show creativity and initiative
3. Accountability, authority, responsibility

 Delegation gives subordinates the authority to perform certain tasks = they have the power
to undertake jobs + make decisions
 If the job is done poorly, the worker is accountable to their manager, they can then be
disciplined
 However, the overall responsibility for the work of the dept. including the performance of
the subordinate is the manager. This means if a job is done poorly the manager will take the
blame
4. Line and staff relationships

 e.g., the sales director will have authority over the sales manager for each of the different
products the firm sells
 line managers have responsibility for achieving specific business objectives
5. Staff managers- managers who, as specialists, provide support and assistance to line managers
 staff managers do not have line authority over others
 they are specialists who are employed to give advice to senior line managers
 they could be economists, specialist market researchers or scientific experts advising on
certain issues
 they are very well paid and due to their position are claimed to be less loyal to the business
as their services are in great demand
Informal Organisations
 the main focus is the employee as an individual
 power and influence are obtained from membership of informal groups within the business
 if an individual breaks the policies within the group then the rest if the group imposes sanctions on
them
 informal structures can either be beneficial or damaging to a business
 a clever manager will try and use informal groups for the benefit of the business e.g. avoiding
personality clashes between people in different groups or by basing team working on these groups
 problems may arise when the informal leader has more power and influence over the team than
the formal leader- so manages will have to choose supervisors carefully

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Chapter 14

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Definitions:

Different types of organisational structure

Advantages of Hierarchal/Bureaucratic structure

The Matrix Structure

Key Principles of Organisational Structure

Centralisation & Decentralisation

Organisational Structure - The Factors That Influence It

Important Links Between Organisational Principals

2. Delegation: conflicts that can arise and potential benefits

3. Accountability, authority, responsibility

4. Line and staff relationships

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