1

Organisational
Structures

Key features of Organisational Structures

Types of Organisational Structures

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Key Points

Span of Control - number of employees that

each manager/supervisor is responsible for.
Wide - charge of many employees
Narrow - charge of a few employees.
Chain of Command
Line of authority from top mgmt
Work Specialization to lowest levels
The degree to which tasks in the Clarifies who reports to who.
organization are divided into separate
jobs. Unity of Command
One employee - one boss
Overspecialization can lead to
boredom, fatigue, stress, poor quality
etc
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Drivers of Organisational
Structure
 Strategy of the Organisation
 Innovation
 Cost driven
 Mass Market

 Size

 Degree of environmental uncertainty

 Products/Services
 Location

 Internal Competencies
 Staff expertise
 Resources
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Small business Simple
Owner/Manager
Limited location Structure

Evolution Product Functional

of Structure Departments
Location
Customer
Structure

Internationalisation Multinational
Complex products Structure
Alliances
Technology
Centralisation Decentralisation
5
Top management Democratic
Dispersed structures.
want control organisation

Decision-making
Topmanagers
Top managersmake
makethe
the
is left to the managers
decisionsand
decisions andlower-level
lower-level who are closest
employeessimply
employees simplycarry
carry operations
outthose
out orders. .
thoseorders

Static
environments Non-specialist/inexperienced
Experienced low
DM Dynamic/complex
level managers.
environments.
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Formal or Informal Structure

Low formalization means fewer constraints on how Highly formalized jobs offer little discretion over what is to be done.
employees do their work.
A rigid and tightly controlled structure
Highly flexible and adaptable structure
High specialization/formalization
Non-standardized jobs Fluid team-
based structure Rigid departmentalization

Little direct supervision/rules Narrow spans of control

Open communication network Limited information network (downward)

Empowered employees Low decision participation

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Tall and Flat Structures

 Many levels of management (long chain of command)

 Narrow span of control – close supervision possible

 There is a clear management structure.

 The function of each layer will be clear and distinct.
 Clear progression and promotion ladder.

 Freedom and responsibility of employees is restricted.

 Decision making could be slowed down
 Communication can be slow.
 High management costs
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Flat Structures

 Few layers or just one layer of management Short chain of command but large span of
control)

 Better team sprit

 Less bureaucracy and faster and easier decision making.
 Lower management costs
 Better communication between management and workers.

 Workers may have more than one manager/boss.

 Structure limited to small organisations such as partnerships, co-operatives and some private
limited companies.
 Function of each department/person could be blurred and merge into the job roles of others.
 Functional Structure 9
(Departmentalization)

Director/Executive/Branch
Manager

Accounts Dept HR Dept Marketing Dept IT Dept

Integration of common specialists

Strong specialized work groups Conflicts between managers
Divides work to be done into specific jobs and departments.
Assigns tasks and responsibilities associated with individual jobs. Poor integration between depts.
Coordinates diverse organizational tasks.
Establishes relationships among individuals, groups, and departments.
Establishes formal lines of authority. Lack of strategic goals
Allocates and deploys organizational resources.
Geographical Structure 10

Sales Director

Sales Director
Sales Director Sales Director Sales Director
(Scotland)
(England) (Wales) (Ireland)

Advantages
More effective and efficient handling of specific regional issues that
arise
Serve needs of unique geographic markets better

Disadvantages
Duplication of functions
Can feel isolated from other organizational areas
Multi Divisional Structure 11
(Geographical)

Chief Executive Officer

Americas Europe Asia

Product A Product A Product A

Process Structure 12

Car Assembly

Design Production Test Distribution

More efficient flow of work activities

Each function with specific role

Can only be used with certain types of products

Can lead to blame culture
Functional Structure 13
(Customer)

Customer Relations
Phone Company

Pay as you customers Contract Customers New Customers

Customers’ needs and problems can be met by specialists

Duplication of functions

Limited view of organizational goals

Matrix Structure
14
Specialists assigned to projects led by project managers.
Fluid and flexible design
Project participants have two managers.
Complexity of assigning people to projects.
Employees work continuously on projects; Task and personality conflicts.
moving on to another project as each project is completed.

Sales
R&D Production

R&D Production Sales

+ + +
Hatchback Hatchback team
Hatchback team Hatchback team

R&D R&D
R&D
+ +
Saloon +
Saloon team Saloon team
Saloon team

R&D R&D R&D

+ + +
Executive Executive team Executive team Executive team
Forms of Virtual Organisations 15

Virtual Organization
Small core of f/t staff
temporarily hires specialists to work
on opportunities that arise

Network Organization
Small core organization
outsources its major business functions

Agile
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Conclusions

Structures are dependent on external and internal environment of

organisations

Modern structures attempt to be organic and flexible with few

boundaries

Most organisations have mixed approaches

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Any
questions