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Summary of organisational design

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Simple but detailed summary of how businesses have different organisational designs and how it benefits them

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  • July 8, 2022
  • 5
  • 2021/2022
  • Summary
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Organisational design
WHAT IS AN ORGANISATIONAL STRUCTURE?
- Shows hoe people and management are organised in business:
 Authority and responsibility
 Individual job roles and titles
 The people whom others are accountable
 The formal routes through which communication flows in the
business

FACTORS AFFECTING THE ORGANISATIONAL STRUCTURE:
- Size of the business
 The larger the business, the more positions are needed
- Type of business
 Limited companies will likely have more employees
- Management and leadership style
 If the leader is autocratic, the dynamic would be different
- The competitive environment
 Change in developments in the market

KEY TERMINOLOGY:
- Spam of control
 The number of employees for whom a manager is responsible
- Hierarchy
 Span, but vertically

Narrow Wide
Allow for closer supervision of Gives subordinates the chance for
employees more independence
More layers More appropriate if labour costs
Helps communication are significant - reducing the
number of managers

SPAN OF CONTROL:
- Span of control depends on:
 Personality and skill / experience of the manager
 Size and complexity of the business
 Whether the business is centralised or decentralised
 The extent of use of clear objectives throughout a business

CHAINS OF COMMAND:
- The chains of command describes the lines of authority within a
business.
- Example: the CEO reports to managers and they report to workers

, LEVELS OF HIERARCHY:
- The number of layers of management or supervision in the
organisation structure.
- Anything from 4 or more layers will be tall, less than that will be flat.

HIERARCHAL STRUCTURES:
- Traditional form of organisational structure in business
- Layers of hierarchy reflect levels of seniority
- Tall or flat? Depends on number of layers
- Associated with formal or bureaucratic management

WHAT IS DELAYERING?
- Delayering is removing layers of management from the hierarchy of
the organisation.
- Benefits:
 Improves communication
 Lowers labour costs
 Reducing the number of layers in the hierarchy
 Other perceived benefits:
- faster decision making
- shorter communication paths
- stimulating employee innovation
 Also associated with:
- widening spans of control
- Greater emphasis on teamworking and empowerment

- Drawbacks
 Reduces labour productivity
 People may get made redundant
 Less promotional opportunities


DELEGATION:
- The assignment to others of the authority for particular functions,
tasks, and decisions.

ISSUES WITH DELEGATION:
- Advantages are as follows:
 Reduces management stress and workload
 Allows senior management to focus on key tasks
 Subordinates are empowered and motivated
 Better decisions or use of resources (potentially)
 Good method of on-the-job training

- Disadvantages are as follows:
 Cannot / should not delegate responsibility
 Depends on quality / experience of subordinates
 Harder in a smaller firm
 May increase workload and stress of subordinates

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