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Summary Organisational Design
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Explains what organisational design is, organisational structures (e.g. centralised and decentralised, tall and flat, matrix), the key features of organisational structures, and advantages and disadvantages of the structures

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  • September 27, 2020
  • 2
  • 2019/2020
  • Summary

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Theme 1 Topic 6
Organisational Structure
Organisational Design

Organisational Design – creating the formal hierarchy that establishes who is answerable to who throughout
the organisation


Organisational Structures

A diagram showing the way authority is organised within a business. They are often represented in the form of
an organisational chart showing:

 The roles and titles of individuals within the organisation
 The chain of command – the lines of authority within the
business
 The units and divisions for which individual managers are
responsible

When the organisation is divided into functional areas (e.g.
marketing, finance, operations, etc.) it is called a functional structure.


Centralised or Decentralised

Centralised Structure – decision making power and control remains in the hands of the top management level.

Decentralised Structure – delegates decision making to workers lower down the organisation

Centralised Decentralised
 Decisions made at the top  Decisions made locally, closer to customers
 Restricts authority for local managers  Gives local managers more responsibility
 Consistency for customers  Staff are more motivated (potentially)


Key Features of an Organisational Structure

Levels of Hierarchy – the number of layers of authority within an organisation

Chain of Command – shows how authority is organised through various levels of hierarchy

Span of Control – the number of subordinates reporting directly to a manager. This may be narrow (if there
are few subordinates) or wide (if there are many reporting to a manager.


Tall or Flat Organisational Structure

Tall Structure – has more layers in its hierarchy and a smaller span of control

Advantages Disadvantages
 Easier to get a promotion  Communication lost
 Smaller span of control  Harder to get to the top
 Lots of support from manager  Don’t know what everyone is doing
 Labour costs are high – more managers




Flat Structure – has fewer layers in its hierarchy and a wider span of control

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