Organisational Structure

ORGANISATIONAL STRUCTURE
IB BUSINESS MANAGEMENT
GRN
Organisational Structure
Human resources are considered by many to be the most

valuable resource for a firm and the way one organizes
them is therefore extremely important to get the most
out of you most important resource. There are a variety
of variables for a firm to consider when organizing its
employees. The firm has to consider job functions
(maybe organize by department), geography, (organize by
region), product lines etc. The firm also needs to
consider the industry it is in. For example, a tech start-
up, a massive established tech firm like Google, a
manufacturing company, a restaurant chain, an
international school all have different internal and
external forces factoring into the firms development.
In essence, organisational structure is the

different levels of management and division of
responsibilities in an organisation.
Responsibility v/s Accountability v/s
Authority
Responsibility: Who is in charge of whom or what task.
Accountability: Who is answerable to whom.
Authority: The right assigned to someone to carry

certain tasks towards the achievement of
organisational objectives.
Additional reading:
http://www.buildingfutureleaders.com/uploads/4/1/1/4/411493/the_difference_between_respo
nsibility_and_accountability.pdf
Structure of an organisation affects:

• Aims and objectives
• Communication
• Organisational culture
• Motivation
• Collaboration
• Costs of running the business
Organisational Chart
Organisational Chart
LBIS
• See Example
Organisational Chart- Key Terms
• Levels of management/hierarchy
• Span of control
• Chain of command
• Centralization and Decentralisation
• Delayering
• Delegation
• Flat structure, tall structure, matrix structure
Levels of management
THEREFORE, THIS ORGANISATIONAL CHART SHOWS 4

LEVELS OF MANAGEMENT
Span of control
The span of control is the number of subordinates under the direct

control of a superior. Therefore, the CEO’s span of control is 4. For the
Production Manager it is one, namely the Team Manager.
Chain of command
Chain of command is the way instructions are passed from

top levels of management to lower levels
Delegation
This is the passing down of authority to lower

levels of management, where subordinates are
given the authority to perform certain tasks on
behalf of superiors.
Delegation
Advantages to the subordinate Advantages to the superior
Helps to increase the variety of tasks done Reduces workload and allows the superior
by the worker, hence might eliminate to concentrate on other aspects
boredom
Might motivate since workers might Might use outcome of delegated task to
believe that management trusts them, identify strengths and weaknesses of
hence might help towards satisfying self- workers
esteem needs
The worker might use this as an
opportunity to show his worth to the
superior
Might be regarded as an on the job
training
Delegation
Disadvantages to the subordinate Disadvantages to the superior
Increase in workload might create stress The final outcome of the task rests on the
and impact negatively on quality superior since authority was delegated,
not responsibility
Lesser time to focus on usual tasks Quality of the task might not be as good
assigned by the organisation as expected since it depends on
experience of the subordinate
Empowerment
This involves the passing down of decision

making power to lower levels of management.
It might motivate workers since management
trusts them. However, with empowerment, the
final outcome of the task rests on the
subordinate since more than authority has bee
delegated.
Centralisation v/s Decentralisation
• Centralisation: Decision making power

concentrated on the hands of a few who are in
the higher levels in the hierarchy. [Link:
Culture- Handy: Power Culture]
• Decentralisation: Decision making power is
distributed across different levels in the
organisation.
• RESEARCH ON BENEFITS & DRAWBACKS

Types of Structure
• Flat structure/horizontal structure

• Tall structure/vertical structure
• Matrix structure
Flat Structure
Tall Structure
Flat Structure v/s Tall Structure
FLAT STRUCTURE TALL STRUCTURE
Wide span of control- More subordinates Narrow span of control- Lesser

under a superior subordinates under a superior
Short chain of command- communication Long chain of command- communication
quicker time consuming and distortions might
also occur
Few levels of management Many levels of management
Delegation easier to practice since more Delegation harder to practice since lesser
subordinates are under a superior subordinates are under a superior
Shorter gap between top management Larger gap between top management and
and lower levels lower levels
Cheaper to run since there are fewer Not cheap to run since there are many
levels of management levels of management
Matrix structure
Matrix structure
Use of project teams to complete different

projects requiring expertise of a wide range of
people in the organisation. Might be a
temporary form of organisational structure
Matrix structure
ADVANTAGES DISADVANTAGES
• Team work and collaboration across • Team will report to two bosses -
departments. Specialists can be creates confusion
assigned to different teams depending
on the project. • Collaboration across teams may make
decision making difficult and take
• Potential for workers to work on longer
various project which make work more
interesting - job satisfaction. • Team members may not normally work
together - be less inclined to get along
• If on a strict timeline, more staff can and different work norms
easily be added.
• Less pressure on one manager as

sharing responsibility
Flexible structure
The more flexible a business structure, the quicker a firm

can adapt to market needs, competitors and various
external and internal forces. Flexible structures refers to
adaptable staff (trained to do multiple jobs) but more
importantly, the ability to adapt and change the
organizational structure. Changing a firms organizational
structure is a very difficult task, especially for large
organizations, but necessary to keep up in the ever
changing globally competitive business climate. To
accomplish this, some firms utilize re engineering which
instead of making small changes over time, completely
changes the structure.
The informal organisation
Informal organizations are one way to help break away potential silos in a firm.
Creating social networks beyond one's daily tasks develops relationships where staff
meet and talk with each other beyond their departments. Even if people stick only
to their departments, the social networks developed may enhance productivity,
sharing of ideas, motivation and staff retention.
Firms try to find ways to develop casual collisions. These collisions are created when
people bump into each outside of their normal tasks. This can be simple as having
lunch together, sharing a lift, have coffee together or just seeing each other around
the office. To accomplish this, office design plays an important role. If one's
department is in one area of a building, potentially they will never leave their main
workspace and just stick to their department. Offering perks like quality food (maybe
even free), a coffee shop (could be free again) at the office, a gym and lounge areas
for staff to relax are all ways to develop casual collisions. Offering these perks
though can be quite expensive so the firm needs to weight that cost.
HOW BUSINESSES ORGANISE
THEMSELVES?
• By product
• By function
• By region
• See Examples
Organisational Structure & Charles Handy-
THE SHAMROCK§ORGANISATION
REFERENCES
• http://www.dpbusinessmanagement.com/22-
organizational-structure.html

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What are the different types of organizational structures discussed?

What are the different types of organizational structures discussed?

What factors should a firm consider when organizing its employees?

What factors should a firm consider when organizing its employees?

ORGANISATIONAL STRUCTURE

Human resources are considered by many to be the most

In essence, organisational structure is the

Accountability: Who is answerable to whom.

Authority: The right assigned to someone to carry

Structure of an organisation affects:

THEREFORE, THIS ORGANISATIONAL CHART SHOWS 4

The span of control is the number of subordinates under the direct

Chain of command is the way instructions are passed from

This is the passing down of authority to lower

This involves the passing down of decision

• Centralisation: Decision making power

• RESEARCH ON BENEFITS & DRAWBACKS

• Flat structure/horizontal structure

Wide span of control- More subordinates Narrow span of control- Lesser

Use of project teams to complete different

• Less pressure on one manager as

The more flexible a business structure, the quicker a firm

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