Business Steve - People And Organisations - Organisational S

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Business Steve ­ Notes Emma Rudd BMA
People and Organisations
Organisational Structures
What is an Organisational Structure?
An organisational structure is the way in which a business is arranged to carry out its
activities. It may be shown in an organisational chart that sets out
The routes by which communication passes through the business
Who has authority, power and responsibility within the organisation
The roles and titles of individuals within the organisation
The people to whom individual employees are accountable and those for whom
they are responsible.
Businesses change the structure of their organisation rapidly and regularly some
entrepreneurs believe they should be continually reorganising their firms to meet the
demand of a dynamic market place. A principle reason for the regular change in
organisational structures is the pace of external change. All businesses have to ensure
that they are able to compete with rival firms. Keeping costs to a minimum is an
important part of competing successfully and is a common factor causing businesses to
change their organisational structures.
Key issues in Organisational Structures.
Factors determining the structure adopted by an organisation include the number of
levels or layers of hierarchy used and the extent of the span of control.
Levels of Hierarchy
Organisations with a large number of layers (or levels) of hierarchy are referred to as tall.
That is, there are a substantial number of people between the person at the top of the
organisation and those at the bottom.
Traditionally, UK businesses have tended to be tall. Such businesses have long chains of
command from those at the top of the organisation to those at the bottom. Businesses
with many layers of hierarchy frequently experience communication problems as messages
moving up and down the organisation pass through many people. This may be a key factor
of why businesses in the UK have now moved to more flatter organisational structures.
This process of flattening structures (commonly termed delayering) has led to businesses
operating with significantly wider spans of control.
Spans of Control
A narrow span of control allows supervisors and managers to keep close control over the
activities of the employees for whom they are responsible. As the span of control widens,
the subordinate is likely to be able to operate with a greater degree independence. This is
because it is impossible for an individual to monitor closely the work of a large number of
subordinates. A traditional view is that a span of control should not exceed 6, if close
supervision is to be maintained. However where subordinates are carrying out similar
duties, a span of control of 10 or even 12 is not unusual. It is normal for a span of control
to be less at the top of an organisation. This is because senior employees have more
complex and diverse duties and are, therefore, difficult to supervise.
Delayering occurs when businesses remove one or more layers of hierarchy from the
organisation. A number of businesses have implemented large scale delayering

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Business Steve ­ Notes Emma Rudd BMA
programmes over recent years. Many businesses have removed middle managers from
their organisational structures.
The increasing level of competition in international markets, has forced UK firms to reduce
their costs. Delayering the organisational structure is one way in which costs have been
Delayering has been encouraged further by the acceptance of management theories
emphasising the benefits that may result from having fewer layers of hierarchy.…read more

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Business Steve ­ Notes Emma Rudd BMA
Organisational Structures
Businesses can adopt a number of structures according to the size of the
organisation, the environment it operates in and the personal preferences of the
owners and senior managers.
Formal or Traditional Hierarchy
This structure gives all employees a clearly defined role, as well as establishing their
relationships with other employees in the business.…read more

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Business Steve ­ Notes Emma Rudd BMA
organisation. So, a project manager looking to develop a new product may be able
to call on IT and design skills from relatively junior employees elsewhere in the
Matrix structures focus on the task in hand. Launching a new product, opening new
retail outlets, closing down factories or entering overseas markets are examples of
projects. Project groups often have a strong sense of identity, despite being drawn
from various areas of the business.…read more

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Business Steve ­ Notes Emma Rudd BMA
are taken at the center, little use is made of hierarchies and the organisation it
relatively `flat'.
However there are distinct drawbacks to the entrepreneurial structure. Its
effectiveness depends on two factors
The quality of management and decision making by the `core' employees. If
decisions are delayed or if the workers lose touch with the market, the
business is unlikely to perform effectively.
As the business grows the core employees experience increasing difficulty in
managing the business.…read more

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Business Steve ­ Notes Emma Rudd BMA
products, it may adopt a matrix structure to minimise bureaucracy and to allow
teams to carry out the necessary research and development, and market research.
On the other hand, an organisation which places importance on tradition (and wants
to appear conventional) may be best suited to a formal, hierarchical structure. The
structure places emphasis on positions rather than people and this factor
encourages the continuance of existing policies and practices. Some highclass
hotels may fall into this category.…read more


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