Human Resource Strategies: Competitive Organisational Structures

Section 3.5

Chapter 18

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Types of organisational structures

Organisational structures can change on a regular basis for businesses, in order to adapt to the changes in the marketplace.
There are 3 types of structure appropriate to larger organisations:

  • A hierarchical structure- where consistency is expected in services/processes
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  •  A matrix structure- project based, split into departments or geographical locations
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  • An informal structure- no obvious organisation, good when creativity is important (e.g R&D) 
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Factors influencing the choice of structure

  • The objectives of the business  
  • The type of business it is  
    Is the work formal/informal
  • The size of the business 
    How many people need to be considered 
  • The culture of the business/its owner
    What kind of features does the owner of the business want to input into the business
  • The amount of finance available
  • Leadership styles
  • Skills of employees
    Do they need supervision? - Extra layers
  • Number of employees
  • Skills and role of employee in relation to communication needed
    Delegation, support 
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How structure can impact on competitiveness

  • Decision making
    The speed in which decisions are made, if decisions are speedy then they can act on competition quicker
  • Increasing efficiency
    Does the business operate on minimum cost? Inefficient to have unneeded levels of management, advances in technology
  • Communication
    If channels of communication are too long then there is chance of communication quality being poor and decision makers will not be able to respond to change
  • Who's involved in the decision making?
    Delegating control, those who are most knowledgeable about the market, customers, suppliers and competitors need to be involved 
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Adapting structures to improve competitiveness

Delayering: Removing one or more layers of hierarchy from the organisational structure 


  • Lower costs- fewer managers are required, which are expensive
  • Improved communication- messages have less layers to get through
  • Offers opportunities to staff in removed layers to search for promotion to higher levels


  • Increase/decrease in workload, pay, responsibility when layers are removed and those join another layer in the hierarchy become de-motivated
  • Lower job security- may impact motivation and morale
  • Valuable knowledge and experience of skilled staff is being lost


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Centralisation vs. Decentralisation

Centralisation: decision making authority is concentrated amongst a small number of senior managers at the top/center of the structure (e.g fast food chains)


  • Easier to implement common policies and practices, standards
  • Tighter control
  • Easier to control and coordinate 
  • Quicker decision making


  • Local/junior managers closer to customer needs yet do not have authority
  • Lack of authority lower down the hierarchy- demotivation


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Decentralisation: authority for decision making is delegated between subordinates in the organisational structure


  • Decisions made closer to the customer
  • Better response to the local circumstances
  • Improves staff motivation


  • Decision making is not strategic
  • Valuable knowledge and experience is lost in decision being amongst lower employees
  • Increasing spans of control
  • Less financial control
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Flexible workforces

Flexible workforces: working arrangements where there are a variety of options offered to employees in terms of working times (set amount of hours, able to move times around as long as time period is complete) working location (from home, on site or between branches) and the pattern of working e.g

  • Flexitime
  • Annual hours contract
  • Term time working
  • Career breaks
  • Mobile working
  • Home working
  • Job sharing
  • Shift swapping

Core workers- full time, permanent employees with business-specific skills and knowledge, performing tasks key to the success of the business often rewarded with high salaries and excellent working conditions
Peripheral workers- part time, temporary and self employed workers brought into the business when needed


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Outsourcing: where business functions are provided by external specialist organisations rather than provided in house. 
E.g giving production responsibilities to another organisation, buying ready-made supplies off another organisation or using external delivery organisations 

Home working: where employees can perform their job from home, increasingly linked to their employer via the internet 

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