ORGANIZATIONAL STRUCTURE By Himashi De Mel BA (Hons) ; CIMA passed finalist
Introduction to organisational structure The set of formal tasks assigned to individuals and departments Formal reporting relationships, including lines of authority, decision responsibility, number of levels and span of control The design of systems to ensure effective coordination of employees across departments
Organisation chart A firms organisational structure can be illustrated with an organisation chart. Organisation chart would indicate the interaction among job positions. This chart indicates the chain of command.
Example: Organisational chart for a water bottling plant
Organising concepts Work Specialization is the degree to which organisational tasks are subdivided into individual jobs; also called division of labor Chain of Command is an unbroken line of authority that links all individuals in the organisation and specifies who reports to whom
Authority Authority is the formal and legitimate right to make decisions and issues orders Power that has been legitimized by an organisation Authority is vested in organisational positions, not in people Authority is received from mainly legal sources but managers can develop authority by acceptance as well. Authority is accepted by subordinates Authority flows down the vertical hierarchy Authority can be transferred from one to another
Responsibility Responsibility is the duty to perform the task or activity assigned Requirements of assigned task to be done It should be match with the responsibility Ultimate responsibility cannot be transferred Responsibility is highly connected to accountability
Accountability The obligation to demonstrate and take responsibility for performance in light of agreed expectations. There is a difference between responsibility and accountability: responsibility is the obligation to act accountability is the obligation to answer for an action
Delegation of authority The act of assigning formal authority and responsibility for completion of specific activities to a subordinate Also known as passing authority to a lower level
Benefits of delegation More effective use of your time Motivation of staff Training Self development More effective working team
Barriers to delegation Lack of abilities to carry out the delegated tasks Fear of subordinates Fear of losing control Fear that subordinates might do a better job Some employees do not accept the delegated tasks Concern about what to do with extra time Feeling of indispensability
Span of management The number of employees reporting to a supervisor is span of management Factors associated with less supervisor involvement and larger span of control Work is stable and routine Subordinates perform similar work Subordinates in single location Highly trained and need little direction Rules and procedures are defined Support systems and personnel are available to manager Little supervision is required
Reorganisation and span of management
Tall vs flat organisations Characteristics of tall structure Characteristics of flat structure Many layers of management between lowest and highest levels Small span of control Close supervision, better communication and reduce delegation. E.g. banking organisation Fewer levels in hierarchy Wider span of control Subordinates grater decision making authority, few management costs, grater employee motivation but less control
Centralisation and decentralisation Change and uncertainty are usually associated with decentralization The amount of centralization or decentralization should fit the firm s strategy During crisis or risk of company failure, authority may be centralized Centralization means that decision authority is located near the top of the organisation Decentralization means decision authority is pushed downward to lower organisational levels
Departmentalisation Basis for grouping positions into departments Choices regarding chain of command Traditional approaches: Vertical Functional Divisional Matrix Innovative approaches: Teams Virtual Networks
Functional and divisional Vertical Functional Approach Grouping of positions into departments based on skills, expertise, work activities, and resource use Divisional Approach Grouping based on organisational output Product, Program, Business (self-contained unit) Geographic or Customer-Based Divisions
Functional versus divisional structures
Geographic-Based Global Organisation Structure
Matrix and team approach Matrix approach combines functional and divisional approaches Improve coordination and information Dual lines of authority Team approach is a very widespread trend Allows managers to delegate authority Flexible, responsive
Dual authority structure in Matrix organisation
Evaluation of matrix organisational structure Advantages Disadvantages Uses resources and expertise Two bosses dilutes effectively. accountability. Improves communication, More conflict, organizational flexibility, innovation. politics, and stress. Focuses specialists on clients Leads to confusion for and products. employees, as they are reporting Supports knowledge sharing for two bosses. within specialty across groups.
Thank You!