Organisational Structures
Types of Structures
Hierarchal:
A traditional organisation structure with the organisation chart looking like a tall pyramid with many management levels. Decisions and instructions are passed down by senior staff with information passing back up. Employees tend to be specialised in departments and know their levels of responsibility and roles. Communication may be slow, resulting in resistance to change and inflexibility.
Flat:
This is a low pyramid with few management levels. Information can be easily passed between levels. There are few levels of management and a short chain of command, giving more independence to each department. This structure suits small- and medium- sized organisations.
Entrepreneurial:
Small businesses use this structure. Decisions are made by a few people at the core of the organisation. Decisions can be made quickly; staff know who they are accountable to and the decision maker doesn’t need to consult staff. This structure is difficult to use in a larger organisation and can create a heavy workload for the few decision-makers. It can also stifle initiative from other staff.
Matrix:
A matrix structure can often be set-up for a part of an organisation when needed. A project team is created to carry out a specific task. Team members come from different functional areas.
A project team might be set-up to develop a new product, launch a new service or introduce a new IT system. Each team would have a specialist in marketing, finance, operations and R&D. Each specialist would report to the project manager as well as their normal functional manager.
The benefits of this structure include: increased experience, motivation and job satisfaction as staff can use their specific expertise in different situations. It is good for tackling complex problems. However, it can be costly to have a variety of different teams. It may be difficult to co-ordinate a team with staff from different functional areas. There can also be confusion as to who reports to whom as each specialist reports to two managers.
Decentralised:
Control and decision-making is delegated to departments, which relieves senior management from routine day-to-day burdens. As subordinates are given responsibility, they are motivated and decision making is quicker. This structure could be used, for example, by a retail chain with different stores. Each store manager would be responsible for the running and decision making in his or her own store allowing them to use local knowledge of consumers and the market in their decision making.
Centralised:
Control and decision making lies with top management in head office. Top management are more likely to posses high quality decision-making skills. This is often seen in a hierarchical structure. Procedures can be standardised for purchasing and hiring, for example. Decisions can be made for the whole organisation. It is also easier to promote a corporate image when procedures are standardised. However, staff who don’t make decisions have very little authority or room for initiative. Decisions made may not reflect local conditions.
Written by: Matt
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