Key Principles Of Organisational Structures aqa

An introduction to organisational structures

• An organisational structure outlines the reporting relationships, roles, and responsibilities of employees 

• Businesses need to choose a suitable structure to enable them to effectively implement ideas and achieve their objectives

  • They should consider how the structure may affect the management and effectiveness of operations and communication

  • A well-designed organisational structure helps to provide clarity, efficiency and accountability

  • It can be visually represented using an organisation chart

Organisational chart example

Key terminology

Hierarchy

• A hierarchy refers to the levels of authority within an organisation

  • It describes the ranking of positions from top to bottom

  • The higher the position in the hierarchy, the more authority and power it holds

  • The hierarchy usually includes top-level management, middle-level management, and lower-level employees

Chain of command

• The chain of command is the formal line of authority that flows downward from top management to lower-level employees

  • It defines who reports to whom and who is responsible for making decisions

  • The chain of command helps to establish a clear communication channel and helps to maintain accountability within the organisation

Span of control

• The span of control refers to the number of employees that a manager or supervisor directly manages

• It is based on the principle that a manager can only effectively manage a limited number of employees

  • A narrower span of control means that there are more layers of management

  • A wider span of control means that there are fewer layers of management

Types of organisational structures

• Organisational structures can be tall or flat

Tall organisational structure

• A long chain of command usually results in a narrow span of control

  • Tall structures have multiple levels of management 

  • Common in large organisations with complex operations

    • E.g. Government agencies and universities

Flat organisational structure

• A short chain of command usually results in a wide span of control

  • Flat structures have few levels of management 

  • Common in small organisations or start-ups

    • E.g. tech start-ups and small businesses

Evaluation of tall and flat structures

Delayering

• Delayering is the process of flattening tall organisational structures by removing one or more levels of hierarchy

  • It usually involves making middle management redundancies or choosing not to replace managers who leave

    • Benefits of delayering include:

      • Communication is likely to improve

      • Significant cost savings can be made as fewer management salaries need to be paid

    • However, some drawbacks include

      • Delayering can increase the workload of other employees

      • Remaining managers’ spans of control widen, affecting coordination

Centralisation and decentralisation

• A centralised organisational structure is where authority for decision-making rests with senior management at the centre of a business

• A decentralised structure is where authority for decision-making is delegated further down the hierarchy towards functional or middle managers

• In reality, few businesses are wholly centralised or decentralised

  • In most businesses, strategic decisions are made by senior leaders, whilst operational decisions are delegated to functional areas and middle managers

Evaluation of centralised and decentralised organisational structures

The main job roles and responsibilities in business

• The organisational structure of a business determines the roles, responsibilities and relationships between individuals in an organisation 

Business roles