Unit 2: Human Resource Management
Chapter 13: Organisational Structure
Organisational Structure= the internal, formal framework of a business that shows the way in which
management is organised & linked together, & how authority is passed through the organisation.
Allows:
1. Clear division of tasks & responsibilities.
2. Workers understand which manager they are responsible to.
This Structure Indicates:
- Who has responsibility for decision-making.
- Formal relationships between staff %
departments.
- Position of individuals & their line managers.
- How accountability & authority passed down.
- Number of subordinates reporting to each
senior manager.
- Formal channels of communication.
- Identify supervisor/manager to whom each worker is accountable.
Changes in Organisational Structure:
1. New competitors enter the industry will require quicker-acting & more flexible structure.
2. As firm expands, its internal structure must change.
3. Business objectives change (creation of departments).
4. Intrapreneurship being encouraged:
- Creation of task forces from different departments & divisions.
- High levels of delegation & trust shown with only minimum direct management.
- Flexibility of team membership.
Functional Structure= departments have clearly defined roles & responsibilities in a specialist area
such as marketing, finance, HR or operations.
Functional Manager= senior employee who has authority over a complete organisational unit.
Pros:
- Employee displays of departamental loyalty & pride.
- Encourages employees to become specialists & increases efficiency & productivity.
- Departments led by managers who are specialists in functional areas.
Cons:
- As vertical doesn't allow for good - Employees may feel remote from
connections between departments. senior management.
- Coordination is therefore difficult. - Competition between departments.
Hierarchical Structure= a structure consisting of multiple levels in which all members of the
organisation, apart from one, are subordinate to someone else.
Pros:
- The role of each individual will be clear & well-defined.
- Clearly identifiable chain of command.
Cons:
- One-way communication is standard.
- No horizontal links between departments.
- Managers only focused on their division.
Features:
- Level of Hierarchy= a stage of the organisational structure where all personnel have equal status &
authority. Three main problems:
1. Slow communication.
1
, 2. Span of control likely to be narrow from clear relationship between number of levels &
average span of control.
3. Lower levels feel remote to decision-making power at top.
- Span of Control= the number of subordinate employees directly accountable to a manager.
Benefits of a Wide Span of Control:
1. Each worker delegated more authority.
2. Employee empowerment is a motivational force.
3. Better communications from short chain of command.
4. Few levels of hierarchy so fewer managers, reducing business costs.
- Chain of Command= this is the route through which authority from the chief executive & the board of
directors is passed down through an organisational.
Divisional Organisational Structure= a structure that organises the activities of a business around
geographical areas or product groups.
Product Structure Pros:
1. Focus on specific market segments.
2. Quick response to consumer needs & market changes.
3. Measures performance & profitability of each division separately.
Product Structure Cons:
1. Duplication of roles (each division has own sales team).
2. Rivalries between divisions.
3. Loss of overall central control over each division.
Delayering= removal of one or more of the levels of hierarchy from an organisational structure.
Pros:
1. Reduces costs.
2. Shortens chain of command, improving communication.
3. Increases span of control & opportunities for delegation.
4. Increase workforce motivation from less remoteness.
Cons:
1. One-off cost of redundancies.
2. Increased workloads on managers.
3. Reduced sense of security.
Matrix Structure= an organisational structure that creates project teams that cut across traditional
functional departments.
Pros:
- Good communication.
- Less chance of staff only focusing on
their division.
- Cuts across traditional boundaries
between departments in a hierarchy.
- Creates more successful & innovative
solutions.
- New project teams created quickly.
Cons:
- Less direct control.
- Difficult for senior managers to pass down authority.
- Reduced bureaucratic control.
- Conflict of interests, employees having 2 managers to respond to.
Delegation= passing authority down the organisational hierarchy.
Pros:
1. Gives senior managers more time to focus on important strategic roles.
2. Shows trust to subordinates, motivation & challenges.
2
Chapter 13: Organisational Structure
Organisational Structure= the internal, formal framework of a business that shows the way in which
management is organised & linked together, & how authority is passed through the organisation.
Allows:
1. Clear division of tasks & responsibilities.
2. Workers understand which manager they are responsible to.
This Structure Indicates:
- Who has responsibility for decision-making.
- Formal relationships between staff %
departments.
- Position of individuals & their line managers.
- How accountability & authority passed down.
- Number of subordinates reporting to each
senior manager.
- Formal channels of communication.
- Identify supervisor/manager to whom each worker is accountable.
Changes in Organisational Structure:
1. New competitors enter the industry will require quicker-acting & more flexible structure.
2. As firm expands, its internal structure must change.
3. Business objectives change (creation of departments).
4. Intrapreneurship being encouraged:
- Creation of task forces from different departments & divisions.
- High levels of delegation & trust shown with only minimum direct management.
- Flexibility of team membership.
Functional Structure= departments have clearly defined roles & responsibilities in a specialist area
such as marketing, finance, HR or operations.
Functional Manager= senior employee who has authority over a complete organisational unit.
Pros:
- Employee displays of departamental loyalty & pride.
- Encourages employees to become specialists & increases efficiency & productivity.
- Departments led by managers who are specialists in functional areas.
Cons:
- As vertical doesn't allow for good - Employees may feel remote from
connections between departments. senior management.
- Coordination is therefore difficult. - Competition between departments.
Hierarchical Structure= a structure consisting of multiple levels in which all members of the
organisation, apart from one, are subordinate to someone else.
Pros:
- The role of each individual will be clear & well-defined.
- Clearly identifiable chain of command.
Cons:
- One-way communication is standard.
- No horizontal links between departments.
- Managers only focused on their division.
Features:
- Level of Hierarchy= a stage of the organisational structure where all personnel have equal status &
authority. Three main problems:
1. Slow communication.
1
, 2. Span of control likely to be narrow from clear relationship between number of levels &
average span of control.
3. Lower levels feel remote to decision-making power at top.
- Span of Control= the number of subordinate employees directly accountable to a manager.
Benefits of a Wide Span of Control:
1. Each worker delegated more authority.
2. Employee empowerment is a motivational force.
3. Better communications from short chain of command.
4. Few levels of hierarchy so fewer managers, reducing business costs.
- Chain of Command= this is the route through which authority from the chief executive & the board of
directors is passed down through an organisational.
Divisional Organisational Structure= a structure that organises the activities of a business around
geographical areas or product groups.
Product Structure Pros:
1. Focus on specific market segments.
2. Quick response to consumer needs & market changes.
3. Measures performance & profitability of each division separately.
Product Structure Cons:
1. Duplication of roles (each division has own sales team).
2. Rivalries between divisions.
3. Loss of overall central control over each division.
Delayering= removal of one or more of the levels of hierarchy from an organisational structure.
Pros:
1. Reduces costs.
2. Shortens chain of command, improving communication.
3. Increases span of control & opportunities for delegation.
4. Increase workforce motivation from less remoteness.
Cons:
1. One-off cost of redundancies.
2. Increased workloads on managers.
3. Reduced sense of security.
Matrix Structure= an organisational structure that creates project teams that cut across traditional
functional departments.
Pros:
- Good communication.
- Less chance of staff only focusing on
their division.
- Cuts across traditional boundaries
between departments in a hierarchy.
- Creates more successful & innovative
solutions.
- New project teams created quickly.
Cons:
- Less direct control.
- Difficult for senior managers to pass down authority.
- Reduced bureaucratic control.
- Conflict of interests, employees having 2 managers to respond to.
Delegation= passing authority down the organisational hierarchy.
Pros:
1. Gives senior managers more time to focus on important strategic roles.
2. Shows trust to subordinates, motivation & challenges.
2
