Internal Organisation

Organisational Structure includes:

The routes through which communication pass through the business

• Who has authority and power and responsibility within the business
• The roles and titles of people within the business
• The people whom individual employees are accountable for and those for whom they are responsible

Tall and Flat Structures

In the 1990s many people felt that traditional tall structures were not cost effective so delayering occurred. Delayering is the process of removing layers ion the hierarchy. Businesses saw delayering as a way of cutting costs and increasing efficiency

Flat Structures

A Flat structure has few layers in the hierarchy, a wide bottom and a gentle slope to the top

• Lots of small companies have a flat structure
• Traditionally an American structure
• Span of control is wider
• Less hierarchy – easier to make decisions
• More employee empowerment
• Can be cheaper as don’t have to pay expensive management salaries

Tall Structures

A tall structure has many layers in the hierarchy. As there are many layers the chain of command is longer.

• Managers have smaller spans of control and there is less delegation
• Traditional structure of European companies
• Clear hierarchy
• Smaller chains of command
• More control
• Clear communication

Matrix Structure

Matrix structure is where the business is organised by task

• Combines a vertical chain of command with project / product teams
• The focus is on the task
• Is a more flexible structure and allows the business to be more responsive to customer needs
• However it can cause conflict and employees may have divided responsibilities
• Extra costs may be generated by duplication of support staff

Entrepreneurial Structure

An Entrepreneurial structure is often found where businesses operate in competitive markets and especially where rapid decisions are needed

• Have a few core workers at the centre of the organisation and peripheral workers surrounding them
• Depends on how good the core workers are at managing and making decisions
• Can be difficult for larger organisations

Additional ways to structure

• By function
• By product / activity
• By area
• By customer
• By process

Key terms

• Hierarchy – the number of layers of levels within an organisation
• Subordinate – a worker
• Span of control – the number of subordinates who directly report into a manager
• Chain of command – the line of communication and authority from the top to the bottom of the hierarchy