An organisation is defined as a clearly bounded group (or groups) of people interacting together to achieve a particular goal in a formally structured and co-coordinated way.
A hierarchy organisation is when employees are ranked at various levels within the organisation, each level is one above the other. A tall hierarchical organisation has many levels and a flat hierarchical organisation will only have a few.
Flat hierarchies were introduced to cut costs as fewer people are now being employed as managers or supervisors. This then leaves current staff with greater responsibility as their span of control increases, encouraging employees to make decisions for themselves. However this type of hierarchy could leave staff demotivated as they see no opportunity for promotion.
Tall hierarchies are essential to large businesses due to the extent of employees they employ each varying in specialist areas or tasks throughout the business. However, communication is slow as there are many different levels of management that have to be informed before any decisions can be made.
Span of Control
Span of control is the number of subordinates who report to an employee and for whose work that employee is responsible. Businesses can operate on a wide or narrow span of control.
Narrow Span of control
A narrow span of control allows swift communication between the manager and employees as there are less people to be informed. Employees are aware to whom they are directly answerably to.
Wide Span of Control
A wide span of control is less expensive because the business employs fewer supervisors or managers. With only one manager and team leader in the hierarchy below the manager, the employees are mostly all on the same level and can work with each other with clear delegation of duties. Less supervision and control can create a more positive attitude among employees, who appreciate the extra trust and freedom.
All businesses have a structure that they use. The most common structural types are detailed below:
▪ Simple Line Structure
▪ Functional Structure
▪ Geographical Structure
▪ Matrix Structure
▪ Customer Structure
▪ Product/ Service Structure
▪ Clover Leaf Structure
Simple Line Structure
This type of structure is best suited to small businesses. Each employee working within this structure is accountable to the person who is immediately above them. My part-time job at Sperrin Bakery would operate this type of structure.
The above named structure occurs in a large business that operates in many different departments e.g. Finance, Marketing. The College which I currently attend operates on a functional structure.
A geographical structure is adaptable to businesses that operate throughout a geographical area or region. Each region is its own complete entity and its goals are tied to the overall goals of the business. There is usually a regional manager overseeing the entire operation. Below is a diagram showing how investment firm “Skandia” is geographical structured.
This type of structure is used when a business requires a structural management which is more adaptable and flexible. It is best suited at dealing with particular projects where different skills are necessary to complete the project to the highest standard.
Customer structure suits an organisation which has a wide range of customers therefore leaving the business being able to departmentalise its customers into categories.
Product/ Service Structure
This structure operates best throughout a large business. It includes...