Advantages and Disadvantages of different organisational structures

Tall
In its simplest form a tall organisation has many levels of management and
supervision. There is a long chain of command running from the top of the
organisation e.g. Chief Executive down to the bottom of the organisation e.g. shop
floor worker.
Tall structures rarely exceed 8 levels of management. This is firstly because the
number of layers (i.e. management levels) decreases the span of control.
Diagram: Tall Structure

Advantages of tall Organisations

There is a narrow span of control
ie each manager has a small
number of employees under their
control. This means that
employees can be closely
supervised.
There is a clear management
structure.

Disadvantages of tall Organisations

The freedom and responsibility of
employees (subordinates) is
restricted.

The function of each layer will be

clear and distinct. There will be
clear lines of responsibility and
control.
Clear progression and promotion
ladder.

Flat

Decision making could be slowed

down as approval may be needed
by each of the layers of authority.
Communication has to take place
through many layers of
management.
High management costs because
managers are generally paid more
than subordinates. Each layer
will tend to pay its managers more
money than the layer below it.

Many organisations have organised their employees into layers. Employees with the
most authority (power) will be in the top layers and those with the least will be in the
bottom layers. Organisations will structure the layers in a number of different ways.
In contrast to a tall organisation a flat organisation will have relatively few layers or
just one layer of management. This means that the Chain of Command from top to
bottom is short and the span of control is wide. Span of control refers to the number
of employees that each manager is responsible for. If a manager has lots of
employees reporting to them, their span of control is said to be wide. A manager with
a small number of direct reports has a narrow span of control. Due to the small
number of management layers, flat organisations are often small organisations.

Advantages of Flat Organisations

Disadvantages of Flat
Organisations

Greater communication between management

and workers.

Employees may have more than one

manager as there are a number of
managers at the same level in the
organisation

Better team sprit as fewer management layers

increase interaction between employees on
different levels (layers).

May hinder the growth of the

organisation especially if managers
have wide spans of control.

Less bureaucracy and easier decision making

Structure limited to small

organisations such as partnerships,
co-operatives and private limited
companies.

Fewer management layers may reduce costs as

managers cost more than non managers. Also
employees at higher levels in the organisation
expect to be paid more than those on lower levels.

Lack of layers may reduce

opportunities for high level strategic
management.

Hierarchical

In a hierarchical organisation employees are ranked at various levels within the

organisation, each level is one above the other. At each stage in the chain, one
person has a number of workers directly under them, within their span of control.
The chain of command (ie the way authority is organised) is a typical pyramid shape.
Senior managers make up the board of directors and are responsible for establishing
strategy and overall business direction, whilst middle managers have responsibility
for a specific function such as finance or marketing.

A traditional hierarchical structure clearly defines each employees role within the
organisation and defines the nature of their relationship with other employees.
Hierarchical organisations are often tall with narrow spans of control, which gets
wider as we move down the structure. They are often centralised with the most
important decisions being taken by senior management.
Advantages of Hierarchical
Organisations

Disadvantages of Hierarchical
Organisations

Authority and responsibility and

clearly defined

There are specialists managers and

the hierarchical environment
encourages the effective use of
specialist managers.
Employees very loyal to their
department within the organisation.

Clearly defined promotion path

The organisation can be bureaucratic

and respond slowly to changing
customer needs
Communication across various
sections can be poor especially
horizontal communication.
Departments can make decisions
which benefit them rather than the
business as a whole especially if
there is Inter-departmental rivalry.
Response can be slow to the market
within which the organisation
operates.

Matrix Structure
A matrix organizational structure is one of the most complicated reporting structures
a company can implement. A matrix organizational structure is a company structure
in which the reporting relationships are set up as a grid, or matrix, rather than in the
traditional hierarchy. In other words, employees have dual reporting relationships generally to both a functional manager and a product manager.

Advantages

Disadvantages

Resources can be used efficiently, since experts

and equipment can be shared across projects

A conflict of loyalty between line managers and

project managers over the allocation of resources

Products and projects are formally coordinated

across functional departments.

If teams have a lot of independence they can be

difficult to monitor.

Information flows both across and up through the

organization.

Costs can be increased if more managers

(ie project managers) are created through the use
of project teams.
Team members may neglect their functional
responsibilities.

Employees are in contact with many people,

which helps with sharing of information and can
speed the decision process.