Internal Auditing (4012)

UNIT 3
SUBTOPICS: ORGANISATIONAL STRUCTURE AND LEADERHIP STYLES AND
TECHNIQUES.
At the end of the topic students should be able to:
describe at least two types of organisational structure.
analyze the major factors affecting an organisational structure.
explain at least three management techniques.
determine which technique is most suited for internal auditors.

The Mechanic and Organic Organisational Structures

A mechanistic structure is a very set and detailed system in which there are tight controls,
extensive division of labor and high formalization. This type of structure works well for mass
production and any time there is a high concern for operational efficiency (Vallabhaneni 2005)
An organic structure, on the other hand has low complexity, a low amount of formalization and
a highly participative decision-making structure. Organic structures are more flexible and
adaptive to change and are better in more dynamic (changing) and complex environments. An
organic structure is better for product development (Vallabhaneni 2005).

Management Styles and Techniques - Vallabhaneni (2005).

.

Democratic Style
Democratic manager delegates authority to his/her staff, giving them responsibility to
complete the task given to them." This method of management is also known as
"empowerment" and allows employees to complete tasks using their own methods. This
gives team members the ability to become more involved in decision making, meaning
that they have a greater interest in their work and are more motivated and productive as a
result.
Autocratic Style
 Some managers like to have full control over a situation and dictate orders to employees,
making decisions without consulting them. Work is usually completed on time, on
account of these quick decisions, but employees can feel left out and unvalued, which can
lead to low morale and poor productivity.
Consultative Style
 This method of managing is a combination of both democratic and autocratic styles. The
manager will consult his staff members when decisions need to be made, listening to their
opinions and suggestions, but making the final decision. This allows staffers to feel
involved and motivated while reaffirming professional boundaries, reminding them that
their manager has the authority to make final decisions.
Laissez-Faire Style
 This method of management sees minimal involvement from the manager or supervisor,
who sets the objective and gives her employees total freedom to complete the task as they
wish. The manager does not become idle, however, but is on hand to give guidance,
encouragement, motivation and clarification. Staff members feel fully involved and
empowered to make their own decisions, but run the risk of becoming confused or losing
sight of the objective, which can result in a project that is not completed on time or
accurately

 Bureaucratic – manages by the rules and policies (by the book) of the organization.
When there is no policy, this manager defers the decision to the next highest level.
• Transformational – this is a leader who is a supporter and implementer of change. The
transformational leader is able to inspire others in the company in order to achieve more than
he or she thought possible (Vallabhaneni 2005).

Reference

Vallabhaneni, S. R. (2005). Internal Audit Activity's Role in Governance, Risk, and Control.
(3rd ed.). Florida: Wiley CIA Exam Review, Volume 1