Organizational Structure

Chapter 10
 Organizational Structure
 Organizational Structure – refers to
the levels of management and
division with in an organization
Top
Hierarchy of
Middle
Management
Lower
 Organizational Structure
Advantages
 Shows how everyone is link
 Individuals see their position (who
they are under and above)
 Shows link/relation between
departments
 Gives sense of belonging
 Chain of Command &
Span of Control
 Chain of Command – structure in an
organization which helps to
communicate from top to lower levels
 Span of Control – number of
subordinates working directly under a
manager
 Chain of Command
 Shorter chain of command results in
“shorter” and “wider” span of control
 Longer chain of command results in
“taller” and “narrower” span of control
 De-layering – when a whole level of
management is removed in order to
shorten chain of command
Short Chain of Command
Advantages ( flatter org )
 Communication quicker and accurate
 Top managers are more in touch
 Healthy competition can motivate
people to do better
 Span of Control will be wider”
– Top will delegate more (more
people)
 Short Chain of Command
Disadvantages ( flatter org )

 Managers lose control

 Subordinates may make mistakes
because of poor training
 More competition for workers in the
teams might be a demotivating factor
for some people
 Functional Departments
 Line Managers – have direct
authority over subordinates in their
departments. Able to take decisions
in their department.
 Staff Managers – are specialist
advisers who provide support to line
managers and to board of directors
 Functional Departments
 Functionaldepartments (i.e. finance
and marketing) are responsible for
one important part of organization.
 Regional Division – use specialist
knowledge to help them run stores
abroad
Advantages of Employing
Staff and Line Managers
 Staffmanagers advice line managers
 Give Line managers time to
concentrate on their department and
taking decisions
Disadvantages of Employing
Staff and Line Managers
 Conflicts created because of different
views
 Line employees get confused about
who to take orders from
 Decentralization and
Centralization
 Decentralization – systematic
delegation is followed at all the levels
of management in organization
 Centralization – most decisions are
taken at the center, or higher levels of
management
 Decentralization
Advantages
 Managers are closer to action
 Managers feel trusted and important
 Decisions are made quickly
Functional Decentralization
 Specialist
departments delegate
decision-making authority in 4
common ways:
– Human Resources
– Marketing
– Finance
– Production
Complete Decentralization?
 Not a good idea:
– Aims and long-term policy should
stay centralized
– If not, common purpose and
direction would go down
 Delegation
 Delegation – giving a subordinate the
authority to perform particular tasks
(final responsibility not given)
Reduction in Increasing
direct control
Delegation trust or
by supervisors must mean: workers by
and managers supervisors
and managers
Advantages to Managers
 Takes pressure off
 Less likely to make mistakes
 Can measure staff success easily
Advantages to Subordinate
 Work become more interesting
 Feels trusted and important
 Gives more career opportunities
 Why a Manager won’t
Delegate?
 May be scared that subordinate may
fail
 May be insecure that subordinate will
do better
 Leadership
 Leadership is a key part of being a successful
manager
 Charismatic leaders set a clear direction &
vision
 The best managers are good leaders
 Managers focusing too much on control of staff
and resources
– Provides no sense of purpose or focus
– Fail to inspire workers to take a fresh direction
– What makes a good leader?
 Leadership Characteristics

 Desire to succeed and have a natural self

confidence
 Creativity - think outside the box
 Multi-talented understands all aspects of the
business.
 Gets to the heart of the issue rather than
wasting time on unnecessary details.
Leadership positions in business
 Top executives – CEO, CFO, COO…
 Directors – elected by shareholders
 Managers – responsible for people, resources
or decision-making
 Supervisors – appointed by management to
watch over the work of others
 Worker representatives (Union Rep) – elected
by the workers, to discuss areas of common
concern with managers