Organisational Structures

Organisational Structure

A sole trader with no employees needs no organisational structure. Even if this sole owner were to take on just one worker or partner, a sense of formal organisation structure would become necessary. Who is to do what job? Who is responsible to whom and for which decisions? If a business expanded further  with more workers, including supervisory staff, different departments or divisions, then the need for a structure would be even greater. This would allow the division of tasks and responsibilities to be made clear to all. 

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  Organizational structure: The internal  formal framework of a business that shows the way in which management is organised and linked together and how authority is passed through an organization.

Chain of command: This is the route through which authority is passed down an organization - from the chief executive and the board of directors.

Span of control: The number of subordinates reporting directly to a manager.

Level of hierarchy: A stage of the organisational structure at which the personnel on it have equal status and authority.

Hierarchical organisational structure        

A hierarchical (bureaucratic) organisational structure is an organisational structure where there are fewer and fewer people on each higher level.

Tall structure - narrow span of control

Flat structure - wide span of control

Factors influencing organizational structure:

1. The size of the business and the number of employees
2. The style of leadership and the culture of management
3. Overhead costs - delayering will reduce management overheads
4. Corporate objectives; e.g., overseas expansion will necessarily mean some decentralization as management control is delegated to other locations
5. New technologies, especially IT can facilitate the flow of information making some roles of middle management less important