Organisational Structures Explained

Summary

This video script explores three primary organizational structures used by businesses: hierarchical, flat, and matrix. It delves into their features, advantages, and disadvantages. Hierarchical structures offer clear accountability and promotion opportunities but can suffer from communication inefficiencies and high management costs. Flat structures, favored by smaller businesses, promote faster communication and employee engagement but lack progression opportunities. The matrix structure, blending departmental and project-based teams, enhances skill utilization and team morale but can lead to conflicting priorities and initial team cohesion challenges.

Takeaways

• 📊 Organizational structures are essential for defining job roles and responsibilities within a business and vary based on size, vision, and requirements.
• 📈 An organizational chart visually represents the hierarchy and relationships within a company, highlighting key terms like span of control, chain of command, and subordinates.
• 🔝 The hierarchical structure is common and features multiple layers of management with a long chain of command, leading to a narrow span of control for managers.
• 🚀 Hierarchical structures can motivate employees through promotion opportunities and provide clear accountability and responsibility due to well-defined roles.
• 🗣️ Communication in hierarchical structures can be challenging due to the many layers, potentially leading to misinterpretation or dilution of messages.
• 💰 High management salaries in hierarchical structures can increase operational costs for the business.
• 🏢 Flat structures are often used by smaller businesses, characterized by fewer management layers and a wider span of control for managers.
• 🔁 Faster communication and increased employee engagement are benefits of flat structures, as they allow for more direct involvement in decision-making.
• 💸 Flat structures can reduce costs by minimizing the number of managers and their associated salaries.
• 🔄 The matrix structure combines traditional departmental functions with project-specific teams, allowing for cross-functional collaboration.
• 🔑 The matrix structure can improve communication and morale by bringing together diverse skills towards a shared project goal, but it may also lead to conflicts in prioritization due to dual reporting lines.
• 👥 Team cohesion can be a challenge in matrix structures, especially if project teams are frequently reorganized.

Q & A

What is an organizational structure?

An organizational structure is the way a business organizes its employees, often represented by an organizational chart, and it varies depending on the business's size, vision, and requirements.

What are the key terms to understand before looking at an organizational chart?

The key terms are span of control, chain of command, and subordinates. Span of control refers to the number of employees a manager is responsible for, chain of command is the route through which instructions flow, and subordinates are the staff working under a manager.

What is a hierarchical organizational structure?

A hierarchical structure is the most common type, characterized by many layers of management with a long chain of command. Managers have a narrow span of control and there are many levels for employees to progress through.

What are the advantages of a hierarchical structure?

Advantages include the ability to motivate employees through promotion, clear accountability and responsibility, and the ease of setting targets.

What are the disadvantages of a hierarchical structure?

Disadvantages include potential communication breakdowns due to many layers, and higher costs due to the number of management salaries.

What is a flat organizational structure?

A flat structure is used by smaller businesses and contains few or no intermediate levels between upper management and staff. It features a wide span of control and a short chain of command.

What are the advantages of a flat structure?

Advantages include faster communication, increased employee engagement due to more autonomy, and cost savings from having fewer managers.

What are the disadvantages of a flat structure?

Disadvantages include limited opportunities for progression which can impact motivation, potential power struggles due to the lack of a clear hierarchy, and difficulty in implementation for large businesses.

What is a matrix organizational structure?

A matrix structure combines traditional departments with project teams that cross functional areas, working on specific projects that can be temporary or permanent.

What are the advantages of a matrix structure?

Advantages include the utilization of diverse skills within the organization, rapid and effective communication within project teams, and the potential for strong team spirit and improved morale.

What are the disadvantages of a matrix structure?

Disadvantages include potential conflicts of interest between project managers and functional area managers, confusion for subordinates regarding priorities, and challenges in team cohesion if project teams are frequently changed.

Outlines

00:00

🏢 Organizational Structures Overview

This paragraph introduces the concept of organizational structures, explaining their purpose in businesses to organize job roles and responsibilities. It outlines the factors influencing the choice of structure, such as size, vision, and requirements. The paragraph also defines key terms like 'span of control', 'chain of command', and 'subordinates', and introduces the hierarchical structure as the most common type, characterized by multiple layers of management and a narrow span of control. Advantages include clear promotion paths and accountability, while disadvantages are communication inefficiencies and higher management costs.

05:01

📉 Hierarchical vs. Flat Organizational Structures

This section compares hierarchical and flat organizational structures. The hierarchical structure is described with its many layers, long chain of command, and narrow span of control, leading to clear accountability but potential communication issues and higher costs. Flat structures, often used by smaller businesses, have fewer management layers, a wider span of control, and a short chain of command, which facilitates faster communication and higher employee engagement but lacks opportunities for progression. The paragraph also discusses the cost savings and potential power struggles in flat structures, and the impracticality of such a structure for large businesses with a vast number of employees.

🔗 Matrix Organizational Structure and Its Dynamics

The final paragraph discusses the matrix structure, which combines traditional departmental organization with project-based teams that cross departmental lines. This structure is designed to leverage diverse skills for specific projects, either temporarily or permanently. The advantages highlighted include effective use of internal skills, rapid communication within project teams, and strong team spirit. However, the matrix structure also presents challenges such as dual reporting lines, which can lead to conflicting objectives and priorities for subordinates. Additionally, the paragraph mentions the initial team formation period, which can be problematic if project teams are frequently reorganized.

Keywords

💡Organizational Structure

Organizational structure refers to the framework that delineates how a business arranges its employees and defines their roles and responsibilities. It is integral to the video's theme as it sets the foundation for understanding the different ways a company can be organized. The script discusses three main types of structures: hierarchical, flat, and matrix, each with its own set of features and implications for businesses of varying sizes and needs.

💡Span of Control

Span of control is the number of employees a manager is responsible for overseeing. It is a critical concept in the video as it affects the management style and efficiency of communication within an organization. The script illustrates this by noting that in a hierarchical structure, managers tend to have a narrow span of control due to the many layers of management.

💡Chain of Command

Chain of command is the route through which instructions and communications flow within an organization, from the top to the bottom. It is a key concept in the video that helps to define the hierarchy and lines of authority. The script uses this term to explain how communication is structured in different organizational forms, particularly highlighting the long chain of command in hierarchical structures.

💡Subordinates

Subordinates are the staff members who work under a manager and are within their span of control. The term is used in the script to describe the employees who are at a lower level in the chain of command. It is important for understanding the dynamics of power and reporting within an organizational structure.

💡Hierarchical Structure

A hierarchical structure is an organizational form characterized by many layers of management. The script describes this as the most common structure, with a long chain of command and a narrow span of control for managers. It is central to the video's discussion on the advantages of clear accountability and promotion opportunities, as well as the disadvantages of potential communication breakdowns and higher costs.

💡Flat Structure

A flat structure is an organizational form with minimal intermediate levels between upper management and staff. The script highlights this as a common choice for smaller businesses, where managers have a wide span of control. The video discusses the benefits of faster communication and higher employee engagement, as well as the drawbacks of limited progression opportunities and potential power struggles.

💡Matrix Structure

The matrix structure is an organizational form that combines traditional departmental functions with project teams. The script explains how this structure leverages cross-functional skills to work towards specific project objectives. It is a key concept in the video that showcases the advantages of utilizing diverse skillsets and promoting team spirit, while also discussing the challenges of dual reporting and team cohesion.

💡Accountability

Accountability in the context of the video refers to the clear assignment of responsibility for achieving targets within an organization. The script emphasizes its importance in hierarchical structures where it is easy to set targets and hold individuals responsible for their achievement.

💡Communication

Communication is a vital aspect discussed in the video, especially in the context of how it flows within different organizational structures. The script points out that in hierarchical structures, communication can be hindered by the many layers, potentially leading to the dilution of messages, while in flat structures, communication is faster and more direct.

💡Employee Engagement

Employee engagement refers to the level of involvement and interest employees have in their work and the decisions made within the organization. The script uses this term to highlight the benefits of a flat structure, where employees have more autonomy and are more involved in day-to-day decisions, leading to higher engagement.

💡Project Team

A project team, as discussed in the matrix structure section of the script, is a group of employees from various departments who come together to work on a specific project. The video explains how this approach allows for rapid and effective communication and the utilization of diverse skills towards a shared objective, which can improve morale and team spirit.

Highlights

Organizational structures vary depending on a business's size, vision, and requirements.

An organizational chart visually represents how a business organizes its employees.

Key concepts include span of control, chain of command, and subordinates.

Hierarchical structure has many layers of management and a long chain of command.

Managers in a hierarchical structure tend to have a narrow span of control.

Hierarchical structures can motivate employees through promotion opportunities.

Clear accountability and responsibility are advantages of hierarchical structures.

Communication challenges can arise in hierarchical structures due to multiple layers.

Higher management costs are a disadvantage of hierarchical structures.

Flat structures are common in smaller businesses with few intermediate levels.

Managers in flat structures have a wide span of control with more subordinates.

Faster communication and engagement are benefits of flat structures.

Flat structures can save businesses money by having fewer managers.

Limited progression opportunities can be a drawback of flat structures.

Large businesses may find it difficult to implement flat structures due to size.

Matrix structures combine traditional departments with cross-functional project teams.

Matrix structures utilize diverse skills and promote rapid, effective communication.

Shared objectives in matrix structures can improve team spirit and morale.

Potential disadvantage of matrix structures is conflicting priorities from dual managers.

Forming and maintaining cohesive project teams can be challenging in matrix structures.

Transcripts

Businesses use

organizational structures to organize job roles and responsibilities.

These structures will vary depending on an organizations size,

vision and requirements. In this video

We'll cover three types of organizational structure, the features of those structures along with some advantages and disadvantages.

An organisational structure is how a business organises its employees.It is most easily

represented in the form of an organisational chart. The structure this organisation will adopt depends on its size and needs of the business

There are a few key words that are important to understand before looking at an organisational chart these keywords are

span of control

This is the number of employees that the manager has responsibility for

Chain of command. The route by which instructions and communications flow from the top of the organisation

to the bottom of the business.

It shows who answers to who and finally

Subordinates. This is basically members of staff that work for a manager they are under that managers span of control and are below them

in the chain of command. The

first and probably the most common

organisational structure is the hierarchical structure. As this chart shows

This structure has many layers of management. The key features of this structure

Is it has a long chain of command as communication has to go through many layers

from the managing director through to the employees working under each manager at the bottom of the

organisation. Due to the nature of this structure

managers tend to have a narrow span of control as there are many managers with a relatively small number of subordinates (employees that work for them)

the higher up in the organisational structure. You are the greater

responsibility you have.

The positive of this organisational structure. Is that by its nature,

it can motivate employees through promotion as you can see there are many levels to progress through

and more chances of promotion. whether this is upward in the organisation or by changing roles and learning new skills.

another pro of this structure is that

accountability and responsibility is clear. It is obvious who manages who and what their roles are

therefore

targets can be set easily and clear accountability given for the achievement of those targets.

One of the clear issues that can arise with this structure is communication through the business. A

message or strategy has to be passed through many layers and can get interpreted or

amended to a point where the original message is less effective. Imagine this on the scale of a business such as coca-cola

That have many departments all over the world.

It's difficult for them to pass a message from one side of the organisation right to the other.

Due to the many levels of management another negative can be higher costs as management salaries can be high and

therefore the more managers in the organisation the higher the cost.

Flat organisational structures are commonly used by smaller businesses. They contain none or very

few intermediate levels between upper management and staff

depending on the size of the business. In a flat structure

managers have a wide span of control with typically more subordinates than in a hierarchical structure.

This means that by its very nature there was a short chain of command. Some pros of this approach are

faster communication,

there are fewer levels to communicate to and often no need to follow lengthy approval processes to respect the hierarchy.

This means that communication from the top to the bottom of the organisation can be much faster.

Engagement is also another positive of a flat structure.

Employees are more involved with the day-to-day decisions as there are less, if any management in between themselves and the owners.

Rather than taking orders from their managers, employees have more autonomy

which in turn can improve engagement.

Another positive is it can save the organisation money.

Unlike the hierarchical structure

The flat structure has far fewer managers and therefore less management salaries to pay.

Which saves the business money, however

an obvious negative of this structure is that there is very little or no opportunity for progression, this can impact

motivation but also by having no clear boss

can cause power struggle as there is no clear hierarchy and therefore no clear accountability.

If you are a large business a clear negative of the flat structure is that is near enough

impossible to implement due to the sheer volume of employees.

It will be very hard to apply this structure across thousands of employees in a variety of different countries.

The final structure we're going to look at is the matrix structure.

This structure has traditional departments that will be found in the hierarchical structure

such as; finance,

marketing, research and development and so on.

However

The matrix structure utilises these skills and creates project teams across the functions of the business to work on a particular project.

These teams can be temporary or permanent depending on the task they have been asked to complete, for example

project A may be to create a new product that the business will eventually sell. A project team is formed with employees from across

departments such as; production, finance

marketing and research and development. Each with their own skill set but with the same objective of successfully getting a new product to market.

Meanwhile, another team will be working on another project and so on.

Advantages of this structural approach is it utilises the skills within the

organisation and brings together people from all departments to work towards the same objective.

Rapid and effective communication within the team

allows ideas to flow quickly and freely throughout the project team. Another positive

is that due to having a shared objective and purpose

it can create a strong team spirit and improve morale within the team.

A key disadvantage is that you are split across two managers a

project manager and your functional area manager. This split can lead to each manager having their own priorities

and then pushing these different objectives onto their subordinates. This can then mean that

subordinates do not know which objective to prioritise

resulting in neither objective being achieved.

Finally when the project team is first formed

it can take time for them to gel as a team. If

these project teams are changed or broken down often and new ones formed, this can be an ongoing issue for the organisation.

Thanks for listening. I hope you have a better understanding of organisational

structures and if you would like to have a go at applying this knowledge, then download the task sheet in the description and

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