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.