Organisational Structures Explained
Summary
TLDRThis 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
🏢 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.
📉 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.
Mindmap
Keywords
💡Organizational Structure
💡Span of Control
💡Chain of Command
💡Subordinates
💡Hierarchical Structure
💡Flat Structure
💡Matrix Structure
💡Accountability
💡Communication
💡Employee Engagement
💡Project Team
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
don't forget to give the video a thumbs up and subscribe
for more weekly Business Studies videos
See you next time!
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