Organisational Design (Edexcel A Level Business) : Revision Note

A hierarchy refers to the levels of authority within an organisation

It describes the ranking of positions from top to bottom

The higher the position in the hierarchy, the more authority and power it holds

The hierarchy usually includes top-level management, middle-level management, and lower-level employees

The chain of command is the formal line of authority that flows down from the top management to lower-level employees

It defines who reports to whom and who is responsible for making decisions

The chain of command helps establish a clear communication channel and helps to maintain accountability within the organisation

Span of control refers to the number of employees that a manager or supervisor effectively manages

It is based on the principle that a manager can only effectively manage a limited number of employees

A narrower span of control means that there are more layers of management

A wider span of control means that there are fewer layers of management

Decision-making authority is concentrated at the top of the organisation

Senior management make most of the key decisions

Centralisation can promote consistency and control

Decision-making authority is distributed throughout the organisation

Lower-level employees have more decision-making power

Decentralisation can promote flexibility and innovation

Provides a clear hierarchy of authority and defined roles and responsibilities

Promotes specialisation and expertise within each department or function

Offers opportunities for career advancement and promotion within the organisation

All of the above increases efficiency and motivation

Can create communication barriers between the upper and lower levels of the hierarchy

Decision-making can be slow as information must pass through multiple layers of management

This can lead to bureaucracy and excessive levels of management

All of the above reduce efficiency and motivation

Promotes a culture of collaboration and open communication

Decision-making can be faster and more efficient

Encourages creativity and innovation as employees have more autonomy and flexibility

All of the above increases efficiency and motivation

This can lead to role ambiguity and a lack of a clear hierarchy

May not provide clear opportunities for career advancement or promotion

This may require employees to take on multiple roles and responsibilities, leading to burnout and overwhelm

All of the above reduce efficiency and motivation

Promotes cross-functional collaboration and communication

Allows for specialisation and expertise within each functional area

Enables efficient allocation of resources and coordination of multiple projects

All of the above increases efficiency and motivation

This can lead to conflicts over priorities and resources

This can create confusion over roles and responsibilities, particularly when multiple managers are involved

Requires a high degree of communication and coordination, which can be challenging

All of the above reduce efficiency and motivation