Organisational Structures (Edexcel GCSE Business) : Revision Note

Understanding Organisational Structure Terminology

• An organisational structure outlines the reporting relationships, roles, and responsibilities of employees in the organisation

• Businesses must determine what the best structure is for them so as to effectively implement their ideas and achieve their objectives

  • They should consider how the structure may affect the management and effectiveness of operations and communications

  • A well-designed organisational structure helps to promote clarity, efficiency, and accountability

Key terminology used in organisational design

Hierarchy

• A hierarchy refers to the levels of authority within an organization

  • 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

Chain of command

• The chain of command is the formal line of authority that flows downward 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 to establish a clear communication channel and helps to maintain accountability within the organization

Span of control

• Span of control refers to the number of employees that a manager or supervisor can effectively manage

• 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

Centralised and decentralised structures

• In a centralised structure, decision-making authority is concentrated at the top of the organization with senior management making most of the decisions

• In a decentralised structure, decision-making authority is distributed throughout the organization, with lower-level employees having more decision-making power

  • Decentralisation can promote flexibility and innovation, while centralisation can promote consistency and control

Different Types of Organisational Structure

• Businesses typically structure their organisation in one of two ways

  • Hierarchical (tall) organisational structures

  • Flat organisational structures

Different Structures & the Impact they have on Business Efficiency & Motivation

Tall Organisational Structure	Flat Organisational Structure
Characterised by multiple levels of management and a more centralised decision making process A long chain of command Common in large organisations with complex operations e.g. government agencies and universities	Characterised by fewer levels of management and a more decentralised decision-making process A short chain of command Common in small organisations or start-ups e.g. tech start-ups and small businesses
Advantages	Advantages
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	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
Disadvantages	Disadvantages
Can create communication barriers between upper and lower levels of the hierarchy Decision-making can be slow as information must pass through multiple layers of management Can lead to bureaucracy and excessive levels of management All of the above reduces efficiency and motivation	Can lead to role ambiguity and lack of clear hierarchy May not provide clear opportunities for career advancement or promotion May require employees to take on multiple roles and responsibilities leading to burnout and overwhelm All of the above reduces efficiency and motivation

The Importance of Effective Communication

• Effective communication between a business and its stakeholders is vital

  • It helps managers and employees to minimise mistakes

  • It supports everyone involved in a business to understand their role and what is expected of them

  • It ensures that the businesses values and objectives are clear

  • It provides customers with the information they need to understand goods and services

• Managers should make sure that communication is controlled and organised to ensure that a suitable level of communication exists between key stakeholders
   

• Effective communications need to be

  • accurate

  • clear and easily understood

  • complete

  • appropriate for the intended audience

  • via the right medium

  • provide a chance for feedback

The implications of over or under-communication in business

Barriers to Effective Communication

• Communication may not be effective for a range of reasons

  • Written communication can be affected by poor spelling and grammar, illegible handwriting or unclear presentation

  • Verbal communication can be affected by language difficulties, the speed of speaking, or strong accents

  • The use of jargon can also be a barrier

    • Jargon refers to technical language or acronyms that may not be understood by a non-expert

Different Ways of Working

• Technological developments and flexible working arrangements mean that businesses now have several options for organising the way workers are employed

The range of ways of working 

• Full-time employees usually work for more than 35 hours per week whilst part-time employees work fewer hours but are entitled to the same benefits such as paid holidays

• Flexible employees may be full-time or part-time and have some choice over when they complete their hours of work

• Shift working involves working set hours outside of the normal nine-to-five pattern and usually on a rotation basis

  • E.g. working during the night for one week followed by a week of working during daytime hours, with time off between the types of shift

• A permanent contract means that a worker is employed until such a point that they want to leave or they are made redundant whereas temporary contracts last for a specified period of time (e.g. seasonal retail staff may be employed for the months leading up to Christmas)

  • Fixed term contracts guarantee a certain amount of hours of work for workers for a specific period of time

  • Zero hours contracts do not guarantee hours of work to employees but workers are expected to be available should they be needed

• A freelance worker is a self-employed contractor who works for a variety of businesses on a job-by-job basis

The Impact of Technology on Ways of Working

• Advances in technology have made remote working a popular option for many businesses

• Employees can work from home and enjoy greater flexibility and a better work-life balance

Benefits of Remote Working for Businesses and Employees

• Technology has meant that communication with all stakeholders can take place quickly and be very cost effective

  • Email and messaging software allows messages to be sent and received instantly at little cost

  • Online meeting software such as Skype or Zoom allows for face-to-face communication without the need for travel

  • Processes such as recruitment can be speeded up as documents can be transferred and signed electronically

  • Mobile devices such as laptops and tablets can be used anywhere allowing employees to remain productive outside of their normal workplace