Organisation Structure and Employee 

An organisational structure is how a business organises its staff to represent the different layers of management. This information can be displayed in the form of a chart. There are two main types of organisational structure used in businesses – hierarchical (or tall) and flat. 

Formal Organisation – internal structure of a business as shown by an organisation chart. Organisational Chart – diagram that shows the different job roles in a business and how they relate to each other. 

Employees Roles and Responsibilities 

Directors 

Directors are the people at the top of a business and its organisational structure. Small businesses may only have one or two directors. Larger businesses often have a board of directors who make the key business decisions, such as implementing new policies, deciding how to invest profit or opening new offices. A board of directors is often made up of a senior person from each department, officers (such as treasurer or secretary), and the owner or chief executive officer (CEO) of a business. 

Managers 

Managers sit below the level of owner or leader. 

Managers: 

• Have to manage supervisors and operational employees, giving instructions and day-to-day tasks
• Make decisions about how the aims and objectives of a business will be implemented and met 
• Are usually experienced in the industry and have often worked their way up to a management position 
• Often delegate tasks further down the chain of command to supervisors and operational employees 
• Are usually well paid and are offered some incentives to help motivate them 

Supervisors 

Supervisors sit below the senior managers in the chain of command. They often manage a team of employees, providing them with daily duties and rotas of working hours, and ensuring employees fulfil their roles. For instance, in a supermarket each department is likely to have a team leader, e.g. the fruit and vegetable section will have a dedicated team of employees managed by a team leader. 

Supervisors: 

• Have overall responsibility for operatives, providing them with tasks and monitoring performance. 
• Will make decisions about tasks that operatives complete, and deal with any immediate operational or customer service issues. 
• Are usually skilled in the role and have had experience as an operative. 
• Will often delegate tasks to operatives to ensure work is evenly distributed. 
• Will be paid at a higher rate than operatives, but a lower rate than senior managers. 

Operatives 

Operational staff are the employees who complete and support those who complete the tasks directly related to the products and services that the company produces in a business. For example, in a car dealership the operational staff will be the sales representatives and car engineers. In a supermarket, operational staff will be customer service representatives, checkout operators and cleaners. 

Operatives: 

• Do not have managerial authority and their responsibilities are provided to them by employees further up the chain of command. 
• Will often be skilled in a particular area of work, though some operatives are lower skilled workers. 
• Do not delegate tasks to others – they complete work that is given to them. 
• Are usually the lowest paid group of employees in a business. 

General Staff 

Businesses often employ staff that do not have any specific skills. eg. drivers, assistants, accounts clerks, etc. Accounts clerk – someone who keeps records of accounts in an office. 

Professional Staff 

These are skilled staff and highly trained. eg. Lawyers, accountants, doctors, etc 

Features of Organisational Structure 

Key terms in organisational structure 

There are a number of key terms that apply to organisational structures: 

❖ Span of control – the number of staff that a manager has responsibility for. 

❖ Chain of command – the route by which instructions and communications flow from the top to the bottom of a business, explaining who is answerable to whom. 

❖ Delegation – a process where tasks are given to members of staff, where often managers give tasks to employees further down the chain of command. 

❖ Subordinates – members of staff below a manager in the chain of command. 

Hierarchical (Tall)structure 

A hierarchical structure is often also referred to as a ‘tall’ organisational structure. A hierarchical structure has many layers of management, and businesses with this structure often use a ‘top-down’ approach with a long

chain of command. In a hierarchical structure, managers will have a narrow span of control and a relatively small number of subordinates (staff). 

Advantages 

• Areas of the business are closely managed. 
• Managers have tight control over employees. 
• Excellent progression opportunities. 

Disadvantages 

• There is slow communication due to a long chain of command. 
• Employees may be demotivated due to lack of autonomy. 
• Organisational changes can be slow to implement. 

Flat structure 

A flat structure is an organisational structure with only a few layers of management. In a flat structure, managers have a wide span of control with more subordinates, and there is usually a short chain of command. Flat organisational structures are commonly used by smaller businesses or those adopting a more modern approach to management. 

Advantages 

• Less layers leads to better communication. 
• More autonomy and responsibility for employees. 
• Employees may feel more motivated, therefore being more productive. 

Disadvantages 

• Lack of progression opportunities. 
• Higher workloads for managers. 
• Managers have more subordinates. 

Centralised and decentralised organisational structures 

Businesses usually use two main forms of management, called centralised and decentralised.

Centralised management structure 

A centralised structure is where business decisions are made at the top of the business or in a head office and distributed down the chain of command. It is often used in retail chains. Usually, all branches will operate in the same way and store managers will have very little input into how their individual store is operated. Businesses with a centralised management style can often be slow to respond to changes in the business environment or local changes near their branches. 

Advantages of a centralised management structure include: 

• Consistency across the business. 
• The business has a clear direction.
• Operations and decisions are closely controlled and managed. 
• The chain of command and accountability are clear. 

Disadvantages of a centralised management structure include: 

• It can demotivate employees. 
• A standardised approach may not work in all business locations. 
• It may lower productivity. 

Decentralised management structure 

A decentralised approach is where a business allows decisions to be made by managers and subordinates further down the chain. This structure provides staff with more decision-making responsibilities. For example, individual stores or departments may make decisions on staffing levels, which products and services to offer for sale, and pricing. 

Businesses with a decentralised management structure can often respond quickly to changes in the business environment and the local area. 

Advantages of a decentralised management structure include: 

• Improved employee motivation 
• Allowing managers lower down the chain to make decisions to suit their local area and customers 
• More responsibility for employees 

Disadvantages of a decentralised management structure include: 

• Consistency is not achieved across the business 
• Managers can make ineffective decisions 
• May negatively impact sales and overall business performance, eg because of ineffective decisions by managers lower down the chain 

Matrix Structure

Matrix structure is often used when cross-functional teams are created to run a project. Team members may come from different disciplines. The team will disband when the project is complete. 

Advantages 

• A good way of having different viewpoints and skills involved in a project 
• Provide staff with an opportunity to learn new skills from other members of the team which may lead to greater motivation and productivity