# Module 4.4 Organizational Structuring
## Duration

1:00hrs

## Delivery method

For instructional purpose, it is advised that trainers/lectures use lectures, role play and group and individual exercises as a major means of delivering this module.

## Introduction

Management sciences and organizational theories websites (e.g. Learn management2.com and Orchart.co.uk) posits that the structure of an organization, business or otherwise, plays a vital role for the success of any business. Organisations are structured in a variety of ways, depending on their objectives and culture. The structure of an organisation will determine the manner in which it operates and its performance. Structure allows the responsibilities for different functions and processes to be clearly allocated to different departments and employees. The wrong organisation structure will hinder the success of the business. Organisational structures should aim to maximize the efficiency and success of the organisation. An effective organisational structure will facilitate working relationships between various sections of the organisation. It will retain order and command whilst promoting flexibility and creativity.Internal factors such as size, product and skills of the workforce influence the organizational structure. As a business expands the chain of command will lengthen and the spans of control will widen. The higher the level of skill each employee has the more the business will make use of the matrix structure to maximize these skills across the organization.
Definition: The term Span of Control is used to describe the number of employees that each manager/supervisor is responsible for. The span of control is said to be wide if a superior is in charge of many employees and narrow if the superior is in charge of a few employees.

## Types of Organizations

The most common organisation structures as described by learn management2 are:

### Tall Structure Organisation

As discussed in Learn Management2,a tall organisation has many levels of management and supervision. There is a “long chain of command” running from the top of the organisation down to the bottom of the organisation (e.g. Chief Executive to shop floor worker). However, tall structures rarely exceed 8 levels of management. This is firstly because the number of layers (i.e. management levels) decreases the span of control. Secondly the disadvantages of the tall structure begin to outweigh the advantages of a tall structure. However, tall organizations have their own advantages and disadvantages, according to Innovative Business Resource (page 4).
| Advantages of tall Organizations | Disadvantages of tall Organizations |
| There is a narrow span of control i.e. each manager has a small number of employees under their control. This means that employees can be closely supervised. | The freedom and responsibility of employees (subordinates) is restricted. |
| There is a clear management structure. | Decision making could be slowed down as approval may be needed by each of the layers of authority. |
| The function of each layer will be clear and distinct. There will be clear lines of responsibility and control. | Communication has to take place through many layers of management. |
| Clear progression and promotion ladder. | High management costs because managers are generally paid more than subordinates. Each layer will tend to pay its managers more money than the layer below it. |

### Flat Structure Organisation

In contrast to a tall organisation, a flat organisation will have relatively few layers or just one layer of management (Innovative Business Resource). This means that the “Chain of Command” from top to bottom is short and the “span of control is wide”. Due to the small number of management layers, flat organisations are often small organisations$^.$
| Advantages of flat Organisations | Disadvantages of flat Organisations |
| More/Greater communication between management and workers. | Workers may have more than one manager/boss. |
| Better team spirit. | May limit/hinder the growth of the organisation. |
| Less bureaucracy and easier decision making. | Structure limited to small organisations such as partnerships, co-operatives and some private limited companies. |
| Fewer levels of management which includes benefits such as lower costs as managers are generally paid more than worker. | Function of each department/person could be blurred and merge into the job roles of others. |

### Hierarchical Organisation

In a hierarchical organisation employees are ranked at various levels within the organisation, each level is one above the other. At each stage in the chain, one person has a number of workers directly under them, within their span of control. A tall hierarchical organisation has many levels and a flat hierarchical organisation will only have a few. The chain of command (ie the way authority is organized) is a typical pyramid shape. A traditional hierarchical structure clearly defines each employee's role within the organisation and defines the nature of their relationship with other employees. Hierarchical organisations are often tall with narrow spans of control, which gets wider as we move down the structure. They are often centralised with the most important decisions being taken by senior management. In the twentieth century as organisations grow bigger, hierarchical organisations were popular because they could ensure command and control of the organisation. However, with the advent of globalisation and widespread use of technology, in the 1990s tall hierarchical organisations began to downsize and reduce their workforce. Technology was able to carry out many of the functions previously carried out by humans.
| Advantages of Hierarchical Organisations | Disadvantages of Hierarchical Organisations |
| Authority and responsibility and clearly defined. | The organisation can be bureaucratic and respond slowly to changing customer needs and the market within which the organisation operates. |
| Clearly defined promotion path. | Communication across various sections can be poor especially horizontal communication. |
| There are specialists managers and the hierarchical environment encourages the effective use of specialist managers. | Departments can make decisions which benefit them rather than the business as a whole especially if there is Inter-departmental rivalry. |
| Employees very loyal to their department within the organisation. | |

### Centralised and Decentralised Organisation

Learn management2.com noted that, in a centralised organisation head office (or a few senior managers) will retain the major responsibilities and powers. Conversely decentralised organisations will spread responsibility for specific decisions across various outlets and lower-level managers, including branches or units located away from head office/headquarters. An example of a decentralised structure is Tesco the supermarket chain. Each store of Tesco has a store manager who can make certain decisions concerning their store. The store manager is responsible to a regional manager.Organisations may also decide that a combination of centralisation and decentralisation is more effective. For example, functions such as accounting and purchasing may be centralised to save costs. Whilst tasks such as recruitment may be decentralised as units away from head office may have staffing needs specific only to them. Certain organisations implement vertical decentralisation which means that they have handed the power to make certain decisions, down the hierarchy of their organisation. Vertical decentralisation increases the input, people at the bottom of the organisation chart have in decision making. Horizontal decentralisation spreads responsibility across the organisation. A good example of this is the implementation of new technology across the whole business. This implementation will be the sole responsibility of technology specialists
| Advantages of Centralised Structure For Organisations | Advantages of Decentralised Structure For Organisations |
| Senior managers enjoy greater control over the organisation. | Senior managers have time to concentrate on the most important decisions as the other decisions can be undertaken by other people down the organisation structure. |
| The use of standardised procedures can results in cost savings. | Decision making is a form of empowerment. Empowerment can increase motivation and therefore mean that staff output increases. |
| Decisions can be made to benefit the organisations as a whole. Whereas a decision made by a department manager may benefit their department, but disadvantage other departments. | People lower down the chain have a greater understanding of the environment they work in and the people (customers and colleagues) that they interact with. This knowledge skills and experience may enable them to make more effective decisions than senior managers. |
| The organisation can benefit from the decision making of experienced senior managers. | Empowerment will enable departments and their employees to respond faster to changes and new challenges. Whereas it may take senior managers longer to appreciate that business needs have changed. |
| In uncertain times the organisation will need strong leadership and pull in the same direction. It is believed that strong leadership is often best given from above. | Empowerment makes it easier for people to accept and make a success of more responsibility. |

## Module 4.4: ASSESSMENT

* Assignment: Present and discuss the organizational structure of a know FOSS company in your country
* Discussion: From you understanding of the organizational structures described in this module, list and discuss the ones you think are applicable to your company or the African context
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