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Within businesses, different organisational structures can be used. Each of these will be utilised for a reason and can be tailored to make sure that the chain of command in a business is efficient and people understand their work roles. When a company is particularly large, the organisational structure must be right. Without this, it will be very hard for the employees to understand their own role and who they can ask when they need assistance. Without knowing who is in charge and what each person must do, it will be difficult for the company to run in a manner that maximises staff.
Organisation charts may be used in some situations to show a hierarchy. This hierarchy will set out the specific people in the company and show who is directly in charge of others. At the very top of a company hierarchy will be the Chief Executive who will oversee the company. Then come the senior executives who will oversee different directors who specialise in a particular part of the company. This will include the Sales Director, Product Director, Marketing Director etc. Under these people will come managers, then team leaders and finally workers for the company.
Hierarchical structures
A hierarchical structure within a business will have many different layers of command. Various levels of management will be used as well as directors and executives. The structure will be like a pyramid with the Chief Executive at the top and lower members of staff at the bottom. The main advantages of this system are that each person will be sure of their own role and know exactly who to report to. A person will be responsible for getting the best from those that are below them in the hierarchy and it can be easier to motivate and discipline employees with such a clear structure.
The disadvantages of this type of structure would be that it can create rivalry between departments which may be unhealthy for the business. A hierarchical structure can also become quite bureaucratic and lead to an unnecessary level of performance evaluations or other staffing procedures that will take up the time of staff.
Flat structures
In a flat structure there will be less levels in the hierarchy and people may not have a specific boss that they can turn to at any time. In this situation, people must be trusted to do their own work and managers may not be needed, which will save the company money. Each person is allowed to make their own decisions for the company rather than having a manager setting work for them and will therefore take greater ownership of their own workload.
Above is a visual representation of a hierarchical structure (organisation A) and a flat structure (organisation B).
The disadvantages of a flat structure will be that decisions that are made might not be the best possible ones. Without management in place, individuals will be responsible for making decisions on their own workload and can therefore end up working on projects that are not necessary or have been completed by someone else. This leads to the output of the company being inefficient and levels of communication not spanning the whole business. With a flat hierarchy it can also be difficult to set objectives for the company correctly and lead an organisation to success.
Centralisation
When a company is centralised it makes decisions in one particular place on the organisation hierarchy – at the top. Executives will set the work for employees, and business decisions such as pricing, marketing strategies and new products will be made in the head office. This may seem like the most logical way to run a business, but it can lead to the wrong decisions being made. If a company is decentralised, it will mean that decisions are made in each area of the business rather than at the head office. This will give the power to people in a business to make decisions about things that they deal with each day. A decentralised company will often work in a number of different countries or markets and allow people in specific areas to make decisions. This means that the individuals that have the most experience in a specialised area have the power to shape the organisation; this leads to a higher success rate with decisions as they are made by people closer to customers.
Communication
Communication in any business is vital. All businesses make use of a number of individuals who must work to the right standards and understand the role of others they work with. Without effective communication, a business can fail to meet objectives and start to fall behind competitors.
Poor efficiency
Without enough communication a business will run the risk of employees not knowing their own roles or being able to work with other people around them. Vague requests or poor organisation of messages will lead to people being confused by their own role and not being able to work efficiently. When multiple people or departments within a company team up on projects, individual skills should be utilised whenever possible. Without communication being to a high standard, people will not be able to show off their true potential.
Lack of morale
The motivation of employees will decrease if communication is poor. People will struggle to get the answers to queries they have and may not understand the work that they are doing. This will lead to people being demoralised in their work role as tasks that are completed will not be fully understood. Being forced to sit through pointless meetings or presentations will lead to confusion in the workforce who may begin to fear for their jobs since they do not fully understand what they are bringing to the business.
Barriers to communication
When communication is poor there can be a number of different reasons. No matter what, it is important that a company can identify these barriers and work to overcome these whenever possible. The most common barriers to communication include:
- Confusion due to technical phrases being used that someone may not be familiar with
- Poor explanation by the sender of a message
- The receiver not hearing or reading the message correctly once it has been passed over
- Messages being lost or misinterpreted due to the system or technology that is being used
- Messages being distorted as they are passed through a number of different people
When any of the above issues are present, communication will be poor and the right message will not get across at the right time.
