Hierarchical structure is a traditional structure used by large businesses .The main features are:
- A large number of layers, each responsible to, and controlled by the level above
- As you go up the structure, the number of people decreases.
- The managing director (MD) is at the top, and is responsible for the success or failure of the business
Flat structures
Some companies use a flat structure. E.g. cybernet has a flat structure. Even though the number of levels has increased from two to three, the overall shape is still flat. A business with a flat structure is likely to:
- Operate quite informally, in that everyone will know everyone else and there will be few formal procedures staff have to follow
- Have good communications, so it is easy to speak to other people and find out what you want to know
- Be good at responding quickly to new ideas or specific customer requests
Flat structures are often seen in divisional structures, where independent divisions operate under the control of higher management. Divisions can be by Function, Product or Geography.
By Function
MD
Sales Finance Production Marketing
By Product
MD
Plastics Fertilises Drugs Cosmetics
By Geography MC Donald’s
(USA)
Mc Donald’s Mc Donalds Mc Donalds
(UK) (France) (Germany)
Organisations have problems maintaining a flat structure as they expand.
Advantages with a flat structure
Communication is better (because there are less layers of hierarchy)
- People are more friendly and sociable
- The employees have more responsibility (so they feel valued and they are motivated)
Disadvantages with a flat structure
You can only employee a certain amount of staff (so the structure stays flat)
- More responsibility to the staff below i.e. this could be a problem because staff may not have the right skills for the job.
Each level in the organisation chart has more responsibility and authorities than the level below .I have drawn a diagram to show who has got the most responsibility to who has got the least. It is in a pyramid shape.
Managing director
Directors
Managers
Supervisors
Shop floor workers
Chain of command
This is the path down which orders and demands are passed from the top of the organisation to the bottom. In a company this goes from the board of directors down to shop floor workers.
Below is an example of one of Jaguars chain of command from the Product Engineering function:
Director of product
Engineering
Manager
Production supervisors
Team leaders
Engineering
Span of control
This is the number of people who report directly to another worker in a superior position (i.e., how many people someone is in charge of)
Mrs Luise
Mr Smith Mr Finlayson Mr Scanlon Mr Newsome
Mrs Luise has a span control of 4.
Below is an example of Jaguars span of control:
Managing director
Dir of? Dir of? Dir of? Dir of? Dir of? Dir of? Dir of?
So the Managing Director at Jaguar has a span control of 7
Factors affecting the span of control
- The type of job – complex jobs need more supervision (the span of control is therefore less)
- The ability of the manager (if the manager is good he /she will be able to look after more staff)
- The ability of the subordinates (the people working below)If they are good workers, then they will need less supervision and the span of control will be bigger.
The problems with communication, which might occur in a hierarchical structure is that messages may get changed as they come down the hierarchical structure.
An example of this might be that the managing director wants every body to start work an hour early than usual.
By the time the message has been passed down from the managing director to the director of product engineering to the production supervisors down to the team leaders and finally the engineers the message could have been accidentally rearranged. ‘To start work an hour later than usual’.
This could affect Jaguar because they may have a lot of orders that need to be done for the following day.
- The most senior
- At the same level
- Managers of other staff
- Subordinates to other staff.
- You can see how many staff each manager has to supervise
Disadvantages of the hierarchical structure
- You cannot see the informal links between different people and different departments – who is friends with whom, which people meet socially, who is popular with the boss and who is not
- You cannot tell who is the best worker, nor who willingly takes on additional responsibility, nor who is most likely to get the next promotion.
- You cannot tell from the chart weather the style of company is formal or informal, whether management is fair or hash, whether the organisation would be good to work for or not
I have thought about some suggestions that could improve Jaguars organisational structure and the way the business functions.
- Delayering - large businesses try to resolve this problem by flattening the chain of command by delayering. This involves cutting out large numbers of middle managers and pushing responsibility and decision making further down the chain
- Shorter chain of command – otherwise messages can get lost or distorted, it takes longer between decisions being made and action taken and it can be more difficult to make changes, as there are more groups to resist change.
- Jaguar could use the Matrix structure – this is where the businesses is organised into different functions (or departments), but people from each department work together on special project teams.
E.g. an example of a special project team might be the development of a new product. (E.g. car) a team of people from different department/functions will work together to develop the product.
So each member would be in charge of:
- Marketing
- Production
- Human Resources
- Finance