Organisational Structure

An organisation is made up of a group of people. It has specific goals that determine its objectives and activities. Different organisations have different goals for example a business organisation will seek to make profits, a charity like Greenpeace, will seek to improve the environment, while a college will seek to operate within budget and improve students results.

Division of Labour

The people within an organisation have defined roles that allow an individual to have specialist knowledge and skills of their area of work. A large organisation may have greater specialisation than a small one, for example there may be separate roles for recruitment and training in a large organisation whereas in a small firm they may be combined.


People are usually grouped together into departments where similar tasks are carried out.

Traditional structure, known as Functional specialisation, dictates that a most organisations would have Accounts, Personnel, Sales and Purchasing departments with different specialists within them.

Government and Local authorities tend to group by Product or Service specialisation leading to Housing, Education, Environment and other such departments.

Larger national and multi-nationals may organise using Geographical specialisation. This allows the local knowledge to be used for the benefit of the organisation and customers. (Recall that a red sign in the UK signifies danger, in China red signifies good luck!)

Chain of Command

Responsibility for decision-making is defined with a structured framework showing the roles, control and monitoring of the staff. An organisation chart shows this clearly. Try to get one from your school / college.

These charts also show how control and internal information is passed from level to level. One of the dangers of a pyramid (or tall) hierarchical structure is that the information may well get distorted as it travels for level to level and decisions can take a long time to be made. In a horizontal (or flat) hierarchical structure decision should be made quicker and information travels much quicker and reliably.

Span of Control

Span of control refers directly to the number of people that are directly supervised by one person. If the span is too wide control will be lacking and may lead to inefficiencies. If the span is too narrow it may be wasteful of staff. The control necessary for the task will dictate how wide the span of control needs to be. A manager may be able to control many check out operators in a supermarket or call centre operatives who are all doing much the same task, however, a manager of an accounts office may have a narrower span of control where their staff have multiple tasks to carry out.

The Three Pillars

The "three pillars" of any organisation are:

  • People (e.g. education, training, employee attitudes)
  • Organisation (e.g. strategy, policy, culture, bureaucracy)
  • Technology (e.g. hardware, software, telecommunications, information systems)

The levels of an organisation's structure

In general there are three levels of personnel in an organisation.

  • Strategic - Chief Executive Officer (CEO): Managing Director (MD)
  • Tactical - Middle Management
  • Operational - Production Workers

The information supplied to these levels can be described as the more senior the less detailed the information needs to be.

In context of a football club the Chairman has a strategic role, the Coach has a tactical role and the team captain has an operational role.

Technology and Organisational Structure

Managers need Management Information Systems as an aid to monitoring and controlling the performance of the organisation as a whole and to plan for the future.

Knowledge Workers (including office workers and "professionals" e.g. accountants, lawyers, teachers, engineers) need facilities like word processing, spreadsheets, databases etc. to help them with their work. They also need communication tools, e.g. Email, video conferencing, fax machines.

Production Workers might use data processing systems (otherwise known as transaction processing systems). These systems record the day-to-day activities of the organisation such as sales and purchases. There are two types of data processing systems: batch systems (where transactions are processed all together in a "batch") and online systems (where data is processed as soon as it is generated).

Effect of IT

IT has led to a flatter structure because:

  • Organisations need to be dynamic.
  • IT enables managers to monitor more people.
  • Many low level jobs have disappeared (e.g. robots have replaced production workers, automated data entry has replaced many secretaries) and, therefore, some levels of the pyramid have disappeared altogether.
  • IT systems can now take decisions that used to be taken by middle managers.

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