Capco Edition 18 Organisational Structure and Teamwork

Organisational structure
Internal organisation of firms
In small firms:
Each worker may undertake a range of roles
The structure may be informal and fluid
As firms grow bigger:

The roles and responsibilities of each worker must
become clearer
A more formal structure is necessary
Functional areas
A function is the specific job of a person or department.

The main functional areas in organisations are:
Finance
Human resources
Sales & marketing
Production and operations
Organisation structure
Organisation charts - pictorial representations of

the job roles and lines of responsibility within a
business.
Hierarchy – an organisation structured in layers,

with those at the top having greater authority than
workers in lower levels
An organisational chart
Organisation structure
Span of control – the number of workers one

manager is directly responsible for
Chain of command – the line down which

instructions are passed through the layers in the
hierarchy
Tall organisations
These have:
Many layers
Small spans of control
Characteristics of tall organisations:

High levels of control (appropriate
for unskilled workers)
More opportunities for promotion
Poor communication as information has
to pass through the many layers
Flat organisations
Flat organisations have:

Few layers
Large spans of control
Characteristics of flat organisations:

Low levels of control (suitable for skilled, experienced
& motivated workers)
Better communication
Managers must delegate work due to larger spans of
control, motivating employees
Delayering
Delayering involves removing one or more layers of

middle managers
Delayering can:
 Cut the costs of paying many managers
 Improve communication
 Empower the remaining workers if they are given
extra responsibilities
X Result in a loss of experienced, skilled managers
X Be costly initially in terms of redundancy and training
Matrix structures
Matrix structures use a project based approach to

organisational design
Project teams are made up of representatives from

the different functional areas
Matrix teams run alongside the traditional

functional structure
Matrix structures
Advantages of matrix Drawback of matrix

structures structures
•Staff from all departments can •Split loyalties as workers have

work on the project, leading to both project team leaders and
quick decision making their functional managers
•Workers may be able to better use •Administration of matrix

their skills and abilities management is expensive
Centralisation
Authority for decision making remains with senior

managers
Benefits of centralisation Drawbacks of centralisation
Firms can benefit from economies of Local differences may not be taken
scale into account
Ensures the activities throughout Employees cannot use their

the business fit with the knowledge of working at the
organisation’s objectives ‘coalface’
Quick decisions can be made by Workers may become demotivated
managers who are skilled at decision
making
Decentralisation
Authority for decision making is delegated down the

hierarchy
Benefits of decentralisation Drawbacks of decentralisation
Staff are empowered to make A consistent corporate message may
decisions which may be motivating not be delivered throughout the firm
Local conditions can be considered Fewer chances of benefiting from

when making decisions economies of scale
The experience of all workers is Workers down the hierarchy may be
utilised less skilled at ‘decision making’
Flexible workforces
Flexibility can be achieved using:

Core & peripheral Outsourcing Home working
workers
Core workers: •Business functions are •Employees work from
•Usually full time and provided by other home
permanent specialist organisations
•Know the firm well e.g. cleaning firms. •Usually relies on the
•Typically managers & use of advanced
specialists. •May be more cost technology and
effective than carrying communication
Peripheral workers: out these functions in-
•Bought in only when house. •Provides flexibility to
needed both workers and their
•Employed on a employers
temporary basis
Culture
Culture refers to the typical way of working

within an organisation as demonstrated by the
behaviours of the people that work for it
An organisation’s culture is influenced by the

structure of the organisation
Types of business culture
Culture Characteristics
Power culture •Power is held by a small number of people
•Swift decisions are made
Role culture •Highly structured and defined roles

•May be bureaucratic and lack creativity
Task culture •Based on team-working within groups set up for a
particular task
•Can respond quickly to changing environment
Person culture •Trained workers are given the freedom to share
knowledge and expertise
Entrepreneurial •Encourages risk taking and creativity
culture •Failure is often accepted and learned from
Teamwork
Importance of teamwork
Teamwork can:
Increase labour productivity
Encourage innovation
Improve employee commitment and motivation
Increase quality
Lower absenteeism and labour turnover
Formal and informal teams
Formal groups are developed to meet given

organisational objectives. Members have defined roles
and there will be a leader.
Informal groups are based on the relationships

between group members. They are concerned with
social and psychological needs rather than business
objectives. Informal groups may provide support for
formal groups.
Characteristics of effective teams
Effective teams are likely to display the following

characteristics:
 Clear, shared goals
 Defined roles
 Open and honest communication
 Mutual trust
 Effective decision making
 Balanced participation and leadership
 Co-operation
 Ways of managing conflict

Effectiveness of teams
The effectiveness of a team can depend upon:
The skills and abilities of the team members

The size of the group
The task to be undertaken
Belbin’s team roles
Belbin identified a number of roles of team members:

 Plant – creative problem solver
 Resource investigator – extrovert and enthusiastic
 Co-ordinator – mature and good delegator
 Shaper – dynamic and driven
 Monitor-evaluator – strategic thinker
 Team worker – co-operative and calming
 Implementer – reliable and efficient
 Completer – conscientious perfectionist
 Specialist – provides knowledge and skills

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Organisational structure

Internal organisation of firms

As firms grow bigger:

A function is the specific job of a person or department.

Organisation charts - pictorial representations of

Hierarchy – an organisation structured in layers,

Span of control – the number of workers one

Chain of command – the line down which

Characteristics of tall organisations:

Flat organisations have:

Characteristics of flat organisations:

Delayering involves removing one or more layers of

Matrix structures use a project based approach to

Project teams are made up of representatives from

Matrix teams run alongside the traditional

Advantages of matrix Drawback of matrix

•Staff from all departments can •Split loyalties as workers have

•Workers may be able to better use •Administration of matrix

Authority for decision making remains with senior

Ensures the activities throughout Employees cannot use their

Authority for decision making is delegated down the

Local conditions can be considered Fewer chances of benefiting from

Flexibility can be achieved using:

Culture refers to the typical way of working

An organisation’s culture is influenced by the

Role culture •Highly structured and defined roles

Formal groups are developed to meet given

Informal groups are based on the relationships

Effective teams are likely to display the following

 Open and honest communication

 Effective decision making

 Balanced participation and leadership

 Ways of managing conflict

The effectiveness of a team can depend upon:

The skills and abilities of the team members

Belbin identified a number of roles of team members:

 Co-ordinator – mature and good delegator

 Shaper – dynamic and driven

 Monitor-evaluator – strategic thinker

 Team worker – co-operative and calming

 Implementer – reliable and efficient

 Completer – conscientious perfectionist

 Specialist – provides knowledge and skills

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