21512 Chap.6 Organisational Structure: Hierarchy, Span and Forms
Organisational Structure: Hierarchy, Span and Forms
To argue that a structure fits or misfits, you need precise words for its parts. The Week 2 lecture defines formalisation, vertical and horizontal differentiation, centralisation, complexity, the administrative component, specialisation and span of control, and explains configuration as the combination of hierarchical levels and spans.
Tall structures with narrow spans suit large, complex organisations; flat structures with wide spans suit smaller, simpler ones.
The chapter compares the three basic forms, functional, divisional and matrix, with the strength and weakness of each, and uses the lecture's structural design fit chart to choose a form from product and market diversity.
It lists the contingencies that set an optimal span of control and the wider factors a structural choice depends on, from strategy and technology to culture and leadership style.
What this chapter covers
- 01
Formalisation, differentiation and centralisation
- 02
Span of control and the administrative component
- 03
Tall and flat configurations
- 04
Functional, divisional and matrix forms
- 05
Matrix structures: flexibility against ambiguity
- 06
Choosing a form from product and market diversity
- 07
Six contingencies for an optimal span
Worked example · free
Read an organisation chart for its structural elements
- 1Vertical differentiation: four layers from chief executive to frontline staff, a moderately tall hierarchy.
- 1Horizontal differentiation: four specialised departments, each grouping people who do similar work.
- 1Span of control: the chief executive supervises four directors, each director about three managers, and each manager about twenty-five staff, so spans widen towards the front line.
- 1Form: grouping by specialised task makes it a functional structure, efficient but likely to be slow when work crosses departments.
Key terms
- Span of control
- The number of employees each manager is directly responsible for.
- Vertical differentiation
- The number of layers in an organisation's hierarchy, which sets where decisions are made.
- Functional structure
- A form that groups people performing similar, specialised tasks, efficient but rigid.
- Matrix structure
- A form in which reporting lines run along two or more dimensions, so people answer to more than one manager.
Organisational Structure: Hierarchy, Span and Forms FAQ
What is the difference between a tall and a flat structure?
A tall structure has many hierarchical levels, a long chain of command and narrow spans of control, which suits large, complex organisations but slows vertical communication. A flat structure has few levels, a short chain and wide spans, which suits smaller, simpler organisations but gives each manager a heavy workload.
When should a firm choose a divisional structure?
The lecture's design fit chart points to divisions when diversity is high on one dimension. High product or service diversity with low market diversity suggests divisions by product; high geographic or market diversity with low product diversity suggests divisions by area. Divisions are more responsive to each market but carry higher overheads.
What are the pros and cons of a matrix structure?
A matrix gives a flexible pool of resources, less downtime, knowledge shared across the organisation and broader individual skills. Its costs are ambiguity and conflict over priorities, stress for staff with two managers, and inefficiency when the two lines disagree. It suits new activities and complex interdependencies but demands different skills.
Which factors decide the right structure for an organisation?
The lecture lists many: the nature of the business, the breadth and depth of its products or processes, the complexity of its operations, its size, the reach of its markets, its strategic goals, its capabilities and technology, customer demand, links to suppliers, management style and culture. Choose the two or three that matter most in your case.
Assessment move
Draw a small organisation chart for a business you know and label it with every structural element from the lecture. Then redraw it as a divisional and a matrix form and write one sentence on what each redesign would gain and lose. Practise the design fit chart until you can place any firm on it from two facts: how many products and how many markets.
Keep a list of the structural terms beside you when writing, and check that each one is used with the meaning the lecture gives it.
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