Chain of Command
Typically, instructions are passed down the hierarchy; information, for example about sales or output levels, is sent upwards. The taller the organisational structure, the longer will be the chain of command – slowing down communications. In other words, chain of command is the route through which authority is passed down an organisation – from the chief executive and the board of directors.
There are two types of organisational structures; organisational and matrix structure. Organisational structure is the internal framework of a firm that shows the way in which management is organised and linked together and how authority is passed through the organization, whilst Matrix Structure is an organisational structure that creates project teams that cut across traditional functional departments.
In this case, Amazon’s organizational structure can be classified as hierarchical.
This is one where there are different layers of the organisation with fewer and fewer people on each higher level – the figure of organisational structure demonstrates this. In general terms it is often presented as a pyramid (A typical hierarchical pyramid).
Senior management team include two CEOs, three Senior Vice Presidents and one Worldwide Controller, who are responsible for various vital aspects of the business reporting directly to Amazon CEO Jeff Bezos. There are seven segments such as information technology, human resources and legal operations and heads of segments also report to Amazon CEO.
As the company has a hierarchical/bureaucratic structure, nevertheless, it remains highly flexible to adapt to frequent changes in the external marketplace. Amazon organizational culture, on the other hand, are based on the principles of high level of cost-consciousness, constant reinvention and improvement of organizational culture and customer obsession.
In the organisational structure above, amazon has a narrow span of control of four ? this is likely to lead to close control of subordinates. This is a tall organisational structure.
Tall organizational structure is one which has many levels of hierarchy. In these tall organisation structures, there are many managers, and each manager has a small span of control – they are in charge of only a small group of people.
Tall hierarchical structures have communication and employee motivation problems. One conclusion many senior managers have come to is to remove whole layers of management to create shorter structures. This is process is known as delayering.
Delayering is removal of one or more of the levels of hierarchy from an organisational structures.
Los Angeles Police Department
The Above diagram is the hierarchy of LAPD.
In this case, LAPD is a organisational/bureaucratic structure as well. But the only difference here is that this structure includes a tall and a flat organisational structure.
A flat organization (also known as horizontal organization or delayering) has an organizational structure with few or no levels of middle management between staff and executives.
Advantages of hierarchical structure
Many businesses are still organised in this way as decision-making power starts at the top, but may be passed down to lower levels. The vertical divisions do not have to be based on functional departments – they could be based on region or country or product category, for example consumer goods and industrial goods. The rungs on the career ladder for a keen and ambitious employee are illustrated by the different levels of hierarchy. The role of each individual will be clear and well-defined. There is a clearly identifiable chain of command. This traditional hierarchy is most frequently used by organisations based on a ‘role culture’, where the importance of the role determines the position in the hierarchy.
Disadvantages of hierarchical structure
Such a structure tends to suggest that one-way (top downwards) communication is the norm – this is rarely the most efficient form. There are few horizontal links between the departments or the separate divisions, and this can lead to lack of coordination between them. Managers are often accused of tunnel vision because they are not encouraged to look at problems in any way other than through the eyes of their own department. This type of structure is very inflexible and often leads to change resistance. This is because all managers tend to be defending both their own position in the hierarchy and the importance of their own department.