To start off, organisational structure refers to the way management is organised within a business. It’s crucial for any organisation to have proper structure as it defines hierarchy within an organisation, identifies each job, their function, and where each job should report to. Possessing knowledge about your responsibilities is beneficial for the business as you’re able to carry out tasks efficiently, and be satisfied with the work environment. If staff members are aware of who’s doing what, performance would be a lot quicker and efficient. Organisational structures also provide information to staff about who to report to if they have any issues or queries as they have a clear view of the corporate ladder.
Both Mercedes and Oxfam are organised in a tall structure – this is when the company is organised in a way that distinguishes the levels of hierarchy within a business. There are numerous levels of staff and departments, however, tall structures are more likely to only have eight levels of management within an organisation as having more than this could decrease span of control. The purpose of this is simply to boost the incoming and current sales of their business.
Having a tall organisational structure comes with many advantages, one being that since there’s many levels of management, the company is able to promote more employees to management positions. Another advantage would include that managers have a much closer relationship with their employees as each manager has control. This could encourage employees to be more comfortable and express their views or any issues/queries they may have. Moreover, a tall organisational structure provides a clear view of the corporate ladder, therefore it’s easy for staff to know who to consult to which then saves time as any issues will be dealt quickly. Additionally, tall structures help Mercedes reach their financial aims as this type of organisational structure could improve sales/profit due to it dividing responsibility between its employees equally.
Whilst this structure can come across as advantageous, there are a few disadvantages – the first one being that since there are so many layers to this structure, decision-making could be very time consuming which could then result in the company missing out on good opportunities by the time a decision is made. If an employee sees an issue or opportunity, they’ll have to contact their manager to take action. If the manager isn’t authorised to take action, then they’d have to move up the chain of command to find someone who can take action.
Another disadvantage would be that there’s not a strong relationship between employers and managers who are several levels above them, thus making it difficult to relate to each other. Mercedes could also have a geographical structure due to the company being worldwide – its popularity resulted in it being managed on a global scale to potentially increase profit. Also, a tall organisational structure includes a lot more managers, therefore it makes sense that management costs would be higher. Additional management reduces net management and cash flow as these tall structures often translate into higher compensation and administrative costs for the various management layers.
Oxfam also uses a functional structure – this is when the business groups employees together based specialised or similar set of roles/tasks, for example, the functions within Oxfam would be corporate/finance services, fundraising, and children/family services. This ensures that all of Oxfam’s activities that are deemed important are done effectively, and efficiently. Their functional structure is of utmost importance when it comes to their organisation due to it helping them achieve their overall aims as every employee in a specific department focuses on their role, thus improving efficiency.