Types of Organisational Charts (DP IB Business Management)

Different Types of Organisational Structure

• Businesses typically structure their organisation in one of three ways

  • Tall organisational structures

  • Flat organisational structure

  • Organisational structures based on product, function or region

1. Tall organisational structures

• Tall or vertical structures have multiple levels of management, a more centralised decision making process and a long chain of command

• Spans of control are usually narrow and managers exert significant control

• Tall structures are common in large organisations with complex operations e.g. government agencies and universities

2. Flat organisational structures

• Flat or horizontal structures have fewer levels of management, a decentralised decision-making process and a short chain of command

• Spans of control are often wide and employees have some level of autonomy

• Flat structures are common in small organisations or start-ups

A Comparison of Tall and Flat Organisational Structures

Tall Organisational Structure	Flat Organisational Structure
Advantages	Advantages
Provides a clear hierarchy of authority and defined roles and responsibilities Promotes specialisation and expertise within each department or function Offers opportunities for career advancement and promotion within the organization All of the above increases efficiency and motivation	Promotes a culture of collaboration and open communication Decision-making can be faster and more efficient Encourages creativity and innovation, as employees have more autonomy and flexibility All of the above increases efficiency and motivation
Disadvantages	Disadvantages
Can create communication barriers between the upper and lower levels of the hierarchy Decision-making can be slow as information must pass through multiple layers of management This can lead to bureaucracy and excessive levels of management All of the above reduce efficiency and motivation	This can lead to role ambiguity and a lack of a clear hierarchy May not provide clear opportunities for career advancement or promotion This may require employees to take on multiple roles and responsibilities leading to burnout and overwhelm All of the above reduce efficiency and motivation

3. Organisation by product

• This type of structure is usually built around specific products or projects (matrix structure)

  • E.g. KitKat has its own team within Nestlé

• It combines the functional areas of a business (HR, finance, marketing, sales) with a specialist team that operates inside the business

Diagram: a project- or product-based structure

Evaluating a Matrix Structure

4. Organisation by function

• This is the most common form of organisational structure

• Employees are arranged into different functions that complete specific functions, such as finance, human resources or marketing

  • Employees are arranged according to their expertise, bringing appropriate skills, experience and qualifications to a particular area of the business

  • There is a danger that functional areas focus only on their own area of responsibility and lose touch with the objectives of the business as a whole

Diagram: organisation by function

5. Organisation by region

• This structure is commonly found in businesses that are located in several different geographical locations

  • Regional management and structures allow a business to respond effectively to the needs of customers in diverse locations

Diagram: organisation by region