7.1 Organisational structure

Organisational structure allocates authority, responsibility, communication and coordination. It should support the objectives and strategy rather than exist as an isolated chart.

Functional, divisional, matrix and flatter arrangements trade specialisation, speed, accountability and flexibility. The best fit depends on size, products, geography and uncertainty.

A diversified firm may use divisions close to customers, while a small specialist firm may benefit from direct communication and fewer layers.

A flatter structure is not automatically faster, and a matrix can create useful expertise as well as conflict.

Organisational structures include functional, divisional, matrix and flatter forms. They define reporting lines, communication and how work is grouped.

Structures trade specialisation against flexibility, local responsiveness against consistency and clear accountability against cross-functional coordination.

A firm with distinct product divisions can respond quickly to different customers, while a functional structure may share specialist expertise efficiently at smaller scale.

No structure is automatically best; fit depends on size, strategy, geography, product variety and uncertainty.

Delegation gives another person authority to carry out a task or decision. The manager remains accountable for the outcome, while the delegate needs clarity, resources and support.

Effective delegation can develop people and speed decisions, but vague authority or unrealistic responsibility creates delay and blame.

A manager can delegate a supplier negotiation with a budget limit and reporting point; the manager still owns the final performance of the function.

Delegation is not dumping work without authority, and accountability cannot simply be delegated away.

Authority is the legitimate power to make decisions; control is the ability to monitor and influence outcomes. Trust allows people to act without constant supervision when expectations and evidence are clear.

More control can reduce risk but slow decisions and weaken ownership. Less control can speed action but requires capability, feedback and consequences.

A branch manager may set service standards, receive regular data and choose local tactics; the centre controls outcomes without dictating every interaction.

Trust is not the absence of accountability, and surveillance is not the same as effective control.

Centralisation keeps important decisions near the centre; decentralisation gives more authority to lower levels or divisions. The choice affects speed, consistency, expertise and local responsiveness.

Central control can protect standards and exploit scale, while local control can use better information and motivate managers. Hybrid arrangements are common.

Head office may set brand and safety rules while local branches adapt opening hours to demand; the boundary between decisions is deliberate.

Decentralisation is not absence of strategy, and centralisation is not always efficient when local information matters.

Line functions are directly involved in the main operating or revenue-generating activity; staff functions provide specialist advice or support such as HR, finance or legal expertise.

Staff advice can improve decisions, while line managers know operational realities. Conflict can arise when roles, authority or accountability are unclear.

A finance team can advise on investment risk, but an operations manager understands whether the proposed change can work on the shop floor.

A staff function is not unimportant and may have formal authority in its specialist domain; labels do not replace role definitions.