(Solution) CIPD 5C001 Advantages and disadvantages of different types of organisational structures


1.1 Advantages and disadvantages of different types of organizational structures

According to Personnel Today (2015), understanding of the type of an organisation structure is important as it grants support to the people practice professionals, management and staff in daily execution of their roles. Additionally, an appropriate organisation structure guides an organisation to operate transparently, save important time and separate different job roles. The identified organisation structure types are;


For the case study organisation-MNGHA, a hierarchical organisation structure is implemented. A hierarchical organisation structure is identified in People Management (2018) as inclusive of a chain of command in an entity involving the senior managers and executives with other lower levels having the employees. Therefore, this structure is characterised by presence of one leader with various subordinates being their followers. In figure 1, the organisation structure which is summarised to be used in MNGHA is provided;

Figure 1: Summary of organisation structure in MNGHA
Figure 1: MNGHA Organisation Structure

The advantages linked with this organisation structure are;

  • Developing a good career path and succession planning– According to Indeed (2021), by following a hierarchical structure, it influences the capacity for ascertaining various command chains. This is while also enhancing relevant appreciation of the best practice followed in growth of a career and succession plan.
  • High-level control level– In the summary offered in NiBusiness Info.CO.UK (2021), the MNGHA organisation adopt a hierarchical structure leading to full authority and control. Also, the employees operate in collaboration with their supervisors promoting entire support services. For example, by MNGHA adopting the two-way communication approach, it guarantees appropriate direction for staff with allocated orders appropriately granted.
  • Developing Specialists– By following the hierarchical organisation structure for MNGHA, they become appropriately placed to guide their entity to engage various specialists. This can be in finance, accountants, innovation and HR. This is supported by Lumen (2021) which note on the presence of a scope of various entities initiatives classified, subdivided in different roles and distinct job functions.

Conversely, their disadvantages are;

Costly in implementation– Considering MNGHA organisation, the main disadvantage includes using a lot of costs to successfully implement the hierarchy structure. Hence, this is complicated undertaking. Further, for MNGHA, to be able to execute this structure successfully, they need to ensure their employees pursue in-depth training which call for an increase in pay.

Reduced pace of decision making– Hierarchical structure has immense roles and categories involved which complicate efficiency in decision making. The importance of this is that the management functions are in most instances engaged in the overall decision making. For MNGHA organisation, owing to the various personalities involved, leadership and management follow various opinions and input from different stakeholders.

Miscommunication issues– Often, by implementing a hierarchical structure, miscommunication tend to be prevalent. This is impacted by existence of a lot of supervisors engaged who work in collaboration as opposed to operation in a single practice. Considering MNGHA organisation, supervisors implement what is expected of them differently.

Functional Organisational Structure

According to PM Study Guide (2021), this includes a process of engaging staff by categorizing them in different areas of specialization. Also, project manager operates in less authority intended to promote assignment of their work functions and used resources. A good case example is the Starbucks Coffee which use this structure as illustrated in figure 2;

Figure 2: Example of Functional Organisation Structure

For functional structure, its main merits are;

Performance/Productivity increase- In regard to the functional structure, it capitalises on leveraging on increasing the level of specialism in various functions, hence increasing their operations (Economic Discussion, 2021). The outcome of this is productivity increased through performance. For instance, considering Starbucks case study, their employees in various departments are noted to have a high-level productivity.

Developing knowledge and skills- Organisations operating a functional structure operates by existing of immense departments with limited teams operations. This is by leveraging on increased experiences on various skills and collaboration who work actively to meet their goals.

On the other hand, the disadvantages are;

Hinder decision-making strategy- In an entity, for success in increase in flexibility, indeed (2021) highlight the structure impact successful and efficiencies in their operations. This is by exercising holistic authority by management teams to make essential decisions.

Competitiveness by various departments- Considering Starbucks organisation case study, they are often defined with an intense competition among their different stakeholders. This impact on the ability of implementing a harmony-based operations with successful interaction……

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