4.1 - Organisational Structure

What is an organisational structure?

The way a business arranges itself to carry out its activities effectively

It sets out:

- What the duties of employees are

- The person/people the employees have to report to

- The other employees in the organisation for whom an employee responsible for

What is an organisational chart?

A plan showing the roles of, and relationships between, all the employees in a business

What would happen without an internal organisational structure?

Without this internal structure, a business would be very chaotic and not very productive - an organisational structure sets everything out so that everyone in the business knows this info

Which businesses have an internal organisational structure?

All businesses

The organisational _______ shows the _____ played by each employee in the business and ___ reports to ____ within the business.

The organisational structure shows the roles played by each employee in the business and who reports to whom within the business.

The _____ and working _________ in a business are shown in an organisational ____.

The roles and working relationship in a business are shown in an organisational chart.

What are the 5 main job roles?

CEO, Directors, Managers, Team Leaders, Shop Floor Workers

What are the responsibilities of the CEO?

Is the highest ranking person in an organisation and has ultimate authority within the business

In a PLC, this person will be voted into position by the shareholders at the AGM (annual general meeting).

They establish the long-term vision of the organisation + set overall aims (CEO/MD)

What are the responsibilities of the directors?

Establish the business’s overall goals

Set long-term plans and targets for the business to be aligned with the overall vision

What are the responsibilities of managers?

Work to achieve the short and long term targets set by the directors

May be responsible for a function within the business, for example, marketing or finance

Use employees and other resources in the best possible ways (allocating resources and workload in their specific team)

What are the responsibilities of team leaders?

Help managers to achieve their targets by reporting any problems and passing on instructions

Take simple decisions, such as allocating jobs among different employees or deciding which area to replenish stock in

What are the responsibilities of shop floor workers?

Carry out the business’s basic duties or activities. (Eg. working on a production line, serving customers in a shop or basic office duties)

What does MD stand for?

Managing Director

What is the span of control?

The number of employees for whom a manager is directly responsible

It is shown on an organisational chart

What are the 2 different spans of control?

What do experts say an ideal span of control should be?

No more than 6 people

What can the exact span of control in an organisation depend on?

- Experience + personality of manager
- Type of business (if being a line manager requires lots of close supervision, a narrow span may be appropriate)
- Skills + attitudes of employees (if employees are highly motivated, skilled and qualified, adopting wider spans of control could be more suitable)

What are the benefits of a narrow span of control?

- Less mistakes + increased efficiency - staff closely supervised
- More promotional opportunities can exist within the organisation

What are the limitations of a narrow span of control?

- Communication may become difficult, due to lots of layers of management for messages to pass through

- Being supervised + monitored closely - they may feel less trusted and unable to contribute their own ideas

What are the benefits of a wide span of control?

- Less layers of management can motivate employees (more contact with senior staff)
- No. of managers can be reduced, lowering labour costs

- Workers are less closely supervised + monitored, leaving them the opportunity to work on their own initiative, which for some workers is motivational

What are the limitations of a wider span of control?

- Possibility of an increased workload 

- less managers exist within the organisation

- Workers may be less productive if they're not heavily scrutinised

What does the chain of command in an organisational chart show?

The lines of authority within the business upon which communication passes

"What does this chain of command show?
"

In this example, Sam is responsible for Eve, Chris and Brenda. Further down the chain, Brenda is responsible for Sharon and Dawn. This means that Sam would directly communicate with his three subordinates. Brenda would then pass on any relevant messages to her team, as she would be their line manager.


Any issues that Sharon and Dawn may have should be directly communicated to Brenda, rather than these two members of staff communicating with Eve and Chris, or even missing a layer and going directly to Sam. If Sharon or Dawn, had a particular concern regarding Brenda however, they could directly communicate with Sam, as he is ultimately in charge of everybody.

What is a tall organisational structure?

"It has narrow spans of control and a larger number of levels of heirarchy
"

What is a flat organisational structure?

"Has a wide span of control and few levels of heirarchy
"

What is a subordinate?

A member of staff below a manager/senior staff member in the chain of command (under the authority of others)

In what organisational structure is passing authority to others easier?

Flat

In what organisational structure do wide spans of control exist?

Flat

In what organisational structure is there a short chain of command?

Flat

In what organisational structure do junior managers have very little involvement in decision making?

Tall

Which organisational structure do democratic (democracy - group members participate in decision making) managers prefer?

Flat

In what organisational structure do workers have a lower chance of making the wrong decisions?

Flat

In what organisational structure is more responsibility given to workers, causing higher training costs?

Flat

In what organisational structure is there quicker communication throughout the organisation?

Flat

In what organisational structure are managers responsible for fewer workers?

Tall

In what organisational structure are managers more easily able to manage the work of subordinates?

Tall

What is delayering?

The process of removing 1 or more levels of heirarchy from a business' organisational structure

What are the advantages of delayering?

- May help improve communication within the business
- Decision making quicker
- Business should be more flexible
- Reduced wage costs (less staff employed)

What are the disadvantages of delayering?

- Reduces promotion opportunities (layer of management removed)
- Employee motivation levels may fall - staff expected to take on more responsibility (possible no extra pay)
- Business may incur additional costs to train staff in new role(s)

What is delegation?

When a manager/senior employee chooses to give some of their workload to another less senior employee

Where does delegation take place?

Down the chain of command

Does the subordinate employee take responsibility for delegated work?

The subordinate employee is given permission/authority to do the job that has been delegated, but does not take responsibility for the work.

Who takes responsibility for delegated work?

The senior employee/manager who delegated the job

What is it important that everyone in the organisation knows?

- What their duties are

- The person/people that they have to report to

- The other employees in the organisation for whom they're responsible

An organisational structure sets this out

"List 3 reasons why businesses have an ""Organisational structure""?"

- To provide clarity on roles and relationships in the business and who reports to whom

- Helps the business be more coordinated + productive by setting out what everyone is doing

- Provides a clear structure so there are no disputes over responsibilities 

The _____ the chain of command (the ____ levels of authority), the _____ the span of control

The longer the chain of command (the more levels of authority), the narrower the span of control

This card is blank

What is the problem with a long chain of command?

It's often difficult for the managers to communicate with the workers because messages are often misunderstood, become distorted or even lost altogether

What is a line manager?

a person with direct managerial responsibility for a particular employee.

What is communication?

the exchanging of information between 2+ people by speaking, writing, or using some other medium.

Levels of hierarchy definition

The layers of authority within an organisation

What are the 2 main forms of management of a business?

Centralised and decentralised

What is a centralised structure?

A centralised structure is where business decisions are made at the top of the business or in a head office and distributed down the chain of command. 

It is often used in retail chains.

Usually, all branches will operate in the same way and store managers will have very little input into how their individual store is operated.

What are the advantages of a centralised management structure?

"

- consistency across the business (uniform customer experience)

- the business has a clear direction

- operations and decisions are closely controlled and managed

- the chain of command and accountability are clear
- Easier to implement common policies + practices for the business as a whole
- Decisions made for the benefit of the whole business (not just 1 division/department)

"

What are the disadvantages of the centralised management structure?

- Lack of authority down the heirarchy may reduce staff motivation

- a standardised approach may not work in all business locations

- it may lower productivity

- it can make a business slow to respond to changes in the business environment/local changes
- More layers in the organisation - increasing costs
- Local or junior managers are likely to be much closer to customer needs, therefore the best decisions for the local area may not be taken by the business.

What is a decentralised structure?

Where a business allows decisions to be made by managers and subordinates further down the chain. 

Provides staff with more decision-making responsibilities. 

Eg. individual stores or departments may make decisions on staffing levels, which products and services to offer for sale, and pricing.

What are the advantages of a decentralised management structure?

- improved employee motivation

- allowing managers lower down the chain to make decisions to suit their local area and customers(reflect specific needs)

- more responsibility for employees 

- Businesses respond quickly to changes in the business environment/local area
- Good for training + developing junior managers

What are the disadvantages of a decentralised management structure?

- consistency (eg. in practices and policies) is not achieved across the business

- managers can make ineffective decisions

- may negatively impact sales and overall business performance, eg because of ineffective decisions by managers lower down the chain
- Harder to control costs - possible overspending
- Decision-making isn't necessarily looking to the long term future direction of the business
- Training may be needed

What are the most common methods of communication in a business?

- Emails

- Texts

- Online shared spaces (eg. intranet)

- Communication apps

- Letters

- Phone calls

- Face-to-face

- Video calls

Which 2 categories can ineffective communication fall into?

Insufficient and excessive

What is insufficient communication?

How can it negatively impact the business?

Not enough/poor quality communication

Can negatively affect efficiency + motivation - employees may not fully understand what is required of them or what is happening across the business as a whole.

Negative effect on business performance + productivity

What is excessive communication?

How does it negatively impact the business?

Too much communication (too much in general/same message in multiple channels)

Can cause employees to become confused/feel stressed or overloaded

Negatively impacts efficiency + motivation, leading to a negative impact on performance + productivity

Name 3 barriers to communication

poor explanations

poor spelling and grammar

incorrect language

technology issues

poor structuring of information

use of jargon, technical language or slang

lack of understanding

What can ineffective communication result in?

reduced business efficiency and mistakes.

Ineffective communication may also confuse customers or stop them receiving a message, which can ultimately impact a business’ sales and profitability.

What are the advantages of flat organisational structures?

- Upward + downward communication easier as there are fewer levels of heirarchy to pass through
- Giving employees greater authority can encourage upwards communication as they're more likely to exchange info with line managers

What are the disadvantages of flat organisational structures?

- Quality of communication suffering - wider spans of control - more emails + fewer meetings
- Horizontal communication more difficult - more people on each level of heirarchy

What are the advantages + disadvantages of tall organisational structures?

- Organisations with many levels of heirarchy often experience problems with passing messages through the levels
- Smaller spans of control = good communication

Xanthe involves her employees in some decision making but she makes all major decisions herself

Recomend whetehr Xanthe should create a taller organisational structure [9 marks']

““