2.5 Organisation structure and employees

Chain of command

The route through which authority is passed down an organisation - from the chief executive and board of directors

Span of control

The number of subordinates reporting directly to a manager

Level of hierarchy

the layers of management and authority

Delegation

Passing authority down the hierarchy to subordinates to do a specific task

Centralised/decentralised structures

Centralised - keeping decision making at the top for control

Decentralised- distributes authority, empowering lower levels

Pros of centralised structures

• easier to implement common policies for the whole business

• Prevents other parts of the business becoming too independent

• Easier to control

• Quicker decision making

Cons of centralised structures

• often more layers

• Local/junior managers are more likely to customer needs but do not have much power

• Lack of authority down the hierarchy reduces motivation

Pros of decentralised structures

• decisions are made closer to the customer - better customer service

• Better able to respond to local circumstances

• Improve staff motivation

• Closer training, developing junior management

Cons of decentralised structures

• harder to ensure consistent practices and policies, inconsistencies

• No strong leadership

• Harder to achieve tight financial controls

• Risk of duplicated efforts

Hierarchal/ Flat structures

• Hierarchal - multiple management layers

• Flat - minimal management layers

Pros of tall/hierarchal structure

• control is at centre and employees understand what responsibilities are

• Paths of communication are clear

• Departments understand their position in relation to other departments

Cons of tall/hierarchical structure

• senior management are distanced from lower subordinates who actually implement decisions

• Vertical communication takes longer (may get distorted)

• Communications between departments is difficult by lack of direct contact between

Pros of flat structure

• increased motivation due to more authority

• Decisions are made faster and by those on a ‘local level’

• Communication is quicker, suffers less distortion

Cons of flat structure

• loss of central control

• Different departments may not be working to the same objective

• Not as much opportunity for promotion - less motivation

What are different functional areas within a business

Human Resources, finance, marketing, production

What is HR responsible for and their main tasks

For the welfare of employees

Tasks: workforce planning, recruitment and selection, training, health and safety, staff welfare, employment issues, industrial relations, disciplinary and grievance procedure, dismissal, redundancy

What is the finance responsible for and tasks included

Responsible for administering and monitoring all financial transactions carried out by the business

Tasks: recording transactions, wages and salaries, credit control, cash flow forecasting and budgets, accounts

Marketing department responsible for and tasks

Responsible for customers and selling products

Tasks: market research, product planning, pricing, sales promotion, advertising, customer service, public relations (strategies that create a positive image/reputation for business among stakeholders, public and media), packaging, distribution

Production responsible for and tasks included

Responsible for making goods and providing services

Tasks: design, purchasing, stock control, maintenance, research and development