6.3 organisational design

organisational design

shows how employees and management are organised in a business

factors affecting the organisation structure

• type of business - several locations, skill of labour

• size of business - small businesses have more flat structures

• management and leadership style

• competitive environment

organisational structure determines

• authority and responsibility

• job roles and titles

• the people to whom others are accountable for

• communication

product based structure

• business organises teams around different products

• each team has its own, marketing, operations and finance departments

ADV product based structure

• focused expertise in each products increasing productivity

• faster decisions, more streamlined increasing efficiency

• useful when products are diverse or have a unique characteristic

DIS product based structure

• may lead to duplication of functions or resources

• coordination between teams may become complex

regional based structures

organisation is divided into different geographical locations

ADV of regional based structures

• local adaptation, tailor product and marketing to region

• streamlined, fast decision making increasing efficiency

• more flexible

DIS of regional based structures

• lack of communication between regions

• lack of standardisation between regions

• cost duplications - diseconomies of scale

matrix structure

• employees report to both the project manger and the functional manager

• used by large businesses

ADV of matrix structure

• increase flexibility of organisation

  • adapt faster to market conditions

• higher efficacy, skills are shared

• increased collaboration

DIS of matrix structure

• employees may be unclear as to what their priority is

• employee burnout, decreasing productivity and employee turnover

• slower communication as there’s too many stakeholders

functional structure

• employees are organised on their roles and functions

• creates department / functional areas

• streamlining efficiency and expertise

ADV of functional structure

• specialisation, more efficient

• beneficial in a centralised structure

• skills developed

DIS of functional structure

• departments may not communicate properly

• less flexible, slower to adapt to change

tall structure (narrow)

organisational structure characterised by many levels of hierarchy, which can lead to tighter control but also slower decision-making and communication

ADV of tall (narrow) structures

• more opportunity for promotion

• employees can be closely supervised

• clear lines of responsibility

DIS of tall (narrow) structures

• slow lines of communication

• less opportunity for delegation

flat structure (wide)

organisational structure characterised by few levels of management and a broad span of control, promoting communication and collaboration among employees

ADV of flat (wide) structures

• more opportunity for delegation

• improved communication’

• faster decision making

DIS of flat (wide) structures

• insufficient time dedicated to each employee

• limited room for promotion - demotivating

• overworked managers - lowers productivity

job design

consists of the duties and responsibility of the job

job enrichment

giving employees more challenging and complex duties

empowerment

give employees greater control over their working lives

job enlargment

increases the number of similar duties

centralisation

keep decision making firmly at the top of the hierarchy (senior management)

ADV of centralisation

• economies of scale

• valuable when most employees are low skilled

• fast decision making

• easier to implement policies

DIS of centralisation

• de motivated staff

• more beurocratic

• lack of authority lower down may demotivate employees

decentralised structure

• spread out their decision making to include more junior managers

• empowers local managers to make on-the-spot decisions

ADV of decentralised structure

• junior employees feel more empowered and motivated

• reduces workload from senior managers

• focuses on needs of local customers

DIS of decentralised structure

• decision making is not strategic

• harder to ensure consistent practices

• limits standardisation

value of changing structure

• expansion, more formal structure

• reduce costs and complexity

• employee motivation needs boosting

• customer service improvements

challenges with changing structure

• employee resistance to change

• disruption

• costs

• negative impact on customer service or quality

delegation

the passing down of authority through the organisation

internal influences on delegation

• leadership / management style

• business objectives

• skills of workforce

external influences on delgation

• technological environment

• competitive environment

• economic environment

reasons to recruit staff

• expansion

• entering new markets

• employees leave

• business needs new skills

ADV of part time / flexible work

• cheaper to employ - entitled to less benefits

• more flexible workforce

• wide range of potential recruits

DIS of part time / flexible work

• employees feel less valued - less motivated

• harder to manage and coordinate

internal recruitment

• jobs given to staff already in the business

• involves promotion and reorganisation

ADV of internal recruitment

• cheaper

• employees feel valued and motivated

• faster - less lost productivity

DIS of internal recruitment

• lower range of skill sets

• staff who don’t get promoted could be demotivated

• have to fill new gap after promotion

external recruitment

recruiting through job centres, advertise, head hunting

ADV of external recruitment

• new skills and ideas

• somebody to motivate staff

DIS of external recruitment

• expensive

• long process - lost productivity

redeployment

moving an employee from one job to another

ADV of redeployment

• retains experienced staff

• reduces need for external recruitment

• maintains employee morale and loyalty

• flexible use of workforce

DIS redeployment

• may require retraining costs

• some employees may resist change

• not all skills are transferable

• possible drop in productivity during adjustment

redundancy

when a business dismissed an emplyee they no longer need

ADV redundancy

• reduces wage costs

• removes surplus or underperforming staff

• can improve efficiency

• may allow investment in new technology

DIS redundancy

• lowers staff morale and trust

• creates negative publicity

• leads to loss of experienced workers

• may require costly redundancy payments

training

involves teaching employees the skills needed for their roles to enhance performance and productivity

ADV training

• improves employee skills and efficiency

• increases motivation and job satisfaction

• helps meet changing business needs

• improves quality and reduces errors

DIS training

• can be expensive

• time-consuming, takes employees away from work

• no guarantee of improved performance

• trained employees may leave for competitors

HR flow

refers to the process of managing the movement of employees within an organisation, including hiring, onboarding, promotions, and exits

how does managing HR flow help meet HR objectives

ensures optimal staffing, enhances employee retention, and aligns workforce capabilities with organisational goals

authority

• the power to make decisions and enforce compliance within an organisation

• enabling efficient management and direction of resources

span of control

the number of employees a manager supervises directly, impacting management effectiveness and decision-making

hierarchy

a system of organisation that establishes a clear chain of command and authority levels within an organization

changes in employment patterns

• increase in part time working

• aging population

• greater emphasis on flexible working hours

• technology allows employees to communicate more effectively

• people change job more often

how to avoid redundancies

• freeze on recruitment

• pay cuts or overtime bans to reduce wage costs

• redeployment

why do businesses need training

• support new employees

• improve productivity

• support high standards of customer service

• introduction of new technologies

• address changes in legislation

why do businesses neglect training

• fear employees will be poached by competitors

• minimise short term costs

• investment isn’t justified

• training takes time - lots output and productivity

link between training and motivation

• employees feel more loyal to a firm

• shows the business is taking interest in workers

• provide employees with greater promotional opportunities

• enables employees to achieve more at work