Business- Unit 4

Define Organisational Structure

Define Organisational Structure

Organisational Structure- Way a business arranges itself to carry out activities

Why do businesses have organisational structures

Employees know their duties
Person or people they have to report to
Other employees that they are responsible for

Usual chain of command in a business

CEOs
Owners/Directors
Managers
Supervisors/Team Leaders
Shop floor (workers and operatives)

Different job roles and their responsibilities

- Directors- Establish the business’s goals, targets and long-term plans
- Managers- Work to achieve targets set by directors. Responsible for a function (finance, marketing etc.) Use employees and other resources in the best way
- Supervisors- Help managers by passing instructions or reporting problems. Take simple decisions
- Shop floor- Carry out business’s basic activities such as serving customers or basic office duties

Define Line manager, authority and span of control

Line manager- An employee’s immediate superior

Authority- Power to control others and make decisions

Span of control- Number of employees another employee has direct authority over

Define Delayering and its consequences

Delayering- Removal of one or more levels of hierarchy from the organisational structure

Consequences:
+ Reduces costs as less employees paid
- Junior employees may have to take on duties that their line managers previously did (less experience)
- Senior employees will have a vast span of control

Features of a Hierarchical structure and the benefits and disadvantages

Features:
- Many layers of management
- Long chain of command
- Narrow span of control

Advantages:
+ Employee motivation via promotion
+ Clear accountability

Disadvantages:
- Slower communication
- Higher costs

Features of a Flat structure and the benefits and disadvantages

Features:
- Few layers of management
- Short chain of command
- Wide span of control

Advantages:
+ Faster communication
+ Engagement
+ Save money on salaries

Disadvantages:
- Reduced motivation (no promotion)
- Little or no progression
- Power struggles

Features of a Matrix structure and the benefits and disadvantages

Features:
- Traditional departments
- Project teams across functional areas
- Temporary or Permanent

Advantages:
+ Increased morale
+ Effective communication
+ Utilises skill within organisation

Disadvantages:
- Takes time to gel as a team
- Split across 2 managers or departments

Define Centralisation and its features

Centralisation- When a small number of senior managers take all the important decisions

- Senior managers have full control and make all the decisions and no ideas come from other staff
- Leads to strong leadership and quick decisions during crisis
- Decisions taken for benefit of the whole business

Define Decentralisation and its features

Decentralisation- When employees working in all areas of the business help to take decisions

- Gives power to workers and junior managers and motivates them (need training to use this power)
- Local managers may have more knowledge than seniors in head office
- Junior managers given experience of responsibility to prepare them for senior roles
- Bad decisions harm whole business
- May be expensive to put decisions in place in different divisions

Why would a business need to recruit somebody?

Need another skill
Increased demand
Increased production
Diversification
Employees leaving

Define Internal recruitment and External recruitment

Internal recruitment- Takes place when when a vacancy is filled from within the existing workforce

External recruitment- Filling a job vacancy with any suitable person not already employed by the business

Advantages and disadvantages of internal recruitment

Advantages:
+ Already knows the business well
+ Already part of the team
+ Motivating
+ Cheaper as you’re adding onto an existing salary

Disadvantages:
- Training costs
- Unsure on quality of worker
- Employee rivalry

Advantages and disadvantages of external recruitment

Advantages:
+ Writer pool of applicants
+ Fresh ideas
+ Can access people who already have the correct skills

Disadvantages:
- More expensive to advertise
- Induction training needed
- Could be demotivating for internal employees
- Paying new salary

Define Job description, Job analysis and personal specification

Job description- Details out all the duties and tasks you’ll do on the job

Job analysis- Collection and interpretation of data about the job

Personal specification- Details out the qualifications and skills required by the employee

What does a job advertisement typically contain?

- Title of the job and information about the business
- Location of the job
- Working hours expected and holidays offered
- Pay rates and other financial benefits
- How to apply and closing dates for applications
- Advertised on newspapers, magazines or on the internet

How does a business shortlist the best applicants?

- Interviews- Face to face meetings where questions are asked to see if you’re eligible
- Psychometric tests- Show the personality of the people; if they’re mentally ready
- Assessment centres- candidate likely to be involved in role-play simulating the job, practical tests and the 2 mentioned

What are the benefits of effective recruitment?

High levels of productivity- employees produce large quantities of goods and services over period of time

High quality products/CS- Will meet needs of customers, improving customer satisfaction and loyalty

Employee retention- Best and most suitable person appointed so employee more likely to be satisfied with job, increasing productivity

Consequences of poor rates of employee retention

Higher costs- cost of replacing employees can be up to £30,000. Costly due to paying for training and advertising etc.

Reductions in quality and CS- New workers need time to settle in so quality of work relatively low. Potentially unhappy customers

Reduced rates of productivity- New employees less productive until familiar with business. Takes around 6 months so business costs maybe higher in the meantime

What is a contract of employment?

Legal document between employer and employee, setting out conditions of employment eg. rates of pay, working hours, duties
Must be given within 2 months of employment

What are the benefits of working full time (for employer and employee)?

Employer’s benefits:
-Better communication and speak directly to employee in a full working week
-Employees more skilled as they work more hours in a week, improving performance

Employee’s benefits:
-Paid for more hours in a week, improving living standards
-More likely to be promoted and can attend more training courses for more experience

What are the benefits of working part time (for employer and employee)?

Employers benefits:
-Can help businesses cope with busy periods during the week. Good customer service
-Need employees with specialist skills but not need them throughout the week. Only required 1 or 2 days a week etc.

Employee’s benefits:
-Can fit in work with other commitments. Allows sufficient time to do other things
-Older employees may not want full time job but may not want to retire

What are the benefits of training employees

Improvements in productivity- teaches them how to work properly, more attractive to potential employees (more skills)

Motivated employees- Feel more valued, Job enrichment increases enjoyment at work

Employee retention- Do not pay recruitment costs, learn more skills for promotion

High quality goods/services- Reduces risk of faulty products, less likely to make errors

All of these make a business more competitive

Difference between on-the-job training and off-the-job training

On-the-job training is given in the workplace usually through work shadowing or computer-based training

Off-the-job happens outside of the workplace such as a college course, qualifications or training companies

Advantages and disadvantages of on the job training

+ Relatively cheap way of training. Benefits from limited spending but improvements in productivity
+ Targeted to exact needs of the business. Recieve precise knowledge and skills
+ Use of technology enables business to use digital learning which meets the needs at any time

- Unlikely to bring new ideas into business unless outside trainer used. No dramatic improvements in performance
- More employees unavailable to work in the business. Lose service of those delivering training

Advantages and disadvantages of off the job training

+ Helps bring new ideas and approaches into a business. Helps in markets with rapid change eg. tech
+ Used to motivate employees as they feel more valued as money spent on them. Substantial improvements in employee’s performance

- Expensive, Businesses who make small profit can’t afford it
- Run a risk of employees leaving for new job once programme complete. May spend heavily to receive little or no benefit

What are the factors affecting decisions on types of training

- Business’s financial position
- Type of training required
- Skills and experience of business workplace

What are the different levels to Moslow’s Pyramid/Hierarchy of needs

1. Physiological needs- food, water, shelter, rest
2. Safety needs- security, stability, no fear/harm
3. Social and belonging needs- Friendships
4. Self-esteem needs- Respect, status, recognition
5. Self actualisation- achieving full potential, creativity

Can’t reach next level until you finish the level below

How does Maslow’s pyramid help motivate employees?

If employees given the opportunity to satisfy next level, they’ll be motivated by this.
Level of effort and commitment to the job will increase so they can feel more valued

What are the different types of motivation?

Financial motivation (promotion, salary increases, bonuses etc.)

Non-financial motivation (praise, breaks, fringe benefits eg. insurances)

What is a management style and the two different types?

Styles of management- approach used by senior employees to make most effective use of employees under their control

Managers who retain authority- make most/all decisions, may “sell” decisions to junior employees

Managers who allow more freedom- Junior employees make or contribute to decisions within limits. Others have less freedom but allow suggestions and ideas from junior employees