Organization structure

• Organizational structure refers to the levels of management & division of responsibilities within an organization.

• This structure is present in the form of a chart, with several levels of hierarchy

• In a sole trader business, there are no need for an organizational structure. However if the business expands, and new employees & managers are hired, then a organizational chart is needed to outline the responsibilities and duties of all employees, and their link with other workers

• When advertising for a vacancy, a job description is needed so that the people applying for the job can see if they are suitable for the work expected of them. Once hired, this job description tells the employee exactly what their duty & responsibilities are.

Organization charts

• Organizational chart refers to a diagram that outlines the internal management structure

• Hierarchy refers to the levels of management in any organization, from highest to lowest

• A level of hierarchy refers to managers/supervisors/other employees who are given a similar level of responsibility in an organization

Advantages of an organization chart

• It shows how everybody is linked together in the organization, including individual workers, and entire departments

• Employees are aware who they are accountable to, & who they have authority over

• Using this chart they can identify who they should take orders from

• Every individual employee belongs to a department, this gives them a sense of belonging

Chain of command and span of control

There are two types of structures and chain of command:

• Tall & long

• Wide & short

→ Span of control is the number of subordinates working directly under a manager

• The ‘longer’ the chain of command, the ‘taller’ the organizational chart will be, and ‘narrower’ the span of control

• When the chain of command is short, the organization will have ‘wider’ spans of control

• There isn’t a perfect organizational structure

• Many organizations have made their structure ‘wider’ with shorter spans chain of control . This is done by removing a whole level of management. This is called delayering.

Advantages of short chains of command

• Communication is quicker & more accurate

• Top managers are less remote from the lower level of the hierarchy

• Spans of control will be wider, meaning each manager is responsible for more subordinates

  • If superiors have more people to manage, it will encourage them to delegate more, as their department is large, they can’t do all the work themselves.

  • There’ll be less direct control of each worker & will feel more trusted. They’ll be able to make more decisions, and will obtain more job satisfaction.

→ However, wider spans of control, could also translate to managers losing control of what their subordinates are doing, and leaves room for errors.

Roles, responsibilities & inter-relationships between people in organizations

The typical features of the organizational chart of many large businesses is as follows:

• Arranged in large departments, which are responsible for one important task, or important part of the organization’s work. They are all run by a director, who has the final responsibility for the work of everyone in the department.

• Conflict between departments is possible, if the workers feel more loyal to only their department, rather than the whole organization. Therefore, managers working in these departments are called ‘line managers’. They have the authority to give orders to supervisors, other employees & have their decision put into effect in their department. They supervise subordinates in a clear line of authority.

• The organization, might also need a regional division responsible for the organization’s other branches in other countries. They have the advantage of being able to use specialist knowledge regarding the locals’ culture and beliefs, to help the organizations run abroad.

• There are also departments, that don’t have a typical function, and employ specialists in particular areas. The people in these departments are called staff managers, as they provide specialist advice to the BOD & to line managers of the functional departments. They are all well-qualified experts.

→ Directors are senior managers who lead a particular department or a division of business

→ Line managers have direct responsibility for people below them in the hierarchy of an organization

→ Supervisors are junior managers who have a direct control over the employees below them in the organizational structure

→ Staff managers are specialists who provide support , information and assistance to the line managers

The role & function of management

All managers, despite their industry, have to fulfill few functions:

Planning

• Planning for the future of the organizations involves setting aims or targets

These aims/targets will give the organization a sense of direction & purpose. It is a poor manager who does not plan for the future at all.

A manager must also plan for the resources which will be needed

Organizing

• Tasks must be delegated by the manager, as he cannot do everything alone.

• It is the managers’ responsibility to organize people & resources effectively. An organizational chart can help to show who has the authority & responsibility to certain tasks. This helps make sure that specialization occurs.

Coordinating

• This means ‘bringing together’.

• It is a real danger for the functionality of the organization, if the manager fails to bring the employees together.

• A good manager will make sure that all departments in the organization are working together to achieve plans originally set by the manager,

• A project team can be set up to develop & launch the new product. This team would consist of people from all departments.

Commanding

• The task of the management is more concerned with guiding, leading and supervising employees, than commanding.

• Managers have to make sure that all supervisors and workers are keeping to targets and deadlines. They also have the responsibility to make sure all the tasks are being carried out by the people below them in the organization.

Controlling

• Managers must try to measure & evaluate the work of all employees and groups to make sure they are on track according to their targets and aims. If employees fail to stay on track then corrective action must be taken.

• It is the manager’s task to figure out why the targets aren’t being met and he must figure how to correct their problem.

Delegation

• Delegation means giving a subordinate the authority to perform particular tasks

• It is only the authority to perform the task that is being given, not the final responsibility. Therefore, if the subordinate fails, the manager must take full responsibility for it.

Why might a manager not delegate ?

• Some managers may be afraid to delegate tasks as they fear that their subordinate might fail and he wishes to control everything by himself.

• There is also a risk that the subordinate might perform the task better than the manager, this makes managers very insecure

Why is it important to have good managers ?

• They motivate employees

• Give guidance & advice to the employees they manage

• Inspire employees they manage to they achieve more than they thought possible

• Manage resources effectively and keep costs under control

Leadership

→ A good leader in a large business is someone who can inspire & get the best out of the workforce, getting them to work towards a common goal

Styles of leadership

Autocratic leadership

• This is where the manager expects to be in charge, and have his orders followed.

• Managers keep themselves distant from employees & make all decisions by themselves.

• They only tell employees what they need to know in order to perform the job given.

• Communication is only downwards / top-down

Democratic leadership

• This gets other employees involved in the decision-making process

• Future plans and objectives are openly discussed before the final decision is made

• Communication is both downward / top-down and upward / bottom-up

Lasissez-faire leadership

• This style tends to make the broad objectives of the business known to all employees, but the employees are left to make their own decision

• Communication is difficult as clear direction is not given

• Leader has a limited role to play

→ The style of leadership used by a manger can vary depending on the employees being dealt with different and the type of problem

→ Different situations often require a different style of leadership. A good manager will adopt the style of leadership required by each situation

Trade unions

• A trade union is a group of employees who have joined together to ensure their interests are protected

• It is a way of helping employees achieve improvements in these different aspects of their employment

• It is a type of pressure group

• To be a part of it, you have to pay an annual subscription fee