ORGANISATIONAL STRUCTURE

WHY IS ORGANISATION IMPORTANT? as a business grows and more and more

people enter the firm, a formal organisation structure will be necessary to ensure that:­ everyone knows their role­ all tasks are co-ordinated­ everyone knows who they are accountable

to and responsible for

POOR ORGANISATION can lead to:­ tasks being missed out­ tasks being repeated- poor communication­ people not know their jobs­ frustration within the workforce­ poor quality goods causing a fall in sales

TYPES OF ORGANISATION Most firms organise themselves into

departments/functions and then levels within the department. This is referred to as a pyramid style and it can be either a tall pyramid or a flat pyramid.

TYPES OF ORGANISATIONSFlat Pyramid

- fewer levels of hierarchy- wide spans of control- short chain of command- common in informal firms

TYPES OF ORGANISATIONSTall Pyramid

- several levels of hierarchy- long chain of command- narrow spans of control- typical in a formal firm

SPAN OF CONTROL

A wide span is where a manager has many workers directly below them

A narrow span is where a manager has few workers directly below them

THE IDEAL SPAN OF CONTROLThere isn’t one!

It will depend upon:

- the job involved- the skills of the workers- the skill of the managers- the amount of money the firm has

PROBLEMS WHEN THESPAN OF CONTROL IS TOO WIDE

workers are not given enough attention

workers may lack the necessary guidance

poor relationship between manager and worker

PROBLEMS WHEN THESPAN OF CONTROL IS TOO NARROW

workers feel stifled

expensive as more managers are employed

conflict may exist due to over-supervision

RECAP Do the Test Yourself, Q1 and Q3

Recap the following:

Organisation ChartHierarchyLine ManagerSubordinateChain of CommandSpan of ControlDelegation

HOW CAN A BUSINESS ELIMINATE THE PROBLEMS OF A LONG CHAIN OF COMMAND?

Removing some of the levels of management, or layers.

This is called Delayering

What effect may this have within the business? How will people feel?

DEFINITIONS Delayering.

This can lead to more group, team or cell work. There may be a team leader nominated, but all subordinates under them will be at the same level in the hierarchy. This could lead to the lack of need for supervisors or quality control inspectors, if the workers are responsible for their own cell.

HOW WILL THIS PROCESS HELP THE BUSINESS? Empowerment of staff

Downsizing the workforce

What will this do to the motivation of the staff?

VALENTINES TASK

CENTRALISATION The major decisions of a centralised

company are made at the Head Office. The decisions are then sent out to the

branches of the business. Standardised systems and procedures

are in place to reduce costs

Problems include: slow decision making process, slow to respond to the demands of the market and demotivated staff.

DECENTRALISED The power to make decisions is

devolved, or given to the smaller parts of the business.

Potential Advantages: It can led to quick decisions being

made, empowered and motivated staff.

Potential Disadvantages: It can expose the business to

coordination problems and increased costs

TEST YOURSELF Q2