An organisation chart (often called hierarchy) An organisation chart (often called hierarchy) takes into account….takes into account….

The way in which human resources (employees) are organised and The way in which human resources (employees) are organised and

how information is communicatedhow information is communicated

It also shows:It also shows: the CHAIN OF COMMAND – the layers that information goes through the CHAIN OF COMMAND – the layers that information goes through The SPAN OF CONTROL – Number of people any one person is in charge of (subordinates)The SPAN OF CONTROL – Number of people any one person is in charge of (subordinates)

Tall structure with a long chain of command

Problems of tall structures Problems of tall structures with a long chain of commandwith a long chain of command

Information takes a long time to go from the top to the people at the bottom - this creates inefficiency.

Messages can be misunderstood, delayed or changed on their way through the hierarchy.

The people at the bottom can become de-motivated due to their position and lack of responsibility.

Managers at the top lose touch with the feelings of workers at the bottom- this can cause resentment.

Wide structure and a short chain of command

Benefits of flat structures and Benefits of flat structures and short chains of commandshort chains of command

Communication is quicker and more accurate - message has to pass through fewer levels.

Top managers are less remote from those at the bottom of the hierarchy, therefore more in touch with them.

The span of control is wider, this gives subordinates more responsibility and trust and thus increases their job satisfaction.

Organisation charts recapOrganisation charts recapManaging Director

Marketing ManagerProduction Manager

Production Supervisor

Production workers x 5

Marketing Assistant

HR Manager

HR Assistants x 2

Finance Manager

Finance Assistants x 2

Title:Title:Centralisation v DecentralisationCentralisation v Decentralisation

• CentralisationCentralisation is where many decision are is where many decision are made at a central office (eg. Head office) made at a central office (eg. Head office) and then passed on to others in the and then passed on to others in the businessbusiness

• May firms centralise their administration May firms centralise their administration activities activities • Eg. A head office undertaking all the Eg. A head office undertaking all the

marketing for a number of smaller branchesmarketing for a number of smaller branches

Title:Title:Centralisation v DecentralisationCentralisation v Decentralisation

• DecentralisationDecentralisation - decisions can be made - decisions can be made by individual parts of the businessby individual parts of the business

Example: CentralisationExample: Centralisation

Tesco Head Office London decides on Pricing Policy

Passes decisions on

Passes decisions on

Individual stores have no or little control over pricing

Benefits of CentralisationBenefits of Centralisation

Senior management have more controlSenior management have more control

Procedures can be standardised (made Procedures can be standardised (made the same), leading lower coststhe same), leading lower costs

Senior managers make better quality Senior managers make better quality decisions decisions

Communication is improved with fewer Communication is improved with fewer decision makersdecision makers

Benefits of DecentralisationBenefits of Decentralisation

It motivates workers by given them It motivates workers by given them responsibilityresponsibilityIt reduces the stress and workload of It reduces the stress and workload of senior managerssenior managersIt can improve worker job satisfactionIt can improve worker job satisfactionPromotes flexibility and a faster response Promotes flexibility and a faster response to problemsto problemsIndividual local level decisions can be Individual local level decisions can be made quicker made quicker