Introduction to Business Organisations

Organisational Structure

What does organisational structure show?

Names of the main departments Employee job titles Management structure Relationship of staff

Administration Manager

Administration Supervisor

WP Operator Filing AssistantReceptionist

KEY TERMS

Span of Control The number of employees each

person (manager) is directly responsible for

Chain of Command The passing of information or

instructions from one level to another

Relationships

LATERAL RELATIONSHIP Link between staff on the same level Staff who report to the same Line

Manager

LINE RELATIONSHIP Link between Line Manager and staff

immediately below them

Managing Director

Finance Manager Sales Manager Purchasing Manager

Sales Rep Buyer BuyerClerk

Line Relationship

Lateral Relationship

Benefits of an organisation chart to:

CUSTOMER/VISITORS show size of the organisation what activities are carried out who to contact within the organisationEMPLOYEES show size and structure of the organisation reporting structure lines of communication/span of control relationships between staff promotion opportunities

Reporting Structure

ACCOUNTABILITY – an employee must be able to explain their action to their manager

AUTHORITY – the power that an employee has to instruct others and make decisions

RESPONSIBILITY – to take charge of a task, situation or person

TYPE OF ORGANISATION STRUCTURE TALL FLAT

5 levels 3 levels

STRUCTURE - FEATURES

TALL Many levels of management posts Narrow span of control Number of specialised jobs

FLAT Few levels of management posts Wide span of control

STRUCTURE - ADVANTAGES

TALL Easier to supervise

staff More promotion

opportunities Better worker/manager

relationship Staff will have a clear

idea of the scope of their duties

FLAT Staff are given more

responsibility – more motivating

Better communication More likely to be

involved in decision-making

Team working may be developed

STRUCTURE -DISADVANTAGES

TALL Employees may not feel

involved in decision-making

complicated communication channels

Many levels of high paid jobs

Lack of opportunity to show initiatives

FLAT Workloads likely to

increase Less chance of

promotion Wider span of

control Staff feel isolated

from management

RESTRUCTURING

How organisations change

GROWTH

An increase in the amount or range of goods sold

Employment of additional staff Additional departments added or

expansion of existing departments Increase in size and number of

premises

DOWNSIZING

Number of staff reduced without reducing output

Staff are made redundant not sacked

Departments can be reduced in size or removed Main reasons for downsizing is to

save money

DELAYERING

Removing a whole level of management

Should lead to management cost savings

OUTSOURCING

Buying in services from another organisation

Reduces the cost of employing specialist staff

Allows staff to focus on core activities Examples – security, office cleaning,

reprographic (brochures)

RESTRUCTURING

BENEFITS Improved

communication Organisation

becomes more efficient

Can reduce staff costs

More delegation opportunities

PROBLEMS Staff morale can be

low Resistance to change Costs Redundancies Confusion after

restructure

TEAM WORKING

WHY Solve problems Improve quality of product/service Wide range of skills and knowledge Improve inter-department

relationships

What makes a good team?

Everyone is working towards the same goal Everyone is committed to achieving the goal Members help each other Skills, experience and qualities of each

person is used Everyone is responsible for success/failure There is team planning and regular

discussion