Key Elements of Organisational Structure

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Other businesses tend to have a more formal organisational structure.

Organisational structure 

This refers to the relationship between different people and functions in an organisation.

Vertically, from shop-floor workers through supervisors and managers to directors.  

Horizontally, between different functions and people at the same level.

Organisation chart: 

A diagram showing the lines of authority and layers of hierarchy in an organisation.

An organisational chart of Thorpe Park:

Organisational hierarchy
The vertical division of authority and accountability in an organisation.

Levels of hierarchy: 

The number of different supervisory and management levels.

Span of control: 

The number of subordinates a manager is required to supervise directly.

If a manager has many subordinates answerable to him or her, the span of control is said to be wide.

If a manager has relatively few subordinates answerable to him or her, the span of control is said to be narrow.

Normally, the greater the degree of similarity in what a group of workers do, the wider the span of control can be.

Chain of command: 

The chain of command is the formal line of authority, communication, and responsibility within an organisation.

Traditionally, organisations tended to have very tall hierarchical structures, i.e. many layers of management, each with a narrow span of control.

More recently, hierarchies have become flatter, meaning that the number of layers of management has been reduced and each manager has a wider span of control.

Centralised / decentralised.

In a centralised organisation power and authority come from head office.

All significant decisions are made from the centre.

Click on the picture:

Advantages of a centralised approach:

Consistency.

Consumers like the fact that they know what the product or service will be like.



Buying can be centralised, saving money through economies of scale.

Disadvantages of a centralised approach:

Managers at head office may not be aware of local trading conditions.

A lack of decision making may demotivate branch managers.

Decentralisation involves delegation.

Delegation 

The process of passing authority down the hierarchy from a manager to a subordinate.

Subordinates must be appropriately skilled, trained and informed about the particular task they will be responsible for.

Advantages of Delegation:

It frees up time for managers to concentrate on strategic tasks.

It empowers and motivates workers.

Subordinates might have a better knowledge of local conditions and therefore might make more informed decisions.

Disadvantages of Delegation:

The actions in one branch could damage the reputation of the brand.

Some staff may not be able to handle the responsibility.

In crisis situations it may not be appropriate.

Some staff may abuse the responsibility that they have been given.

Communication:

Communication is the process of exchanging information or ideas between two or more individuals or groups.

Internal communication: exchange of information that takes place within an organisation (e.g. at departmental meetings, in team briefing sessions and in memos to staff).

External communication: exchange of information that takes place with individuals, groups and organisations outside the business (e.g. via advertising material, telephone calls to suppliers and letters to customers).

Two-way communication ensures that any communication has been fully understood and is therefore more effective than one-way communication. 

Effective two-way communication is a vital element of democratic management, effective delegation, empowerment and teamwork.

More details on this topic here.

Socrative quiz:

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Approaches to Staffing

Staff as an asset v's staff as a cost.

Staff as an asset

Staff will be valued because employers recognise that their efforts will make the organisation perform more effectively.

This might include:

Acceptable remuneration.

Reasonable holidays and pensions.

A safe and comfortable working environment.

Training.

Job security.

Recognition.

Clear and effective leadership.

Opportunities for promotion.

Opportunities to solve problems, work in teams and be creative.

Airbnb:

Click on the headline:

Staff as a cost

Click on the picture for the full story.

What might treating staff as a cost mean?

Paying the minimum wage.

Using zero hours contracts. Details here.

The 'gig economy':

More details here.

Minimal investment in training.

Having minimal 'employee rights'.

Penalties for rule breaking.

Relying on 'self employed' status.

Click on the picture:

Building a 'flexible workforce'

This would involve:

1. Multi-skilling.

The training of a single employee in multiple skill-sets.

2. Part-time and temporary staff.

A part-time worker is someone who works fewer hours than a full-time worker.

A temporary worker is where an employee is expected to remain in a position only for a certain period of time.

3. Flexible hours and home working.

Flexible working is a way of working that suits an employee’s needs, for example having flexible start and finish times, or working from home.

4. Outsourcing.

To obtain (goods or a service) by contract from an outside supplier.

Advantages of a flexible workforce:

Allows a business to expand and contract quickly depending on demand.

Cost efficient a.k.a. cost saving.

Disadvantages:

Peripheral workers may have less loyalty to the organisation.

Outsourced work may be poor quality.

Problems with poor motivation.

Recent news:

Distinction between dismissal and redundancy:

Redundancy occurs when a job disappears.

Dismissal occurs because of misconduct or the inability to do a job.

Unfair dismissal is dealt with by an Employment tribunal.

Employer / employee relations.

Tensions could exist around these issues:

Pay

The introduction of new technology

Flexible working

Work conditions

In some workplaces there is an 'individual approach' to resolving issues.

This involves an individual employee discussing issues such as pay with a manager or director.

In other workplaces there is a 'collective approach' involving 'collective bargaining'.

This is negotiation between employers and employee representatives such as from a trade union.

A failure to reach agreement can lead to industrial action.

Recruitment, Selection and Training

Definition: Recruitment is the process of analysing the job requirements and then finding the prospective candidates who are then encouraged to apply for the job. 

When will a business need new staff?

If the business is expanding.

If people need to be replaced because they have left.

People who have been promoted need to be replaced.

Temporary cover.

Internal recruitment is recruitment from within the business.

A candidate may be approached and offered the job or the vacancy may be advertised internally.

Benefits of internal recruitment:

Cheaper than advertising externally.

The abilities of the candidates will have been proven.

Promotion or opportunities for promotion can be seen as motivating.

The candidates will be familiar with the culture of the organisation (the way things are done).

External recruitment is when someone is appointed from outside the business.

Advantages:

Someone from outside can bring new and different ideas.

A wider range of candidates will be available.

Disadvantages:

The true abilities and qualities of the candidates may not be apparent.

The costs of advertising.

Time spent interviewing.

Time taken for the successful candidate to 'get up to speed' in the organisation.

How to recruit external candidates:

Advertising in newspapers or specialist websites.

Jobcentre plus.

Click on the picture:

Commercial recruitment agencies.

Click on the picture:

The selection process:

Definition: the actions of carefully choosing someone as being the best or most suitable candidate for a job vacancy.

Possible selection techniques:

1. Interviews

'The handshake'

Preparing for an interview. Details here.

Things not to say in a job interview:

2. Testing and profiling.

IT skills may be tested.

Psychometric profiling examines personality and attitudes.

Some companies use IQ tests.

3. Assessment centres

Real life role plays and simulations, often over a number of days.



Costs of recruitment and selection:

The process (£2000?)

The opportunity cost of lost management time.

Lost productivity until the vacancy is filled.

Time before new staff member is fully productive.

Employing People

Types of employees used in small businesses:

Temporary staff: Sometimes called contract workers. What advantages of hiring temporary staff are evident from this video?

Permanent full time staff: tend to be motivated, knowledgeable and productive but they come as a significant expense to a start up business.

Also, employing people has many legal implications for an entrepreneur. More details here.

Can you think of the advantages to a small business start up of employing part time staff.

Consultants and advisors:
An advisor says "What to do". A consultant apart from saying "What to do", also says "How to do it".



But...
A small business start up needs to consider the cost of an advisor or consultant.
Also, they would have to consider what expertise they could bring to the business.

Employment legislation:

Employers must not discriminate against employees on what grounds?

Training

The purpose of training is to help employees to develop existing skills or gain new ones.

Types of training:

Induction training

Induction training:

On the job training

Receiving instruction while still carrying out their job.

May involve mentoring or training.




Off the job training

May be in a training room within the business or at a university, college or private training company.

The business loses productivity but the participants can concentrate fully on the training.

Overall: 'Having the right person with the right skills in the right job at the right time' is the aim of successful recruitment, selection and training.

Employee Roles in the Organisational Hierarchy

Directors:

Directors are appointed to run the business in the interests of the owners.

They meet as the Board of Directors.

The Managing Director (now more commonly called the CEO) will have overall authority in running the business.

Other directors usually have charge of a functional area within the business such as Finance or Human Resources.

Managers:

The sales manager would report to the Marketing Director.

There may be departmental managers.

Regional managers are common in retail as are branch managers.

Team leaders:

What role do you think a team leader would play?

Supervisors:

Supervisors monitor work in their designated area.

Professionals:

Including accountants, architects and lawyers.

Operatives:
Skilled workers involved in the production process or providing a service.

General staff:

Functional v's Matrix Management

Functional management

Traditionally larger businesses have been organised into departments or 'functions'.

What functions may there be in this head office building?

This video shows a traditional management structure by department / function:

Advantages and disadvantages of functional management:

More on Functional management here.

Matrix management

Managing cross functional, cross business groups and other forms of working that cross the traditional functional structure.

Employees are put into project teams with individuals from other departments to find a solution to a problem or they are working on an innovative new product.

Potential benefits:

1. Projects may be completed more quickly as different parts of the business are working together.

2. It enriches the experience of every team member. They learn new things, meet new people. It is likely to be motivating.

Potential problems:

1. Matrix team members will have two bosses. The original boss from the part of the firm where the employee normally works and the team boss.

2. Conflicting demands from these two bosses or between team members.

More on Matrix management here.