Key Topics

1. Organisational StructureThis unit looks at the various ways that businesses organize their human resources

2. Key Topics • The formal organization: job roles • The formal organization: organizational charts • Delegation and span of control • Delayering • Levels of hierarchy • Chain of command

3. Why is there a need for a more formal and organized structure? • Accountability – shows who is held responsible for what job. • Responsibility – shows who is in charge of whom.

4. Formal and Informal Structures Informal Age Experience Qualifications Peer groups Friendship groups ‘Floors’ Formal Line management Manager Supervisor Chain of command Span of control Departments Teams

5. Levels of Hierarchy These are the different job titles/roles given to each layer of an organisation and include terms such as: • Owners • Directors • Managers • Supervisors • Workers etc CEO Board of Directors Management Supervisors and Team Leaders Other Employees

6. Making an organisational chart Task 1: Complete the “roles in the hierarchy” activity, independently then discuss your answers with your neighbour Task 2: Form 2 groups and create an organisational chart for the secondary school using the materials supplied to your group. You have to work fast and beat the other group to it. The buzzer will go in 10 minutes! Task 3: Identify the levels of hierarchy, span of control of all line managers and possible chains of command. Discuss the advantages of such a chart and share with the class.

7. Organisational Charts An organisational chart shows 4 features of a business: • Functional departments within a business e.g. Marketing, Finance, HR, Production • Chain of Command - which people have authority over others • Span of Control – number of staff directly accountable to a single line manager • Channels of Communication – route that messages are communicated within an organisation

8. Advantages of charts • Shows how everyone is linked • Show communication channels • Informs employees as to who is accountable to whom • See your own position in the organisation • Shows links between departments • Gives a sense of belonging

9. Flat Organisational Structure In this structure there are few layers and tend to describe small businesses such as sole traders/partnerships

10. Chief Partner Partners Associates Flat Organizational Structure --Vertical Structure. Characteristic of decentralized companies with relatively few layers of management and relatively wide spans of control Typical Law Firm Relatively wide span of control 5 - 10

11. Tall or Hierarchical Organisational Structure A tall or hierarchical structure is one which has many levels/layers. It tends to describe larger businesses such as Ltds and PLCs

12. General Colonels Majors Captains & Lieutenants Warrant Officers Sergeants Corporals Privates United States Army Tall Organizational Structure -Vertical Characteristic of centralized companies with multiple layers of management and relatively narrow spans of control Relatively narrow span of control. At lower levels, where tasks are similar and simpler, span of control widens. 5 - 12

13. Now create another chart using the US army ranks issued to you. • Compare it with the BISS chart you created earlier with relation to the key terms learnt in this topic.

14. Different method of Departmentalization Departmentalization Process of grouping jobs into logical units Customer Departmentalization  Departmentalization according to types of customers likely to buy a given product Product Departmentalization  Departmentalization according to specific products being created Process Departmentalization  Departmentalization according to production processes used to create a good or service

15. Departmentalization Geographic Departmentalization Departmentalization according to areas served by a business Functional Departmentalization  Departmentalization according to groups’ functions or activities

16. Vice President Marketing Vice President Production Vice President Finance Texas Plant Manager Oregon Plant Manager Florida Plant Manager Consumer Products Industrial Products Consumer Products Industrial Products Consumer Products Industrial Products Multiple Forms of Departmentalization President Functional Departmentalization Geographical Departmentalization Product Departmentalization 6 - 16

17. Delegation • Delegation is when authority (and sometimes responsibility) for a task/activity is handed down from superior to subordinate • You need to understand how delegation can cloud the issue of ‘accountability’ Task Describe a situation where delegation is essential Describe a different situation where delegation would be disastrous

18. Fear of Delegating Many managers actually have trouble delegating tasks to others. This is especially true in small businesses where the owner-manager started out doing everything.

19. Why do some small business managers have trouble delegating effectively? • They feel that employees can never do anything as well as they can. • They fear that something will go wrong if someone else takes over a job. • They lack time for long-range planning because they are bogged down in day-to-day operations. • They sense they will be in the dark about industry trends and competitive products because of the time they devote to day-to-day operations.

20. What can small business managers do to delegate effectively? Admit that they can never go back to running the entire show and that they can in fact prosper—with the help of their employees. They must learn to let go.

21. Four reasons some managers in big companies don’t delegate as much or as well as they should: • They fear that subordinates don’t really know how to do the job • They fear that a subordinate might “show the manager up” in front of others by doing a superb job • They desire to keep as much control as possible over how things are done • They simply lack the ability to effectively delegate to others

22. How can managers in big companies learn to delegate more effectively? All managers should recognize that they can’t do everything themselves. If subordinates can’t do a job, they should be trained so that they can assume more responsibility in the future. Managers should recognize that if a subordinate performs well it also reflects favorably on the manager. A manager who simply doesn’t know how to delegate should seek specialized training in how to divide up and assign tasks to others.

23. Matrix Structure A matrix structure refers to the flexible organisation of employees from different departments temporarily working together on a particular project.

24. Centralized Structure • Vast majority of decision-making is performed by a very small number of people • Cons • Increase pressure/stress for decision makers • Inflexibility • Demotivation • Bottleneck if many decisions to be made • Pro • Rapid decision making • Better control • Better sense of direction

25. Decentralised Structures • Some decision making authority and responsibility is passed onto others in the organisation. • Pro • Input from workforce • Speedier day-to-day decision making • Higher morale • Improved accountability • Encourage teamwork • Cons • Loss of control • Greater chance of mistakes • Greater reliance on effective communication • Duplication of functions

26. Flexible StructuresHenry Mintzberg p221 Mintzberg came up with 6 organisational configurations: • Innovative • Entrepreneurial • Machine • Divisionalised • Professional • Missionary All can be evident in an organisation, but one is likely to dominate.

27. Flexible Structures Henry Mintzberg (cont) Minztberg also argued that: • Different organisational configurations to suit different businesses. • For any structure to work effectively, employees must believe in the organisation's common values (ideology). • A business can only remain successful if its organisational structure is flexible.

28. Flexible Structures Tom Peters Argued that: • Flatter organisational structure are more successful since: • Better channels of communication • Greater opportunities for delegation and empowerment • Greater flexibility in adapting to change • Key features of successful companies(researched 43 highly successful companies) • Motivated workforce • Removal of bureaucracy leading to greater flexibility • Use of project teams (matrix structures) leading to more innovative and creative ideas being generated

29. Changes in Structures Organisations can change their internal structure by: • Moving from a flat to a tall structure • Moving from a tall to a flat structure • Moving to a matrix structure Organisations can change their external structure by: • Changing business structure

30. Outsourcing, Offshoring and Migration Outsourcing – this is when a business recruits another business or group of employees to carry out work for them (example) Offshoring – this is when parts of a business or a group of employees are based overseas (example) Migration of HR – this is similar to offshoring but is when the whole of the HR department are based overseas (example)

31. Delayering Chain of command Centralisation Organisational Chart Bureaucracy Span of control Decentralisation the number of subordinates working under a supervisor the way authority and powers are passed down in a business the execution of tasks that are governed by official administrative and formal rules of an organisation aka “red tape” this exists when a small number of managers/leaders have all of the authority this exists when many workers have a degree of authority refers to the diagrammatic representation of a firm’s formal organisational structure is the process of removing one or more levels in the hierarchy in order to flatten out the organizational structure. Matching Activity