Organisation and management

Organisational structure- the formal, internal framework of a business that shows

how it is managed and organised.
Functional departments- the main activities of businesses: finance, marketing,
operations, human resources and research and development.

Organisational chart- shows the structure of the company and its departments.

Advantages of an organisational chart

i. it shows how everybody is linked together in the organisation. Employees are
aware of which communication channel is used to reach them with news and
instructions
ii. every individual can see their own position in the organisation. They can identify
who they are accountable to and who they have authority over. Employees can
see who they take orders from
iii. it shows the links and relationship between different departments within the
organisation
iv. everyone is in a department and this gives them a sense of belonging

Simple hierarchical structures

- the main features of this hierarchical structure are;
i. levels of hierarchy
ii. chain of command
iii. span of control
i. Levels of hierarchy
- describes the different levels in an organisational structure.
- top management will be at the top level while factory workers will be at the bottom
- there are more and more people as you move down the hierarchy from top
management up to floor workers.
- as you move down there is a wide span of control than it is at the top
- people who are on the same level of the organisational structure have the same status
or level of authority

Hierarchy- the number of levels in an organisational structure

Chain of command
- the route through which authority and power is passed down in an organisation
- as business grows it will employ more employees and it wont be possible for the
person at the top to have effective control of all employees
- day to day control of employees becomes the responsibility of managers lower down
the hierarchy

 business A has a tall structure, a long chain of command and a narrower span of
control
 business B has a wide or flat structure, a short chain of command and wider span
of control
Advantage of short chains of command
i. communication is quicker and more accurate. Each message has fewer levels to
pass through before reaching the intended person
ii. top managers are less remote from the lower of the hierarchy
iii. span of control will be wider. Each manager is responsible for more subordinates.
If managers have more people to manage, it means it will encourage managers to
delegate more

Subordinate- an employee who is below another employee in the organisation’s

hierarchy

Span of control- the number of subordinates reporting to each supervisor or manager

- each manager is in charge of a number of employees or subordinates
- a span of control can be wide or narrow

Factors that affect the size of the span of control

i. the difficulty of tasks- if the work that subordinates do is simple and repetitive,
then a wide span of control can be used. The more complex the task subordinates do,
the more likely that they will use a narrow span of control.
ii. the experience and skills of employees- highly skilled employees may require
less control than less skilled and experienced employees. when employees are skilled
the span of control will be wide and less experienced ones use a narrow span of
control where there will be more managers and supervisors
iii. the size of the business- large business afford to employ more managers than
small businesses. The span of control of individual managers in large businesses is
often narrower than that for managers in small businesses
iv. levels of hierarchy- managers in tall organisation structures will usually have
narrower spans of control than managers in flat organisation structures
v. management style- some businesses use a management style that has greater
control over the workforce that others. In this business, managers have a narrow span
of control
 Wide span of control Narrow span of control
Advantages Disadvantages Advantages Disadvantages
- less expensive as fewer - fewer - effective - communication and
managers/supervisors are managers/supervisors communication is decision making are
needed reduces promotion easier often slower
opportunities
- less supervision improves - less control over - better control over - more expensive
employees motivation subordinates work employees and their because more managers
work are needed
- faster communication and - effective - more - more supervision may
decision-making communication may be managers/supervisors reduce employee
difficult increases promotion motivation
opportunities

Tall structure or Flat structure

- organisational structures may be tall or flat depending on the number of levels in the
hierarchy
Tall structure characteristics
- tall organisations have many levels of hierarchy and they have several layers of
management, therefore more managers means there is a narrow span of control for
each manager
-the chain of command is long
- communication and decision making is often slow because they pass through several
layers
Flat structure characteristics
- flat organisations have few levels of hierarchy
- the chain of command is very short
- communication and decision making are much quicker in flat structure because they
are very few levels to pass through
- the are few managers in a flat structure so the span of control is wide

Delayering- reducing the size of the hierarchy by removing one or more levels- most
often middle management
 - this is mostly done by tall structure organisations to reduce its level of hierarchy to
minimise costs through cutting out middle management such as finance and
marketing managers
Advantages Disadvantages
- reduces costs - increased workload for managers who remain
could mean that tasks are not completed on time or
that the quality of decision making is not as good
- reduces the chain of command so communication - business may have to make redundancy payments
and decision making should be quicker and more to managers who lose their jobs. this is a once-off
effective increase in costs
- wider span of control increases the opportunity for - employees who remain might fear redundancy and
delegation and this helps develop employees skills this reduces their job security
and could motivate them since they feel that they are
trusted
- senior managers are in closer touch with what is - wider span of control after delayering might reduce
happening in the business the effective management of subordinates

Centralised or Decentralised
- who makes decisions is important in a business also. Whether senior managers at the
centre of the organisation make all the decisions or is some of this authority for
decision making delegated to lower level managers
1. Centralised organisations
-is one where all important decisions making power is held at head office, or the
centre
- decisions are made by top level managers and then there are passed down to lower
levels of the hierarchy through the chain of command
- international franchise companies such as Pizza Hut use this approach so to make
sure they control what each franchised outlet offers to customers. This is done to
ensure that the same level of quality service is provided at all outlets
2. Decentralised organisations
- is one where the decision- making powers are passed down the organisation to lower
levels
 - authority to make some decisions id delegated to lower levels in the hierarchy or in
businesses with several production facilities or operating in different locations to the
managers within those areas

Centralised organisation Decentralised organisation

Advantages Disadvantages Advantages Disadvantages
- decision making is often - slower communication - decisions are made - decisions taken might
quicker based on local needs not be in the interests of
the whole business
- decision are taken for the - unable to respond - can be used to train - poor decisions might
benefit of the whole business quickly to changes in junior managers be made because
local markets managers lack skills and
experience
- greater use of specialist - may reduce employee - delegation helps to
staff improves decision motivation improve employee
making motivation

Roles, responsibilities and inter-relationships

Annual General Meeting- a meeting for shareholders that limited companies must
hold once every year.

Directors and the Chief executive officer

Directors
- are appointed or elected by shareholders of a company at the Annual General
Meeting and have the responsibilities
i. setting strategy- the long-term plans for the business
ii. making sure that the resources are available to achieve objectives
iii. reviewing the performance of managers
iv. protecting the interests of shareholders and other stakeholders
v. providing leadership to ensure the success of the business

- there are the most senior level of management in any limited company, some
directors might have managerial role e.g marketing directors
Chief executive officer [CEO]
- has the overall responsibility for the day to day management of the business and
implementing the decisions of the Board of Directors.

Manager- is an individual who is in charge of a certain are or department of a

business
- they are responsible for running the day to day running of departments e.g human
resources, finance, operations managers

Responsibilities of all departmental managers are / roles of management

i. making sure that the decisions of the directors are carried out
ii. delegating tasks to members of their department
iii. taking the decisions needed to achieve departmental targets
iv. motivating employees in the department so that they achieve departmental goals
v. solving day to day problems that may arise within the department
vi. setting out objectives

Supervisors an other employees

Supervisors- is an individual who checks and controls the work of subordinates
- in large departments where there are many employees, supervisors may be
responsible for giving out tasks to the employees, making sure they carry out the task
and checking the quality of the work on behalf of the departmental managers.

Functions of management
1. Planning
- looking at where the business is now and where it wants to be in the future. Once
this is set managers then set clear objectives and decide on the actions needed for
these to be achieved. e.g Compal might plan to increase sales of ts fruit juice range by
50% in three years and to achieve this objective management should decide on
increasing their advertising budget

2. Organising
- preparing and organising resources needed to achieve the planned goals and
objectives
- managers will decide the best way to completing tasks at the lowest possible cost to
the business. e.g people organised to do or specialise in doing a certain task towards
achieving objectives
3. Commanding
- involves the control and supervision of subordinates and making sure that all
supervisors and employees are keeping to targets and deadlines
- managers should provide instructions and guidance
4. Coordinating
- this is making sure that all of the different parts of the business are working together
towards achieving the business goals corporate objectives
5. Controlling
- this involves checking to make sure that the plan is working. Will it be completed on
time and to the required standard, if not then action must be taken to correct it

However, managers when performing their functions they need to;

i. understand the people who work with them
ii. set a good example
iii. treat subordinates fairly
iv. delegate tasks
v. communicate effectively

Delegation- is passing authority to make decisions complete tasks down through the
organisational hierarchy to a subordinate
- it is impossible for managers to complete all tasks by themselves because of time
and may not have the necessary skills
- however, some managers don’t want to delegate they believe that ‘if you want it
done right, you have to do it yourself’

Advantages of delegation to manager

- managers have time to focus on complex tasks of greater importance
- mistakes are less likely to be made since managers offload some of the work to their
subordinates
- targets set by managers are likely to be obtained faster
- reduces work over load for managers
Advantages of delegation to subordinates
- employees can be motivated after delegation as they feel trusted and valued
- delegated employees can improve or develop their skills after being delegated
- the work becomes more interesting and rewarding
- helps train employees for promotional prospects

Leadership Styles
- there are three main types of leadership styles;
i. Autocratic leadership style
ii. Democratic leadership style
iii. Laissez-faire leadership style

Autocratic leadership style- a leadership style where the leader makes all the
decisions
- the leader makes all the decisions without discussion with others
- instruction are passed down to employees and the leader will check to make sure
that these have been carried out and the tasks have been completed
- the leader is more focused in the completion of a task than in the welfare and
motivation of employees
- it makes faster decisions and is best suited for situations which require immediate
action or response e.g in health and safety situations

Democratic leadership style- a leadership style where employees take part in

decision making
- leader will discuss with employees before taking any decisions and this improves
quality of final decisions
- leader is likely to delegate authority for decision making to subordinates
- this leadership style requires trained and skilled staff to be able to carryout the tasks
and make decisions

Laissez-faire leadership style- a leadership style where most of the decisions are left
to the employees
- ‘Laissez-faire means let them do it’
 - it allows employs to make decisions and carry out tasks with very little or no input
from the leader, but the leader can only provide a coordinating and supporting role for
the team members
- this approach is most suitable for employees involved in creative tasks such as
research and development of new products or designing a new advertisement

Features of the main leadership styles

Feature Autocratic Democratic Laissez-faire
Objectives - Set by the leader without -Set by leader, but employees - usually set by leader with
any input from employees are often consulted or without any input from
employees
Decision- making -Taken by the leader -Employees are encouraged - delegated to employees
without any input from to take part, but the leader who take the decisions
employees still takes the final decision
Communication - One-way, from the leader - Two way and feedback is - communication is most
to employees. No encouraged often upwards from
opportunity for feedback subordinates to the leader.
Little feedback from the
manager
Supervision of - Closely supervised by the -The leader is available to - no supervision by the
employees leader solve problems,but otherwise leader
close supervision is not
needed
Availability of -Employees are given very - employees are given - employees are provided
information limited information about information which allows all the information they
the business them to fully participate in need to take decisions
the business
Motivation levels - Likely to be low - likely to be high - could be high or low
depending on the task and
skills of the employees
Factors considered when choosing leadership style
i. the skills and experience of the workforce- high skills we use democratic or
laissez-faire and low skills we use autocratic
ii. the time available to make decisions- long time we use democratic and for short
time we use autocratic
iii. the personality of the manager- some are naturally autocratic and some are
naturally democratic
iv. the task to be completed- creative and innovative task we use laissez-faire and
for complex task we use autocratic and simple task we use democratic

Trade unions- is an organisation of employees aimed at improving pay and working

conditions and providing other services such as legal advice for members
Collective bargaining- is the negotiation between trade unions and employers

Roles of trade unions

i. negotiating with employers to improve pay and working conditions such as hours
of work, health and safety at work, salary increments
ii. resolving conflicts- acting as a mediator for solving disputes between employer
and employee and negotiating on behalf of its members
iii. providing legal support and advice- provide its members with advice about their
legal rights as employees e.g taking legal action against unfair dismissal
iv. providing services for members- trade unions provide services such as pension
schemes, insurance schemes, holiday schemes
Features of an organisational structure
 Main functions of management

Leadership styles

Benefits of being a trade union member