Cambridge (CIE) IGCSE Your notes
Business
2.2 Organisation & People Management
Contents
Organisational Charts & Roles
The Role of Management
Leadership Styles
Trade Unions
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Organisational Charts & Roles
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Organisational Structures
An organisational structure outlines the reporting relationships, roles, and responsibilities
of employees in the organisation
Businesses must determine what the best structure is for them so as to effectively
implement ideas and achieve their objectives
They should consider how the structure may affect the management and
effectiveness of operations and communications
A well-designed organisational structure helps to promote clarity, efficiency and
accountability
Diagram: an organisational chart
This organisation chart shows a traditional hierarchy where workers are answerable to the
supervisor or manager who has authority over them in the structure
1. Hierarchy
A hierarchy refers to the levels of authority within an organisation
It describes the ranking of positions from top to bottom
The higher the position in the hierarchy, the more authority and power it holds
The hierarchy usually includes top-level management, middle-level management,
and lower-level employees
2. Chain of command
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The chain of command is the formal line of authority that flows downward from the top
management to lower-level employees
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It defines who reports to whom and who is responsible for making decisions
The chain of command helps to establish a clear communication channel and helps
to maintain accountability within the organisation
3. Span of control
Span of control refers to the number of employees that a manager or supervisor can
effectively manage
It is based on the principle that a manager can only effectively manage a limited number
of employees
A narrower span of control means that there are more layers of management
A wider span of control means that there are fewer layers of management
Tall & Short Organisational Structures
The chain of command and span of control are closely linked
A long chain of command usually results in a narrow span of control
This is known as a tall organisational structure
A short chain of command usually results in a wide span of control
This is known as a flat organisational structure
Characteristics of tall and Short Structures
Tall Organisational Structure Flat Organisational Structure
Multiple levels of management Fewer levels of management
A long chain of command and narrow span of A short chain of command and
control wide span of control
Common in large organisations with complex Common in small organisations
operations or start-ups
E.g. government agencies and universities E.g. tech start-ups and
small businesses
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Advantages Advantages
Provides a clear hierarchy of authority and Promotes a culture of
defined roles and responsibilities collaboration and open
communication
Promotes specialisation and expertise within
each department or function Decision-making can be faster
and more efficient
Disadvantages Disadvantages
Can create communication barriers between Can lead to a lack of clear
upper and lower levels of the hierarchy hierarchy
Decision-making can be slow as information May require employees to take
must pass through multiple layers of on multiple roles and
management responsibilities leading to
burnout and overwhelm
Some businesses may choose to remove layers from their hierarchy which shorten the
chain of command
This is known as delayering
Examiner Tips and Tricks
Remember the following distinctions:
The longer the chain of command, the ‘taller’ the organisational structure and the
‘narrower’ the span of control
The shorter the chain of command, the 'wider' the span of control
In exam questions, you may be asked to define a specific key term in this section or
explain a type of organisational structure
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The Role of Management
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Roles, Responsibilities and Organisational
Relationships
The organisational structure of a business determines the roles, responsibilities and
relationships in an organisation
Individuals at the top of the structure usually have more authority
Middle managers will have relationships with senior managers, other middle
managers, and their subordinates
These hierarchies determine the formal routes through which communication often
flows in a business
Diagram: possible business roles
Many larger firms are arranged into functional departments such as Finance and
marketing, which are led by directors who carry the final responsibility for the work of
everyone in the department
Managers
Managers have many responsibilities in the business and help it to operate effectively
on a day-to-day basis
Types of managers include directors, line managers and supervisors
Roles and Responsibilities of Managers in an Organisation
Job Roles Responsibilities
Owners/Directors Establish the business’ overall goals
Set long-term plans and targets for the business
Managers Work to achieve the short and long-term targets set by
the owners or directors
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May be responsible for a function within the business, e.g.
marketing or finance
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Use employees and other resources in the best possible
ways
Supervisors/Team Help managers achieve their targets by reporting any
Leaders problems and passing on instructions
Take simple decisions, such as allocating jobs among
different employees
Role and Functions of Management
The responsibilities of managers are similar, no matter the organisation in which they
work
In schools
Headteachers organise the school's overall curriculum and staffing
Heads of Department manage teaching staff and subject course planning
Pastoral Managers focus on pupil behaviour and reward systems
Site Managers oversee the safety and maintenance of buildings and equipment
Diagram: manager roles
Managers roles commonly include planning, organising, commanding and controlling
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Planning
Setting targets or aims for the organisation or department to achieve which provide a Your notes
clear sense of purpose and direction
Managers also plan and budget for resources required to achieve targets
The number of people required
Finance and capital resources needed
Organising
Once targets have been set, managers should then organise the resources including
Allocate tasks and delegate responsibility to employees
Make changes to ways of working to improve efficiency
Commanding
Managers need to guide, lead and supervise employees in the tasks they do
Make sure staff meet deadlines and achieve individual or team targets
Provide feedback and direct staff to tasks
Controlling
Evaluate the performance of employees and teams
Investigate reasons for missed targets and implement changes
Manage budgets and report to senior leaders
Ensure effective coordination between departments to achieve the organisation’s
aims
Coordinating
Encourage groups of workers to communicate with each other and work towards the
same goal
Ensure all of the required resources are available to ensure objectives are met
Delegation
Delegation is a process where responsibility for specific tasks is given to
subordinates by managers
Delegation usually involves transferring authority from manager to subordinate
E.g. the Human Resources Director of a large company delegates authority for
recruitment and training to the Recruitment and Training Manager
The Advantages of Delegation
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Advantages for Managers Advantages for Workers
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Allows managers to concentrate on Delegation allows workers to feel
important tasks empowered in decision making
Managers do not have the time to This can motivate as staff are
do complete every task trusted to perform a job well
themselves
Helps managers to measure the Provides a form of training as workers
performance of their staff as they can learn on the job thus increasing job
judge how well subordinates carry out opportunities to progress within the
these tasks organisation
Can help to reduce errors if managers Makes employees work more
delegate interesting and rewarding
Workers may be skilled in certain This could reduce absenteeism and
areas and have sufficient time to labour turnover
complete the task to a higher
standard
Some managers are reluctant to delegate as they lose some control over decision-
making
Managers may need support to be able to balance trust and control to delegate
appropriate tasks
Autocratic leaders may not be willing to give authority to others
Some managers may feel threatened by highly skilled subordinates seeking
promotion
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Leadership Styles
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Types of Leadership Styles
Leadership is about having a vision, sharing that vision with others and providing
direction
Leadership is necessary in many different contexts
A leader in sport could be the captain of a national football or basketball team
A political leader could be a president, prime minister of leader of a political group
Leaders can inspire and motivate others to work towards a common goal
This contributes to the meeting of aims and objectives and supports the
development of a motivated workforce
Leadership styles
Leadership styles reflect the behaviours and attitudes of a leader towards their team
members and influence the organisational culture, productivity and performance of a
business
A successful leader will be able to use a variety of leadership styles, depending on the
situation, to achieve the best results for their business
Diagram: different leadership styles
Most leaders operate using an autocratic, democratic or laissez-faire leadership style
Autocratic leadership
An autocratic leader holds absolute power and authority within a business
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Leaders set the direction and goals of the business and makes decisions without
seeking input or agreement from others
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The opinions, ideas or expertise of team members are not generally considered
Decisions are generally not open for discussion or debate
Strict obedience and compliance is expected from subordinates
Communication in business is mainly one-way: downward or 'top-down'
Advantages & Disadvantages of Autocratic Leadership
Advantages Disadvantages
Autocratic leaders can make swift Reduced employee morale as workers
decisions without the need for have no input into decision-making
lengthy discussions
Lack of input from team members
Speeds up decision-making limits ideas for problem-solving
and innovation
Can be crucial in emergency
situations Limited creativity as employees are
required to follow strict instructions and
Coordination and efficiency may are closely monitored
be improved as roles and tasks are
clearly stated
Democratic leadership
Democratic leaders actively involve employees in the decision-making process and
encourage discussion, though they have the final say
Consultation, collaboration, delegation and teamwork are common features
It is most effective in organisations with skilled and experienced employees
It works well in creative industries when managers give workers responsibility to
work on projects together and manage their own time
James Parker, the ex CEO of Southwestern Airlines, is well-known for his democratic
style of leadership. In his book Do the Right Thing he states “I’ve always tried to expect
the best of people and to trust them, and I have almost never been disappointed. Part of
trusting people is empowering them to make decisions”
Advantages and Disadvantages of Democratic Leadership
Advantages Disadvantages
Encouraging participation from Decision-making can be time-
employees in decision-making consuming as consensus or majority
processes agreement is sought
Can lead to higher levels of Competitive advantage may be
employee engagement and job lost as decisions take longer than
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satisfaction rivals
Individuals feel valued and Making compromises may cause
empowered when their opinions and further delays Your notes
ideas are considered Conflicts and disagreements may arise
when different views are sought
Encourages creativity and innovation
within a business Resolving conflicts can be
challenging and time-consuming
Employees are more likely to share
ideas and think outside the box Leaders need to possess strong
when they have a say in decision- conflict resolution skills to ensure
making that disagreements do not
escalate
Laissez-Faire leadership
Laissez-faire leaders play a minimal role in managing subordinates or business teams
Leaders provide little guidance, direction or supervision to employees
Employees have significant autonomy and freedom in making decisions and
completing tasks
Laissez-faire leadership is most appropriate where leaders are working with a highly
skilled and self-motivated team that requires minimal supervision
Communication may suffer in this type of organisation as clear direction is not
given
Advantages and Disadvantages of Laissez-faire Leadership
Advantages Disadvantages
Laissez-faire leadership can Some employees may struggle with
encourage creativity and innovation decision-making
within the business
This can lead to inefficiency and a
Employees have the freedom to lack of coordination within the
explore ideas and make decisions team
independently
Productivity may fall as individuals
This allows for diverse struggle to prioritise tasks or make
perspectives and fresh informed decisions
approaches to problem-solving
Without clear guidelines or standards,
Employees are empowered because there is a risk of inconsistency in the
they have autonomy and ownership quality of output
over their work
Different employees may have
Team members feel trusted and varying approaches
valued
This may lead to a lack of cohesion
This enhances job satisfaction, and potential conflicts in the team
motivation, and a sense of
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responsibility
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Recommending an Appropriate Leadership Style
The choice of leadership style can be influenced by a range of factors
Business circumstances including the nature and size of the business
Aims and objectives to be achieved
Personality, experience and skills of the leader
In particular, the skills and abilities of the workforce and the nature of the
competitive business environment will impact upon the style of leadership adopted
Diagram: appropriate leadership styles
The leadership style adopted will depend on the skills of workers and the environment in
which a business operates
Choosing the most appropriate style
When a business faces a crisis situation and its workers are unskilled, autocratic
leadership is likely to be most appropriate
However, if the workers are highly skilled, a democratic approach would be more
effective
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When a business operates in a stable environment and its workers are unskilled, a
democratic approach is likely to be most appropriate
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However, if the workers are highly skilled, a laissez-faire approach would be more
effective
When a business operates in a high growth/challenging environment and its workers are
unskilled, an autocratic approach is likely to be most appropriate
However, if the workers are highly skilled, a democratic approach would be more
effective
Examiner Tips and Tricks
Exam questions often ask you to recommend an appropriate leadership style for a
business, or to epand on the advantages or disadvantages of a particular style. Often
the choice of style depends upon the current situation of the business. Leaders may
not be autocratic all of the time but at certain times it may be the best best approach.
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Trade Unions
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Trade Unions
A trade union is an organisation that represents the interests of its workers in
negotiations with a firm’s management or owners
A trade union's main aim is to protect and advance the interests of its members in
the workplace
Most trade unions are independent of any employer but try to develop close
working relationships with employers
The interests of the worker include:
Correct and fair pay
Non wage benefits of employment such as training
Health and safety in the working environment
Suitable working environment
The reduction of discrimination and worker exploitation
Trade unions are usually formed by the members of specific industries
Airline pilots have a pilots' union
Rail & sea workers have a rail & maritime union
E.g. The NEA is the USA's largest professional employee organisation representing
public school teachers and other support personnel at colleges and universities
Workers pay a monthly fee to join a trade union
The fee is called a subscription
Membership ends when the member stops paying this fee
The Effects of Trade Union Membership
Almost 23% of UK employees in permanent positions belonged to a trade union in 2022
Poland has the lowest level of trade union membership in the EU
Around 70% of workers in Scandinavian countries are trade union members
Public sector industries tend to have the highest membership density
Women are more likely than men to belong to a trade union
Trade union members generally receive higher pay than non-union members
Trade unions can become so large that they are able to influence government decisions
in favour of workers
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The effects of trade union membership for employees
Pros & Cons of Trade Unions For Workers Your notes
Pros Cons
Workers no longer need to Industrial action is stressful as it is a conflict
negotiate with management on between workers & management
their own, as they benefit from
collective bargaining Workers do not get paid while on strike
Workers receive better pay than Strike action disrupts economic activity &
non-unionised workers can upset other people in the economy
Workers enjoy better working Individual workers may not agree with
conditions than non-unionised specific demands made by the trade union
workers on behalf of all the workers, and yet they are
pressured to support the collective action
Workers enjoy better non-wage
benefits, such as guaranteed Some union members continue to work
lunch breaks through a strike (they may need the money) &
receive abuse & intimidation from the other
Workers receive specialised job striking union members
training & free legal advice from
the union
The effects of trade union membership for employers
The higher the percentage of workers from a firm that belong to a trade union,
the greater the collective bargaining power of that union with the employer
Advantages and Disadvantages of Trade Unions for Employers
Advantages for Employers Disadvantages for Employers
Training from the trade union increases Including unions in decision-making
worker productivity which decreases increases the time period taken to
costs implement changes which can be
detrimental to effective competition
Empowerment in the workplace
improves employee motivation, which Management styles have to be more
usually results in fewer sick days, higher inclusive & less authoritarian which
productivity & greater output for the some managers find difficult to
firm accept
Meeting union demands increases
costs of production, which may
reduce output & profits
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Examiner Tips and Tricks
It is commonly assumed that trade unions are negative for business owners. To Your notes
balance any exam answers, always consider how trade unions can benefit businesses.
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