Effective People Management Topic 3.4

Topic Overview This topic examines how the organisational structure of a business can be reflected in an organisational chart, the importance of organisational structures, how different businesses have different structures, the factors that affect motivation at work and how these relate to the theories such as Maslow’s hierarchy of needs, the impact of effective and poor communication in organisations, the barriers to effective communication and the various methods used to remunerate people and the effect that different payment systems have on employees and organisations.

What will you learn? Organisational Structure – how businesses are organised. Motivation Theory – what is and how to motivate in the workplace. Communication – what is the effect of good and bad communication. Remuneration – payment systems and their impact on staff

Organisational Structure This unit looks at the different types of organisational structure and they way that the structure effects the business as a whole.

Objectives Appreciate that businesses tend to be organised through a particular structure Understand the importance of divisional structure within a business. Understand levels of hierarchy and chains of command within a business context Compare centralised versus de- centralised systems.

Divisional Structure A divisional organisational structure usually consists of several parallel teams focusing on a single product or service line. Examples of a product line are the various car brands under General Motors or Microsoft's software platforms. One example of a service line is Bank of America's retail, commercial, investing and asset management arms. Unlike departments, divisions are more autonomous, each with its own top executive--often a vice president--and typically manage their own hiring, budgeting and advertising. Though small businesses rarely use a divisional structure, it can work for such firms as advertising agencies which have dedicated staff and budgets that focus on major clients or industries. Blooming American websites!!!

In your workbooks... There is a list to be filled in with the advantages and disadvantages. Make sure you complete these....

Divisional Structure Advantages Divisions work well because they allow a team to focus upon a single product or service, with a leadership structure that supports its major objectives. Having its own president or vice president makes it more likely the division will receive the resources it needs from the company. Also, a division's focus allows it to build a common culture and esprit de corps that contributes both to higher morale and a better knowledge of the division's portfolio. This is far preferable to having its product or service dispersed among multiple departments through the organization.

Divisional Structure Disadvantages A divisional structure also has weaknesses. A company comprised of competing divisions may allow office politics instead of sound strategic thinking to affect its view on such matters as allocation of company resources. One division will sometimes act to undermine another. Also, divisions can bring compartmentalisation that can lead to incompatibilities. For example, Microsoft's business- software division developed the Social Connector in Microsoft Office Outlook They were unable to integrate Microsoft SharePoint and Windows Live until months after Social Connector could interface with MySpace and LinkedIn. Some experts suggested that Microsoft's divisional structure contributed to a situation where its own products were incompatible across internal business units.

Organisation Through out some companies workers specialise in the jobs they perform. Each takes on a role, a given job of work. Some jobs are administration or sales staff, some are skilled workers whilst others are managers. Workers need to know 4 things...

What workers need to know! They need to know What job they are supposed to do. 2. Who is in charge of them. 3. Who they are in charge of. 4. How they are related to the wider organisation This can be shown on an organisational chart.

Organisation Charts

The chart on the previous slide shows an organisational chart for an engineering company. Within the company there is a hierarchy. This is a series of layers in the organisation At the top is the chief executive, the senior executives responsible for individual departments

Organisation Charts At the bottom of the hierarchy are the workers – the clerical staff, Ancillary staff and Machine operators. Workers in a hierarchy have a line manager, someone above them to whom he or she reports. Most businesses with this structure or organised by function. As the are more people at the bottom a hierarchy is often referred to as a pyramid

Organisation Charts

The Chain of Command The person at the top of the hierarchy/pyramid is in a position of authority over workers lower down, so a chief executive has authority over the Departmental Executives. He or she can give orders to their subordinates (people lower down). There is a chain of command in the organisation.

Chain of Command The chain of command shows how the orders are passed through the organisation. The longer the chain the longer the message takes to get to the right person.

The length of the Chain of Command The length of a chain of command can vary between businesses, a hairdressers may only have two, the manager and the stylist, whilst an organisation like BP (British Petroleum) May have up to 20 layers from the CEO to the bottom of the hierarchy. This can cause problems:-

Problems with the chain of command Messages can get lost or distorted as they go up and down the chain of command – like Chinese whispers. Managing change can be difficult – the longer the chain of command the more people there are to ‘resist’ the change. Long chains of command may make workers feel de-motivated, as they may feel that they are not part of the business.

Problems with the chain of command cont Long layers of command can create a ‘tribe’ mentality when each layer focuses on its own affairs rather than the objectives of the business, leading to inefficiencies.

Groups, teams and delayering. Some large organisations try to resolve these issues by flattening it out! Delayering is the cutting out of some of the levels of command, basically removing some levels of management. This is often called group, cell or team working. Workers are organised in to groups, teams or cells.

Groups, teams and delayering. There is likely to be a leader of the group, but everyone else may be the same level in the hierarchy. The team is given a task and how they complete it is up to them. For example quality inspectors and supervisors may be eliminated from the chain of command if the team is given the responsibility for their own quality and output, they may even manage their own budgets.

Groups, teams and delayering. Empowerment This empowerment of workers can motivate them, however, it means that workers will have to be better trained to cope with the extra responsibility, may have to be paid more. Delayering may mean that workers are more efficient and a business may be able to downsize

Groups, teams and delayering. Restructuring a business may be difficult if the workers see it as a cost cutting exercise – the management needs to demonstrate considerable skill to see through such changes.

The Span of Control A sales director at a company responsible for a large sales team is unlikely to be able to organise or supervise everyone in the department - the job would be too large! Instead the sales director will only organise some workers, they control 4 sales managers who in turn manage a number of sales staff

The Span of Control The number of workers that are controlled by one person is called the span of control. The span of control for the sales manager is the 4 sales directors – the directors span of control is the members of their team.

The Span of Control how big? The span of control varies depending on the circumstance of the business. the more complex the supervision task – the smaller the span of control. The longer the communication to the team takes – the smaller the span of control. The better the supervisor – the bigger the span of control. The more a supervisor delegates their work the greater the span of control.

Centralisation A CENTRALISED organisation is one where many of the business decisions are made at the ‘Head Office’. These decisions are then sent out to the rest of the business. Deciding on objectives and a strategy for the business are done from head office so that the costs can be minimised

Decentralisation Businesses that are decentralised give the power to make decisions to the different parts of the business Decentralisation encourages workers to change more quickly as the business environment changes. It gives power to those who are closest to customers, suppliers and to the market.

Unit 16 Review Questions Complete the review questions in your workbook.

Homework Complete the longer answer questions on organisational structure.