Introduction to Business Organisations Organisation of Departments

ORGANISATION CHARTS An Organisation Chart is used to show the structure of an organisation. An example is shown here:

What Does An Organisation Chart Show?   What Does An Organisation Chart Show?   The management structure and main departments within an organisation The relationship between departments The reporting structure The span of control of each employee (the number of people a person has responsibility for) Who Would Use An Organisation Chart?   Visitors to the organisation New members of staff Receptionist

What information does an organisation chart show? LEVELS OF RESPONSIBILITY LINES OF COMMUNICATION   LINES OF RESPONSIBILITY (LINE RELATIONSHIPS) LATERAL RELATIONSHIPS

LINES OF COMMUNICATION The chain of command shown is: Board of Directors Managing Director Sales Director Sales Manager Board of Directors Managing Director Sales Director Sales Manager

Organisational Structure

TALL ORGANISATIONS FLAT ORGANISATIONS There are 2 main types of organisational structure TALL FLAT TALL ORGANISATIONS Many levels of management Managers have narrow span of control FLAT ORGANISATIONS Few levels of management Managers have wider span of control

TALL Disadvantages Examples of Tall Organisations Police Force Army School TALL Advantages Disadvantages Easier for managers to supervise staff More opportunity for promotion Employees more likely to know their immediate boss It may take longer to communicate decisions and information throughout the organisation The management structure may be costly due to many highly paid jobs Employees may not the opportunity to suggest ideas or show initiative

FLAT Disadvantages Examples of Flat Organisations Small Shops eg Newsagent, Chip Shop Small Offices Farms FLAT Advantages Disadvantages Employees have more responsibility – should result in staff feeling valued/motivated Fewer levels of management – more efficient communication Employees more likely to be involved in decision making process Employees may become more stressed due to increased workload Increase in amount of training needed – due to employees wider responsibilities Fewer opportunities for promotion to management posts

Changing the organisational structure Organisations are unlikely to remain the same year after year. The business may be growing in size or it may have to reduce its operations. METHODS OF RESTRUCTURING Growth – the organisation is becoming larger. More staff are employed by the organisation. New departments may need to be created. Downsizing – the organisation has to make cut backs without reducing output – some staff may be made redundant, others will find themselves with increased responsibilities.  Delayering – the organisation removes certain levels of management. This results in managers having wider spans of control and the organisation having a flatter structure

What are the benefits and problems of restructuring? Possible Benefits Possible problems Reduction in costs – staffing costs, general running costs (Delayering & Downsizing) To become more efficient To improve communication within the organisation (Delayering) Low staff morale through redundancies, increased workload etc Staff may not like the new structure and want things to stay the same Costs of restructuring – associated with moving to new departments Customers may be unfamiliar with the new structure