Knowledge Organiser - 3.4 - Effective People Management Why do businesses use organisational structures? Helps organise employees into different departments/areas so a business can operate properly Helps determine authority and responsibility i.e. who is accountable to who etc. Helps achieve business aims Divisional structure A divisional structure is divided up according to: Product - like in a supermarket – toiletries, fruit & veg products, meat products etc. Service – like for example Reading Council – recycling, street sweeping, maintenance etc. Region/geographical Advantages: Allows business to specialise Increases accountability because each product division needs to show how its performing Advantages of Decentralisation Decisions are made closer to the customer (e.g. down the hierarchy) which may lead to better customer service Improves staff motivation Respond better to local needs as decisions are made closer to the customer Centralisation v Decentralisation This is all about where decision making takes place: If its with senior management at the centre of the business (i.e. top of the hierarchy) then its called centralisation If its delegated further down the hierarchy (away from the centre) then its called decentralisation What are the different types of organisational structures? Tall structure Flat structure Divisional structure Tall structure A tall structure has many levels of hierarchy and therefore a ‘long’ chain of command. Advantages: The main advantages of having a tall structure is that there is generally a narrow span of control which means employees can be supervised more closely. As well as this there are clear lines of authority and more promotional opportunities for employees to progress up the chain of command. Disadvantages: The disadvantages of a tall structure could be that subordinates have little delegation. Decision making could also be slowed down as there are more levels of hierarchy to go through therefore slowing communication down. Tall structures however tend to have high labour costs Why change an organisational structure? One reason could be to reduce costs for example through delayering Another reason may be to achieve growth therefore there may be a need for additional roles and greater levels of hierarchy The last reason could be employee motivation through for example empowerment. Advantages of centralisation Easier to implement common policies across the business - especially important for large firms Easier to control and co-ordinate from the centre for things like financial budgets Quicker decision making Disadvantages of centralisation Lack of authority down the hierarchy might reduce staff motivation i.e. no delegation Lacks flexibility and makes it more difficult to meet ‘local needs’. Flat structure A flat organisation will have relatively few layers of management – may occur due to delayering. This means that the “Chain of Command” from top to bottom is short and the “span of control is wide”. Advantages: The advantages of a flat structure are that there is greater communication between workers as there are fewer layers therefore decision making will be easier. Few layers also means lower labour costs. Another advantage is that spans of control are wider meaning managers will have to delegate more which could result in higher levels of motivation Disadvantages: The disadvantages of flat structures are that there will be fewer opportunities for promotion. Maslow& communication The structure of an organisation can affect many aspects of how workers are managed and treated. For example it will impact on communication and motivation of the workforce according to Maslow. Degree of responsibility, level of supervision, flow of communication (speed and accuracy), opportunities for promotion etc. Disadvantages of Decentralisation Harder to ensure consistent practises and policies which may lead to staff confusion and questionable decision making to take place Harder to achieve financial control

Knowledge Organiser - 3.4 - Effective People Management Why is motivation important? A motivated workforce will be more committed to a business therefore ensures productivity levels are high. As output per worker increases cost per unit lowers Helps maintain good levels of customer service which presents a good image to customers thereby increasing customer loyalty and repeat purchasing Reduces staff absenteeism and poor punctuality Helps avoid conflict in the business therefore maintaining good morale A motivated workforce produces better quality work because they take pride in what they do Knowledge Organiser - 3.4 - Effective People Management How is Maslow's model applied to the real business world? Overall Maslow’s model has good overall potential in the business world - if management can find out which level of the hierarchy of needs each employee has reached then they can decide on suitable rewards which will motivate them. However there are several problems with Maslow’s model when real - life working practice is considered. Employees are likely to respond to several needs, not just one and there is also a problem in deciding when a level has actually been satisfied. For example, increased pay could be a motivator for some employees, possibly through overtime, but only to a certain extent. An employee who has a fixed schedule due to childcare requirements might not at all be motivated by overtime, and asking even the most dedicated employee to work twenty - hour days for extra pay will only motivate for so long. Different remuneration methods: Method Definition Benefit Problem Piece rate Paid according to production Encourages quick working May reduce quality Flat rate Paid by hours worked Useful in service firms No incentive to work hard Commission Paid a % of sales value Good for sales staff Usually a low basic wage Profit sharing Paid a small % of the profits Creates a ‘team’ feeling All workers get some share What are some of the different methods a business can use to motivate its staff? Through their remuneration i.e. bonuses and other perks Promotional opportunities Praise Giving employees a say in decision making What is Maslow's hierarch of needs? Maslow argued that people first need to satisfy their basic physiological needs (food, drink), once these have been met then people seek to satisfy higher level needs. Once lower order needs are satisfied then further motivation for employees can only come by giving hem greater scope for using skills, initiative and creativity. What is ‘communication’ and its types? It’s the sending and receiving of information. There are two types of communication: Internal: communication within the business i.e. between fellow employees External: communication between the business and an outside person/organisation e.g. a customer or supplier. What monetary and non monetary benefits could the following people get from their job Teacher: Monetary - salary, possible bonus. Non monetary - Longer holidays Customer service assistant: Monetary - wage, possibly higher rate with overtime. Non monetary - free or discounted food Sales director of a national company: Monetary - sales, sales related bonus. Non monetary - company car, phone Manager of a hotel which is part of national chain: Monetary - salary, possible profit related bonus. Non monetary - free or discounted hotel rooms What are the dangers of poor communication within a business? Instructions maybe misunderstood and mistakes made costing the business money and impacting efficiency and productivity negatively The reputation of the business could be damaged as mistakes are made and quality of product/service worsens

Knowledge Organiser - 3.4 - Effective People Management How can managers in a business help to ensure communication is good? The managers can ensure that staff are adequately trained and know how to communicate with customers. They can also provide regular reviews/appraisals to discuss with staff how they could maintain or improve their communication skills How can a business use its website to communicate with potential customers? Businesses can use websites to advertise and update their products and services, as well as communicating with their customers through media such as email, online forums and ‘live’ chat functions. What are the benefits of effective communication? Lower costs as there are likely to be fewer mistakes by staff which will improve efficiency and therefore make the business more competitive. Increased motivation of staff as they are informed about key decisions and may be involved in the decision making process (e.g. about pay and remuneration or holidays). This may well improve customer service and therefore customer satisfaction as staff feel more empowered What are the different channels of communication a business could use? Written communication: Advantages: A physical record of the communication is made for example financial records The message can be approved before its sent Disadvantages: Can be more time consuming and expensive There is no immediate feedback Electronic communication: Information can be sent quickly A variety of types of media can be used Potential for messages to be hacked Verbal communication: There is an opportunity for immediate feedback or clarification therefore the its quicker Body language can be picked upon People are not always available Language and cultural issues may impact on the message being understood What are the impacts of excessive communication? Information overload which may lead to staff confusion and therefore greater mistakes and a fall in production. This will also increase unit costs and make the business less competitive than rivals. What are some of the barriers to effective communication? Unclear message. Technical jargon/words being used Language - e/g/ accent or a foreign language What are some of the barriers to effective communication? Unclear message. Technical jargon/words being used Language - e/g/ accent or a foreign language