An organisation chart (often called hierarchy) takes into account…. The way in which human resources (employees) are organised and how information is communicated It also shows:  the CHAIN OF COMMAND – the layers that information goes through  The SPAN OF CONTROL – Number of people any one person is in charge of (subordinates)

Tall structure with a long chain of command

Problems of tall structures with a long chain of command Information takes a long time to go from the top to the people at the bottom - this creates inefficiency. Messages can be misunderstood, delayed or changed on their way through the hierarchy. The people at the bottom can become de-motivated due to their position and lack of responsibility. Managers at the top lose touch with the feelings of workers at the bottom- this can cause resentment.

Wide structure and a short chain of command

Benefits of flat structures and short chains of command Communication is quicker and more accurate - message has to pass through fewer levels. Top managers are less remote from those at the bottom of the hierarchy, therefore more in touch with them. The span of control is wider, this gives subordinates more responsibility and trust and thus increases their job satisfaction.

Organisation charts recap Managing Director Marketing Manager Production Manager Production Supervisor Production workers x 5 Marketing Assistant HR Manager HR Assistants x 2 Finance Manager Finance Assistants x 2

Title: Centralisation v Decentralisation Centralisation is where many decision are made at a central office (eg. Head office) and then passed on to others in the business Centralisation is where many decision are made at a central office (eg. Head office) and then passed on to others in the business May firms centralise their administration activities May firms centralise their administration activities Eg. A head office undertaking all the marketing for a number of smaller branchesEg. A head office undertaking all the marketing for a number of smaller branches

Title: Centralisation v Decentralisation Decentralisation - decisions can be made by individual parts of the business Decentralisation - decisions can be made by individual parts of the business

Example: Centralisation Tesco Head Office London decides on Pricing Policy Passes decisions on Individual stores have no or little control over pricing

Benefits of Centralisation Senior management have more control Procedures can be standardised (made the same), leading lower costs Senior managers make better quality decisions Communication is improved with fewer decision makers

Benefits of Decentralisation It motivates workers by given them responsibility It reduces the stress and workload of senior managers It can improve worker job satisfaction Promotes flexibility and a faster response to problems Individual local level decisions can be made quicker