IB Business and Management 2.2 Organisational Structure

Discuss different types of organisation structure Open 2.2 Outline Today’s objectives: Examine job roles Discuss different types of organisation structure

Organisational Structure Refers to the ways that businesses organise their human resources (employees) As businesses grow there is a growing need for the structure to be formalised

Other Employees (Operatives) Company Hierarchies CEO/MD Board of Directors Management Supervisors Other Employees (Operatives) Senior management Pay and Authority Middle management Junior management

CEO/MD CEO/Chairperson: Responsible for day-to-day operations. Leads & represents the board.

Board of Directors A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization on behalf of the shareholders These directors could include: A Chief Executive Officer (CEO) who may also be Chairman of the Board Other executives of the organization, such as its Chief Financial Officer (CFO) or Executive Vice President Large shareholders Representatives of other stakeholders such as labour unions, major lenders, or members of the community in which the organization is located Outside directors

Board of Directors – Home Retail Group

Board of Directors - Roles governing the organization by establishing broad policies and objectives; selecting, appointing, supporting and reviewing the performance of the chief executive; ensuring the availability of adequate financial resources; approving annual budgets; accounting to the stakeholders for the organization's performance; setting the salaries and compensation of company management.

Managers Management: Responsible for a certain task or team of people (HR, finance, marketing, etc.) & day-to-day implementation of organisation’s policy

Supervisors Junior managers who carry out operational decisions & directly contact workforce.

Other Employees (Operatives) Considered the workforce. Cashiers, secretaries, laborers, teachers, etc. Make routine decisions concerning their job only. Provide support to others in organisation & work as member of a team or department.

Delegation Refers to passing authority & control on to others. Manager retains responsibility, but the subordinate does the work. What are the benefits of delegation?

Why might a manager be reluctant to delegate?

Organisational Charts Most businesses create a formal, organized structure to delineate accountability & responsibility Accountability: shows who answers to whom Responsibility: shows who is in charge of whom

Organisation Chart Terminology Person directly above an employee is known as the line manager. The people who a manager has direct control over is called a subordinate.

Organisational Chart Shows 4 important features: Functional departments within a business (marketing, finance, etc.) Chain of command: which people have authority over others Span of control: number of subordinates directly accountable to a single manager Official channels of communication: route that messages are to be communicated within an organization

Organisational Chart Example

Span of Control Is described as either being: Wide = Each manager has lots of subordinates Narrow = Each manager has few subordinates

Task Group A: Think of advantages and disadvantages of a Wide Span of control Group B: Think of advantages and disadvantages of a narrow span of control

Chain of Command Refers to the formal line of authority through which orders are passed down in an organization. Flat organization = short chain Tall organization = long chain

Task – In groups I will show a picture to one person in your group They then have to re-draw it for the next person etc

Organisational Chart Example

Task Spurs Mystery Use the information and draw the firm’s organisation chart

Task BISS organisation chart Who fills the positions in the organisation chart How has the structure of the school changed since this chart was drawn up? Why?

Flat and Tall Structures Depending on how the business is organised, a business can have a tall or a flat structure. Consider the example of an organisation with 52 workers

Tall Structure MD Finance Manager Finance Supervisor 3 Finance Assistants Accounts Manager 4 Accounts Clerks 8 Data Entry operators Human Resource Manager Training Manager 2 trainers Marketing Manager 2 Marketing Supervisors 4 marketing Assistants Operations Manager 3 Shop Floor Supervisor 18 shop floor workers

Human Resource Manager Flat Structure MD Finance Manager 18 Finance Assistants Human Resource Manager 3 trainers Marketing Manager 6 marketing Assistants Operations Manager 21 Shop Floor Workers

Questions – Discuss and decide Which type of organisation (flat, tall, wide, narrow) will: Have good opportunities for promotion More likely to have stressed managers Have quick vertical communication Workers may feel over supervised Workers may be delegated additional responsibilities Problems spotted on the shop floor will be dealt with quickly by management Likely to be large organisations Workers may feel unsupported Response to problems may be slow

Factors Affecting Choice of Structure Business size (larger firms require a more formal structure and are likely to be tall) Employee competence (business with highly skilled workers can have flat, informal structure) Management Attitudes (managers that trust their staff are more likely to have a flat, flexible structure) History & culture (innovative firms accustomed to change may opt for more flexible structure)

Changing/Reorganizing Structure Delayering: removing one or more levels in the hierarchy in order to flatten out organizational structure (employees are moved around) Results: reduces the number of layers of management & widens the span of control Purpose: reduce cost, improve communication speed, give employees more responsibility

HIERARCHICAL STRUCTURE DE-LAYERING HIERARCHICAL STRUCTURE Flatter Structure COMPANY OWNER Chain of Command Delegation MANAGERS Feedback DEPARTMENT MANAGERS SUPERVISORS SHOPFLOOR WORKERS

Advantages of delayering Reduces costs – wage costs of middle management Motivates employees lower down the hierarchy by giving them more responsibility, authority and control Communication may improve, as there are less levels to pass information through Can produce good ideas from employees who otherwise wouldn’t have a say Improves responsiveness, as senior managers and customers are closer.

Disadvantages of Delayering Can lessen performance, as knowledge and experience of middle management is lost Not all organisations suited to a flat hierarchy Has a negative impact on motivation in the short term – job losses Disruption period, due to people taking on new responsibilities Remaining managers have a wider span of control, which means they can lose focus New responsibilities could mean more stress.

Changing/Reorganizing Structure Downsizing: reducing the size of the workforce (employees are laid off) Purpose/results: reduces cost Drawbacks: creates sense of insecurity, can over-stretch employees (decreasing quality of work), can increase decision-making time if teams are larger