People in Business Improving Organisational Structures “ We don’t have as many managers as we should, but we would rather have too few than too many.” Larry Page 2.4 Improving Organisational Structures

2.4 Improving Organisational Structures Improving Organisational Structures In this topic you will learn about: Key elements of organisational structures Workforce roles How organisational structure affects business performance 2.4 Improving Organisational Structures

Key elements of Organisational Structure Levels of hierarchy/Spans of control Work loads/Job allocation Delegation The communication flow 2.4 Improving Organisational Structures

What is organisational structure? Organisational structure refers to the way in which a firm is organised on a vertical level and a horizontal level. A vertical structure looks at the firm from the top to the bottom e.g. the Chief Executive, through different levels of management to the Shop Floor worker. A horizontal structure looks at how a firm is organised on the same level e.g. workers doing similar jobs such as supervisor or manager but in different functional areas or departments such as finance, marketing and sales. 2.4 Improving Organisational Structures

Levels of hierarchy/Span of control The levels of hierarchy shows the number of levels of management and supervision within a business. The span of control shows the number of subordinates that a manager or supervisor is in control of. If a manager has many subordinates this is called a wide span of control. If they have few subordinates this is called a narrow span of control. 2.4 Improving Organisational Structures

Organisation Charts We can use an organisation chart to show the levels of hierarchy and the span of control in a business Managing Director Finance Manager Accounts Supervisor Sales Supervisor Production Manager Production supervisor 2.4 Improving Organisational Structures

Levels of hierarchy/Span of control The levels of hierarchy within firms will differ: - tall and thin structures occur where each superior is responsible for a few subordinates. This allows for closer supervision and communication between the two levels. - wide and flat means that each superior is responsible for a large number of subordinates. This requires greater delegation but fewer levels allowing for quicker communication through the firm. 2.4 Improving Organisational Structures

Organisation Charts Three people report to Fiona. Four people report to Brian. Neither Fiona nor Brian reports to one another, but they both report to Clive. Clive Reports to Sybil. Sybil reports to the Board of Directors And they report to the Managing Director. Using a pyramid shape, draw the business structure. Comment on the structure in terms of the layers of management, hierarchies and spans of control. 2.4 Improving Organisational Structures

2.4 Improving Organisational Structures Who’s in Charge? Managing Director Board of Directors Sybil Clive Fiona Worker 1 Worker 2 Worker 3 Brian Worker 4 2.4 Improving Organisational Structures

Workloads/Job Allocation Workload looks at the amount of work that an individual worker has to undertake. This will be influenced by the layers of hierarchy within a business – a wide span of control is likely to lead to a greater workload. Job allocation looks at the type of work that an employee has been given to do. As a firm increases in size it is likely that the employees will be given increasingly specialised job roles e.g. Accountants or IT specialists. 2.4 Improving Organisational Structures

2.4 Improving Organisational Structures Delegation Delegation involves the passing of authority down the hierarchy. Authority occurs when an employee is given the right to do something by their superiors. This will: - Free up time for management - Motivate workers by providing them with greater responsibilities 2.4 Improving Organisational Structures

Workloads/Job Allocation The AQA state that Workforce roles should include: Team Leader – in charge of a group of employees covering specific tasks Supervisor – a junior manager in charge of lower grade workers Manager - in charge of a number of subordinates and with responsibility for short and medium term decisions Director – a senior manager elected by shareholders 2.4 Improving Organisational Structures

2.4 Improving Organisational Structures Communication flow Communication is the exchange of information between individuals or groups Communication can flow in different directions and in different ways both internally within a business and externally from sources outside of the business Feedback occurs when the person sending the original message receives a response Communication problems in the hotel industry!: You will need access to the internet to watch this clip 2.4 Improving Organisational Structures

2.4 Improving Organisational Structures Communication flow Communication can come through a variety of communication channels: Open channels are available to all staff members, closed channels are restricted to certain employees Formal communication occurs through official company channels, informal communication through unofficial channels 2.4 Improving Organisational Structures

Communication flow CHINESE WHISPERS Your teacher will provide the person sitting at the front of the class with a written saying. That person must whisper the saying to the next person and so on until the last person in the class. They must write down what they think they heard and pass it on to the teacher to read out. You are not allowed to ask for a class member to repeat the saying. Did the class face problems with communications? What was the cause of this problem? What was the result of the problem? How could this problem be solved? Use your understanding gained from this activity to explain how communication problems can occur in businesses. Remember to use business terminology. 2.4 Improving Organisational Structures

How organisational structure affects business performance Different organisational structures suit different businesses. Firms will have to take into account: Finance – delayering can remove a level within the hierarchy but increase the span of control Communication – how important is efficient communication within the organisation? Growth – a larger business needs a more formal structure Ownership – as the legal structure of the business changes so too will the organisational structure. A sole trader will have a different structure than a partnership Business culture – an informal entrepreneurial culture will have a different structure than a formal organisation Reasons for reorganisation at Business Link: 2.4 Improving Organisational Structures

Activity – Organisation Charts The Guardian Newspaper You have been asked to produce an organisation chart for the Guardian newspaper. This can be hand drawn or produced using IT. On your chart you must show the levels of hierarchy and the spans of control: For further information regarding the newspaper go to: http://www.guardian.co.uk/