1. 3.4 Effective people management Organisational structure Learning Objectives
To understand the main types of organisational structures used in business and their purpose.
Understand the importance of divisional structures, hierarchy and chains of command within a business context
Compare centralised and decentralised systems

2. Topic Overview Organisational Structure Motivation Theory
Communication
Renumeration

3. Organising a business An Organisation
The way in which a business is structured for it to achieve its objectives

4. Organisational Chart

5. Organisational structure chart
Organisation charts are diagrams that show the internal structure of the business.
They make it easy to identify the specific roles and responsibilities of staff. They also show how different roles relate to one another and the structure of departments within the whole company.
TASK
Thinking about Iqra Academy
Produce an organisational structure chart
Think about the Leadership Team right down to support staff (i.e. teaching assistants, mid-day supervisors)

6. Tall Structures

7. Flat Structures

8. Divisional Structure

9. Divisional Structure Organised on
Product/ Geographic/Market basis
Expertise in manufacturing and selling product
Specialist knowledge (product/region)
Increase in accountability
Produce own accounts/performance
Incentive to perform better

10. Centralisation
Where decisions are made at the centre of the organisation and the passed down the chain of command

11. Centralisation Advantages Disadvantages
It reduces delegation, lessen ability to respond to market changes
Business opportunities may be lost because people are not allowed to make decisions
Job satisfaction may be lost as staff are not able to feel involved
Decisions can be made with an overview of the whole company
Central managers are able to make sure that policies and decisions are followed consistently across the whole organisation
Decision making and communication can be quick

12. Decentralisation
When decision making is pushed down the hierarchy (local level) and away from the centre of the organisation

13. Decentralisation
Encourages workers to change more quickly as business changes
Power to those closest to customers, suppliers and the market
High employee involvement

14. Levels of Hierarchy
Hierarchy structure of different levels of authority in a business organisation, one on top of the other
Top Managing Director
Bottom are workers
More at bottom
hierarchy called a pyramid

15. The path or chain down which orders are passed down the organisation
Chain of Command
The path or chain down which orders are passed down the organisation
From top to bottom
Person at top has authority over workers lower down the pyramid
Managing Director has authority over Department Directors
Give orders to workers lower down the hierarchy (their subordinate)

16. Length of chain of command
Small independent company short chain of command
Large companies longer chains
Messages can get lost (Chinese whispers)
Managing change – further down resist change
Demotivate workers – feel outsiders – reduce efficiency and productivity
Lots of layers ‘tribal mentality’ –focus on own affairs not businesses aims = lead to inefficencies

17. Resolving problems
DELAYERING - Removing layers of management and workers in a hierarchy so that there are fewer workers in the chain of command (group/team/cell working)
Empowerment Giving the workers more responsibility further down the chain
Responsible for own work extra responsibilities
More training
More productive ( can downsize)

18. Span of Control
A span of control is the number of people who report to one manager in a hierarchy.
The more people under the control of one manager - the wider the span of control. Less means a narrower span of control.

21. The Span of control depends on:
The type of product being made – products which are easy to make or deliver will need less supervision and so can have a wider span of control
Skills of managers and workers – a more skilful workforce can operate with a wider span of control because they will need less supervision. A more skilful manager can control a greater number of staff
More supervisors delegate the wider the span of control
Time it takes to communicate with subordinates. More time smaller the span of control

22. Organisational key terms
Hierarchy refers to the management levels within an organisation.
Line managers are responsible for overseeing the work of other staff.
Subordinates report to other staff higher up the hierarchy. Subordinates are accountable to their line manager for their actions.
Authority refers to the power managers have to direct subordinates and make decisions.
Chain of command the path (or chain) down which orders are passed. Ina company this goes from the board of directors down to other workers in the organisation.
The span of control measures the number of subordinates reporting directly to a manager.

23. Organisational key terms
Delayering refers to removing layers of management and workers in a hierarchy so that there are fewer workers in a chain of command.
Downsizing when a business employs fewer workers to produce the same amount through increases in productivity which can be achieved through delayering
Delegation is when managers entrust tasks or decisions to subordinates.
Empowerment sees managers passing authority to make decisions down to subordinates. Empowerment can be motivational.
The span of control measures the number of subordinates reporting directly to a manager.
Lines of communication are the routes messages travel along.