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Organisational Structure of a Business

Organisational Structure of a Business. Learning Objectives. Analyse the main features of an organisational chart, including levels of hierarchy, chain of command, span of control, flat and tall organisations Identify why firms need to organise employees and analyse ways in which this is done.

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Organisational Structure of a Business

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  1. Organisational Structure of a Business

  2. Learning Objectives • Analyse the main features of an organisational chart, including levels of hierarchy, chain of command, span of control, flat and tall organisations • Identify why firms need to organise employees and analyse ways in which this is done

  3. Why do businesses need to be organised? • Small businesses (particularly sole traders) have an informal organisational structure • As a business gets bigger then it starts to form some kind of organisation and an organisation structure is required, this is a type of internal framework which shows how management is linked together and how authority is passed down • The structure determines: • Who is responsible for what job and • Who is responsible to whom.

  4. Hierarchy • Describes management structure of business • From top of company – managing director, through to shop floor worker • Usually best understood by drawing an organisation chart • Shows which levels of management and employees report to whom

  5. OrganisationStructure & Job Roles • Accountabilitytoyourbossor manager • Responsibilityforthepeoplewhoworkforyou • Whatdoesthe formal organisationstructure show? • Hierarchy CEO Board of Directors Managers Supervisors & Team OtherEmployees

  6. Hierarchical / Bureaucratic structure This is called a layer of the hierarchy

  7. Advantages Disadvantages This type of structure seems to suggest one way communication Managers often accused of tunnel vision • To highlight how decision making is done • Vertical departments can be based on anything not just departments • Role of each individual is clear and defined

  8. Span of Control • What is the Span of Control? • 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 • Example below shows a span of control of 4 for the Marketing Manager Marketing Manager Marketing Assistant Market Researcher Telesales Supervisor Customer Care Assistant

  9. Advantage of a Narrow Span of Control • Allows a manager to: • Communicate quickly with employees under them • Control employees more easily • Feedback of ideas from workers more effective • Requires a higher level of management skill

  10. Advantage of a Wide Span of Control • There are less layers of management to pass a message through • So the message reaches more employees faster • It costs less money to run a wider span of control because a business does not need to employ as many managers

  11. Organisation Charts We can use an organisation chart to show the levels of hierarchy and the span of control in a business How large is the MD’s span of control? How large is the Finance Manager’s span of control? How many levels of hierarchy are there?

  12. Tall and Flat Organisations • Tall organisation • Large number of managers • Narrow spans of control • Can suffer from having too many managers (expensive) • Decisions can take a long time to reach bottom of hierarchy • Can provide good opportunities for promotion • Manager does not have to spend so much time managing staff • Flat organisation • Few managers • Wide span of control

  13. Chain of Command • Line on which orders and decisions are passed down • From top of hierarchy to bottom Example Managing Director Production Director Production Manager Factory Supervisor Machine Operators

  14. Factors influencing organisational structure • Size of the business and number of employees • Style of leadership and culture of management • Retrenchment (Cutting down on the number of staff you have) • Corporate objectives • New technologies

  15. Task • Create an organisational structure diagram for all staff at the college. • It must include job titles & people´s names

  16. Another activity • Any business plc has a functional organisation structure. • The MD is responsible to a chair person and has a sales director, a finance director, a personnel director and a production director accountable to her. • On the production side there are a works manager, technicians, test engineers and machine operators. • In addition, the company employs 5 personnel assistants, 4 financial staff and 10 administrative staff and 20 sales people. • DRAW an organisation chart for Any Business plc from this information!

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