ORGANIZATIONAL STRUCTURE – determines roles,responsibilities,authority of managers and employees

within a business to best achieve its objectives

ORGANIZATIONAL CHART – shows roles,responsibilities,relationships within a business

-organizational chart can show:

 Hierarchy of different layers

 Chain of command – how many other layers person has authority/control over
 Span of control – number of employees, job roles they r responsible for
 Delegation – task,responsibilities from senior to junior managers/employees

-Most businesses and their roles and responsibilities are organized into DIVISIONS / DEPARTMENTS

DEPARTMENT

– subdivision of an organization specializing in performing a major function

– grouping together employees based on skills/jobs>easier to communicate w each other
– departments within an organization are functionally interdependent (each one relies on work of other
departments to help fulfil objectives)
– can be organized in different ways, more departments can be added

-activities and tasks are divided up between employees with different levels of authority

-Directors have overall responsibility for running a company,elected by company shareholders

-Board of directors (in limited company) is the most senior management team, some responsibilities are:

 setting business objectives

 developing long-term business policies,plans
 monitoring business performance
 controlling company activities
 making important financial decisions

-Managers may have responsibility for:

 carrying out instructions of their directors

 setting objectives, allocating tasks to their staff
 motivating staff to increase productivity
 monitoring employees‘ performance
 identifying training needs of staff
ORGANIZATIONAL HIERARCHIES can be TALL or FLAT

< A: tall < B: flat

A: many layers of management, long chain of command, tall structure, each manager has narrow span of
control

B: less layers of management, short chain of command, flat structure, each manager has wide span of control

-management functions help organizations make best use of their financial,human,natural,man-made

resources, main management functions:

 PLANNING - setting aims,objectives for an organization (ex. to increase profits by 5% per year),
business strategies must be agreed (launching new product), identifying/meeting training needs of
employees
 ORGANIZING – managers must organize employees/other resources to achieve objectives (delegate
tasks and responsibilities to them)
 CO-ORDINATING – bringing together employees/other resources in organization to achieve objectives
 COMMANDING – giving instructions to employees to carry out tasks (managers have authority to see
if they r carried out > managers must be good leaders to motivate employees to fufill tasks)
 CONTROLLING – managers need to measure the performance of employees regularly to make sure
their work is satisfactory, managers have power to hire/fire/promote staff

DIVORCE OF OWNERSHIP FROM CONTROL can cause conflict:

- directors may award themselves and their senior managers large pay rises/annual bonuses even if
performance/profitability of company has been poor > reduced profits

- directors may spend money on luxury company cars and to decorate offices > reduced profits

- directors may agree to expansion plans that may be considered too big/risky

- directors may take more financial risks than shareholders if they haven‘t invested own money in company

FOR DELEGATION TO WORK SUCCESSFULLY the following are required:

 Tasks and authority should only be given to junior managers/employees with right skills/motivations
to complete them
 Junior managers/employees who don’t have right skills should be given training/guidance
 Senior managers should make sure everyone on their chain of command understands their
objectives/tasks
 Managers should monitor performance of their employees and provide feedback
LEADERSHIP STYLES – managers may adopt different leadership styles depending on situation or employees
they’re required to manage

1. AUTOCRATIC MANAGEMENT – autocratic manager tells employees what to do and expects their
orders to be followed (good style to adopt in emergencies but employees may become dissatisfied
because they’re unable to contribute ideas/challenge wrong ideas)

2. DEMOCRATIC MANAGEMENT – democratic manager consults and involves employees in problem-

solving and decision-making, communication is two-way, information and ideas discussed openly
before manager makes informed decision on actions (can make employees feel valued but slows down
decision-making)

3. LAISSEZ-FAIRE MANAGEMENT – laissez-faire manager is „hands-off“,communicates business

objectives to employees then leaves them to make their own decisions (this encourages creativity adn
decision-making but some employees need more support/direction and workers may fail to co-
ordinate because of lack of leadership)