Organisation and Management

CHAPTER 7

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This chapter will explain:
❑ how to draw, interpret and understand simple organisational charts

❑ simple hierarchical structures: span of control, levels of hierarchy, chain of command

❑ the roles and responsibilities of directors, managers, supervisors and other employees in an organisation, and
inter-relationships between them

❑ the role and functions of management – planning, organising, coordinating, commanding and controlling

❑ the importance of delegation; trust versus control

❑ features of the main leadership styles – autocratic, democratic and laissez-faire

❑ how to recommend and justify an appropriate leadership style in a given circumstance

❑ what a trade union is and the effects of employees being union members.

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What is organisational structure?
Organisational structure refers to the levels of management and division of responsibilities within an
organisation. This structure is often presented in the form of an organisational chart with several levels of
hierarchy. Like this one:

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What is organisational structure?

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In Bill’s business there is no need for an organisational structure
because he works alone. There is no need to outline the
responsibilities and duties of other employees or to indicate their
links with other workers – because there aren’t any! As he is the
only manager, there can be no other management levels. This
example shows the simplest form of business. What would happen
to the organisation of Bill’s business if it expanded?

BILL MURRAY STORE

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Organisational structure changes as
businesses expand

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Bill’s business now has a very simple organisational
structure. There are two people in the organisation and
they are specialising in different jobs. Bill now manages
the work of his shop assistant.

CONT. BILL MURRAY STORE

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Organisation charts
Bill Murray’s business had expanded rapidly. More employees had been appointed. Some of them managed the
shop because Bill spent more time on office work. Shop opening hours were lengthened. Eventually, Bill decided
to open four further stores in other towns. It became clear to Bill that his business needed the advantages of
limited company status. A business friend agreed to buy shares and become one of the directors of the company.
As the organisation was growing, Bill decided it needed a clear structure. After discussions with his directors and
senior managers, he drew up the chart below.

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In fact, this is a typical type of organisation chart for many
businesses. The most important features are as follows.
• It is a hierarchy. This means that there are different levels in the organisation. Each level has a different degree
of authority. People on the same level of hierarchy have the same degree of authority. There are five levels of
hierarchy from Chief Executive down to Shop Worker.

• It is organised into departments. Each of these departments has a particular job or function.

• As there are different levels of management, there is a chain of command. This is how power and authority are
passed down from the top to the lower levels in the organisation. Because Cosy Corner Ltd is still quite a small
business, the chain of command is quite short as there are not many levels of management. Bigger businesses
are likely to have many more levels of hierarchy and therefore a longer chain of command.

Bill decided to give a copy of this chart to all members of staff. He considered that there were several advantages
in both constructing the organisation chart as a hierarchy and informing everybody of it.

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Advantages of an organisation chart
» The chart shows how everybody is linked together in the organisation. All employees are aware of which
communication channel is used to reach them with messages and instructions.

• Every individual can see their own position in the organisation. They can identify who they are accountable to
and who they have authority over. Employees can see who they should take orders from.

• It shows the links and relationship between different departments within the organisation.

» Everyone is in a department and this gives them a sense of belonging.

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Chain of command and span of control
Look at the two organisation charts below. There are two essential differences between them.

» Business A has a tall structure and a long chain of command.

» Business B has a wide structure and a short chain of command.

As a result of these two different structures, the span of control (the number of subordinates working directly
under a manager) is wider in Business B than in Business A-– in Business A this number is two and in Business B
it is five.

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Definitions to
learn
The span of control is the number of
subordinates working directly under
a manager.
Key info:
Malaysian Airlines (MAS) recently
announced a new organisational
structure. Several levels of hierarchy
have been cut to improve
communication and to allow
decision making and accountability
to become clearer to all employees.
There is therefore an important link between the span
of control and the chain of command. The longer the
chain of command, the ‘taller’ will be the
organisational structure and the ‘narrower’ the span
of control. When the chain of command is short, the
organisation will have ‘wider’ spans of control.
There is no perfect organisational structure. In
recent years many organisations have made their
structure ‘wider’ and with a shorter chain of
command. In some cases, this has been done by
removing a whole level of management – called
delayering.
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Advantages of short chains of command
» Communication is quicker and more accurate. Each message has fewer levels to pass through before reaching the
intended person.

» Top managers are less remote from the lower level of the hierarchy. These top managers should be more in touch with
people below them as there are fewer management levels to get to know.

» Spans of control will be wider. This means that each manager is responsible for more subordinates. Why is this an
advantage?

• If superiors have more people to manage, it will encourage managers to delegate more. This is because, as their
department is larger, they cannot possibly do all the important work by themselves.

• There will be less direct control of each worker and they will feel more trusted. They will be able to take more
decisions by themselves. They may obtain more job satisfaction.

However, wider spans of control, with more people to be directly responsible for, could mean that the managers lose
control of what their subordinates are doing. The subordinates could make many mistakes if they are poorly trained.

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The span of control is the number of subordinates working directly
under a manager. (1) The factory manager is in charge of the whole
factory and has a span of control of 3 people. (1) The production
supervisor has a wide span of control of 6 production workers (1)
and the finance office supervisor only has a narrow span of control
with 1 worker below them. (1)

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The majority of candidates correctly completed the blank
organisation chart. However, errors included making up
their own jobs instead of using the ones given in Appendix
3 or putting the machine maintenance worker in the
wrong position. Many candidates could not go on to
explain the span of control using their chart. There was
often confusion between span of control and chain of
command.

EXAMINER COMMENT

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Span of control will be wider therefore more
delegation (1).

Her 3 employees will have more varied jobs to do

and therefore they will be more motivated (1) and
less likely to leave their job (1) of making food at
the food stall (1).
• communication is quicker
• manager is less remote
• span of control will be wider therefore more
delegation
• more direct control of employees

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The majority of candidates found this quite a challenging
question. The main benefit of a short chain of
command is to bring about quicker communication so
that responsive action to a problem or request for
information can be speedy and effective. Not many
candidates were able to explain this but some did discuss
the likelihood of clear understanding of messages and
fewer of them being confused because there were not so
many people in the chain of command.

EXAMINER COMMENT

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For example:
Span of control is the number of subordinates working directly
under a manager (1). This makes it easier to delegate. (1) E.g.
The span of control for Hilda is 3 (ap) these are the
Administration manager, Hotel manager and Restaurant
manager, if their motivation increased it will be better for Hilda
to focus on more important responsibility of how to attract
more customers during country x growing (an).
For example:
Chain of command is the structure in an organisation,
which allows instructions to be passed down from senior
management to lower levels of management (1). This
makes communication quicker. (1) E.g. DH has a short
chain of command (ap) as any instructions need to pass
from Hilda at the top to the employees at the bottom such
as the waiters so, Hilda might be more likely to provide
immediate response to guests inquiries.(an).
Span of control explanation might include:
• Span of control is the number of
subordinates working directly under a
manager
• This span of control is narrow
• It is only 3 people
• Makes it easier to delegate
Chain of command explanation might include:
• Chain of command is the structure in an
organisation, which allows instructions to be
passed down from senior management to
lower levels of management
• This chain of command is short
• It has only 4 levels
• Hilda, the general manager, is at the top of
the hierarchy and any instructions will pass
through a further three levels down to the
lowest level, such as receptionists or waiters •
Makes communication quicker •
Communication is less likely to be distorted •
Hilda is less remote from the lower level
employees in the hierarchy
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ROLES, RESPONSIBILITIES AND INTER -RELATIONSHIPS BET WEEN PEOPLE I N
ORGANISATIONS
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ROLES, RESPONSIBILITIES AND INTER -RELATIONSHIPS BET WEEN PEOPLE I N
ORGANISATIONS
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All organisations, including businesses, have managers. They may not
be called managers because different titles can be used – leader,
director, headteacher, and so on. Whatever their title the tasks of all
managers are very similar, no matter what the organisation. If you are a
student in a school or college or if you are in full-time employment, the
managers of your organisation will, at some time, have to fulfil the
following functions.

The role and functions of management

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Planning
Planning for the future of the organisation involves setting aims
or targets.
These aims or targets will give the organisation a sense of
direction or purpose. There will be a common feeling in the
organisation of having something to work towards. It is a poor
manager who does not plan for the future at all. In addition to
these aims, a manager must also plan for the resources which
will be needed.
For example: ‘To achieve our aim of increasing student
numbers in the sixth form, we will need to build a new sixth
form centre’ or ‘Increased advertising expenditure will be
needed to increase sales of our fruit juices.’ These are two
examples of strategies which are designed to help the
organisation achieve the aims set for it.

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Organising
A manager cannot do everything. Tasks must be
delegated to others in the organisation. These people
must have the resources to be able to do these tasks
successfully. It is therefore the manager’s responsibility
to organise people and resources effectively.

An organisational chart can help to show who has the

authority to do different jobs. It also helps to make sure
that specialisation occurs and that two people do not
end up doing the same task. An effective manager will
organise people and resources very carefully indeed.

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Coordinating
Coordinating means ‘bringing together’.
A manager may be very good at planning and organising but may have failed to
‘bring people in the organisation together’. This is a real danger with the
functional form of organisation.
Different departments can be working away in their own specialist area without
making contact with people from other departments. For example, there is no
point in the Marketing department planning the launch of a new product unless
they have worked with (coordinated with) the Operations department.
It is the Operations department that will have to produce the product at the right
time, in the right quantities.
A good manager will therefore make sure that all departments in the
organisation work together to achieve the plans originally set by the manager. In
the example above, this could be done by regular meetings between people in
the different departments. Alternatively, a project team could have been set up to
develop and launch the new product. The team would be made up of people from
different departments.

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Commanding
Many people think that this is all managers do! In fact,
the task of management is more concerned with
guiding, leading and supervising people than just telling
them what to do – although this may be important too.

Managers have to make sure that all supervisors and

workers are keeping to targets and deadlines.

Instructions and guidance must be provided by

managers and it is also their responsibility to make
sure that the tasks are carried out by people below
them in the organisation.

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Controlling
This is a never-ending task of management. Managers must
try to measure and evaluate the work of all individuals and
groups to make sure that they are on target.
There is little point in planning and organising if managers
then fail to check that the original aims are being met.
If it seems that certain groups are failing to do what is
expected of them, then managers may have to take some
corrective action. This is not necessarily disciplining staff –
although that might be important.
There might be reasons for poor performance other than
inefficient workers – it is the manager’s job to find out why
targets are not being met and then to correct the problem.
Briefly, It verifies that all tasks are performed on time.

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Management is not easy to define, but the list of tasks
above helps to demonstrate the varied and important
work that good managers should be doing.

it should also become clear why management is

necessary to any organisation. Without clear and
effective management, a business is going to lack:

» a sense of control and direction

» coordination between departments, leading to wastage

of effort » control of employees

» organisation of resources, leading to low output and

sales.

In short, without management to take the business

forward, the business will drift and eventually fail.

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 Organising the employees (1)

Functions might include:

To manufacture the playground equipment (app)

• Planning - setting aims for the business such as sales

targets of increasing output of 3 large items of playground
equipment per week
• Organising - Kaari organises the tasks for the 3
employees
• Coordinating – the tasks for the job production
• Commanding - Kaari instructs the employees on how to
manufacture the new unique product
• Controlling - Kaari controls the employees so that 15
small items of playground equipment for home use is
produced each week.

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The Operations Manager needs to control
the department. (1) This will involve
ordering the ingredients to ensure that
the planned production of cakes can be
made (1) otherwise bakers (1) may not be
able to bake the batches of cakes
ordered. (1)
Planning – sets aims/targets; plan for
necessary resources
Coordinating
ensure departments working
together; aims/tasks linked
together; chair regular meeting
between departments
• Organising – delegate tasks; people and resources; ensure everyone
working effectively/no duplicated tasks
• Commanding – guiding employees; leading/supervising employees;
ensure employees keep to targets/tasks
• Controlling – measure/evaluate work of employees; identify poor
performance/identify problems
Examiner Comment:
It was pleasing to see strong explanation and reasoning from some candidates
as they considered each function of the Operations Manager. The best Level 2
responses were most often the ones explaining the key skills of planning,
organising and controlling the operations at DD. Some good answers explained
the benefits of planning the ordering of appropriate quantities of ingredients for
a particular batch of cakes, or the advantages of controlling quality by
undertaking regular cake tastings. Weaker candidates showed insecure
knowledge of this new area of the syllabus and instead discussed aspects of
human resources management such as recruitment and pay. Those candidates
who gained Level 3 credit were able to make an effective judgement about the
most important management function of the Operations Manager. They often
cited controlling quality as the key because the future reputation of DD would
be dependent on positive feedback from customers.
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 Even when Bill’s business was still very small with just
one employee it was possible to see a very important
idea being used. This idea is called delegation.

It is very important to remember that it is the authority to

perform a task which is being delegated – not the final
responsibility. If the job is done badly by the subordinate
Delegation then it is the manager who has to accept the
responsibility for this.
means giving a subordinate the
authority to perform particular
tasks.

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Advantages of delegation for the manager
» Managers cannot do every job themselves. As we have seen, it became very difficult for Bill to control all of the
running of Cosy Corner by himself. By delegating, he was able to concentrate his time on other important
management functions.

» Managers are less likely to make mistakes if some of the tasks are performed by their subordinates.

» Managers can measure the success of their staff more easily. They can see how well they have done in
performing the tasks delegated to them.

Why might a manager not delegate?

Some may be afraid that the subordinates might fail and the manager wants to control everything by themselves.
Also, there is a risk that the subordinates might do a better job than the manager! This could make the manager
feel very insecure.

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 The senior managers will be able to concentrate
their time on other important management
functions
as they often complain they have too many tasks to do
(app). If the senior managers are carrying out too many
basic tasks it will allow less time to focus on more
important decisions such as developing a new car (1)
making it more likely for mistakes to be made or
opportunities missed (1).
Relevant disadvantages might include:
Relevant advantages might include:
• able to concentrate their time on other important
management functions – as they complain that they have too
many tasks to do – delegating tasks will allow them to
concentrate on the most important tasks – leading to better
decisions being made
• less likely to make mistakes if some of the tasks are carried
out by others – have time to focus on specific tasks – not
rushed or too many other tasks to complete taking up time
• can measure tasks performed by juniors more easily –
easier to measure the success of their staff – more motivating
• may be afraid subordinates perform the tasks better than
them – makes them insecure
• subordinates may make mistakes – as they may not be
trained to perform all the tasks they have been asked to do –
for example order the wrong components for the cars
• tasks are still the senior managers responsibility if things go
wrong – if junior managers carrying out the tasks make
mistakes – it is the senior managers who will have to sort out
the problems
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Advantages of delegation for the subordinate
» The work becomes more interesting and rewarding.

» The employee feels more important and believes that trust is being put in them to perform a job well.

» Delegation helps to train workers and they can then make progress in the organisation. It gives them career
opportunities.

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Why is it important to have good managers?
A good manager should:

» motivate employees

» give guidance and advice to employees they manage

» inspire employees they manage to achieve more than they thought possible

» manage resources effectively and keep costs under control

» increase profitability of the business.

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Importance of having a good managers

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Restaurant Managers can focus on their most
important tasks (1) which will help them to make
better decisions for the fast-food restaurants (app).
Advantages could include:
Restaurant Managers cannot carry out every job
themselves/reduce workload – they can then focus
on the most important tasks at the fast food
restaurant and make better decisions
Gives the Restaurant Managers time to assess
employees performance below them in the
hierarchy – they can then identify where employees
need more support/training in developing/cooking
new recipes
Disadvantages could include:
Restaurant Managers could lose some control
over subordinates – mistakes may be made leading
to worse reputation if food is served longer than 5
minutes after ordering
Restaurant Managers may be reluctant to give
up some control – if Assistant Managers do a good
job carrying out the delegated tasks such as
ordering new ingredients for the meals
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Sadiq may have more time to spend carrying
out his tasks (1)
such as marketing the hotel (app) so he will be
able to concentrate on these tasks and be less
likely to make mistakes (1) improving the
reputation of the business and potentially
increasing sales (1).
Relevant advantages might include:
• Would allow Sadiq to give more time to other tasks - more
time to make better decisions as not rushed - improves the
success of the hotel / less likely to make mistakes
• Sadiq could keep more control of the whole business - if he
has some time to devote to checking on and communicating
with his employees – he will be more aware of what is
happening in the business and if anything needs changing
• Employees could be more motivated – as feel trusted to do
additional tasks / work is more interesting – increases
efficiency
• May be able to monitor/measure success of employees
more easily
• Employees may be more productive as their skills are
developed
Relevant disadvantages might include:
• Sadiq could lose some control – as tasks are carried out by
employees who may not know what to do – employees may
make the wrong decisions
• Sadiq may need to train the employees – so that they know
how to carry out the delegated tasks – which will increase
costs in the short-term
• Mistakes may be made by subordinates – this may lead to
customer complaints – bad reputation for the business
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Managers will be responsible for planning the
resources needed in production (1) to ensure there
is sufficient wool to manufacture the rugs (app).
Award one additional mark for each explanation
applied in this context.
Directors : Deciding the direction/strategy of the
business – expanding into new markets in other
countries
Managers: Planning the resources needed for
production – ensuring there is sufficient wool to
manufacture the products
Supervisors: Ensuring that the employees do their
job correctly – this would ensure that they
maintain their reputation for excellent customer
service
Production employees: To carry out their tasks
effectively – to help ensure they produce rugs
with the correct standard patterns
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The director is responsible for the production
methods used (1) so that AD can meet
demand for agricultural equipment. (app)
Relevant responsibilities might include:
• Responsible for the work of everyone in their
department/delegation of tasks – as factory
workers have high productivity
• Liaise with other directors – such as the
Human Resources Director when more production
workers are required due to expansion
• Maintaining quality products – as AD’s tractors
have a reputation for being high quality
• Overseeing production methods used – for the
production of diggers and ploughs
• Planning production to meet deadlines and
satisfy consumer demand – as AD is planning to
expand output and start selling in other countries
• Communication/passing on information –
for example, Managing Director to 100 production
workers
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Leadership
Studies on motivation have emphasised the importance of good management in business and the need for leadership. There are
many leaders in society – from politicians, religious leaders and captains of sports teams, to leaders of large businesses. Many
people take on the role of being a leader and some are more effective than others. A good leader in a large business is someone
who can inspire and get the best out of the workforce, getting them to work towards a common goal.
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Styles of leadership
Leadership styles are the different approaches to
dealing with people and making decisions when in a
position of authority

There are different approaches to leadership that are

adopted and these can be summarised into three main
leadership styles:
◦ autocratic leadership
◦ democratic leadership
◦ laissez-faire leadership.

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Autocratic leadership is where the manager expects to be in charge of the business
and to have their orders followed. They keep themselves
separate from the rest of the employees. They make virtually
all the decisions and keep information to themselves. They
tell employees only what they need to know. Communication
in the business is mainly one way, that is, downward or top-
down, and the workers have little or no opportunity to
comment on anything.

Potential advantage

» Quick decision making, for example, during a crisis.

Potential disadvantage

» No opportunity for employee input into key decisions, which

can be demotivating.

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Democratic leadership gets other employees involved in the decision-making
process. Information about future plans is openly discussed
before the final decision is made, often by the leader.
Communication is both downward or topdown, and upward or
bottom-up.

Possible advantage

» Better decisions could result from consulting with

employees and using their experience and ideas – as well as
being a motivating factor.

Possible disadvantage

» Unpopular decisions, such as making workers redundant,

could not effectively be made using this style of leadership.

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Laissez-faire leadership Is French for ‘leave to do’. Laissez-faire leadership tends to
make the broad objectives of the business known to
employees, but then they are left to make their own decisions
and organise their own work.

Communication can be difficult in this type of organisation as

clear direction is not given.

The leader has only a very limited role to play.

Possible advantage

» Encourages employees to show creativity and responsibility.

Possible disadvantage

» Unlikely to be appropriate in organisations where a

consistent and clear decision making structure is needed, for
example, in providing customer service.

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 They could use a democratic leadership style (1)
where communication is both downward and upward
allowing the experience of employees to be considered by
the owners (1) leading to possibly better decisions being
made (1) about how to operate the theatre (app).
Autocratic
The manager expects to be in charge and have all
orders followed
Manager keeps themselves separate from the
employees
Manager makes all the decisions and keeps
information to themselves
Communication is one-way/employees having no
opportunity to comment or take part in any decisions
about business
Decision-making is quick
Democratic
Gets employees involved in decision-making about
the business
Information about future plans for the business
shared with employees and discussed before owners
make the final decision
Communication is both downward and upward
allowing the experience of employees to be considered
by the owners – leading to possibly better decisions
being made
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Cont. Democratic
Motivating for employees as they feel more involved
in the business – less likely to leave/reduced labour
turnover

Laissez-faire
Main objectives of the new business are shared with
employees but then they are left to organise their own
work and take decisions without any interference
Communication can be difficult as the leader has
little involvement in the decisions being made
Employees can be motivated as they are valued and
trusted to take the decisions
Employees can be creative with fresh ideas about
how to operate the business

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Better decisions may be made by Yasin (1)
Because employees are asked for their
opinions before decisions are made (1). Yasin
only employs 3 people (app) so it will be easier
for them to offer additional ideas from their
own experience of doing the job (1).
Advantages:
Better decisions – as employees are consulted – may offer
additional ideas from own experience of doing the job
Motivating for employees – asked to offer opinions before
decisions are made – feel more trusted/valued – less likely
to leave/lower labour turnover
Employees work better due to their sense of
belonging/builds a relationship – more productive/positive
Disadvantages:
Takes time to consult employees – Yasin and the
employees could be more productive doing other jobs – less
productive/less output produced
Unpopular decisions may be difficult to make – such as
making employees redundant – may be less effective if
employees are asked for their opinions as the decision may
affect them directly – therefore opinions may be biased
Employees may not have the experience to make suitable
contributions – unable to make helpful suggestions
Suggestions made by employees may be different to the
objectives of management – may lead to conflict/confusion
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 Laissez-faire (1)

The broad objectives are provided by the

Managing Director, but the store managers (app)
are left to make the individual decisions in the
running of each store. (1) This could mean that Leadership styles identified could be:
each store is managed differently and there is
not a consistent approach (1). Autocratic
Democratic
Laissez-faire

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Recommend and justify an appropriate
leadership style in given circumstances
The style of leadership used by a manager can vary depending on the employees being dealt with and the problem
to be solved. For example, managers may not be autocratic leaders all of the time – it may be appropriate for them
to be democratic over some issues, whereas other issues will need a decision imposing on the workforce.

Different situations often require different styles of leadership. The way in which a manager deals with a
situation can have a very important impact on people and how they react to the manager. It is important to
remember here that a good manager will adopt the style of leadership that best suits each situation.

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Laissez-faire
• Main objectives of the new business shared with
employees but then they are left to organise their
own work and take decisions without any
interference which can be motivating
• Communication can be difficult as the leader has
little involvement in the decisions being made
Democratic
Information about future plans of the window
cleaning business shared with employees
and discussed before owner makes the final
decision …
Autocratic
Bob will make all the decisions and keep
information to himself – employee 2 likes to be
told what to do
Autocratic might be best so that Bob gives
clear instructions to be followed by his two part-time
employees. They may not be there all the time or working
together and mistakes may be made if decisions are left
to these two people. They will not have all the information
about the business and what the future plans are.
Autocratic
• The manager expects to be in charge and have all orders followed – such as which
cleaning materials should be used
• Manager keeps himself separate from the two part-time employees
• Communication is one-way with employees having no opportunity to comment or
take part in any decisions about the cleaning services which can be demotivating
• Decision making is quick
Democratic
• Gets employees involved in decision-making – and employee 1 is happy to be asked
what he thinks
• Communication is both downward and upward allowing the experience of both part-
time employees to be considered by the owner, leading to possibly better decisions
being made
• Motivating for employees as they feel more involved in the business – less likely to
leave
• May be time consuming to ask employees – reducing the work carried out by the two
employees
• Unpopular decisions may need to be made and employee ideas ignored
Laissez-faire
• Employees can be motivated as are valued and trusted in to make the decisions
• Employees can be creative with fresh ideas about how to wash windows more quickly
• Not suitable if a clear direction is needed and consistent approach to customers
Democratic might be suitable as there are only two employees and Bob may have a close
working relationship with them. This may make autocratic less likely to be used as it may
require Bob to keep his distance from his employees and this would not make for a good
working relationship in the business.
Laissez-faire is not suitable as consistent customer service is required to maintain a good
reputation for cleaning windows and for the business to gain more customers.
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 Being a member of a trade union gives strength in
numbers so workers are more likely to achieve their
demands [k]
rather than if one worker tries to achieve the demands on their
own (an). At the moment CC does not allow a worker to be a
member of a trade union (ap). Production workers are only paid
low wages and they may want to be members of a trade union in
order to gain a pay rise. This is better than demanding higher
wage individually. (an)
• Gives strength in numbers/collective
bargaining so more likely to achieve
demands
• Provides services such as insurance
• Improved pay
• Improved working conditions/health and
safety
• Representation in grievances
• Represents the views of the workers
• Advice can be given if the worker has
problems
• Legal support if the worker has problems •
Access to training/education
• Social activities/clubs
• Unions membership benefits e.g. discounts
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Easier to negotiate with employees (1) because all
the 200 production workers are in a trade union and
so there is only one representative to negotiate with
(1). This will take less time for ACE to negotiate wage
rates as otherwise it might need to discuss pay with
many of the 200(ap) production workers (1).
Advantage:
• Easier to negotiate with employees
• Negotiation over wages takes less time.
Disadvantage:
• Strength in numbers may lead to more disputes
• Easier to organise industrial action
• Industrial action may lead to a poor reputation
for the business
• Higher costs if wages increase.
Examiner comment:
(a) This was a poorly answered question as many
candidates did not actually answer the question asked.
Many candidates did not realise that the question asked
for the advantages and disadvantages to the company
and not to the trade union members. Only better
candidates appreciated the advantages of structured
negotiations with one union and not hundreds of
individuals. Strikes and disruption to production were
often mentioned as a disadvantage, even by those
candidates who approached the advantage from the
viewpoint of the employee. Others identified higher wage
costs and possibly lower profits as a disadvantage.
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The managers could use a democratic management style (1)
This would make employees feel more involved in decision making and
therefore increase worker motivation.(1) Production workers who make
the ovens (ap) could be asked for their views on how the ovens are
manufactured, but this takes more time to carry out. (1)

Examiner comment:

(b) The majority of candidates were aware of the management styles of

democratic, autocratic or laissez-faire and their corresponding
advantages and disadvantages, but the word, ‘motivation’ in the
question seems to have encouraged some candidates to describe
motivational theories instead. Better candidates developed their
answers by discussing the advantages and disadvantages of two of
these management styles and then made a recommendation, which
included a comparison of the two styles, as to which was the better one
to use for this business. The answer could have easily been applied to
this business as labour turnover is high and therefore democratic
management style might be more appropriate or the nature of the
business is production work and therefore workers need to be told what
to do and so autocratic management style might be better.

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Trade unions
Employees generally share many of the
same interests, such as improving their pay,
having a pleasant environment in which to
work, being treated fairly by their employer,
being given proper training and working in a
safe environment.

Forming a trade union is a way of helping

employees to achieve improvements in
these different aspects of their employment
– a trade union is a type of pressure group.

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Trade unions
A trade union is a group of employees who have joined together to ensure their interests are protected. When a
person starts work they may be asked by someone who represents a trade union if they want to join. If the worker
decides to join the trade union, they will pay an annual subscription (a yearly fee).
Effects of employees being union members:
◦ Strength in numbers when negotiating with employers.
◦ Improved conditions of employment, for example, rates of pay, holidays and hours of work.
◦ Improved environment where people work, for example, health and safety, noise, heating.
◦ Improved benefits for members who are not working because they are sick, retired or have been made redundant.
◦ Improved job satisfaction by encouraging training.
◦ Advice and/or financial support if a member thinks that they have been unfairly dismissed or made redundant, have
received unfair treatment, or have been asked to do something that is not part of their job.
◦ Benefits that have been negotiated or provided for union members such as discounts in certain shops, provision of sporting
facilities or clubs.
◦ Trade unions often meet government officials to influence policies for the benefit of workers

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Disadvantages for an employee of trade
union membership:
◦ It costs money to be a member.
◦ Workers may be required to take industrial action even if they don’t agree.
Trade unions can have both advantages and disadvantages for employers too:
◦ They can help improve communications between workers and management.
◦ Wage agreements will be easier to negotiate with a trade union than with many individual workers.
However:
◦ trade unions can organise strikes if they do not receive the pay levels and work conditions they demand
◦ wages are likely to be higher – adding to business costs – when many employees are trade union members.

Make sure you can explain the advantages and disadvantages of trade union
membership from both the employees’ and employers’ viewpoints.

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