Chapter 23-Organisation

Structure and Employees

Quote:
There is no substitute for hard
work. – Thomas Edison
 Organisational Charts
Organisation chart
• Diagram that shows the different job
roles in a business and how they relate.

Formal organisation
 Its the internal structure of a business as
shown by organisation chart
It normally shows the following:
How the business is split into functions or
departments
The roles of employees and their job titles
Who has responsibility
To whom people are accountable
Communication channels Hierarchy
The relationship between different positions in  order or levels of responsibility in an
the business. organisation from the lowest to the
highest.
 Employees and responsibilities
Directors:
They are appointed by the owners
to run the business
They make all important decisions
in the business.
They also have authority over the
managers in the layer below.
Managers:
They are responsible for planning,
controlling, organising, motivating,
problem solving and decision
making.
They are also leaders and help to
guide and shape the business.
Supervisors:
Supervsors monitor the work in
their particular area.
They have authority over
operatives and general workers.
Operatives:
Operatives are skilled workers
They are involved in the
production process.
They are accountable to
supervisors or managers.
They have more status than
general staff because they are often
skilled.
General staff:
Businesses often employ staff that
do not have any specific skills
However, with training they can
perform a variety of tasks and gain
promotion to other position.
Professional staff
They are skilled and highly trained
e.g.lawyers, accountants & doctors.
In palces where lots of
professionals are employed,
organisation charts may be
different.
 Features of organisatioal
structures
1. Chain of command
 It is the route through which orders are
passed down in the hierarchy.
Note
Orders will pass down through the layers from
the top to bottom
Information may also flow back from the
bottom to the top
If the chain of command is long:
Messages may get lost or confused as they
pass up and down the chain.
Changes might not be accepted lower down
the chain.
2. Span Of Control
 The numbers of subordinates a person is
directly responsible for
Note
 Narrow span of control: allow for closer
supervision, more layers in hierarchy may
be required, helps more effective
communication
 Wide span of control: gives subordinates
more independence, more appropriate if
labour costs are significant, reduce number
of managers
Factors affecting span of control:
 experience and personality of manager
 nature of business
 skills and attitudes of employees
 tradition and culture of organisation
 Features of organisatioal
structures
4. Flat Structures
 A flat structure means there are a
fewer layers in hierarchy.
Note:
The chain of command is short but
the span of control is wide.
Implications
Communication is better because
chain of command is short.
Management costs are lower because
there are fewer layers of management.
Control may be frendly and less
formal because there is more direct
contact between layers.
4. Hierarchical(Tall) Structures
 A tall structure means there are more layers in
hierarchy.
Note:
The chain of command is long and span of
control is narrower.
Implications
Communication through the whole structure can
be poor because there is a long chain of command.
Management costs will be higher.
There may be a clear route for promotion that
might help to motivate staff.
Staff control tends to be more formal and less
friendly because of all the layers in the hierarchy.
 Features of organisatioal
structures
5. Delegation Key point
 Authority to pass down work from  One change in recent years has
superior to surbodinate. been a switch to flatter structures. This
Postive effect has helped to cut managerial costs.
Sometimes delegation can motivate  It has also given more responsibility
workers because they feel as though to other workers, which may help to
they being trusted to carry more difficult motivate them.
work
Negative effect
However, if employees think that
'extra' work is being given to them
without any reward, they may be
dissatisfied.
Note:
To extent to which delegation takes
place will often depend on whether
decision making is centralised or
decentralised.
 Page 79
Questions: Discuss the strengths and weaknesses
of delegating all responsibility to the manager
(5)
 Ronald and Jazwinder give the appointed manager authority to
do work. The manager might think that 'extra' work is being
given to him/her without any reward, he/she may be
dissatisfied. The manager may not organise the coffee shop in
the manner that they want. This may lead losing the customers.
But by appointing the manager to take control of the shop will
help them cope with increasing number of customers and this
means the workload of Ronald and Jazwinder reduce giving
them more time to do other work such as finances of the
business.

De/Centralisation
Centralised
Type of organisation system where most
decisions are made at the top of the organisation
and then passed down the chain of command.
Advantages
 Senior management has complete control over
resources.
Senior managers are trained and experienced in
decision making.
It prevents parts of the business e.g.
departments acting independently.
Coordination and control is easier.
Disadvantages
 Employees may be demotivated without any
authority.
it brings less creativity and fewer ideas
Procedures may be needed to make decision
making easier.
People at the top may be out of touch with the
needs of customers served by more local
employees.
Decentralised
Type of organisation system
where decisions making is pushed
down the chain of command and
away from the top.
Advantages
Workers have autonomy and may be
better motivated.
It speeds up decision making
It takes pressure off senior managers
by reducing their workload.
Workers get the opportunity to be
creative and share their ideas.
It provides more promotion
opportunities at the different managerial
levels.
Disadvantages
Senior managers may lose control of
resources.
Costs may be higher owing to less
standardisation and more variability in
decision-making process.
Some employees may not have the
ability to make decisions.
 Organisation chart and
Growth
As businesses grow, the formal organisation is likely to change:
Most businesses, because they start small, have an entrepreneurial structure. This means
that decisions are made centrally-by the owner or key workers.

As a business grow, they may introduce a traditional structure. This is where the structure
is based on a hierarchy and decision making is shared throughout the business.

In some business, a matrix structure is favoured. This is where employers are put into
teams that cut across departmental roles. They may work together on a specific project-
designing a new product.
 Past paper questions

• Multiple choice questions;

 Page 5-Question 1 (a) (v)
 Page 38-Question 1 (a) (v)
 Page 103-Question 1 (a) (iii)
 Page 137-Question 1 (a) (ii)
• Structured questions
 Page 39-Question 1 (b)
 Page 79-Question 5 (b)
Chapter 24-Departmental
functions
Quote:
There are no traffic jams on the
extra mile. – Zig Ziglar
 Departmental functions
Introduction Human resource(HR) Department
Departments are sections in a It is responsible for the welfare of
business where all employees have employees.
similar skills and specialise in particular The main taks completed by the
activities. department include the following:
A business may be divided into four Workforce planning.Involves calculating
departments: the number and type of staff required.
Human resource Recruitment and selection
Finance Training
Marketing Comply with health and safety legislation
Staff welfare-responsible for meeting the
Production
welfare needs of employees
Employment isues. They have draw up
contratcs of employment for employees.
Subject vocabulary
Industrial relations. Involved in
Contracts of employment
negotiations between employers and
Unfair dismissal
employees
Employment tribunal
Dismissal & redundancy. Workers may
Market orientated
be forced to leave a job therefore, the HR
Wholesaler
will handle.
Pharmceutical
Automotive
 Departmental functions
Finance department
Marketing department
It is responsible for administering and
Many businesses are market
monitoring all financial transactions
orientated. This means that the main
carried out by the business.
focus for businesses is the customer.
In a large business, the following tasks
The marketing department may be
may be carried out:
involved in the following activities:
Recording transactions-Purchases and
Market research: People may be
sales must be recorded by a business to
empoyed gathering, processing and
prepare financial statements.
presentating data about customer needs,
Wages and salaries. This involves
markets and competitors.
processing wages and salaries for all
Product planning:This involves
workers e.g.provide wage slips to
deciding which products should be
workers.
marketed.
Credit control. This involves monitoring
Pricing: The marketing department has
the amount of money owed by
to decide what prices should be charged
customers.
for the range of products sold by the
Cash flow forecasting and budgets.
business.
The department is responsible for
Sales promotion e.g. free gifts,
controlling the firm's money.
coupons, discounts, buy-one-get-one-
free offers, competitors and loyalty
cards.
 Departmental functions
Continuation on.......The marketing
department may be involved in the
following activities:
Advertising:Businesses have to
create innovative and effective
adverts
Customer service: An increasing
number of businesses focus on the
importance of providing good quality
customer service.
Public relations-communication
between the company and the
general public, including shareholders
and potential investors hence its
managing the company's image.
Packaging: Its important because it
often says a great deal about the
product itself.
Distribution of goods and services
Production department
It involves making goods and services. This
will depend which sector the business is
operating in i.e. Primary sector, Secondary
sector or Tertiary sector.
Other activities that may be carried out in
production department:
Designing products
Purchasing resources e.g. raw materials.
Stock control e.g. controlling, supplying,
handling and provide information.
Maintenance. They might be responsible for
cleaning and the maintenance of machines
and property.
Research and development. They are
responsible for the investigation and
discovery of materials, processes and
products
 Departmental functions
Relationships and interdependence between departments
•It is very important for departments to work together. They are
interdependent, which means that they rely each other for their
success.
Some examples of relationships and interdependence between
different departments include:
The production department may have to meet with the marketing
deparment to discuss changes to a customer's order.
The welfare officer from human resources department may have to
meet the sales director to discuss customer complaints about one of
the sales people.
The HR department will need to communicate regularly with the
finance department to discuss wages and salaries.
The finance department may have to communicate with the
production department to ensure that designs for a new product are
profitable.
 Past paper questions
Structured questions
 Page 60-Question 3 (c)
 Page 120-Question 1 (c)
 Page 54-Question 1 (b)

1. (b) State two functions of the Human Resources

(Personnel) department. (2)
 Advertise vacancies
 Prepares job descriptions/person specifications
 Interviews/selects staff
 Negotiates with trade unions on pay and working
 conditions
 Warn and discipline staff if necessary
 Training
 Page 60-Question 3 (b)

Covers-up Ltd has three directors. Each director has

responsibility for only three employees.
3 (b) Explain one benefit for the directors of having a
narrow span of control. (4)
 The director only having 3 people means that he only
has a small number to be responsible for, so that
communication between him and them is much
better and therefore this should reduce the amount
of errors/misunderstanding. The director knows
exactly what is going on in the business and the
strengths and weaknesses of each of their
employees.
 Page 120-Question 1 (c)

1 (c) To help FF Ltd carry out its work, it has

several departments. These include:
• Purchasing
• Production.
Using an example of a job, explain how these
departments help FF Ltd.
(i) Purchasing department (3)
 Continuation...
of Job (Buyer)
Explanation
• places orders (1) – to FF Ltds suppliers for cloth
to be imported
• Find most suitable product to purchase for the
business and negotiates price
 Continuation...
of Job (Production Manager)
Explanation
• production planning/production control so FF
Ltd can meet the demand for its curtains
orders sent out time/meet deadlines
 quality control make sure the curtains are of
a high quality to reduce complaints