19 - Improving Organisational Structures Flashcards
Organisational chart
A diagram showing job titles, lines of communication and responsibility within a business.
An organisational chart should include the following features:
- where the responsibility and authority for decision making lies within the business.
- the job titles and roles of positions in the business (and the name of the person currently holding that position).
- the lines of authority which show who each employee is accountable to and who they are responsible for.
- the lines of communication through the business.
The way in which the organisational structure is developed by a business owners may take into account a number of factors:
- THE BUSINESS ENVIRONMENT. Is the market very competitive and does the business need to keep costs low and be as up to date as possible?
- THE SKILLS OF THE EMPLOYEES. If the business is made up of a small number of highly trained professionals, the organisational structure may be very different to a firm employing a larger number of unskilled or semi-skilled workers.
- THE CULTURE OF THE ORGANISATION. If the business has gained its market share based on originality, cutting-edge design and flair, the organisational structure must not restrict creativity. However, the firm may have developed its place in the market because of an emphasis on traditional values, with consistency being very important.
Levels of hierarchy
The number of layers of management and supervision existing in an organisation.
Chain of command
The lines of authority in a business.
The more layers that exist in the hierarchy, the longer the chain of command from those at the top to those at the bottom of the organisation.
Lines of communication
How information is passed up, down and across and organisation.
Organisations with lots of layers can lead to communication problems because the lines of communications are stretched, which can slow down the movement of important information.
This can cause particular difficulties for smaller businesses that have to stay in touch with market conditions if they are to maintain their market share.
Span of control
The number of subordinates, on job/post holder is responsible for.
A narrow span of control allows for close supervisor ion of the work of employees, whereas a wider span gives subordinates the chance for more independence.
Organisational structure
The way the jobs, responsibilities and power within a business are organised.
Work load
How much work one employee, department or team have to complete in a given period of time.
Job roles
The tasks involved in a particular job.
Delegation
Passing the authority to make to make decisions to somebody further down the organisational hierarchy.
The owners of successful businesses can become overwhelmed by workload and the number of decisions made. By appointing employees who are willing and able to accept authority, business owners can delegate tasks and some decision making.
One very important principle of effective delegation is that the final responsibility for a decision still remains with the delegator - the person who delegated the authority.
Communication flows
How information is passed around an organisation including downwards, upwards, sideways and through the grapevine or gossip network.
Why are good internal communications important?
- A managers and employees should be aware of the objectives of the business. This will provide focus and motivation. Decisions will be made in that aim to increase the chances of achieving these objectives.
- Customer needs can be met: market research, after-sales service and increasingly business ‘blogs’ are used to gather information about customer satisfaction, which must be communicated to the appropriate department so changes can be made.
- decision makers are aware of ideas and improvements for the business: in a competitive market, this could mean the difference between success and failure for a small or growing firm.
- decision makers are promptly aware of changes in the business environment: this could be a new competitor entering the market or a change in tastes and fashion.
Workforce role
The tasks involved in a particular job within an organisation.
- Supervisors. People who are directly responsible for one or more subordinate depending on whether the organisational structure is tall (narrow span of control) or flat (wide span of control). Essentially, the role of the supervisor is to allocate jobs to subordinates and ensure that tasks are carried out to a satisfactory standard.
- Team leaders. Employees who facilitate the functioning of a group within the organisation. Rather than allocating jobs, the team leader ensures that the work load is spread fairly between team members, that the resources required by the team are available, and that the deadlines are met.
- Managers. Employees who oversee the operation of a specific area of a business.
- Directors. Appointed by the shareholders to oversee the running of the business. They usually take responsibility for a particular function/area of the organisation.
Improving the organisational structure to enhance business performance:
- Cutting overhead costs. A business is facing increased price competition and needs to reduce overhead costs. In this case it might be that a level in the hierarchy is removed.
- Revising workloads. An additional role, or level of hierarchy, may be needed. This would then allow the manager to delegate certain duties and decisions to this additional person to revise work loads.
- The growth of the business. Does the structure need to become more formal, and roles clearly defined? By making adjustments to the structure, the business can operate more efficiently, perhaps changing from an entrepreneurial structure to a hierarchical structure with a few levels in the hierarchy.
- Responding to market conditions. Have new competitors entered the market, forcing prices own and increasing the need for financial efficiency? Can flatter, less hierarchal structure achieve this?
