Chapter 41- Organisation Flashcards
Definition of organisational chart
- A diagram that shows the hierarchy in a business (top-bottom)
Definition of span of control
- The number of employees for whom a manager is responsible for
What does a wide span of control mean?
- The manager is responsible for many employees
What does a narrow/thin span of control mean?
- The manager is responsible for relatively few employees
What is the best span of control ?
4 or 5
What happens as span of control increases?
- The number of channels of communication increases
- So effective communication breaks down
What happens if there is a small span of control?
- The number of layers/levels in the hierarchy will increase
- This means there will be more layers for communication to pass through making effective communication less likely.
What are the factors that depend on how many people are involved?
- personality of the manager
- size of the business
- skill/experience of the employee
- degree of competition in the market
- whether or not the business is centralised
Definition of chain of command
- It’s concerned with the way in which responsibility for employees is organised within a business
Definition of levels of hierarchy
- This refers to the number of levels/layers in a business organisation
What will depend on the number of levels or layers in a business?
- Type of organisational structure chosen by the business
What organisational structure will have fewer levels?
- Horizontal/flat structure
Definition of delayering
- Reducing the number of levels in the hierarchy of an organisation
Why does delayering take place?
- It takes place as a result of rationalisation in a business
- If a business is in a competitive market it needs to make sure it’s costs are kept under control and one way to reduce costs is to remove a layer/tier of management
Advantages of delayering
- It provides an opportunity for employees to have more responsibility (beneficial for motivation)
- Decision making process is quicker as there are fewer layers for decisions and messages to go through
Disadvantages of delayering
- Span of control in the business will increase
- There may be implications for costs in the short term as redundancies may be necessary to achieve the delayering
- Employees may be demotivated as they are fearful of losing their job (reduce sense of security)
Definition of delegation
- It refers to the process by which a manager/leader assigns responsibility and authority for specific tasks or decisions
What happens when there’s more delegation in an organisation?
- There is a bigger span of control
- Wider organisational structure
What factors depend on how much delegation takes place?
- Leadership style (democratic style means more delegation)
- How busy the manager is (the busier it is the more likely for delegation to occur)
- Ability and willingness of employees to take on additional responsibility
Definition of empowerment
- This means giving employees responsibility for the tasks they perform (form of delegation)
- By enriching employees jobs it will make them more motivated (Herzberg and Mayo)
- Offering empowerment may give the business the opportunity to reduce the number of levels in it’s organisational structure (delayering)
What is organisation by system?
- The business is split into specialist areas which operate together to make the business function efficiently
Points to bear in mind with organisation by system:
- Without high levels of integration, coordination and some degree of compromise e.g. deadlines, the business will become fragmented which will damage the overall productivity
- Difficult to evaluate performance and whether or not it’s successful since there are several department inputs affecting performance. (Departments may try to take most of the credit/ blame others for failure)
- Not easy for managers in one department to see direct result between their contribution and results
What is organisation by product?
- The business is organised around recognisable individual products (known as profit centres)
Reasons why organisation by product is a sensible way to organise
- Easier to see which products are performing well (each profit centre can be easily evaluated)
- Managers of each product can concentrate their energies on the product rather than several
- Managers can see the direct result of their decisions (may be more motivated)
Drawbacks of organisation by product
- Different products compete for resources (leads to conflict)
- Resources being wasted
Organistic (horizontal or flat) structure
- Flat
- Large span of control
- Associated with democratic style of leadership
- Delegation is encouraged (more motivated workforce)
Mechanistic (vertical or tall) structure
- Vertical
- Smaller span of control
- Less democratic style of leadership as there are a large number of layers
- More bureaucratic
Centralised structure
- Associated with autocratic leaders who want to keep firm control of the business
- Leader is involved with everything
- Communication goes through them
- Decision-making process takes place at the top of the hierarchy
Decentralised structure
- Allows the decision making process to take place away from the head office
- Span of control will be wide
- Associated with democratic leaders as employees will have responsibilities delegated to them
Advantages of a centralised structure
- Decisions are quicker because there is no need to consult all areas
- Strong leadership (in an event of a crisis)
- Consumers will recognise the standardised approach and consistent organisation
Disadvantages of a centralised structure
- Decisions are made without the benefit of local knowledge
- Lack of involvement in the decision making process is demotivating
- Experts in a region may be ignored resulting in mistakes
Advantages of a decentralised structure
-Being able to make decisions is a motivator (Mayo & Herzberg)
- Local regions/ areas are better informed for some decisions
- Delegation/empowerment will mean there are opportunities for local initiative to be used
Disadvantages of a decentralised structure
- Duplication of resources occurs which could be reduced if centralised
- Some decisions made at regional/product level may be appropriate for that region or product but not appropriate for the business as a whole
Matrix organisational structures
- It’s where employees with similar skills are put together to complete tasks or projects but with more than one manager supervising
What does there need to be for matrix organisational structures?
- A substantial amount of co-operation as working for various managers may be confusing
Value of organisational structure
- Brings a sense of organisation/order to the business
- Spans of control can be viewed and used to ensure there are a fair distribution for the spans of control for directors/managers within the business
- May be possible to ascertain whether delayering is possible/beneficial for the business that may need to cut costs
- It allows the business to plan for the future
- Stakeholders within the business can identify the strengths and weaknesses
- Employees may be able to see where there may be possibilities for promotion
How is the level of authority clear within the organisation?
- By viewing the chain of command and span of control
Organisational culture
- This reflects the values, attitudes and beliefs of a business
- It will strongly influence the manner in which the business operates
What will give an indication of the culture of a business?
A mission statement
What do mission statements highlight?
- Ethical stance and/or how a concern for the environment is high on it’s list of priorities which may be reflected in the way the business operates
What are the main components of a good organisational/corporate culture?
- Vision- starting with a mission statement
- Values- They are a core of its culture
- Practices- acting/operating in such a way as to match it’s values
- People- employees who share the values of the business
- Narrative- viewing the history of the business and it’s heritage
- Place- location is very important
How can the corporate/ organisational culture of a business be seen within a business?
By the manner in which it:
- Conducts its business
- Treats its customers
- Reacts/ show concern for its local community
- Allows employees to be involved in the decision making process
- Communicates within the organisation
- Views the commitment of all within the business to the values, objectives and mission statement
How can the organisational culture of a business be seen?
- The way employees dress
- The manner in which the building is designed, equipped and decorated
- Publications of the business
- Degree of training offered
