Why is Organisation Important? • as a business grows and more and more people enter the firm, a formal organisation structure will be necessary to ensure that: • everyone knows their role • all tasks are co-ordinated • everyone knows who they are accountable to and responsible for
Poor Organisation • can lead to: • tasks being missed out • tasks being repeated - poor communication • people not know their jobs • frustration within the workforce • poor quality goods causing a fall in sales
Types of organisation • Most firms organise themselves into departments/functions and then levels within the department. This is referred to as a pyramid style and it can be either a tall pyramid or a flat pyramid.
Types of Organisations Flat Pyramid • fewer levels of hierarchy • wide spans of control • short chain of command • common in informal firms
Types of Organisations Tall Pyramid • several levels of hierarchy • long chain of command • narrow spans of control • typical in a formal firm
Span of Control • A wide span is where a manager has many workers directly below them • A narrow span is where a manager has few workers directly below them
The Ideal Span of Control There isn’t one! It will depend upon: • the job involved • the skills of the workers • the skill of the managers • the amount of money the firm has
Problems when theSpan of Control is too Wide • workers are not given enough attention • workers may lack the necessary guidance • poor relationship between manager and worker
Problems when theSpan of Control is too Narrow • workers feel stifled • expensive as more managers are employed • conflict may exist due to over-supervision
Recap • Do the Test Yourself, Q1 and Q3 • Recap the following: • Organisation Chart • Hierarchy • Line Manager • Subordinate • Chain of Command • Span of Control • Delegation
How can a business eliminate the problems of a long chain of Command? • Removing some of the levels of management, or layers. • This is called Delayering • What effect may this have within the business? How will people feel?
Definitions • Delayering. • This can lead to more group, team or cell work. There may be a team leader nominated, but all subordinates under them will be at the same level in the hierarchy. This could lead to the lack of need for supervisors or quality control inspectors, if the workers are responsible for their own cell.
How will this process help the business? • Empowerment of staff • Downsizing the workforce • What will this do to the motivation of the staff?
Centralisation • The major decisions of a centralised company are made at the Head Office. • The decisions are then sent out to the branches of the business. • Standardised systems and procedures are in place to reduce costs • Problems include: slow decision making process, slow to respond to the demands of the market and demotivated staff.
DEcentralised • The power to make decisions is devolved, or given to the smaller parts of the business. • Potential Advantages: • It can led to quick decisions being made, empowered and motivated staff. • Potential Disadvantages: • It can expose the business to coordination problems and increased costs
Test Yourself • Q2