Chapter 7 Organisation and Management

What is Organisational structure?

This is the formal, internal framework of a business and shows how it is

managed and organised.

Levels of hierarchy

Hierarchy means the levels of management in the business, from the highest
to the lowest.
Employees on one level will all have similar levels of responsibility.
As a company gets larger, there are more people on every level.
The tasks become simpler as you move down the hierarchy so that there are
more people on the same status.

1. Chain of Command – this is the line where decisions and instructions are
passed from senior managers to lower levels of managers to employees.
Examples - Decisions from management to teachers:
● You will always attend PTM

● No smoking in school

Usually, instructions are passed DOWN and information is passed UP the chain
of command.

Span of control

Managers have authority (power) over employees. The number will vary
from manager to manager. The number of employees that they have
control over is called their Span of control.

e.g. Head of Department – 5 staff – span of control – 5

e.g. Head of Year 11- 5 staff – span of control – 5

There are 2 types of organisations structures:

1. TALL

The span of control is 3 and has a tall structure

2. FLAT structure
 The span of control is 6 and has a flat structure

There is NO BEST TYPE – companies have been moving towards a

short chain of command as there will be a smaller hierarchy – this will
mean less management and less costs for the business.

Which one to choose? - it will depend on these factors below:

1. How difficult is the task? (easy, simple = wider span of control)

2. How experienced and skilled are the workers? ( s and e = wide
span, as they less supervision)
3. The size of the business - larger companies can afford more
managers ( = narrow span)
4. Management style

Advantages of narrow span of control

1. Communication is faster and more accurate

2. Managers will know the workers below them more (better
cooperation between workers and bosses)
3. Each manager will have more responsibility. This means that they
will have to delegate more as they cannot do all the work
themselves. This is a valuable skill.
4. There will be less direct control over the workers. This means that
they will feel more trusted and hopefully have more job
satisfaction.

BUT…disadvantages..

- Communication and decision making are slower

- Higher costs because more managers are needed
- More supervision will lower motivation

Advantages of wide span of control

Less expensive (fewer managers)

Higher motivation as less supervision
Faster communication
Disadvantages

Less chance of promotion

Better control over employees and their work
Communication may be more difficult

Roles, responsibilities and inter-relationships between people in

organisations

Directors and the chief executive officer (CEO)– these are senior
managers who will be in charge of a department or a division of a
company. Directors are in limited companies.
e.g. Operations Director/Finance director
e.g. Conglomerate – Director of Restaurants division/director of Furniture
division

Some of the directors responsibilities:

1. Deciding the long term plans of the business. This is called the strategy

2. Making sure that there are enough resources for this.

3. Showing leadership

4. Protecting the rights of shareholders and other stakeholders

5. Monitoring the performance of managers

The CEO has responsibility for the day to day running of the business and
introducing the decisions made by the board.

Managers – They are below the directors. They have the responsibility for
people below them and are responsible for the day to day running of their
department.
What do they usually do?

● Make sure that the Board’s decisions are carried out

● Motivating employees to help make sure that the targets are met
● Solving day to day problems
 Supervisors - often given authority to give tasks to employees, making
sure that they do these tasks and also to make sure that the quality is
good.

The role of management

Managers are in all businesses although they can be called many names as
leader, boss, director, principal etc. They will all have similar jobs to do.

Planning

Planning is a very important job for a manager. Planning is when the managers
have to set aims that the business wants to meet in the future.
e.g. we plan to increase sales by 50% within 3 years. Having these aims means
that the employees of a business have a target that they can work together to
try to reach. The managers will also have to plan for the resources to meet the
aims.
e.g. to increase sales, we need a budget of $50 million and 250 new sales staff

Organising

The managers cannot do all the work themselves – they need to delegate. This
means that they pass on some tasks to others, who they can trust and are able
to carry out these tasks. They also have to make sure that these people have
the resources to carry out these tasks. The organisational chart is used to
show who is responsible for each task.

Co-ordinating

This means “bringing people together”. A manager’s job is to make sure that
different people and different departments work together to make sure that
the aims are reached. For example, if the aim is to increase output, the
production department and the finance department will have to work
together. Not working together can lead to the aim not being reached.
Managers can make sure that there are regular meetings with different
departments.
Commanding

Managers need to tell people what to do – this is an important part of their

job. Not just yelling but to assist, help and advise to make sure that aims are
met and tasks(jobs) are carried out.

Controlling

Managers need to work out (evaluate) whether people and departments are
“on target” to meet the company aims. If they are not, the manager needs to
evaluate why and make sure that people/departments are brought back on
target.

Delegation

This is when a manager gives a subordinate (someone lower than them in the
hierarchy) the authority to carry out a task.
e.g Manager Charlie gives subordinate Fred the job of writing a report.
The manager still has the responsibility though – if the subordinate “messes
up,” the manager should not just blame him, he has to accept responsibility.
(He should have controlled more.)

+ of delegation for managers

● managers cannot do all the work themselves so they should concentrate

on the most important aims

● managers will less likely make mistakes

+ of delegation for subordinates

● they will be doing more interesting and challenging work

● workers will see that they are trusted by the managers so will feel more
motivated
 ● doing new and different work will help train the workers and help them
with their future career

However… There are times when a manager might not delegate.

1. He may not trust the subordinate and thinks that they may not do the
job well.
2. The manager may not be confident – he may be afraid that others may
do a better job!
3. The manager may not want to lose control
4. https://www.youtube.com/watch?v=cjlvoYPDy74

Leadership

Different styles of management

Managers often follow a certain style. The style they choose is important as it
will affect employees and the success of the business.

1. Autocratic style
● The manager makes up his mind – he does not ask / consult any
others.
● He plans and controls the group telling people what to do.

● He wants a task to be completed; he is less concerned with the

welfare or motivation of others.

● One way decision making with much checking and supervision

Advantage – quick decision making

Disadvantage – employee have no input and information, this can demotivate
staff

2. Democratic style
● Workers get (some) employees involved in decision making.
 ● Communication is two way

● Manager will make the final decision

Advantage – more motivated workers as they are able to give their opinions
AND by using their experience and ideas, the manager can make better
decisions. The quality of the decisions should be better.

Disadvantage – managers cannot use this style if they are going to make
unpopular decisions. E.g. job losses

3. Laissez faire - “ it’s up to you”

● The manager allows members of the team to work without much
interference, although a target will be set by the manager.
● The manager will be in the background and the workers will make
decisions and organise their own work

● The manager will delegate much

Advantage – useful in creative and artistic work

Disadvantage – some/many workers prefer more scheduled time and
input from managers

The best style depends on the situation.

Managers should always think about:

THEIR OWN PERSONALITY – are they naturally Democratic or Autocratic or

Laissez Faire?

PERSONALITIES OF THEIR EMPLOYEES – do they prefer on average to be

given set tasks or do they want to work as a team to decide how to work?

THE TASK – is it straightforward or very complex? Designing a new shopping

mall is complex – deciding how many boxes of fat to order for a restaurant
is pretty basic.
 The manager will often have to choose the “ best fit.” It may not be ideal
but it will be the best that they can do.

What is meant by a Trade Union

● It is an organisation that has been set up to protect the rights and

interests of its members. Some of the interests can be to improve pay,
protect jobs and to make sure that all workers are given training.
● There are many types of union, virtually covering every industry and
trade

Roles of a trade union

1. Negotiations – in negotiations (talks) between a worker and the

management, the management will always have the most power. With a
union, it has a lot more power and influence with the employer.

2. Advice/financial help - if a member is made redundant or

dismissed(fired)/Information on taking leave and training/unions can
represent members in court action

3. Resolving disagreements between employers and employees

Effects of trade unions on employees

1. Being in a union gives more power to employees . This is called

Collective bargaining. Employees will get higher pay rates/longer
holidays and shorter hours are more likely

2. Better environment at work – higher health and safety

standards/improved safety standards.

3. Better benefits – sick pay/redundancy/retirement pay will usually be

higher. Most workers would have it difficult to pay for the legal help that
unions can give for free.
 4. More secure jobs – if there is a closed shop, where everyone HAS to be
in the union, jobs are safer. Unions will work with management to try
and minimise job losses.

Problems

● There is a fee to join the union

● If workers go on strike (refuse to work), they receive no pay, unless the

union helps financially.

● Workers may have to take industrial action e.g. strikes , even if they do
not agree with it.

Unions can be good for the employers……………

1. Communications between workers and management can be improved.

They are the “middle men” between the two.
2. It is easier to arrange wage agreements with 1 (or more ) trade unions
than with people individually.

But, they can be bad for employers…………..

1. Trade Unions can organise strikes if they do not get what they want (no
work, no sales)
2. Wages will be higher so costs for the business will be higher