Transcript Improving Organisational Structures

People in Business
Improving Organisational
Structures
“ We don’t have as many managers
as we should, but we would rather
have too few than too many.”
Larry Page
2.4 Improving Organisational Structures
Improving Organisational Structures
In this topic you will learn about:
Key elements of organisational structures
 Workforce roles
 How organisational structure affects
business performance

2.4 Improving Organisational Structures
Key elements of Organisational
Structure
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Levels of hierarchy/Spans of control
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Work loads/Job allocation
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Delegation
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The communication flow
2.4 Improving Organisational Structures
What is organisational structure?
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Organisational structure refers to the way in which a firm is
organised on a vertical level and a horizontal level.
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A vertical structure looks at the firm from the top to the bottom
e.g. the Chief Executive, through different levels of management
to the Shop Floor worker.
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A horizontal structure looks at how a firm is organised on the
same level e.g. workers doing similar jobs such as supervisor or
manager but in different functional areas or departments such as
finance, marketing and sales.
2.4 Improving Organisational Structures
Levels of hierarchy/Span of control

The levels of hierarchy shows the number of
levels of management and supervision within a
business.
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The span of control shows the number of
subordinates that a manager or supervisor is in
control of. If a manager has many subordinates
this is called a wide span of control. If they
have few subordinates this is called a narrow
span of control.
2.4 Improving Organisational Structures
Organisation Charts

We can use an organisation chart to show the levels of
hierarchy and the span of control in a business
Managing
Director
Finance
Manager
Accounts
Supervisor
Sales
Supervisor
Production
Manager
Production
supervisor
2.4 Improving Organisational Structures
Levels of hierarchy/Span of control

The levels of hierarchy within firms will differ:
- tall and thin structures occur where each
superior is responsible for a few subordinates.
This allows for closer supervision and
communication between the two levels.
- wide and flat means that each superior is
responsible for a large number of
subordinates. This requires greater
delegation but fewer levels allowing for
quicker communication through the firm.
2.4 Improving Organisational Structures
Organisation Charts
Three people report to Fiona. Four people report to Brian.
Neither Fiona nor Brian reports to one another, but they both
report to Clive. Clive Reports to Sybil. Sybil reports to the Board of
Directors And they report to the Managing Director.
A. Using a pyramid shape, draw the business structure.
B. Comment on the structure in terms of the layers
of management, hierarchies and spans of control.
2.4 Improving Organisational Structures
Who’s in Charge?
Managing
Director
Board of
Directors
Sybil
Clive
Fiona
Worker 1
Worker 2
Brian
Worker 3
Worker 1
Worker 2
2.4 Improving Organisational Structures
Worker 3
Worker 4
Workloads/Job Allocation
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Workload looks at the amount of work that an
individual worker has to undertake. This will be
influenced by the layers of hierarchy within a
business – a wide span of control is likely to lead
to a greater workload.

Job allocation looks at the type of work that an
employee has been given to do. As a firm
increases in size it is likely that the employees
will be given increasingly specialised job roles
e.g. Accountants or IT specialists.
2.4 Improving Organisational Structures
Delegation

Delegation involves the passing of
authority down the hierarchy. Authority
occurs when an employee is given the
right to do something by their superiors.
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This will:
- Free up time for management
- Motivate workers by providing them
with greater responsibilities
2.4 Improving Organisational Structures
Workloads/Job Allocation
The AQA state that Workforce roles should include:

Team Leader – in charge of a group of employees covering
specific tasks
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Supervisor – a junior manager in charge of lower grade workers
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Manager - in charge of a number of subordinates and with
responsibility for short and medium term decisions
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Director – a senior manager elected by shareholders
2.4 Improving Organisational Structures
Communication flow
Communication is the exchange of
information between individuals or groups
 Communication can flow in different
directions and in different ways both
internally within a business and externally
from sources outside of the business
 Feedback occurs when the person
sending the original message receives a
response
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Communication problems in the hotel industry!:
2.4 Improving Organisational Structures
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Communication flow
Communication can come through a
variety of communication channels:
 Open channels are available to all staff
members, closed channels are restricted
to certain employees
 Formal communication occurs through
official company channels, informal
communication through unofficial
channels
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2.4 Improving Organisational Structures
Communication flow
CHINESE WHISPERS
Your teacher will provide the person sitting at the front of the class
with a written saying. That person must whisper the saying to the next person and so on until
the last person in the class.
They must write down what they think they heard and pass it on to the teacher to read out.
You are not allowed to ask for a class member to repeat the saying.
Did the class face problems with communications?
What was the cause of this problem?
What was the result of the problem?
How could this problem be solved?
Use your understanding gained from this activity to explain how communication problems
can occur in businesses. Remember to use business terminology.
2.4 Improving Organisational Structures
How organisational structure affects
business performance
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Different organisational structures suit different businesses.
Firms will have to take into account:
Finance – delayering can remove a level within the
hierarchy but increase the span of control
Communication – how important is efficient communication
within the organisation?
Growth – a larger business needs a more formal structure
Ownership – as the legal structure of the business changes
so too will the organisational structure. A sole trader will
have a different structure than a partnership
Business culture – an informal entrepreneurial culture will
have a different structure than a formal organisation
Reasons for reorganisation at Business Link:
2.4 Improving Organisational Structures
Activity – Organisation Charts
The Guardian
Newspaper
You have been asked to produce an organisation chart for the Guardian
newspaper. This can be hand drawn or produced using IT. On your chart
you must show the levels of hierarchy and the spans of control:
For further information regarding the newspaper go to:
http://www.guardian.co.uk/