Chapter 7: Organisation and structure
An organisational structure are the levels of management and division of responsibilities
within an organisation which is often represented by an organisational chart.
Key Features of an organisational Chart
• Departments: Firms are organised into departments which each department
responsible for a particular function or role. Examples are Marketing department,
Finance department, Transport department.
• Hierarchy: Organisational chart are also based on hierarchy which is allotted to
different positions with varied level of authority.
• Chain of Command: This shows how communication and tasks are passed down
the business from the top to the bottom.
• Delegation: This means that someone higher up the chain of command can give
responsibility to perform a task.
• Span of Control: This shows how many individuals or subordinates under the
control of one manager.
Advantages:
• All employees are aware of which communication channel is used to reach them
with messages
• Everyone knows their position in the business. They know who they are accountable
to and who they are accountable for
• It shows the links and relationship between the different departments
• Gives everyone a sense of belonging as they appear on the organizational chart
Chain of command – The structure in an organisation which allows instructions to be passed
down from senior management to lower levels of management.
• Advantages of an organisation chart:
o Employees are aware of which communication channel is used to reach them.
o Employees can identify who they are accountable to and who they have authority over. o
Shows relationship between different departments within organisation.
• Span of control – The number of subordinates working directly under a manager.
• The longer the chain of command, the narrower the span of control and vice versa.
• Advantages of short chains of command:
o Quicker and more accurate communication.
o Top levels of hierarchy are more in touch with lower levels.
o Wider span of control:
▪ Advantage:
Encourage managers to delegate jobs, less direct control of each worker → workers feel more
trusted and may obtain more job satisfaction.
▪ Disadvantage:
Responsible for more people → lose control of subordinates.
Line Managers have authority over people directly below them in the organizational
structure. Traditional marketing/operations/sales managers are good examples.
Staff Managers are specialists who provide support, information and assistance to line
managers. The IT department manager in most organisations act as staff managers.
he role of management
Roles of managers in a business.
1. Planning
Planning is the first tool of the four functions in the management process. The difference
between a successful and unsuccessful manager lies within the planning procedure. Planning
is the logical thinking through goals and making the decision as to what needs to be
accomplished in order to reach the organizations’ objectives. Managers use this process to
plan for the future, like a blueprint to foresee problems, decide on the actions to evade
difficult issues and to beat the competition.
2. Organising
The second function of the management is getting prepared, getting organized. Management
must organize all its resources well before in hand to put into practice the course of action to
decide that has been planned in the base function. Through this process, management will
now determine the inside directorial configuration; establish and maintain relationships, and
also assign required resources.
3. Coordinating
It involves the implementation of plans by mobilising individuals and group effort through
motivation, communication, leadership and supervision. Coordinating may be defined as the
process of activating the efforts of employees towards the achievement of organisational
objectives.
4. Controlling
It is the process of regulating the ongoing activities of the organisation to ensure that they are
in conformity with the established plans and produce the desired results. Through the
controlling function, management can keep the organisation to its chosen track. It involves:
• Establishing standards of performance
• Measuring current performance
• Comparing actual results with the established standards
• Detecting deviations from the standards
• Taking corrective actions for significant deviations.
Importance of delegation
• Delegation – Giving a subordinate the authority to perform particular tasks.
• Only the authority to perform a task is delegated, not the final responsibility. If the job is
done badly, the manager is responsible.
Benefits for the manager
• can concentrate on more important job and improve their productivity. The manager
gets the opportunity to handle aspects of the job that no one else can do. These
activities might include project planning, monitoring team members, and handling
personnel problems as they arise.
• Delegation ensures that specialist people are doing the job which reduces the
chances of mistakes by the manager.
• Manager can also gauge the efficiency of the subordinates.
Benefits for the subordinates
• It motivates the subordinates as they feel more trusted.
• Through delegation subordinates can be trained to handle responsibilities and future
growth.
• Increases team member involvement. Proper delegation encourages team members
to understand and influence the work the department does.
For the organisation
• Quick decisions can be taken as the authority to take decisions lies near the point of
action.
• Delegation improves a healthy relationship among the manager and the subordinate
and thus fewer conflicts.
• Reasons why some managers might not delegate:
o Afraid that the subordinates might fail.
o Want to control everything themselves.
o Insecurity of subordinates doing better than them.
• Delegation needs an increase in trust of workers in order to reduce direct control over
workers.
Leadership styles
There are 3 main leadership styles – Autocratic, democratic and laissez-faire
• Autocratic leadership:
o Manager expects to be in charge and have their orders followed. All decisions made by
manager.
o Keep information to themselves and tell employees only what they need to know.
o One-way communication → downward.
o Workers have little or no say.
• Democratic leadership:
o Employees involved in decision-making process.
o Information and future plans openly discussed before final decision made by manager.
o Two-way communication → downward and upward.
• Laissez-faire leadership:
o Employees know the objectives but are left to make their own decisions.
o Communication can be difficult → clear direction not given.
2.2.4 Trade unions
• Trade union – A group of workers who have joined together to ensure their interests are
protected.
• Closed shop – All employees must be a member of the same trade union.
• A trade union is a type of pressure group.
They seek to:
o Put forward their views and influence government decisions, e.g. minimum wage.
o Improve communication between workers and management.
• Benefits of trade union membership:
o Strength in numbers. o Improved conditions of employment, e.g. pay rates, work hours.
o Improved work environment, e.g. health and safety, noise.
o Improved job satisfaction by encouraging training.
o Improved benefits for retrenchment, the sick, or retired.
o Advice or financial support if members are dismissed (unfairly or made redundant) or asked
to do something not part of the job.
o Benefits such as discounts in certain shops, provision of clubs.
o Employment if there is a closed shop.
• Disadvantages of trade union membership:
o Costs money.
o May be required to take industrial action even if they don’t agree.
