1. Organisational structure

2. Internal organisation of firms
In small firms:
Each worker may undertake a range of roles
The structure may be informal and fluid
As firms grow bigger:
The roles and responsibilities of each worker must become clearer
A more formal structure is necessary

3. Functional areas Finance Human resources Sales & marketing
A function is the specific job of a person or department.
The main functional areas in organisations are:
Finance
Human resources
Sales & marketing
Production and operations

4. Organisational charts
Board of directors
HR Manager
4 HR Officers
Finance Manager
6 Accounts Clerks
Operations Director
Factory A Manager
3 Quality controllers
20 Factory workers
Factory B Manager
2 Quality controllers
15 Factory workers
Marketing Manager
8 Sales Reps

5. Organisation structure
Organisation charts - pictorial representations of the job roles and lines of responsibility within a business
Hierarchy – an organisation structured in layers, with those at the top having greater authority than workers in lower levels

6. Organisation structure
Span of control – the number of workers one manager is directly responsible for
Chain of command – the line down which instructions are passed through the layers in the hierarchy

7. Tall organisations These have: Many layers Small spans of control
Characteristics of tall organisations:
High levels of control (appropriate
for unskilled workers)
More opportunities for promotion
Poor communication as information has
to pass through the many layers

8. Flat organisations Flat organisations have: Few layers
Large spans of control
Characteristics of flat organisations:
Low levels of control (suitable for skilled, experienced & motivated workers)
Better communication
Managers must delegate work due to larger spans of control, motivating employees

9. De-layering De-layering involves removing one or more layers of
middle managers
De-layering can:
Cut the costs of paying many managers
Improve communication
Empower the remaining workers if they are given extra responsibilities
Result in a loss of experienced, skilled managers
Be costly initially in terms of redundancy and training

10. Matrix structures
Matrix structures use a project based approach to organisational design
Project teams are made up of representatives from the different functional areas
Matrix teams run alongside the traditional functional structure

11. Matrix structures Advantages of matrix structures
Drawback of matrix structures
Staff from all departments can work on the project, leading to quick decision making
Workers may be able to better use their skills and abilities
Split loyalties as workers have both project team leaders and their functional managers
Administration of matrix management is expensive

12. Centralisation Authority for decision making remains with senior
managers
Benefits of centralisation
Drawbacks of centralisation
Firms can benefit from economies of scale
Local differences may not be taken into account
Ensures the activities throughout the business fit with the organisation’s objectives
Employees cannot use their knowledge of working at the ‘coalface’
Quick decisions can be made by managers who are skilled at decision making
Workers may become demotivated

13. Decentralisation
Authority for decision making is delegated down the hierarchy
Benefits of decentralisation
Drawbacks of decentralisation
Staff are empowered to make decisions which may be motivating
A consistent corporate message may not be delivered throughout the firm
Local conditions can be considered when making decisions
Fewer chances of benefiting from economies of scale
The experience of all workers is utilised
Workers down the hierarchy may be less skilled at ‘decision making’

14. Flexible workforces Flexibility can be achieved using:
Core & peripheral workers
Outsourcing
Home working
Core workers:
Usually full time and permanent
Know the firm well
Typically managers & specialists.
Peripheral workers:
Bought in only when needed
Employed on a temporary basis
Business functions are provided by other specialist organisations e.g. cleaning firms.
May be more cost effective than carrying out these functions in-house.
Employees work from home
Usually relies on the use of advanced technology and communication
Provides flexibility to both workers and their employers