1. Relationships, Delayering, Outsourcing etc…

2. Learning Intentions
Be able to describe the different types of relationships in an organisation
Know the importance of Corporate Culture and how it is developed
Be able to describe the current trends in structure ie delayering, downsizing and outsourcing
Know what is meant by Empowerment

3. Formal Relationships Line relationships
Relationships between a superior and a subordinate, eg, DHT and PT
Lateral relationships
Between staff on the same level within an organisation
Functional
Where a manager has authority over another by virtue of their position/knowledge, eg finance manager
Staff Relationships
Relationship between staff and individuals who provide support for the whole organisation, eg company lawyers or ICT specialists

4. Informal Structures
An organisation chart shows the formal structure of a business based on official roles
Informal structures exist in most business based on relationship that develop between staff
Business should recognise the existence of these informal structures and use them to pass information or solve problems

5. Corporate Culture An organisation’s established pattern of working
The values, norms and behaviour accepted and shared by all in the organisation
The culture of an organisation must match the environment in which it operates
The culture develops over time as a result of the
Attitude of staff
Pattern of behaviour
Established rules
Individuals are more likely to conform than rebel against the culture

6. Elements of Corporate Culture
Edgar Schein believes there are 3 main elements which instil an identity in individuals within an organisation
(eg McDonalds franchise)
Artefacts (shop layout/colour schemes/uniform)
Values (staff attitudes to customers)
Underlying assumptions (food – availability, quality, portion size)

7. Benefits of Corporate Culture
Provides a sense of identity
Helps team building
Increases commitment – may prevent high turnover of staff/industrial relations problems
Motivated worker = higher productivity
Helps communication
Reinforces values of senior management
Acts as control device for management

8. Questions Explain the term “Corporate Culture” (2marks)
2. Describe the benefits of having a strong corporate culture.
(4marks)

9. Recent trends in internal structure
UK based organisations have undergone structural change due to
de-industrialisation
competition from ‘tiger’ economies
This has led to
changes in traditional structure and methods of management
Delayering
Downsizing
Outsourcing

10. Downsizing Reducing costs by
Reducing scale of operations to meet decreased market demand eg, closure of factories
Stripping out excess capacity
Consolidating complementary departments under one function eg sales and marketing
Reducing resources eg workforce

11. Delayering
Cutting out levels of management and ‘flattening’ out structure
Some levels of management can be unnecessary
Staff are empowered to make own decisions
Removing levels of management can result in
Improved communications
Faster decision making
More responsive to change
Adapt more quickly to changing situations

12. 2008 Question 2c(i) Section 2
Distinguish between Delayering and downsizing
(3 marks)

13. Answer
Delayering involves removing a whole level of management to flatten an organisation’s structure, whereas downsizing is closing specific areas of the organisation.
Delayering improves communication within the organisation due to the reduction levels of senior management, whereas downsizing completely removes functions therefore making communication more difficult.
The purpose of downsizing is to reduce costs by reducing the scale of operations whereas the purpose of Delayering is to cut out the levels of management to make the organisation flatter.

14. Outsourcing
Contracting another organisation to carry out some tasks/functions.
Can be very basic, eg cleaning or catering.
Can be more complex; eg recruitment, accounts

15. Outsourcing Reasons for: Frees up staff and time Reduces costs
Allows experts to carry out the tasks
May not have a full-time need for a section or person
Allows greater flexibility

16. Disadvantages of Outsourcing
Loss of control
Specialist firm may let the organisation down in terms of delivery and quality
Confidentiality may be compromised
Communication between the two organisations needs to be very good

17. Empowerment
This means giving staff more responsibility for their own work and decision making. This often occurs when an organisation delayers or downsizes.
Employees will be more motivated and productive
Increased pay and training
Enhanced promotion prospects
Decision making is quicker – made by people doing the job
Staff develop skills

18. Empowerment Pros Cons Good decisions taken quickly
More flexible and motivated staff
Improved productivity
Improved competitiveness
More ideas
Improved communication – fewer managers
Not all staff want to be decision-makers
Managers may be unwilling to give up powers
Staff may not trust the organisation as they have usually had a situation of delayering or downsizing
Costly to train staff to make decisions

19. Role of Management Management are responsible for:
Choosing the best structure for the organisation
Ensuring all staff are aware of the structure
Recognising the existence of any informal structure
Organise and promote the organisational culture
Ensuring the formal structure is consistent with the culture
Changing the structure where necessary

20. Factors affecting internal structure
SIZE – larger organisations need more structure and controlbusiness grows (perhaps by merger) its structurchange, eg entrepreneurial structure may become more decentralised
TECHNOLOGY – technologies can change the structure eg downsizing if technology results in fewer staff being required. Or depts may need to be created eg e-commerce dept
MARKET – national organisations may need to be more structured and therefore hierarchical
As market expands or declines the structure may change to reflect this
PRODUCT/SERVICE – organisation producing a large range of products may need more departments therefore a more formal structure
STAFF – highly skilled staff may work independently therefore organisation can be flat and decentralised

21. Questions Describe the terms product grouping and place grouping
What are the advantages and disadvantages of customer grouping?
What is the purpose of an organisation chart?
What are the disadvantages of a wide span of control?

22. Describe the factors which will affect the formal structure of an organisation
When would a matrix structure be used by an organisation?
Describe 3 relationships that can exist in an organisation
Why might an organisation delayer?
Why might an organisation empower staff?