1. Organisational Structure of a Business

2. Learning Objectives
Analyse the main features of an organisational chart, including levels of hierarchy, chain of command, span of control, flat and tall organisations
Identify why firms need to organise employees and analyse ways in which this is done

3. Why do businesses need to be organised?
Small businesses (particularly sole traders) have an informal organisational structure
As a business gets bigger then it starts to form some kind of organisation and an organisation structure is required, this is a type of internal framework which shows how management is linked together and how authority is passed down
The structure determines:
Who is responsible for what job and
Who is responsible to whom.

4. Hierarchy Describes management structure of business
From top of company – managing director, through to shop floor worker
Usually best understood by drawing an organisation chart
Shows which levels of management and employees report to whom

5. Organisation Structure & Job Roles
Accountability to your boss or manager
Responsibility for the people who work for you
What does the formal organisation structure show?
Hierarchy
CEO
Board of
Directors
Managers
Supervisors & Team
Other Employees

7. This is called a layer of the hierarchy
Hierarchical / Bureaucratic structure
This is called a layer of the hierarchy

8. Advantages
Disadvantages
To highlight how decision making is done
Vertical departments can be based on anything not just departments
Role of each individual is clear and defined
This type of structure seems to suggest one way communication
Managers often accused of tunnel vision

9. Customer Care Assistant
Span of Control
What is the Span of Control?
The number of people who report to one manager in a hierarchy
The more people under the control of one manager - the wider the span of control
Less means a narrower span of control
Example below shows a span of control of 4 for the Marketing Manager
Marketing Manager
Marketing Assistant
Market Researcher
Telesales Supervisor
Customer Care Assistant

10. Advantage of a Narrow Span of Control
Allows a manager to:
Communicate quickly with employees under them
Control employees more easily
Feedback of ideas from workers more effective
Requires a higher level of management skill

11. Advantage of a Wide Span of Control
There are less layers of management to pass a message through
So the message reaches more employees faster
It costs less money to run a wider span of control because a business does not need to employ as many managers

12. 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
How large is the MD’s span of control?
How large is the Finance Manager’s span of control?
Managing Director
Finance Manager
Accounts Supervisor
Sales Supervisor
Production Manager
Production supervisor
How many levels of hierarchy are there?
MD span = 2 Finance Manager span = 2 Production Manager span = 1…. Levels of hierarchy = 3
Mrs G / Mr A 12

13. Tall and Flat Organisations
Tall organisation
Large number of managers
Narrow spans of control
Can suffer from having too many managers (expensive)
Decisions can take a long time to reach bottom of hierarchy
Can provide good opportunities for promotion
Manager does not have to spend so much time managing staff
Flat organisation
Few managers
Wide span of control

14. Chain of Command Line on which orders and decisions are passed down
From top of hierarchy to bottom
Example
Managing
Director
Production
Director
Production
Manager
Factory
Supervisor
Machine
Operators

15. Factors influencing organisational structure
Size of the business and number of employees
Style of leadership and culture of management
Retrenchment (Cutting down on the number of staff you have)
Corporate objectives
New technologies

16. Task
Create an organisational structure diagram for all staff at the college.
It must include job titles & people´s names

17. Another activity
Any business plc has a functional organisation structure.
The MD is responsible to a chair person and has a sales director, a finance director, a personnel director and a production director accountable to her.
On the production side there are a works manager, technicians, test engineers and machine operators.
In addition, the company employs 5 personnel assistants, 4 financial staff and 10 administrative staff and 20 sales people.
DRAW an organisation chart for Any Business plc from this information!