Unit 1a/b Revision - Alness Academy Business Studies



Standard Grade

Administration

Area of Study 1: Administrative Support

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Unit 1 – Introduction to Business Organisations

Unit 1a – Organisation of Departments

Contents Page

What does an organisation chart show? 3

Accountability 3

Authority 3

Responsibility 3

Level of Responsibility 3

Lines of communications and reporting 3

Benefits of an organisation chart 4

To customers and visitors 4

To employees 4

Disadvantages of an organisation chart 4

Interpretation of organisation charts 4

Types of posts associated with different levels of responsibility 4

Organisation Chart Structures 5

Pyramid structure 5

Flat and tall structures 5

Span of control (Delegation) 5

Team working 5

Advantages and disadvantages of different structures 5

Advantages of Tall Management Structures 5

Disadvantages of Tall Management Structures 5

Advantages of Flat Management Structures 5

Disadvantages of Flat Management Structures 6

Relationships 7

Chain of command 7

Line relationships 7

Lateral relationships 7

Restructuring 8

Reasons for restructuring 8

Types of Restructuring and Effects on an Organisation Chart 8

Growth 8

Downsizing 8

Delayering 8

Outsourcing 9

Definitions 10

What does an organisation chart show?

• the management structure and main departments within an organisation

• the titles of main jobs within an organisation and within each department

• the relationship between the various posts

• the reporting structure

• the number of people who are accountable to each manager

Accountability

The obligation an employee has to justify or explain his/her actions or decisions (an employee will be accountable to his/her line manager).

Authority

The power that an employee has to instruct others and take decisions.

Responsibility

The obligation an employee has to carry out a range of tasks or duties (duties may include supervising other people).

Level of Responsibility

This is the position the employee holds within the organisation, eg Sales Manager is positioned above sales department staff because he/she is in charge of them.

Lines of communications and reporting

Benefits of an organisation chart

To customers and visitors

• Visitors gain an immediate impression of the overall size of the organisation.

• Visitors gain an immediate impression of the type of work carried out by the organisation.

• Visitors are given a better idea of who to contact within the organisation.

To employees

• Employee can immediately see the overall size and structure of the organisation.

• Employees can see promotion channels.

• Employees can see immediately who their line manager is.

• Reporting structure is clearly shown.

• Employees can see the relationship of the departments and managers within the organisation.

• Employees are made aware of the range of activities undertaken by the organisation.

Disadvantages of an organisation chart

• It can become out-of-date quickly (staff leave/arrive/restructuring)

• Does not show the informal relationships in an organisation

Interpretation of organisation charts

Types of posts associated with different levels of responsibility

Organisation Chart Structures

Pyramid structure

Flat and tall structures

Flat Management Structure - this will have few levels of management and therefore fewer lines of communication.

Tall Management Structure - this will have more levels of management and therefore many lines of communication.

Span of control (Delegation)

The number of staff reporting directly to a manager.

Team working

Advantages and disadvantages of different structures

Advantages of Tall Management Structures

• Increased opportunities for promotion.

• Easier for managers to supervise employees.

• Employees are more likely to know who their immediate boss is.

• Employees are more likely to know what their own duties and responsibilities are.

• Less responsibility

Disadvantages of Tall Management Structures

• Decision-making process is slow.

• Communication is slow [due to the number of levels].

• Employees may not feel involved in decision-making process.

• Employees do not have the opportunity to suggest ideas.

Advantages of Flat Management Structures

• Employees are given more authority and responsibility – they are likely to feel more motivated as a result.

• Employees are more likely to be able to show initiative.

• Employees are more likely to be involved in key decision-making.

• Communication channels are likely to be less complicated and more efficient.

• Should take less time to reach decisions and react to situations.

• Should take less time to communicate decisions throughout the organisation.

Disadvantages of Flat Management Structures

• Workloads of employees are likely to increase – possibility of stress.

• Employees may need training to carry out new/wider responsibilities.

• Where span of control is too wide, employees may feel isolated or ignored.

• Employees may not be able to meet with their line manager on a regular basis.

• Likely to be fewer opportunities for promotion.

Relationships

Chain of command

The way in which instructions are passed down from one level of post to another in an organisation.

Line relationships

A relationship an employee has with a person (directly) above or below them.

Examples:

• Managing Director and one of the Directors (Human Resources/Sales and Marketing)

• Director (HR) and one of the Managers (Health and Safety/ Recruitment/Training and Development)

• Director (Sales and Marketing) and one of the Managers (Scotland/England).

Lateral relationships

These exist between employees who are on the same level and who report to the same line manager.

Examples:

• Director (Human Resources) with the Director (Sales and Marketing)

• Manager (Health and Safety) with Manager (Recruitment/Training and Development)

• Manager (Scotland) with Manager (England)

• Any of the Managers(Human Resources) with any of the Managers (Sales and Marketing).

Restructuring

A change to the internal structure of the organisation because it is expanding or contracting.

Reasons for restructuring

Organisations restructure for the following reasons:

• Losing Money

• Wasting resources

• Duplication

• Expansion

Types of Restructuring and Effects on an Organisation Chart

Growth

• Increase amount/range of products sold.

• More staff employed to meet increased sales.

• May have to increase the size of premises.

• May result in new departments.

• May result in new specialist posts.

• May lead to more levels of management.

Downsizing

• Reduction in number of staff employed without aiming to reduce output.

• Some members of staff likely to be made redundant.

• Reduces staffing costs.

• Some posts likely to disappear.

• Some workers will have increased responsibilities.

Delayering

• Removes certain levels or layers of management posts.

• Should lead to management cost savings.

• Results in flatter structure/wider spans of control.

• Some workers will have increased responsibilities.

Outsourcing

• Buying in services – eg software design, security, office cleaning – from another firm on a contract basis instead of getting its own staff to carry out the work.

• Benefit of subcontracting specialists.

• Organisation focuses on its core activities

• May result from downsizing

• Should result in simpler organisation chart with fewer departments/specialist members of staff.

Definitions

ACCOUNTABILITY The obligation an employee has to justify his actions.

AUTHORITY The power that an employee has to instruct others and take decisions.

CHAIN OF COMMAND The way in which instructions are passed down from one level of post to another in an organisation.

DELAYERING The organisation removes certain levels or layers of management posts.

DELEGATE Pass on to selected employees the authority and responsibility to carry out a task or activity.

DOWNSIZING The organisation reduces the number of staff employed without reducing the amount of output.

FLAT MANAGEMENT STRUCTURE This will have few levels of management and therefore fewer lines of communication.

GROWTH The organisation increases the amount and/or range of products/services sold.

LATERAL RELATIONSHIP These exist between employees who are on the same level and who report to the same line manager.

LINE RELATIONSHIP These exist between line managers and the staff immediately below them.

ORGANISATION CHART The management structure of an organisation shown as a diagram.

OUTSOURCING The organisation buys in services, eg security or office cleaning.

RESTRUCTURING A change to the internal structure of the organisation because it is expanding or contracting.

SPAN OF CONTROL The number of staff reporting directly to a manager.

TALL MANAGEMENT STRUCTURE This will have more levels of management and therefore many lines of communication.

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