Chapter 41- Organisation

Question 1

Definition of organisational chart

Answer 1

• A diagram that shows the hierarchy in a business (top-bottom)

Question 2

Definition of span of control

Answer 2

• The number of employees for whom a manager is responsible for

Question 3

What does a wide span of control mean?

Answer 3

• The manager is responsible for many employees

Question 4

What does a narrow/thin span of control mean?

Answer 4

• The manager is responsible for relatively few employees

Question 5

What is the best span of control ?

Answer 5

4 or 5

Question 6

What happens as span of control increases?

Answer 6

• The number of channels of communication increases
• So effective communication breaks down

Question 7

What happens if there is a small span of control?

Answer 7

• The number of layers/levels in the hierarchy will increase
• This means there will be more layers for communication to pass through making effective communication less likely.

Question 8

What are the factors that depend on how many people are involved?

Answer 8

• personality of the manager
• size of the business
• skill/experience of the employee
• degree of competition in the market
• whether or not the business is centralised

Question 9

Definition of chain of command

Answer 9

• It’s concerned with the way in which responsibility for employees is organised within a business

Question 10

Definition of levels of hierarchy

Answer 10

• This refers to the number of levels/layers in a business organisation

Question 11

What will depend on the number of levels or layers in a business?

Answer 11

• Type of organisational structure chosen by the business

Question 12

What organisational structure will have fewer levels?

Answer 12

• Horizontal/flat structure

Question 13

Definition of delayering

Answer 13

• Reducing the number of levels in the hierarchy of an organisation

Question 14

Why does delayering take place?

Answer 14

• It takes place as a result of rationalisation in a business
• If a business is in a competitive market it needs to make sure it’s costs are kept under control and one way to reduce costs is to remove a layer/tier of management

Question 15

Advantages of delayering

Answer 15

• It provides an opportunity for employees to have more responsibility (beneficial for motivation)
• Decision making process is quicker as there are fewer layers for decisions and messages to go through

Question 16

Disadvantages of delayering

Answer 16

• Span of control in the business will increase
• There may be implications for costs in the short term as redundancies may be necessary to achieve the delayering
• Employees may be demotivated as they are fearful of losing their job (reduce sense of security)

Question 17

Definition of delegation

Answer 17

• It refers to the process by which a manager/leader assigns responsibility and authority for specific tasks or decisions

Question 18

What happens when there’s more delegation in an organisation?

Answer 18

• There is a bigger span of control
• Wider organisational structure

Question 19

What factors depend on how much delegation takes place?

Answer 19

• Leadership style (democratic style means more delegation)
• How busy the manager is (the busier it is the more likely for delegation to occur)
• Ability and willingness of employees to take on additional responsibility

Question 20

Definition of empowerment

Answer 20

• This means giving employees responsibility for the tasks they perform (form of delegation)
• By enriching employees jobs it will make them more motivated (Herzberg and Mayo)
• Offering empowerment may give the business the opportunity to reduce the number of levels in it’s organisational structure (delayering)

Question 21

What is organisation by system?

Answer 21

• The business is split into specialist areas which operate together to make the business function efficiently

Question 22

Points to bear in mind with organisation by system:

Answer 22

• Without high levels of integration, coordination and some degree of compromise e.g. deadlines, the business will become fragmented which will damage the overall productivity
• Difficult to evaluate performance and whether or not it’s successful since there are several department inputs affecting performance. (Departments may try to take most of the credit/ blame others for failure)
• Not easy for managers in one department to see direct result between their contribution and results

Question 23

What is organisation by product?

Answer 23

• The business is organised around recognisable individual products (known as profit centres)

Question 24

Reasons why organisation by product is a sensible way to organise

Answer 24

• Easier to see which products are performing well (each profit centre can be easily evaluated)
• Managers of each product can concentrate their energies on the product rather than several
• Managers can see the direct result of their decisions (may be more motivated)

Question 25

Drawbacks of organisation by product

Answer 25

- Different products compete for resources (leads to conflict) - Resources being wasted

Question 26

Organistic (horizontal or flat) structure

Answer 26

- Flat - Large span of control - Associated with democratic style of leadership - Delegation is encouraged (more motivated workforce)

Question 27

Mechanistic (vertical or tall) structure

Answer 27

- Vertical - Smaller span of control - Less democratic style of leadership as there are a large number of layers - More bureaucratic

Question 28

Centralised structure

Answer 28

- Associated with autocratic leaders who want to keep firm control of the business - Leader is involved with everything - Communication goes through them - Decision-making process takes place at the top of the hierarchy

Question 29

Decentralised structure

Answer 29

- Allows the decision making process to take place away from the head office - Span of control will be wide - Associated with democratic leaders as employees will have responsibilities delegated to them

Question 30

Advantages of a centralised structure

Answer 30

- Decisions are quicker because there is no need to consult all areas - Strong leadership (in an event of a crisis) - Consumers will recognise the standardised approach and consistent organisation

Question 31

Disadvantages of a centralised structure

Answer 31

- Decisions are made without the benefit of local knowledge - Lack of involvement in the decision making process is demotivating - Experts in a region may be ignored resulting in mistakes

Question 32

Advantages of a decentralised structure

Answer 32

-Being able to make decisions is a motivator (Mayo & Herzberg) - Local regions/ areas are better informed for some decisions - Delegation/empowerment will mean there are opportunities for local initiative to be used

Question 33

Disadvantages of a decentralised structure

Answer 33

- Duplication of resources occurs which could be reduced if centralised - Some decisions made at regional/product level may be appropriate for that region or product but not appropriate for the business as a whole

Question 34

Matrix organisational structures

Answer 34

- It’s where employees with similar skills are put together to complete tasks or projects but with more than one manager supervising

Question 35

What does there need to be for matrix organisational structures?

Answer 35

- A substantial amount of co-operation as working for various managers may be confusing

Question 36

Value of organisational structure

Answer 36

- Brings a sense of organisation/order to the business - Spans of control can be viewed and used to ensure there are a fair distribution for the spans of control for directors/managers within the business - May be possible to ascertain whether delayering is possible/beneficial for the business that may need to cut costs - It allows the business to plan for the future - Stakeholders within the business can identify the strengths and weaknesses - Employees may be able to see where there may be possibilities for promotion

Question 37

How is the level of authority clear within the organisation?

Answer 37

- By viewing the chain of command and span of control

Question 38

Organisational culture

Answer 38

- This reflects the values, attitudes and beliefs of a business - It will strongly influence the manner in which the business operates

Question 39

What will give an indication of the culture of a business?

Answer 39

A mission statement

Question 40

What do mission statements highlight?

Answer 40

- Ethical stance and/or how a concern for the environment is high on it’s list of priorities which may be reflected in the way the business operates

Question 41

What are the main components of a good organisational/corporate culture?

Answer 41

- Vision- starting with a mission statement - Values- They are a core of its culture - Practices- acting/operating in such a way as to match it’s values - People- employees who share the values of the business - Narrative- viewing the history of the business and it’s heritage - Place- location is very important

Question 42

How can the corporate/ organisational culture of a business be seen within a business?

Answer 42

By the manner in which it: - Conducts its business - Treats its customers - Reacts/ show concern for its local community - Allows employees to be involved in the decision making process - Communicates within the organisation - Views the commitment of all within the business to the values, objectives and mission statement

Question 43

How can the organisational culture of a business be seen?

Answer 43

- The way employees dress - The manner in which the building is designed, equipped and decorated - Publications of the business - Degree of training offered