Managing a Business - People

Organisational Structure

• Way in which a business is arranged to carry out activities, shown in organisational chart
• Diagram showing lines of authority + layers of hierarchy:

Workloads and Job Allocation

• Decisions managers have:
  • Who is going to do which jobs?
  • How much work a person can be expected to do?
• As small business develops entrepreneur cannot do all jobs on his own, much more importance to manage people as business gets bigger

Organisational Hierarchy

• Each line represents a relationship
  • Instructions/Orders passed downwards - Communication flows
  • Reports and feedback passed upwards - Communication flows
• Reporting system from top down = Chain of Command
• Person immediately above someone = Their Line Manager

• Communication flows = Exchange of information between levels of hierarchy

Layers of Hierarchy

• Number of different supervisors + management levels between shop floor and chief executive within organisation

Span of Control

• Number of subordinates whom a manager is required to supervise directly
• Wide span of control - If manager has many subordinates to supervise
• Span of control for senior managers is narrower than shop floor supervisors as less people doing the same job

Accountability - Responsibility

• Extent to which an individual is held responsible for success/failure of particular policy/project
• If companies management structure is clear staff should know the authority given to them
• Hertzberg - Achievement + recognition produce employee motivation
• Authority can be delegated down hierarchy

Delegation + Consultation

Delegation

• Process of passing authority down the hierarchy from manager to subordinate
  • Subordinate able to make decisions with particular task
  • Manager still accountable for decision taken

Consultation

• Asking employees their views on various issues that will affect them and business
• Taking into account their views instead of actually passing over decision making

Centralisation Vs. Decentralisation

• Degree to which authority delegated within organisation 
• Centralised structure - Decision making power kept at top of hierarchy - Greater degree of central control
• Decentralised structure - Decisions delegated from…