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People In Business

Improving organisational structures

Traditionally businesses are structured according to business funtions such as marketing and production. This is known as functional management.

Functional management - Jobs are grouped together organised into departments, sections or functions, e.g. marketing, finance, production. This form of management can lead to:

  • clearly defined channels of communication and hierachy
  • clearly defined roles
  • decision making being more centralised

In order to build more flexibility into the structure of the organisation, matrix management if often introduced.

Organisational hierachies and structures are useful to define accountability and to clarify roles, but they discourage flexibility and can become quickly outdated. Spans of control and hierachies are closley linked - the wider the span of control the fewer the levels in the hierachy.

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Levels of hierachy means the number of levels of management within an organfinsition. A company that has many levels of hierachy will have a tall organsisational structure. Whereas one with fewer levels of hierachy will have flatter organisational strcture.

Many levels in the hierachy (tall structure)                                                                             The pros and cons of this kind of structure are as follows:

  • Greater opportunities for specialisation
  • Greater opportunities for promotion
  • May be less opportunity for delegation
  • Admisistration costs may be higher
  • Can create communication problems as there are many layers to pass

Few levels in the hierachy (flat structure)

  • Few opportunites for specialisation and promotion
  • Greater opportunites for delegation
  • Admistration costs may be lower
  • Easier to communicate as there as fewer levels to pass through
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Wide versus narrow span of control

Wide span of control

  • Greater opportunites for delegation
  • supervision and control will be looser
  • the distance between the top and the bottom of the organisation will be smaller
  • If accompanied by delayering this can lead to lower costs but also reduced opportunites for promotion
  • reduced contact and communication between managers and reportees

Narrow span of control

  • The expertise of the manager and his/her ability to control a larger number of people and delegate tasks effectively.
  • The motivation of employees and their ability to work on their own with little supervision.
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Centralised versus decentralised structures

Centralisation involves authority and responsibily for decision making being in the hands of senior managers. Decentralisation means that this responsibility is given to individual units, departments, branches or lower level managers.

Centralised decision making may result in:

  • Greater control over decisions made
  • More consistency
  • More effiecient use of specialist skills of employees and managers

Decentralised decision making may result in:

  • Increased motivation due to the empowerment of lower level managers
  • The development of skills in lower level mangers
  • Quicker decision making - but it will be difficult for these lower - level managers to have an overview and be aware of the wider impact of their decisions.
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Tasks are handed down by a manager to a subordinate. The subordinate is given the authority to make decisions but the manager remains accountable. The process can be a way of motivating and empowering employees.

For delegation to be effective a manger must:

  • Think carefully about getting the right person to do the job.
  • Ensure he or she is adequately trained.
  • Ensure that the interesting tasks as well as the boring tasks are delegated.
  • Provide support mechanisms.
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Recruitment and selection process

This is the process by which an organisation fulfils its need to find new employees. It requires the organisation to address the following questions.

  • What is the job that needs to be filled? (job description)
  • What does the job entail? (job description)
  • How can the organisation decide if the applicants are suitable? (interview, asessment centres)
  • What type of person is needed to fill the vancancy (person specification)
  • What are the legal implications? (sex discrimintation act. race, race relations act, age regulations)
  • How can the organisation attract sufficient numbers of suitable applicants to apply.

The method of recruitment and selection usually depends on:

  • Level of job within the organisation
  • location of the job
  • Approach and attitudes of management
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Internal or external recruitment :                                                                            Internal recruitment is recruiting an employee from within the organisation. Advantages:

  • Advertising is cheap, via internet, notice board , newsletters.
  • Applicant already knows the organisation, reducing costs for training
  • The applicant is known in terms of his or her potential for the post.


  • New ideas or a fresh approach may be generated.
  • There will be a limited source of potential applicants, if only this method is used.
  • It may create a vacancy elsewhere in the organisation which will need to be filled.

External Recruitment is recruiting employes  from outside an organisation.                    Advantages: Applicant can bring in new ideas or fresh approaches to the organisation. Wider pool of applicants to choose from.                                                                                             Disadvantages: expensive , time consuming.

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Training : Training is the process that attempts to fill the gap between what the employee has already in terms of accumulated skills, knowledge and attributes and what is demanded by the job now and possibly in the future. This can be:

  • Induction
  • training for change
  • Training for personal developement
  • Skills development
  • Team building

A range of methods can be used, involving:

  • courses
  • mentoring
  • on the job of the job training
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Internal or external training?Internal training is appropriate if if training needs are specific to the individual organisation.The most common type of internal training is on the job training. External training is appropriate is there are only a few employees with this specific training need and the training requirement is not specifically linked to the organisation. It gives employees the chance to meet people from other organisation and to also make employees feel more valued.

On the job training is likely to:

  • Be cheaper, as existing employees and equipment can be used.
  • Take place in a realistic environment.

Of the job training is likely to:

  • Training being more highly valued by employees, leading to increased motivation
  • opportunities to meet staff from other organisations and learn more

Purpose and benefits of training:can lead to increase in motivation, ensuring employee has the right skills and potential. Reduces costs in the long term.

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Motivation in practice

Why is motivation important? Poor morale in an organisation can lead to:

  • high levels of absenteeism
  • high levels of labour turnover
  • lower productivity
  • loss of competitive advantage
  • poor image, which could cause problems in recruiting and retaining employees

A number of different methods have been tried and tested to improve morale and motivation based on the various motivation theories, including improving job design, empowerment, teamworking and financial insentives.

Improving Job design, this may take form of: Job enrichment or enlargement.

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Job enrichment means giving employees greater responsibilty and offering more challenges that allow them to utilise their skills fully.                                                                                     The advantages & disadvantages are:

  • It developes workers skills and presents them with challenges.
  • It allows workers to make more decisions and feel more valued.
  • It motivates workers by ensuring that their abilities and potential are exploited and that individuals gain a high degree of self control over the setting of goals and the identifciation of how to achive these goals.
  • Some workers may feel that it places more pressure on them.

Job enlargement involves increasing the scope of the job, either by job enrichment or by job rotation, where a worker takes on a variety of roles.                                                                 The advantages & disadvantages are:

  • It motivates workers through giving them greater recognition
  • relieve boredom of work
  • A firm can demoralise its workforce by giving them excessive workloads.
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Empowerment: This can be acheived through informal systems or through formal structures, such as autonomous wok groups, giving employees autonomy and decision making powers. The aim is to increase motivation while also improving flexibility and quality.

Teamworking: When accompanied by other techniques such as job rotation, enrichment and some degree of decision making, teamwork can enchance motivation. This ties in with mayo's principles and maslow's social needs.

Financial insentives: These range from piece rates to profit sharing and share ownership schemes. Links with Taylor's view.

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