Organisation Chart: A diagram showing the lines of authority and layers of hierarchy in an organisation.
A line between two different levels (e.g. A team leader and a supervisor) represents a relationship where instructions are passed downwards, and reports and feedback are passed upwards within the organisation.
When describing the person immediately ABOVE someone in the organisation chart as his or her LINE MANAGER. For example, The team leader's line manager is the manager.
The reporting system from the top of the hierarchy down to the bottom is called the CHAIN OF COMMAND.
Organisational Hierarchy: The vertical division of authority and accountability in an organisation.
Levels of Hierarchy: The number of different supervisory and management levels between the shop floor and the chief executive in an organisation.
In this organisation chart, the marketing function has 3 levels.
Span of Control
Span of control: The number of subordinates whom a manager is required to supervise directly.
If a manger has a lot of subordinates to answer to --> Wide Span of control
If a manger has few subordinates to answer to --> Narrow Span of Control
Relationship between: Span of Control and levels of hierarchy
Normally an organisation with a tall hierarchical structure (i.e. many layers of management), each had a narrow span of control.
Now it is becoming more popular to have a flatter hierarchical structure (reducing the layers of management) and each manager will have a wider span of control.
Here organisation A is a tall structure with 4 layers of management. Organisation B is a flat structure with 2 layers of management. A the top of the triangle is the Top management and at the bottom is the shop-floor workers:
Centralised and Decentralised Structures
Centralised involves authority and responsibility for decision making being in the hands of senior managers (e.g. at a head office).
Decentralisation means that this responsibility is given to individual units/departments/branches or lower-level managers.
Benefits of centralised decision making:
- Greater control over decisions made
- More consistency
- More efficient use of specialist skills of employees and managers.
- Increased motivation due to empowerment of lower-level managers
- Skills developed in lower-level managers
- Quicker decision making (However it would be hard for lower-level managers to have an overview and be aware of the wider impact of their decisions)
Delegation is the process of passing authority down the hierarchy from a manager to a subordinate.
Responsibility
Being accountable for one's actions.
e.g. A personnel manager may be responsible for ensuring that all employees receive appropriate training for their particular job.
Authority
The ability or power to carry out a task.
Subordinates must have the authority to undertake the various tasks delegated to them. The manager must formally pass authority on to them and is clear and explicit.
For example, if a manager was due to be away and did not give her assistant the authority to sign cheques or make decisions on her behalf, the firm's activities may grind to halt.
Limits must also be laid out.
Accountability
The extent to which a named individual is held responsibility for the success or failure of a particular policy, project or piece of work.
Accountability remains firmly at the top of the organisation structure.
Factors that can make delegation effective:
- Based on mutual trust between manager and subordinate
- Get the right person to do the job (skilled, trained, can do the task effectively and efficiently)
- Ensure that the interesting tasks, as well as more boring ones, are delegated.
- Effective support system provided (e.g. allows the subordinate to ask questions and discuss issues with their delegated tasks)
- Managers should delegate responsibility and authority. Limitations of the subordinate's authority should be made clear too.
- Managers should not interfere with delegated tasks unless something is going seriously wrong. Subordinates need to feel trusted and that managers have confidence in them.
Communication Flows
Communication: The process of exchanging information or ideas between two or more individuals or groups.
Internal Communication: The exchange of information that takes place within an organisation (e.g. at department meetings, in team briefing sessions and in memos to staff)
External Communication: The exchange of information that takes place with individuals, groups and organisations outside the business (e.g. via advertising material, telephone calls to suppliers and letters to customers).
Good communication means that the organisation will have a more motivated and committed workforce, make better decisions, makes the business better coordinated, and find it easier to implement change.
The Communication Process
One and Two-way communication
One-way communication: Communication WITHOUT any FEEDBACK (e.g. putting a notice on a notice board, or giving instructions in an authoritarian manner that allows no comment or questions from the listener).
Two-way communication: Communication WITH FEEDBACK (e.g. giving instructions in a manner that allows for questions to be asked or comments to be made, a discussion or a question-and-answer session).
In one-way communication, the communicator cannot be sure if the message was fully understood and if it was effective. This communication is associated with autocratic management styles.
However two-way communication ensures that communication is fully understood and so is more effective. Two-way communication is an example of democratic management, effective delegation, empowerment and team working.
Communication Channels
Communication Channel: The route through which communication occurs.
Examples: A team briefing session, works council (a discussion between management and employee representatives about company plans)
Open and closed channels of communications
Open channels of communication: Any staff member is welcome to see, read or hear the discussions and conclusions.
Closed channel of communications: Access to the information is restricted to a named few.
Formal and informal channels of communication
Formal channels of communication: Communication channels established and approved by senior management, within which any form of communication is regarded as formal (e.g. meetings of departmental heads, personnel department meetings and production team briefing sessions).
Informal channels of communication: Means of passing information outside the official channels, often developed by employees themselves (e.g. the 'grapevine' and gossip).
Vertical and lateral communication
Vertical communication: When information is passed up and down the chain of command.
Two types of vertical communication:
1. Downwards communication- Transmitted from the top to the bottom of the organisation, or from superior to subordinate. Usually used to give instructions or inform employees about decisions.
2. Upwards communication- Transmitted from the bottom to the top of the organisation, or from subordinate to superior E.g. feedback, advising of any problems. It can help to improve downwards communication and provide feedback on its effectiveness.
Lateral Communication: When people at the same level within an organisation pass information to each other.
e.g. The finance dep. telling the marketing dep. about the budget available for a sales promotion.
What influences the structure of an organisation?
- The size of the organisation - The larger the organisation --> More complex its structure --> More layers of hierarchy, divisions or departments.
- The nature of the organisation - Manufacturing sector? Service sector? National? Single product or multiple? Needs tight control?
- The culture and attitudes of senior management - Depends on management style (Autocratic and controlling or democratic and participative)
- The skill and experience of its workforce - Do the workers have little skills and do repetitive jobs? Or are they high skilled and do different jobs?
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