Business at work

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Organisational structure
In many small firms, the owner may have a very hands-on approach and may be responsible for getting customers, hiring any extra labour and acquiring other inputs and taking all financial decisions. As organisations grow, however, their structure takes on a greater significance and those at the top have to pay more attention to its formal structure and presentation.
The various business functions will show an increasing degree of specialisation as an organisation expands and people will be employed to manage and take decisions in specialist areas.

In general, an organisational structure sets out:

1. Major roles and job titles, showing who is in control of the business as a whole and who manages its major business functions within departments.

2. The level of seniority of people holding different positions and their respective positions in the organisation’s overall hierarchy.

3. The working relationships between individuals, identifying relationships in terms of superiors and their subordinates and indicating who has authority to take certain kinds of decisions and who are responsible for carrying out the work arising from those decisions.

4. The extent to which decision making is concentrated in the hands of people at or near the top of the organisation or handed down to those at lower levels of management.

5. The broad channels through which information is communicated throughout the organisation, indicating the route by which instructions flow down the hierarchy and how information flows back up the hierarchy.

Organisational charts

Organisational charts are representations of the job titles and the formal patterns of authority and responsibility in an organisation.
Business may produce organisational charts for several reasons. First, it is important that a company reviews its organisational structure on a regular basis to take account of any changes in the business environment.
A formal organisational chart helps the company to identify where changes need to be made and to decide the relationship between any new sections or departments and the rest of the organisation. Business also produce organisational charts because they allow a company to review its structure and to identify areas where cost saving changes and improvements can be made. Organisational charts are useful when changes take place in the company. It can be updated to take account of any informal developments in its structure that have been good for the company. A revised organisational chart is particularly useful for informing people about the new structure of the company after mergers or take-overs.
The organisational chart can also be used during an induction period to give new employees a useful overview of the company and their own position within the structure in terms of their authority and the managers to whom they are responsible. Although an organisational chart has several uses, it should not be taken as giving an exact description of how the organisation actually operates. It does not give the exact nature of job responsibilities or indicate what levels of cooperation may be necessary between departments.

Function 1.7: Line authority in a production department.

Chain of command - is the line of command flowing down from the top to the bottom of an organisation. It passes down the management hierarchy, from director and senior management levels to those in middle and junior management positions and eventually to employees in supervisory jobs who, for example may have authority over assembly line workers or staff providing services to the organisation’s customers. Organisations with a long chain of command - with a hierarchy made up of many levels of management - are said to have tall organisational structures.

Span of control - refers to the number of subordinates a manager is responsible for and has authority over. Organisations with a long chain of command will tend to have narrow spans of control. Organisations with a short chain of command tend to have wider spans of control. This produces a flat organisational structure because it has a hierarchy with fewer levels of management.

Flat organisational structures: are generally desirable, there is a limit to the number of subordinates who can be placed under one superior. Even very experienced managers who have the qualities and personalities that promote loyalty and hard work can only be responsible for so many employees.

Tall organisational structure : some organisations have many levels and grades of staff with a tree-like management structure and strong patterns of vertical communication. This means that there are many different grades of staff between people lower down the organisation and the person at the top. Tall organisations suffer from problems with bureaucracy, as information needs to be directed through the correct channels before appropriate action is taken.
The main features of such a structure are as follows:

6. At each level there are several staff responsible to a person at the next level up. The process is repeated until the top of the organisation is reached.

7. In a limited company the person at the top is the Managing Director who is ultimately responsible for the whole organisation.

8. As the levels within the organisation are ascended, the number of people at each level decreases and this gives the organisation a pyramidal structure.
In an organisation with flat structure there are fewer levels or grades of staff and much more emphasis on communication across the organisation. This is more likely to be the structure of a small business where everyone knows each other and works together more as a team.
In some situations, however, a relatively wide span of control may be acceptable if:

9. The potential disadvantages of a wide span are outweighed by the costs of employing the extra managers needed to produce narrower spans of control.
10. Junior employees are engaged mainly in routine work and as a result the manager is required to make relatively few decisions.
11. Managers are willing to reduce the pressure on their own time by delegating more decision making and they can identify staff who are likely to respond well to the extra responsibility.
12. An effective range of financial and non-financial motivational factors produces a committed group of people who need very little supervision.
13. The group within the span are highly skilled or talented and are given a great deal of scope to be creative and imaginative in their work.

Line structure

In a line structure, a company is usually organised into functional departments, each headed by a senior manager, below whom there is a chain of command. This indicates that there is a line of authority and responsibility as one goes down the structure.
Each person in the line has authority over those below, while being responsible for making sure that the work handed down to them from their immediate manager is completed. This applies even if the subordinate does not personally undertake the actual work.
Advantages:
14. It is hierarchical structure which is simple to understand - staff know precisely where they are in the structure, who can allocate work to them and to whom they are responsible.
15. Managers have a clear understanding of the roles of people when allocating work and spend less time monitoring work because subordinates are not distracted or confused by instructions from other sources.
16. A well-established line authority makes it possible for work to be delegated further down the line - this can be valuable when superior is seeking to widen the experience subordinates and develop their management or supervisory skills.
Disadvantages:
17. It can involve a very long chain of command - instructions may take a considerable time to filter from the top and impact on production, which can be an important drawback if the organisation operates in a rapidly changing market.
18. The flow of information back up a long chain to management may be a lengthy process, causing a considerable delay before problems are identified and tackled.
19. Individuals might only respond to requests from the superior, creating inflexibility in the organisation which may be totally unnecessary if co-operation with other managers does not effect working relations with their superior.

Line and staff structure

A line and staff structure combines both a line authority and what is known as staff authority. The term staff authority refers to those staff, usually at a relatively senior level, whose are of work often involves dealing with different departments. Someone with the relevant staff authority can provide services and advises to those in the line of authority of other departments. Managers with staff authority do not have the power to control or give instructions, but rather the authority to deal with different departments and to offer advice or support services in relation to problems or exploiting new opportunities. However, since those with staff authority are appointed because of their expertise, experience and good personal skills, their advice, though not binding, is likely to be very persuasive.
Advantages:
20. Staff authority enables the expertise and experience of specialists to be utilised more fully across the organisation.
21. By having access to all areas of the company, managers with staff authority, communications between departments are at director level, and so any inter-departmental communication has to pass up the chain of command in one department to director level and then down the other before it reaches the appropriate level.
22. Staff authority prevents individual departments from being too inward looking - departments remain aware of their interdependence and their role in seeking to achieve the organisation’s objectives.
Disadvantages:
There is a risk that staff authority may diminish the authority of individuals in the line management, particularly if those with staff functions acquire informal power and authority.

Matrix structure

In a matrix structure, a senior manager heads a division or team of specialists drawn from different departments. These specialists are also located in departments where they are part of a line authority; they are therefore subject to two sources of authority.
In a matrix structure the simple chain of command found in a line structure is replaced by a very large number of reporting relationships as individuals report to managers in more than one department or function.
A matrix structure may be used for just some of an organisation’s activities or it may cover the whole work of the organisation. It is often used for organising and managing project teams, where people with specialist skills, perhaps from different levels in the hierarchy, are brought together to solve complex and urgent problems. Project teams may be created to deal with issues which arise every now and again or they may be an ongoing feature of the organisational structure.
Some aspects of marketing, however, may be handled by an ongoing project team drawn from other departments, although the membership of the group may change as different marketing issues arise.
Advantages:
23. It promotes increased co-ordination between departments because it cuts across departmental boundaries - it encourages greater flexibility and creativity, produced by the cross-fertilisation of knowledge and skills.
24. It allows for the involvement of relatively junior staff, giving them valuable experience in a wider field for the expression and application of their particular skills.
25. Staff lower down a line structure can also gain valuable management development in a project team, preparing them for promotion to higher management positions.
26. The involvement of specialists from different areas reduces the risk of resources being wasted on projects with no future - in non-matrix structures an idea originating in, say, the marketing department may be pursued for a long time before it comes to the attention of production which might find that it is simply not practical.
Disadvantages:

. The existence of a matrix structure and project teams can lead to confusion as individuals are involved in a large number of different relationships creating a complex pattern of authority and responsibility.

. A line manager may resent a subordinate receiving instructions from managers based on other departments, especially if they are at a lower level of management.

. This also raises questions as to who has priority over the subordinate’s time and what information arising out of the work of the project team should also be reported through the line authority. This can be a potential source of conflict and relations may also be strained if the subordinate suffers from divided loyalty.

Centralised structure

Organisations are centralised when the majority of decisions are taken by a few people at the top of the organisation and little decision making is delegated to those further down the organisational structure.
Even if many important decisions are delegated to subordinates, some aspects of the business are always likely to remain totally under central control. In general, senior managers or a centralised department takes responsibilities for: major financial issues, wages and salaries, manpower planning and personnel records, purchasing.
Advantages:
27. Senior management have more control of the business, eg budgets.
28. Procedures, such as ordering and purchasing, can be standardised throughout the organisation, leading to economies of scale and lower costs.
29. Senior managers should be more experienced and skilful in making decisions. In theory, centralised decisions by senior people should be of better quality than decentralised decisions made by others less experienced.
30. In times of crisis, a business may need strong leadership by a central group of senior managers.
31. Communication may improve if there are fewer decision makers.

Decentralised structure

Complete decentralisation would mean subordinates would have all the authority to take decisions. It is unlikely that any business operates in either of these ways. Even if authority is delegated to a subordinate, it is usual for the manager to retain responsibility.
Some delegation is necessary in all firms because of the limits to the amount of work senior managers can carry out. Tasks that might be delegated include staff selection, quality control, customer relations and purchasing and stock control. A greater degree of decentralisation - over and above the minimum which is essential - has a number of advantages.

Advantages:
32. It empowers and motivates workers.
33. It reduces the stress and burdens of senior management. It also frees time for managers to concentrate on more important tasks.
34. It provides subordinates with greater job satisfaction by giving them more say in decision-making, which affects their work.
35. Subordinates may have a better knowledge of ‘local’ conditions affecting their area of work. This should allow them to make more informed, well-judged choices.
36. Delegation should allow greater flexibility and a quicker response to changes. If problems do not have to be referred to senior managers, decision-making will be quicker. Since decisions are quicker, they are easier to change in the light of unforeseen circumstances which may arise.
37. By allowing delegated authority, management at middle and junior levels are groomed to take-over higher positions. They are given the experience of decision making when carrying out delegated tasks.

Delegation is therefore important for management development.

Delayered structure

Delayering involves a business reducing its staff. The cuts are directed at particular levels of a business, such as managerial posts. Delayering involves removing some of these layers. This gives a flatter structure.
Delayering is likely to play a major role in a policy of decentralisation as the removal of management layers allows authority for decision making to be shifted to a lower level in the organisation.
Advantages:

. The savings made from laying off expensive managers. It may also lead to better communication and a better motivated staff if they are empowered and allowed to make their own decisions.

. However, remaining managers may become demoralised after delayering.

Also staff may become overburdened as they have to do more work. Fewer layers may also mean less chance of promotion.

Management style

Management style refers to the approach that an organisation takes in setting objectives for its employees and the way it manages relations between superiors and subordinates.
Management or leadership styles can be categorised as:

Autocratic: A manager that adopts an autocratic management style takes entire responsibility for decisions and, having set objectives and allocated tasks to employees, expects them to be carried out exactly as specified. Employees are told exactly what, how and when work must be started and finished. It is the kind of management style often associated with a corporate culture centred almost exclusively around production.
Power is focused at the top, and the centralised decision making is geared to getting the goods out of the factory and to customers. Little regard is paid to any non-monetary needs of employees; they are not consulted or involved in decision making.

Democratic: A democratic management style seeks to involve employees in the decision-making process, either by consulting them directly or through their representatives. This approach reflects a corporate culture which is more human resource centred and recognises the organisational benefits from meeting its employees’ non-monetary needs - such as a need for job satisfaction and a sense of belonging. A consultative approach is particularly important if an organisation is planning to change product design or working conditions, methods and practices.

Laissez-faire style: This style gives people complete freedom to organise and carry out their work. It is a very person centred approach. A laissez- faire approach may still impose some constraints, such as completion dates for certain key tasks or the earliest and latest arrival times for a flexible hours working day. There is no formal structure for decision making as decisions are taken by a variety of processes depending upon the nature of the problem, the opportunity to be explored and the individuals involved.

Consultative style: Leaders consult with others before decision are made.
There will be a group influence in the final decision, even though it is made by the leader.

As diagram above shows, Tesco has many levels of staff: directors on the top, and step by step to employees on the bottom, therefore I can think that Tesco is a hieratical organisation, where each individual knows who he must report to. Communication in a complex organisation such as Tesco will be dependent on the organisational structure, but this will be discussed later in my section on “Communication”.
I can see that Tesco has a centralised and decentralised form of organisation because people on the top, who control the company, take the majority of decisions and also the company’s Head office is centralised at
Cheshunt in Hertfordshire.
Tesco is very big organisation and has very many stores in different places
– this fact shows that Tesco is a decentralised organisation, with much decision-making delegated on a regional and individual store level.
From the information I have managed to access I believe/consider that Tesco has a very good democratic and consultative management style. It is a very successful firm, as seen earlier, it is now the U.K. market leader with positive leadership from above and a notable corporate culture.
The directors present their annual report to shareholders on the affairs of the Group together with the audited consolidated financial statements of the Group for the 52 weeks.
The principal activity of the Group is the operation of food stores and associated activities in the UK, Republic of Ireland, France, Czech
Republic, Slovakia, Hungary, Poland and Thailand. A review of the business is contained in the Annual Review which is published separately and, together with this document, comprises the full Tesco PLC Annual report
Accounts.

Culture

Culture in organisations is often described as the set of values, beliefs and attitudes of both employees and management that helps to influence decision-making and ultimately behaviour within them. Each organisation has a unique culture. This is what makes studying business behaviour so fascinating. The business culture helps to determine how things get done in firms and defines, quite simply, how the company works. The fact that organisations are themselves organic, composed of workers constantly interacting with each other and their environment, suggests that the culture in firms is not static and constant – the way firms operate can change, either intentionally through management action or more likely through natural evolution.

Corporate culture

Corporate culture is a set of values and beliefs that are shared by people and groups in an organisation. A simple way of explaining corporate culture might be to say that it is the ‘way that things are done in a business’.
The corporate culture of a business can influence decision-making. It also encourages low level managers to behave like entrepreneurs. Business leaders are able to create a corporate culture to achieve a corporate objectives and strategy of the company. It is important that the corporate culture of a business is understood by all the people that work in the organisation. It is usually transmitted to new members and reinforced informally, by stores, symbols and socialisation, and more formally through training.

Advantages of a strong corporate culture.

. It provides a sense of identity for employees. They feel part of the business. This may allow workers to be flexible when the company needs to change or is having difficulties.

. Workers identify with other employees. This may help with aspects of the business such as team work.

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