BUISNESS CHAPTER 15 INTERNAL ORGANIZATION

Formal Organization - the internal structure of a business represented by an organization chart Small businesses rarely need a formal organization.. however, businesses that employ thousands of people need formal organization. Without it would be difficult to control. Communication may break down, mistakes might occur and staff may become confused about their roles. Organization Chart - a diagram that shows the different job roles on a business and how they relate to each other. An organization chart shows How the business is split into functions or departments The roles of employees and their job titles Who has responsibility To whom people are accountable to Communication channels The relationship between different positions in the business

Hierarchy the order or levels of responsibility in an organization from the lowest to the highest The chairperson is at the top of the hierarchy and is accountable to the shareholders. Employee roles and responsibilities DIRECTOR Appointed by the owners to run the business Together with the chairperson form Board of Directors (make all the important decision in the business) They have authority over the managers in the layers below them MANAGERS Responsible for planning, controlling, organizing, motivating, problem solving and decision making Overall role achieve objective of the owner Employed to get things done using the resources of the business as effectively as possible They are also leaders and help to guide and shape the business. The manager in each department is accountable to the departmental director SUPERVISORS Monitor the work in their particular area.

 Have authority over operatives and general workers. May carry out managerial duties, but at a lower level. OPERATIVES Skilled workers that are involved in the production process They may operate machines, assemble products, work with tools or carry out maintenance They are accountable to supervisors or managers At the bottom of the hierarchy but have more status than a general worker because they are often skilled GENERAL STAFF Staff that do not have any specific skill With training they can perform a variety of tasks and gain promotion to other positions Do not have any authority PROFESSIONAL STAFF Skilled and highly trained In places where lots of professionals are employed, organization charts may be different. Examples lawyers, doctors, pilots and dentists Features of organizational structures CHAIN OF COMMAND This is the route through which the orders are passed down in the hierarchy. Each layer in the hierarchy is like a link in a chain Orders will pass down through the layers from top to bottom Information can also flow back from bottom to top IF its too long then Messages may get lost or confused as they pass up and down through the chain Making changes might meet with resistance lower down the chain. Therefore if there are lots of links in the chain, resistance is more likely. SPAN OF CONTROL People or subordinates directly controlled by a person Wide span of control = person controls relatively more subordinates Narrow span of control = person controls less subordiantes If span of control > 6 the n problems may arise FLAT AND TALL STRUCTURES Flat structure = fewer layers in the hierarchy. Our flat structure only has 2. Tall structure = multiple layers in the hierarchy .

TALL STRUCTURE

FLAT STRUCTURE

With flat structures Communication is better because of shorter chain of command Management costs are lower because there are fewer layers of management Control may be friendly and less formal because there is more direct contact between layers With tall structures Communication through the whole structure can be poor because there is a long chain of command Management costs will be higher There may be a clear route for promotion which might help motivate staff Control tends to be more formal and less friendly because of all the layers in the hierarchy DELEGATION Handing a more complex task to a subordinate by the manager The manager will still have responsibility for the overall task Time can be saved if a subordinate completes a task Delegation can motivate workers as workers feel that they are being trusted to carry out a more difficult work Organizational charts and growth

As businesses grow the formal organization is like to change At start, businesses have a entrepreneurial structure. This means that the decisions are made centrally by the owner or the key workers. As they grow , businesses opt for a traditional structure. This is where structure is based on a hierarchy and decision making is shared throughout the business Some businesses have a matrix structure. This is where employees are put into teams which cut across departmental roles. They may work together on a specific project.