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An organisational structure is how a business organises its staff to represent the different layers of management. This information can be displayed in the form of a chart. There are two main types of organisational structure used in businesses – hierarchical (or tall) and flat.
Hierarchical structure
A hierarchical structure is often also referred to as a ‘tall’ organisational structure. A hierarchical structure has many layers of management, and businesses with this structure often use a ‘top-down’ approach with a long chain of command. In a hierarchical structure, managers will have a narrow span of control and a relatively small number of subordinates (staff).
Flat structure
A flat structure is an organisational structure with only a few layers of management. In a flat structure, managers have a wide span of control with more subordinates, and there is usually a short chain of command. Flat organisational structures are commonly used by smaller businesses or those adopting a more modern approach to management.
Key terms in organisational structure
There are a number of key terms that apply to organisational structures:
span of control - the number of staff that a manager has responsibility for
chain of command - the route by which instructions and communications flow from the top to the bottom of a business, explaining who is answerable to whom
delayering - a process where a business removes layers of its management to make its structure more flat
delegation - a process where tasks are given to members of staff, where often managers give tasks to employees further down the chain of command
subordinates - members of staff below a manager in the chain of command
Centralised management structure
A centralised structure is where business decisions are made at the top of the business or in a head office and distributed down the chain of command. It is often used in retail chains. Usually, all branches will operate in the same way and store managers will have very little input into how their individual store is operated.
Businesses with a centralised management style can often be slow to respond to changes in the business environment or local changes near their branches.
Advantages of a centralised management structure include:
consistency across the business
the business has a clear direction
operations and decisions are closely controlled and managed
the chain of command and accountability are clear
Disadvantages of a centralised management structure include:
it can demotivate employees
a standardised approach may not work in all business locations
it may lower productivity
Decentralised management structure
A decentralised approach is where a business allows decisions to be made by managers and subordinates further down the chain. This structure provides staff with more decision-making responsibilities. For example, individual stores or departments may make decisions on staffing levels, which products and services to offer for sale, and pricing.
Businesses with a decentralised management structure can often respond quickly to changes in the business environment and the local area.
Advantages of a decentralised management structure include:
improved employee motivation
allowing managers lower down the chain to make decisions to suit their local area and customers
more responsibility for employees
Disadvantages of a decentralised management structure include:
consistency is not achieved across the business
managers can make ineffective decisions
may negatively impact sales and overall business performance, eg because of ineffective decisions by managers lower down the chain
The impact of communication on efficiency and motivation
Effective communication is important in any business. The type of organisational structure and the management approach a business chooses each have a significant impact on the type and amount of communication the business uses. As a business grows, maintaining an effective level of communication becomes increasingly difficult.
Communication in a business can be done in a number of ways. The most common methods are emails, text messages, online shared spaces, communication apps, letters, reports, phone calls, video-conferencing, and face-to-face meetings.
When communication is not done well, there can be negative effects on business performance. Ineffective communication falls into two categories: insufficient and excessive.
Business staff showing insufficient communication and excessive communication via emails, social media messages and face-to-face.
Insufficient communication
Insufficient communication means not enough communication or poor-quality communication. Insufficient communication can negatively impact efficiency and motivation, as employees may not fully understand what is required of them or what is happening across the business as a whole. This may have a negative impact on overall business performance and decrease the productivity of employees.
Excessive communication
Excessive communication means too much communication. For example, employees may receive too much communication in general, or they may receive the same message via multiple channels. This can often cause employees to become confused or feel stressed or overloaded. Ultimately, excessive communication can have a similar impact on efficiency and motivation to insufficient communication.
Barriers to effective communication
A barrier to communication is something that stops communication happening or makes communication less effective. There are a number of barriers to effective communication.
Some barriers to communication include:
poor explanations
poor spelling and grammar
incorrect language
technology issues
poor structuring of information
use of jargon, technical language or slang
lack of understanding
If communication is not received or understood properly, the result may be reduced business efficiency and mistakes. Ineffective communication may also confuse customers or stop them receiving a message, which can ultimately impact a business’ sales and profitability.
Full time usually refers to an employee working more than 35 hours per week, often spread over five days each week. Full-time employees work in all job roles. Examples of job roles that include full-time employees are teachers, office workers, pilots, police officers, doctors and nurses.
Part time refers to an employee working for only part of the working week, or anything less than full time. Often, a part-time employee may work for two, three or four days a week. Part-time employees work in all industries but are commonly found in the retail industry, where a shift role may only be required on certain days or times.
Having flexible hours is a more modern way of working. Employees are given a set number of hours to work in a week, month or year but get to choose when they work. For example, a business might let employees start work any time between 7am and 10am, then depending on start time, finish between 3pm and 6pm.
Permanent contracts
A permanent contract is one that has no fixed end date. The employee may stay within the business until either they decide to leave or the job role no longer exists. Permanent contracts are suited to certain types of more stable, long-term job roles, such as nurses, pilots and teachers.
Temporary contracts
A temporary contract is one that has a specific end date, where the worker is only employed for a certain period of time. Temporary contracts are very common within the retail industry and in other industries with seasonal demand. For example, a high street shop would require more staff over the Christmas period, so it would employ staff on temporary contracts.
Freelance contracts
A freelance contract is usually one where a self-employed individual is engaged to carry out a specific piece of work over a defined period of time. The period of time is sometimes very short. Freelance work is very common in the creative industries, such as when a business needs an advertisement, promotional photographs or a new logo.
Technology, efficiency and remote working
Technology has had a huge impact on how businesses operate and how employees work. Two of the main ways it has changed businesses are increased efficiency and remote working.
Increased efficiency
Increased efficiency means that a business is able to produce items and provide services more quickly, more accurately and with fewer resources. For example, in the car industry, cars would traditionally have been produced by many people working on an assembly line. In contrast, in a modern factory, cars are mostly made using machines. This means these factories require only a small number of employees.
Technology has also vastly improved the efficiency of communication in businesses. Messages can now be sent very quickly to a large number of people with a reduced risk of barriers to communication. Common ways of communicating using technology include email, text messages, online chat, telephone calls and online video communications.
Remote working
Remote working is where employees are able to work from home or somewhere that is not the main working environment of their employer. This is because technology has enabled them to work at home in the same way they would in an office. Not all roles are able to take advantage of remote working. For example, police officers and retail workers usually cannot work from home.
Remote working means that employees have more flexibility – they may not have to travel as far and are less likely to take time off because of sickness or be late. However, employees working remotely may not always work as hard and they may not be able to seek help easily when required.
Key job roles and their responsibilities
Businesses employ staff to take on a number of different roles, with different duties and responsibilities. Roles are often organised into a hierarchy, which can include directors, senior managers, supervisors and team leaders, operational staff, and support staff.
Directors
Directors are the people at the top of a business and its organisational structure. Small businesses may only have one or two directors. Larger businesses often have a board of directors who make the key business decisions, such as implementing new policies, deciding how to invest profit or opening new offices. A board of directors is often made up of a senior person from each department, officers (such as treasurer or secretary), and the owner or chief executive officer (CEO) of a business.
Senior managers
Senior managers sit below the level of director in the hierarchy. They are the highest level of manager in a business and usually have overall responsibility for all staff below them. Senior managers may make key day-to-day operational decisions for a business and set business strategy or direction. For example, a senior manager of a bookshop chain might decide how the tables and shelves are going to be organised for the busy Christmas period and what sort of extra stock will be ordered to make the seasonal offer more appealing and maximise profit.
Supervisors and team leaders
Supervisors and team leaders sit below the senior managers in the hierarchy. They often manage a team of employees, which involves providing them with daily duties, agreeing their working hours and ensuring they fulfil their roles. In a supermarket and some other businesses, each department is likely to have a team leader. For example, the fruit and vegetable section may have a dedicated team of employees and the team may be managed by the team leader of that department.
Operational staff
Operational staff complete tasks that fulfil the purpose of a business. For example, in a car dealership, the operational staff would be the sales representatives and car engineers. In a supermarket, the operational staff would be the customer service representatives and checkout operators.
Support staff
Support staff assist with the daily operation and running of a business. Their duties do not directly contribute to the overall operation or purpose of a business. Support staff may include cleaners, maintenance workers, human resources employees and finance workers.
Recruitment documentation - Recruitment is the process of deciding who will fulfil a specific job role. There are a number of documents that form part of the recruitment process. These include the person specification, job description, application form and CV.
Person specification
A person specification is a document created by a business that wants to fill a vacancy. This document provides information about the type of person the business wants to hire. A person specification includes details about the educational background, skills, experience and hobbies the business wants applicants to have.
Often, a person specification is split into two sections – ‘essential’ and ‘desirable’. If something is classed as essential, it means a person must have it in order to apply for the role. An example could be experience in a similar role or a certain qualification. In contrast, if something is classed as desirable, it means it is not a necessity to apply for the role, although it may give applicants a better chance of getting the job. An example could be having a master’s degree.
Job description
A job description is another document produced by a business that wants to fill a vacancy. Its main purpose is to list all of the duties that are required in the role. A job description may include the job title, rate of pay or salary, bonus information, hours of work, location of work, all duties included in the role and who the new employee would report to in the business.
Application form
An application form is completed by a potential employee when they apply for a job. It will often include a series of questions for a potential employee to answer, so that the business can learn more about them. It often includes a section for applicants to write about themselves and why they are the best candidate for the role.
Sometimes, instead of completing an application form, a potential employee is asked to write a letter of application, in which they demonstrate why they should be employed to fulfil the job role. Additionally, some applications require letters of reference, which are letters from an applicant’s previous employers about their skills, experience and character.
CV
A CV is a document that applicants complete and submit alongside a job application. CV stands for ‘curriculum vitae’, which is Latin for ‘course of life’. It is a personal document that includes information about an applicant’s skills, experience, qualifications and hobbies. This document is used by a business to decide whether applicants match the requirements of the person specification. Some roles only require a CV, with no application form, as this may encourage more applicants to apply.
Internal recruitment
Internal recruitment is often carried out through internal job adverts published via internal emails, notice boards, business websites and internal company memos.
Advantages of internal recruitment include:
a quick process
applicants will already be known to the business
applicants may have previous experience in the role
cheaper to recruit and advertise roles internally
Disadvantages of internal recruitment include:
usually a small pool of applicants
applicants may not be experienced in the role
a lack of fresh ideas in the business
External recruitment
External recruitment is often carried out through external job adverts published via external emails, job websites, recruitment agencies, the business’ own website, newspapers and trade magazines.
Advantages of external recruitment include:
may bring new ideas into the business
fresh enthusiasm and skills
larger pool of potential applicants
Disadvantages of external recruitment include:
may take the new employee time to settle into the business
expensive to recruit
new employee not previously known to the business
can take more time than internal recruitment
Training and development are processes in which employees are provided with additional skills, knowledge and qualifications so as to enable them to contribute to maximising a business’ performance. If employees are receiving regular training and development, they are more likely to perform well. Employees are also more likely to be happy in their workplace, as they see that the business is investing in them to help them reach their full potential.
Formal training refers to official, structured training that may be job specific or related to gaining a qualification. Formal training is often referred to as ‘off-the-job’ training because it involves employees taking time away from their day-to-day activities. Formal training may involve an employee going on a training course outside the business, undertaking an apprenticeship or completing a graduate scheme.
Informal training refers to less structured training, which often takes place at work or ‘on the job’. For example, in a supermarket, informal training may take place to teach an employee how to use a till or stack a shelf. Informal training is often provided directly by colleagues or done by observing colleagues.
Self-learning refers to an employee teaching themselves a skill or part of their role without being taught by another employee or external training supplier. Self-learning is often done through reading, researching, watching videos or watching fellow employees. Employees who engage in self-learning are seen as proactive by businesses and can save businesses money.
Ongoing training is training that takes place continuously throughout an employee’s time working for a business. For example, an employee may have developmental training each week or month on a specific area of the business or their role. The aim of ongoing training is to continuously improve the performance of employees and the overall productivity of the business.
Target setting and performance reviews are undertaken by businesses to ensure employees know how they are performing and how they could improve in the future. Target setting refers to the process of setting goals or objectives for employees to help them reach the next level in their employment or get better at their current role.
Appraisals Performance reviews are often referred to as appraisals. These are formal meetings between an employee and a manager to discuss the employee’s performance in their job role. They are opportunities to review previous targets, set new targets and address any concerns the manager has about the employee’s performance.
Why businesses train and develop employees - motivation and retention
Businesses train and develop their employees for a number of reasons, but the two of the most important are motivation and retention.
Motivation
Motivation refers to how driven and happy an employee is in their role. If an employee is motivated, they are more likely to do a good job and work hard.
Most businesses view training and development as important ways to motivate their employees. If an employee is receiving training and development from their employer, they are likely to feel valued and feel like the business is interested in their progress. They may also feel like the business wants them to reach their full potential. As a result, employees will be motivated to work harder.
Retention
Retention refers to keeping employees working for a business. Retention is extremely important for a business. Keeping employees means keeping their skills and experience rather than losing them to other businesses, and it also means that time and money are not wasted hiring new employees. Employees are likely to feel valued by a business that invests in their training and development, meaning that they are more likely to stay working for that business.
Retention is usually represented as a percentage of employees. For example, a 95 per cent retention rate would mean a business had managed to keep 95 per cent of its employees working for it over a certain time period. A retention rate of 90 per cent or higher is considered to be very good.
Different industries tend to have different staff retention rates. For example, a call centre might have a low retention rate due to the relatively low skill level required to do the work and the fact that it is relatively easy for employees to find alternative employment, either at another call centre or in another low-skill position. In contrast, a school might have a high retention rate due to the training commitment involved in becoming a teacher and the difficulty of interviewing for roles at other schools while fulfilling teaching duties.
Retraining to use new technology
Technology is constantly becoming more advanced and changing as new machinery, software and ways of working are introduced. It is very important for businesses to ensure that they train their employees to use new technology. Doing so makes employees more efficient and skilled in their roles.
The type of technology a business invests in will depend on the type of business. For example, some businesses will need to train their employees to work a self-service checkout or a new payment system. Other businesses might need to teach their employees how to operate a new piece of industrial equipment, such as a robot that installs car parts.
Training employees to use new technology may also make them feel more valued by the business, which may in turn improve both motivation and retention. Ultimately, if employees are able to fully use new technology, business performance is likely to improve.
Motivation refers to how driven and happy an employee is in their role. If an employee is motivated, they are more likely to do a good job and work hard. Motivation is very important for attracting employees, retaining employees and general levels of productivity in a business.
Attracting employees
Attracting employees is extremely important for a business. If a potential employee can see that a workplace has high levels of motivation, they are more likely to want to be employed there. Motivated staff are also more likely to recommend their workplace to potential applicants.
Retaining employees
Retention refers to keeping employees working for a business. Retention is very important for a number of reasons:
employees who have worked for a business for a long time require less monitoring and training than those who are new to the business
when employees stay working for a business, their skills and experience are kept within the business
retaining existing employees avoids wasting time and money hiring new employees to replace the ones who have left
Employees are likely to feel valued by a business that invests in their training and development. This means they are much more likely to stay working for that business.
Productivity
Productivity relates to how much work is completed by employees. It is usually measured in the number of products produced or the amount of work completed in a certain period of time.
A business will aim to have the highest possible level of productivity. This is because having a high level of productivity leads to more revenue and potentially more profit. More motivated employees are likely to increase a business’ productivity levels.
Businesses can use a range of methods to motivate their employees. Financial motivation involves motivating employees with money and things associated with money. The main methods of financial motivation used in business are remuneration, bonuses, commission, promotion and fringe benefits.
Remuneration
Remuneration is the money employees are paid in return for working in a business. Different roles in a business are rewarded with different levels of remuneration. For example, a company director might earn £100,000 per year whereas a data entry clerk might earn £18,000 per year.
Many employees are motivated by remuneration, and pay rises can often make employees feel more motivated. Many businesses offer regular yearly increases in remuneration to help increase motivation.
Bonuses
A bonus is a form of additional remuneration. Some businesses and industries use bonuses to motivate their employees. For example, in an electronics shop, a salesperson might be awarded a £500 bonus at the end of the year for selling a large number of TVs – this could be because they made a certain number of sales, or because they created a certain amount of revenue for the business.
Often, when an employee is motivated by money, a bonus is a very good way to raise their level of motivation.
Commission
Commission is similar to a bonus. Commission is paid on top of a normal wage or salary to help motivate employees. Commission is usually given as a percentage of a sale or a specified amount of money per sale. For example, if a salesperson sells a car, they might receive 25 to 30 per cent of the profit as commission. Earning additional money is often a motivating factor for employees and generally makes them work harder.
Promotions
A promotion is another way to improve an employee’s motivation. When an employee is promoted, they are provided with a higher-ranking job and more responsibility in a business. Often, a promotion means the employee earns a higher wage and receives more financial benefits. This makes employees feel more valued by a business.
Fringe benefits
Many businesses use fringe benefits as a form of financial motivation. Fringe benefits are additional employment perks awarded to employees, such as a free gym membership, a company car, a company mobile phone, free holidays, additional holiday allowance, free parking or transport, or free food and drink. Fringe benefits are often ways of saving employees money rather than providing them with additional money.
Non-financial methods of motivation
Non-financial methods of motivation involve motivating employees in ways that don’t involve money. Non-financial methods of motivation include job rotation, job enrichment and autonomy.
Job rotation
Job rotation involves an employee having a large amount of variety in their day-to-day role. It can motivate employees by avoiding them becoming bored with their job. There are two types of job rotation.
In the first type of job rotation, the employee has a number of different job roles in the business. For example, in a car manufacturing plant, this could mean an operator applying bumpers for part of the day, lights for part of the day and then wheels for the rest of the day.
In the second type of job rotation, the employee has a range of different duties within their role. For example, a software developer might spend part of the day developing a website and part of the day developing a software package.
Job enrichment
Like job rotation, job enrichment involves enhancing employees’ roles through providing a wider range of tasks for them to complete during the working day. In addition, job enrichment often means giving employees more responsibility, allowing them to make more decisions and enabling them to have more of a say in how they complete their role. However, they continue to work at the same level in the chain of command.
Common methods of job enrichment include:
completing a variety of tasks
having more flexibility in how a role is carried out
making more decisions
having more control of tasks and duties
developing additional skills
enhancing knowledge
Job enrichment has a number of benefits, such as increased motivation, lower absence rates, increased productivity and higher staff retention.
Autonomy
Autonomy refers to the degree to which employees are able to make decisions about their day-to-day roles. Having more autonomy means an employee has the ability to make more decisions about their role, whereas having less autonomy means an employee has limited decision-making responsibility.
Having a high level of autonomy can be a significant motivator for employees as it can make them feel valued and trusted by their employer.
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