2.5.1 Organisational charts

Organisational charts show the shape of a business and where decisions are made

1. An organisational chart helps you see how many management levels a business has and whether important decisions are kept at the top or shared more widely.

Hierarchical structures have more management levels than flat structures

1. Hierarchical structure: several management levels can create clear authority and more stages for promotion.
   1. Advantage: employees can see who has authority and may have a clearer route for career progression.
   2. Disadvantage: information and decisions may take longer to pass through the organisation and extra management layers increase cost.
2. Flat structure: fewer management levels can make communication more direct and reduce management costs.
   1. Advantage: communication can be faster and employees may have more direct access to managers.
   2. Disadvantage: managers may have more people and issues to deal with and there are fewer management levels available for promotion.

Centralisation and decentralisation describe where decisions are made

1. Centralised decision-making: senior managers keep important decisions at the top of the organisation.
   1. Advantage: the business can keep tighter control and make more consistent decisions across departments or locations.
   2. Disadvantage: local managers may have to wait for approval and have less freedom to respond quickly to local conditions.
2. Decentralised decision-making: decision-making authority is shared with people closer to particular departments, customers or locations.
   1. Advantage: local decisions can be faster and can use the knowledge of managers closer to customers or operations.
   2. Disadvantage: different parts of the business may make less consistent decisions and senior managers give up some direct control.

2.5.2a Span of control and chain of command

Span of control and chain of command shape supervision and accountability

1. An organisational structure affects how many employees each manager supervises and how authority passes through the business, helping show who must follow instructions and who is responsible for results.

Span of control is the number of people reporting directly to one manager

1. Wide span: advantage: one manager is responsible for many employees, so fewer managers may be needed and employees can have more independence.
   1. Disadvantage: the manager has less time to supervise, support and monitor each employee closely.
2. Narrow span: advantage: one manager is responsible for relatively few employees, making close supervision and individual support easier.
   1. Disadvantage: the business may need more managers and employees may have less freedom in how they carry out their work.

The chain of command shows the line of authority through the business

1. Long chain: advantage: several management levels can make authority and responsibility clearer because employees know which level they report through.
   1. Disadvantage: messages and decisions pass through more people, so communication can be slower and more likely to be changed or delayed.
2. Short chain: advantage: fewer management levels can make communication faster and more direct.
   1. Disadvantage: managers may have to deal directly with a wider range of issues and employees, which can increase the demands on each manager.

Compliance and accountability depend on clear responsibility

1. A clear chain of command supports compliance because employees know whose instructions they should follow and which manager is responsible for checking that procedures are followed.
2. It also supports accountability because responsibility can be traced through the structure, while the span of control affects how closely a manager can oversee the employees for whom they are accountable.

2.5.2b Delegation

Delegation passes work and authority down while accountability remains with the manager

1. The employee becomes responsible for carrying out the delegated task and must still follow the business's rules and procedures, but the manager remains accountable for the final result.

Delegation can save management time and develop employees

1. Delegating suitable tasks frees the manager to concentrate on decisions or work that needs their experience, while the employee can deal with routine issues without waiting for approval.
2. Employees can gain skills, confidence and experience from taking responsibility. Feeling trusted can also improve motivation, although this depends on the employee being ready for the task and receiving enough support.

Poor delegation can create mistakes or pressure

1. A task can be done badly if it is given to an employee who lacks the skills, information or authority needed to complete it, and the manager still has to answer for the result.
2. Delegation can also demotivate if it feels like extra work without support or if the manager keeps interfering and never gives the employee enough authority to make the delegated decisions.

Effective delegation matches the task, employee and level of authority

1. The manager needs to choose a capable employee, explain the expected result, give enough authority to complete the task and provide support without taking control of the task back.
2. Routine work can often be delegated more easily than high-risk decisions, so the amount of supervision needed depends on the difficulty and consequences of the task.

2.5.3a Human resources function

Human resources manages people from workforce planning to leaving the business

1. HR supports the business throughout an employee's working life, from deciding what staff are needed to recruitment, training, welfare, employment issues and the way employment eventually ends.

Workforce planning and recruitment put the right people in the right roles

1. Workforce planning: HR estimates how many employees the business needs and which skills will be required now and in the future, helping the firm avoid being short of important skills or paying for more staff than it needs.
2. Recruitment and selection: HR helps attract suitable applicants and choose people who match the requirements of the vacancy, using the recruitment processes covered earlier in Unit 2.

Training, health and safety and welfare help employees work effectively

1. Training: HR helps employees gain the skills and knowledge needed for their roles and for changes in the business, which can improve performance and help staff work safely.
2. Health and safety and staff welfare: HR helps the business meet workplace safety requirements and supports employee wellbeing through suitable procedures, working conditions and support when problems arise.

Employment issues and industrial relations shape the ongoing relationship with staff

1. Employment issues: HR deals with matters such as contracts, pay, working hours and holiday entitlement so that the business and employees understand the terms of employment.
2. Industrial relations: HR manages relationships between the business and employees, including dealings with trade unions where relevant and discussions about issues such as pay and working conditions.
3. Disciplinary and grievance procedures: disciplinary procedures give the business a fair process for dealing with employee conduct or performance problems, while grievance procedures give employees a route for raising complaints about work.

Dismissal and redundancy end employment for different reasons

1. HR needs fair procedures when employment ends. Poorly handled dismissal or redundancy can create legal costs, damage trust among remaining employees and harm the business's reputation.
2. The distinction matters because dismissal concerns the employee's employment being ended by the employer, while redundancy arises because the business no longer needs the role itself.

2.5.3b Finance function

The finance function manages payments, cash planning, budgets and financial records

1. Finance keeps track of money coming into and leaving the business and provides financial information that managers can use when making decisions.

Wages, salaries and cash-flow forecasts keep payments under control

1. Wages and salaries: finance helps make sure employees are paid the correct amount at the correct time and that accurate payroll records are kept.
2. Cash-flow forecasting: finance predicts future cash inflows and outflows so the business can identify periods when it may not have enough cash and plan how to deal with the shortage before payments are due.

Budgets and accounting help managers control and understand the firm's finances

1. Budgets: finance sets targets for income or spending and compares actual results with those targets, helping managers control costs and see where performance differs from the plan.
2. Accounting: finance records the business's financial transactions and prepares financial information so managers and other users can understand how the business is performing and what its financial position is.

2.5.3c Marketing function

Marketing turns customer needs into products customers can find, value and buy

1. Marketing links the business with its customers. It gathers information about the market, helps shape what is offered and makes sure potential customers know about and can obtain the product.

Research, product planning and pricing shape what the business offers

1. Market research: marketing gathers information about customer needs, demand and competitors so that decisions are based on evidence rather than guesswork.
2. Product planning: marketing helps decide what products to offer and how features, ranges or packaging should change as customer needs and market conditions change.
3. Pricing: marketing helps set a price that customers are willing to pay while supporting the objectives and financial needs of the business.

Sales promotion, advertising and public relations communicate with the market

1. Sales promotion: short-term incentives such as discounts or special offers can encourage customers to buy now or try a product.
2. Advertising: paid communication can make customers aware of a product, give them information and persuade the target market to consider buying it.
3. Public relations: marketing manages communication intended to build or protect the public image of the business, including its response when reputation is at risk.

Customer service, packaging and distribution affect the buying experience

1. Customer service: support before, during and after a sale can solve problems, increase satisfaction and encourage customers to return.
2. Packaging: packaging protects the product, carries useful information and helps present the product and brand to customers.
3. Distribution: marketing helps decide how the product reaches places where customers can buy it, such as shops, intermediaries or direct delivery.

2.5.3d Production function

The production function makes products and manages design, quality and stock

1. Production turns inputs such as materials, labour and equipment into the products the business plans to sell, while also helping ensure the product is suitable, available and made to the required standard.

Manufacturing and product design determine what is made

1. Manufacturing the product: production organises workers, materials and equipment so the required quantity of goods is made at the time the business needs it.
2. Designing new products: production helps turn new product ideas into something that can be made reliably, working with other functions so the design meets customer needs and is practical to produce.

Quality control and stock control keep production reliable

1. Quality control: output is checked against the required standard so faults can be identified before unsuitable products reach customers.
2. Stock control: production monitors supplies of materials and finished products so there is enough stock for operations and sales without holding unnecessary amounts.