Management Structures Flashcards
Management hierarchy
Management hierarchy is the arrangement that provides increasing authority at higher levels of the hierarchy. This means senior managers have greater accountability, responsibility and power compared with those at lower levels.
Chain of command/line authority
A chain of command or line authority is a system that determines responsibility, supervision and accountability of members of the organisation. The advantage of using a chain of command is that only one person ultimately remains in charge. Of course, one disadvantage of this model is that information flows only one way, from top to bottom, with little questioning of authority. In this type of structure, communication is said to be ‘top down’.
Unity of command
Closely related to the chain of command, and central to the effective use of this structure, is the principle of unity of command, each employee should report to a single supervisor. Where an employee is expected to take orders from several people, confusion is likely to occur.
Span of control
Span of control refers to the number of people for whom a manager is directly responsible. The person in charge of each division within an organisation is called the manager.
Changes in organisational structures
Rapid advances in technology, coupled with the signi cant pressures on organisations from increased competition due to forces of globalisation, have resulted in organisations flattening their structures. This means that there are fewer levels of management. Such organisations can adapt quickly to meet changing consumer needs and market conditions because there are fewer managers who need to approve decisions.
The basic types of management structure common today include:
Functional, divisional and matrix.
Functional structure
This basic functional structure involves grouping employees according to their function (the task or job that staff do). For example, an accountant will be part of the finance department and a person who is involved in advertising will work in the marketing department. Such a structure is used by LSOs producing a small range of products.
2 Pros of the functional structure
(1) Benefits of Specialisation:
The whole company is divided into many departments on the basis of major activities to be performed. Each department is headed by an expert manager. This results in more and better work being accomplished in much lesser time. Hence, the benefits of specialisation become available.
(2) Coordination is established:
All the persons working within a department are specialists of their respective jobs. It makes coordination easier at the departmental level.
2 Cons of the functional structure
Each departmental head works according to his sweet will. They always give more importance to their departmental objectives. Hence, overall organisational objectives suffer. For example, to establish its image, the production department may produce quality product ignoring the fact that market trend favors accepting medium quality product.
All departmental heads may work as per their own wish. No doubt this facilitates coordination within the department but it makes interdepartmental coordination difficult.
Divisional structure
A divisional structure groups employees together according to divisions that may be geographical, or customer, product or process focused. The divisional structure is commonly used by organisations producing a range of different products or services.
Management Structure
Management structure is a term used to describe the ways in which the management, employees and resources of an organisation are formally arranged to achieve objectives. An organisation’s structure is usually represented diagrammatically in an organisational chart which shows the key positions of responsibility and accountability, and lines of communication.
2 Pros of divisional structure
1) Development of Divisional Heads:
The head of each division looks after all the functions connected with their product that is, purchase, sale, advertisement, production, finance, etc. It helps in the development of varied skills in a divisional head.
2) Quick decision making
Every division is independent in itself. The divisional manager can take any decision regarding his division independently without consulting other divisional managers. Hence, decisions are quick and effective.
2 cons of divisional structure
Conflict between Divisional Heads:
Every divisional head wants to establish his supremacy. To satisfy ego each demands maximum resources for his division. This situation leads to conflicts among the divisional heads.
Duplicity of Functions:
The entire set of functions (e.g., production, marketing, financial, personnel, etc.) is required for all divisions. It gives rise to duplicity of efforts among divisions. Hence, resources are misused and cost of operations is unnecessarily increased.
Matrix structure
The matrix structure involves bringing together specialists from different parts of the organisation, based on the functions they perform and the divisions they belong to, to undertake specific projects. The purpose is to support more cross-functional communication between departments.
2 pros of matrix structure
Flexible
The matrix structure is a flexible structure. It undertakes the completion of a large number of small projects. Depending on needs of environmental situations and other organizational factors, more projects could be undertaken by the organisation by forming additional project teams.
Heightened motivation and morale of employees:
Under a matrix organisation, the motivation and morale of people are heightened as they have no problem of insecurity about job assignments. Immediately after the completion of one project, people are assigned to some new project. As such, people in a matrix organisation work with enthusiasm and dedication.
2 cons of matrix structure
Confusion caused by double line of command:
The serious most limitation of a matrix organisation is the confusion caused by the double line of command; so that a project team member is always in a state of flux as to whose orders the project manager or the functional head to obey first. This feature of ‘double command system’ creates a situation of ‘shifting-loyalties’; and tells upon the operational efficiency of the project work.
Problem of adjustment:
A matrix organisation, after the completion of one project, people are assigned to some new project. Many persons may face a problem of adjustment to the new project; because of entirely new conditions surrounding the new project. A best fit in one project, may be a misfit in a second project.
Glass Transport is a long-established bulk transport provider, which has recently taken a decision to invest in becoming a national parcel delivery service. The opportunity that CEO Catherine Glass seized on arose from fast-growing online sales. In order to build the expanded business, a significant number of new staff will be required. Some of these staff could be relocated from the bulk transport division and some will need to be recruited. Service standards will need to be set and new vehicles purchased. Further decisions will be made to determine whether parcel pick-up from residential and business premises will be offered.
The major existing competitor in parcel delivery is a government-owned postal service. Its business of delivering mostly letters is declining because of emails and texting. Its delivery infrastructure is mostly suited to letters, not parcels. The growing parcel sector is a highly profitable business opportunity for the organisation that ‘gets it right’.
As Glass Transport is becoming more complex in its service offerings, Ms Glass is considering changing the management structure of her organisation.
a. Discuss an appropriate management structure for Ms Glass’s expanding business.
An appropriate management structure that Ms Glass could employ would be the divisional structure. This is a structure where employees are grouped together regarding the product or service, geography or process they undertake. As Ms Glass’s company is incorporating a new aspect of parcel delivery, she can divide the organisation into the bulk transport division and the parcel delivery service. This enables each area of the organisation to focus on its own service that it provides rather than having one operations manager for two fairly different operations. This focus means greater efficiency and effectiveness is able to be delivered in each of the different operations as each division will develop expertise in their area. This will however, create some duplication of work in some areas such as finance and human resources and she also must ensure that the company remains one company as although it is separated into two major divisions they are still both part of Glass Transport.
By nature, Ms Glass is a consultative manager.
Identify two characteristics of this management style, and explain one advantage and one disadvantage of using this style.
The consultative management style is where the employer asks for the employees’ opinions before an executive decision is made. It utilises a two way channel of communication as employers actively discuss with employees and ask them what they think is appropriate. However, whilst the manager does consult employees it still is a centralised approach to decision making as ultimately it is the manager who makes the final decision. One advantage arising from this will be the innovation that employees can bring. They may show a new perspective that management may not have thought about. One disadvantage is that the process may be time consuming as the employers need to ask the employees for opinions. As a result, the decision made may be delayed and thus this style is more time consuming than that of an autocratic or persuasive style.
Glass Transport is a long-established bulk transport provider, which has recently taken a decision to invest in becoming a national parcel delivery service. The opportunity that CEO Catherine Glass seized on arose from fast-growing online sales. In order to build the expanded business, a significant number of new staff will be required. Some of these staff could be relocated from the bulk transport division and some will need to be recruited. Service standards will need to be set and new vehicles purchased. Further decisions will be made to determine whether parcel pick-up from residential and business premises will be offered.
The major existing competitor in parcel delivery is a government-owned postal service. Its business of delivering mostly letters is declining because of emails and texting. Its delivery infrastructure is mostly suited to letters, not parcels. The growing parcel sector is a highly profitable business opportunity for the organisation that ‘gets it right’.
As Glass Transport is becoming more complex in its service offerings, Ms Glass is considering changing the management structure of her organisation.
Ms Glass has identified that she will have to use the management roles of organising, leading and controlling.
Define each role and explain how the use of these roles will contribute to the success of her new national parcel delivery service.
Organising is the process of arranging resources and tasks to achieve objectives. Ms Glass will need to organise the division of labour, outline who will be responsible for what and she will also need to organise who will be relocated and delegate authority of various roles in the new parcel delivery service. Ms Glass will also need to coordinate all employees in the organisation and apply resource and task allocation techniques such as distribution of materials, to ensure Glass Transport is operating effectively and efficiently.
Leading is the process of influencing or motivating others towards the achievement of the organisations objectives. Ms Glass will require informational qualities to inform employees of changes and outline reasons as to why. Ms Glass will need decision making qualities to make effective decisions about the change. Ms Glass will also need interpersonal qualities in this role, to be able to relate to employees, share their concerns and support them through the change.
Controlling is the process of evaluating performance and taking corrective action where necessary. Once the service standards are set, Ms Glass must evaluate the success of the changes via financial and non-financial performance indicators and deadlines and benchmarking. She must then make changes where necessary to ensure set objectives are being achieved.
Glass Transport is a long-established bulk transport provider, which has recently taken a decision to invest in becoming a national parcel delivery service. The opportunity that CEO Catherine Glass seized on arose from fast-growing online sales. In order to build the expanded business, a significant number of new staff will be required. Some of these staff could be relocated from the bulk transport division and some will need to be recruited. Service standards will need to be set and new vehicles purchased. Further decisions will be made to determine whether parcel pick-up from residential and business premises will be offered.
The major existing competitor in parcel delivery is a government-owned postal service. Its business of delivering mostly letters is declining because of emails and texting. Its delivery infrastructure is mostly suited to letters, not parcels. The growing parcel sector is a highly profitable business opportunity for the organisation that ‘gets it right’.
As Glass Transport is becoming more complex in its service offerings, Ms Glass is considering changing the management structure of her organisation.
Describe Locke’s theory of motivation and explain how Ms Glass could use this theory to motivate staff.
Locke’s goal setting theory is the belief that clear, specific, challenging (but not overwhelming) goals will motivate employees. It focuses on the process of setting and attaining goals as well as receiving feedback regarding achievements. It includes two aspects; goal difficulty (to a certain extent as goal difficulty increases, motivation will increase) and goal specificity (clear, explicit goals will motivate employees). Ms Glass can use this as a form of performance appraisal, set goals in conjunction with employees on the Glass Transport changes which according to Locke would lead to increased effort, persistence, and task focus. Ms Glass can then review the goals and provide feedback to employees, allowing them to develop a sense of purpose, motivation and thus improved performance as a result. Locke’s theory would also allow Ms Glass to add clarity and altering the level of difficulty to goals so the Glass Transport expansion can be successfully achieved and employees will be motivated to achieve their goals as part of the expansion.
Define ‘market share’
Market share is the proportion of sales belonging to an organisation out of the total sales in the industry or market, often measured as a percentage figure. For example, the four large scale organisations have 92% market share in the chocolate industry.
In the chocolate industry, four large-scale organisations dominate the market, collectively accounting
for 92% of all chocolate sales. Currently these four organisations compete on price. The smallest of the
four organisations, Websters, is less able to take advantage of economies of scale than the three larger organisations. As a result, Websters has decided to focus on competing on quality rather than price to ensure its long-term success.
Sam Webster, grandson of the founder of the business, is currently the CEO and has identified that numerous changes must be made.
As the focus of Websters shifts to quality, it will need to measure quality as part of its operations management. A human resources audit has identified that the current staff do not have the necessary capabilities to implement this change. To allow the staff to develop the necessary capabilities, Mr Webster has identified two preferred options.
• improve the capabilities of the current staff
• purchase and import state-of-the-art equipment from Belgium
While the purchase of equipment will be more expensive initially, it will improve productivity and reduce waste and carbon emissions in the longer term.
Identify and explain two methods from the strategy of managing quality that Websters could use to ensure a high-quality chocolate product.
The management of quality can be done through the strategy of quality assurance or total quality management. Quality assurance involves gaining quality certification from an external body that has set predetermined quality standards which the organisation must meet. These are often known as ISO standards. If Websters uses quality assurance it guarantees all products produced in the operations system are of a high quality or they are not allowed to be sold.
The other strategy Sam could employ is known as total quality management where all employees in the operations system are encouraged to be continually striving for high quality in all they produce. Sam could organise groups known as quality circles where they discuss options on how to make their products even better. This approach is also viable to ensure that Websters produce high quality chocolate products, which is necessary to improve their competitiveness.
In the chocolate industry, four large-scale organisations dominate the market, collectively accounting
for 92% of all chocolate sales. Currently these four organisations compete on price. The smallest of the
four organisations, Websters, is less able to take advantage of economies of scale than the three larger organisations. As a result, Websters has decided to focus on competing on quality rather than price to ensure its long-term success.
Sam Webster, grandson of the founder of the business, is currently the CEO and has identified that numerous changes must be made.
As the focus of Websters shifts to quality, it will need to measure quality as part of its operations management. A human resources audit has identified that the current staff do not have the necessary capabilities to implement this change. To allow the staff to develop the necessary capabilities, Mr Webster has identified two preferred options.
• improve the capabilities of the current staff
• purchase and import state-of-the-art equipment from Belgium
While the purchase of equipment will be more expensive initially, it will improve productivity and reduce waste and carbon emissions in the longer term. Identify and justify two performance indicators that Websters could use to measure the success of the business’s change in focus.
Performance indicators are specific criteria used to measure effectiveness and efficiency of performance.
Websters could use the number of sales which looks at the number of chocolates sold in a particular time. This is done by comparing the new numbers with some old statistics taken. If the numbers have increased it shows that Websters are using the right methods to increase competitiveness. If there are not, it means Websters needs to identify where they can continue to fix it.
Secondly, customer complaints are often made when the quality of a product is quite poor. As quality improves you would expect the number of customer complaints to drop significantly. By comparing previous numbers with the number after the implementation of the quality management strategies the organisation will be able to notice if quality of product has increased as customers are happier with the product.
In the chocolate industry, four large-scale organisations dominate the market, collectively accounting
for 92% of all chocolate sales. Currently these four organisations compete on price. The smallest of the
four organisations, Websters, is less able to take advantage of economies of scale than the three larger organisations. As a result, Websters has decided to focus on competing on quality rather than price to ensure its long-term success.
Sam Webster, grandson of the founder of the business, is currently the CEO and has identified that numerous changes must be made.
As the focus of Websters shifts to quality, it will need to measure quality as part of its operations management. A human resources audit has identified that the current staff do not have the necessary capabilities to implement this change. To allow the staff to develop the necessary capabilities, Mr Webster has identified two preferred options.
• improve the capabilities of the current staff
• purchase and import state-of-the-art equipment from Belgium
While the purchase of equipment will be more expensive initially, it will improve productivity and reduce waste and carbon emissions in the longer term. Describe and justify one management practice or process from each of the three phases of the employment cycle that could apply to Websters as it changes its focus to compete on quality.
In the establishment phase, a selection process must be used to ensure the best employees are hired. Websters could use this to measure the desirability of those who apply for the job and how appropriate they will be, especially regarding the new focus on quality. The selection process involves receipt of applications, they then screen and short list (Websters should select those applicants who will be most focussed on the quality of the organisation), interviews (specific questions about quality should be asked), testing, reference checking and finally offering the job to the best applicant, who in this case, should be focussed on quality.
The maintenance phase involves development, which has a forward looking focus in improving the skills of an employee. Websters could use this to best develop the employees involved in quality and in improving the capabilities of the current staff they will be able to better compete regarding quality.
The final stage of the employment cycle is termination, when the employee is no longer employed at the organisation. Due to some staff lacking capabilities they may be subject to dismissal on notice due to not being able to perform their role to the appropriate standard. This occurs after a period of training. This enables the manager to make room for new more skilled employees, hence being able to improve quality and thus the competitiveness of Websters.
