Relationships, Delayering, Outsourcing etc

1
Relationships, Delayering, Outsourcing etc
2
Formal Relationships

• Line relationships
• Relationships between a superior and a
  subordinate, eg, DHT and PT
• Functional
• Where a manager has authority over another by
  virtue of their position/knowledge, eg finance
  manager
• Staff Relationships
• Relationship between staff and individuals who
  provide
• support for the whole organisation, eg company
• lawyers or ICT specialists

3
Informal Structures

• An organisation chart shows the formal structure
  of a business based on official roles
• Informal structures exist in most business based
  on relationship that develop between staff
• Business should recognise the existence of these
  informal structures and use them to pass
  information or solve problems

4
Corporate Culture

• An organisations established pattern of working
• The values, norms and behaviour accepted and
  shared by all in the organisation
• The culture of an organisation must match the
  environment in which it operates
• The culture develops over time as a result of the
• Attitude of staff
• Pattern of behaviour
• Established rules
• Individuals are more likely to conform than rebel
  against the culture

5
Elements of Corporate Culture

• Edgar Schein believes there are 3 main elements
  which instil an identity in individuals within an
  organisation ( eg McDonalds franchise)
• Artefacts (shop layout/colour schemes/uniform)
• Values (staff attitudes to customers)
• Underlying assumptions (food availability,
  quality, portion size)

6
Benefits of Corporate Culture

• Provides a sense of identity
• Helps team building
• Increases commitment may prevent high turnover
  of staff/industrial relations problems
• Motivated worker higher productivity
• Helps communication
• Reinforces values of senior management
• Acts as control device for management

7
Questions

• Explain the term Corporate Culture
• (2marks)
• 2. Describe the benefits of having a strong
  corporate culture.
• (4marks)

8
Recent trends in internal structure

• UK based organisations have undergone structural
  change due to
• de-industrialisation
• competition from tiger economies
• This has led to
• changes in traditional structure and methods of
  management
• Delayering
• Downsizing
• Outsourcing

9
Downsizing

• Reducing costs by
• Reducing scale of operations to meet decreased
  market demand eg, closure of factories
• Stripping out excess capacity
• Consolidating complementary departments under one
  function eg sales and marketing
• Reducing resources eg workforce

10
Delayering

• Cutting out levels of management and flattening
  out structure
• Some levels of management can be unnecessary
• Staff are empowered to make own decisions
• Removing levels of management can result in
• Improved communications
• Faster decision making
• More responsive to change
• Adapt more quickly to changing situations

11
2008 Question 2c(i) Section 2

• Distinguish between Delayering and downsizing
• (3 marks)

12
Answer

• Delayering involves removing a whole level of
  management to flatten an organisations
  structure, whereas downsizing is closing specific
  areas of the organisation.
• Delayering improves communication within the
  organisation due to the reduction levels of
  senior management, whereas downsizing completely
  removes functions therefore making communication
  more difficult.
• The purpose of downsizing is to reduce costs by
  reducing the scale of operations whereas the
  purpose of Delayering is to cut out the levels of
  management to make the organisation flatter.

13
Outsourcing

• Contracting another organisation to carry out
  some tasks/functions.
• Can be very basic, eg cleaning or catering.
• Can be more complex eg recruitment, accounts

14
Outsourcing

• Reasons for
• Frees up staff and time
• Reduces costs
• Allows experts to carry out the tasks
• May not have a full-time need for a section or
  person
• Allows greater flexibility

15
Disadvantages of Outsourcing

• Loss of control
• Specialist firm may let the organisation down in
  terms of delivery and quality
• Confidentiality may be compromised
• Communication between the two organisations needs
  to be very good

16
Role of Management

• Management are responsible for
• Choosing the best structure for the organisation
• Ensuring all staff are aware of the structure
• Recognising the existence of any informal
  structure
• Organise and promote the organisational culture
• Ensuring the formal structure is consistent with
  the culture
• Changing the structure where necessary

17
Factors affecting internal structure

• SIZE
• As a business grows (perhaps by merger) its
  structure may change, eg entrepreneurial
  structure may become more decentralised
• TECHNOLOGY
• The introduction of new technology may alter
  structure, eg reduced need for administration,
  therefore tall structure becomes flatter
• MARKET
• As market expands or declines the structure may
  change to reflect this
• PRODUCT/SERVICE
• New products may be introduced leading to new
  structure