7. Human Resource Management

7.1 Organisational Structure

7.1.1 The Relationship Between Business Objectives And Organisational Structure

Meaning Of Organisational Structure

• Organisational Structure Refers To The Way In Which A Business Is Arranged Internally.
• It Shows The Formal Framework That Outlines How Tasks, Roles, Responsibilities, And Authority Are Distributed Among Employees.
• It Determines The Flow Of Communication, Decision-Making Authority, And The Reporting Hierarchy Within A Firm.
• It Can Be Represented Through Organisational Charts That Illustrate Positions, Lines Of Authority, And Relationships Between Departments.

Purpose Of An Organisational Structure

• Clarification Of Roles And Responsibilities
  • Defines Who Does What Tasks, Who Reports To Whom, And Where Accountability Lies.
  • Example: In A Bank, A Customer Service Officer Reports To A Branch Manager Who In Turn Reports To A Regional Director.
• Efficient Coordination
  • Ensures Different Departments Work Together Towards Common Goals.
  • Avoids Duplication Of Work And Promotes Specialisation.
• Decision-Making Clarity
  • Establishes Clear Lines Of Authority So That Decisions Are Made At The Right Levels.
  • Helps Prevent Confusion Or Conflict Over Who Has The Final Say.
• Facilitation Of Growth
  • A Good Structure Allows The Business To Expand Into New Markets Or Products Without Losing Control.
  • Example: Multinational Corporations Use Divisional Structures To Manage Global Operations Efficiently.
• Communication Channels
  • Provides A System For Passing Information Upwards, Downwards, And Horizontally Across Departments.
  • Effective Structures Reduce Miscommunication And Increase Efficiency.

Written And Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course

Attributes Of A Good Organisational Structure

• Flexibility
  • Structure Must Adapt To Changes In The Market, Technology, And Consumer Preferences.
  • Example: Tech Firms Like Google Use Matrix Structures That Allow Teams To Shift Focus Quickly Towards Emerging Opportunities.
• Clear Chain Of Command
  • Defines Authority Levels And Lines Of Reporting To Avoid Confusion.
  • Employees Understand Their Supervisors And Their Own Role In The Hierarchy.
• Appropriate Span Of Control
  • Refers To The Number Of Employees Directly Managed By A Supervisor.
  • A Wider Span Of Control Works Well For Routine Jobs, While Narrow Spans Are Needed For Complex Roles Requiring Close Supervision.
• Encouragement Of Intrapreneurship
  • Intrapreneurship Involves Employees Acting Like Entrepreneurs Within The Business.
  • A Flexible Structure Allows Teams To Innovate, Take Initiative, And Develop New Ideas.
  • Example: 3M Encourages Employees To Dedicate A Portion Of Their Work Time To Experimenting With New Ideas, Leading To Innovations Like Post-It Notes.
• Support For Growth And Development
  • Structures Should Allow Businesses To Scale Operations, Add New Departments, And Expand Internationally.
  • Example: Amazon Uses A Divisional Structure By Geography And Product Line To Handle Global Operations.
• Efficiency In Resource Allocation
  • A Well-Defined Structure Ensures That Resources Are Distributed Effectively Across Departments.
  • Prevents Wastage And Duplication Of Efforts.
• Employee Motivation
  • Clear Structures Provide Career Progression Opportunities, Which Can Motivate Staff.
  • Example: A Graduate Trainee In A Multinational May See A Clear Path To Managerial Roles, Increasing Commitment.

Relationship Between Business Objectives And Organisational Structure

• Alignment With Strategic Goals
  • The Structure Must Reflect The Long-Term Vision And Objectives Of The Business.
  • Example: A Company Focusing On International Expansion Will Adopt A Geographical Divisional Structure To Manage Different Regions Effectively.
• Efficiency In Achieving Objectives
  • Structures With Clear Hierarchies And Communication Channels Allow Objectives To Be Achieved More Smoothly.
  • Example: A Cost Leadership Strategy Requires A Functional Structure That Emphasises Tight Control Of Costs.
• Innovation And Growth Objectives
  • Businesses Aiming For Rapid Innovation May Use A Matrix Structure To Facilitate Collaboration Across Departments.
  • Example: Apple Combines Functional Expertise With Cross-Departmental Collaboration To Drive Innovation.
• Customer-Focused Objectives
  • Firms Aiming To Provide Superior Customer Service May Adopt A Customer-Centric Structure.
  • Example: Banks Organise Teams Based On Customer Segments Such As Retail Banking, Corporate Banking, And Wealth Management.
• Flexibility And Adaptability
  • Businesses With Objectives To Enter New Markets Or Develop New Products Require Flexible Structures That Can Adapt To Change Quickly.
  • Example: Start-Ups Often Use Flat Structures To Allow Fast Decision-Making And Innovation.
• Motivational Objectives
  • If A Business Aims To Improve Employee Morale And Retention, It May Structure Itself To Encourage Delegation And Participation.
  • Example: Companies Using Team-Based Structures Often Find Employees More Engaged And Motivated.

Written And Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course

Case Studies And Examples

• British Airways (Functional To Divisional)
  • Before Privatisation, British Airways Had A Bureaucratic And Rigid Structure.
  • After Privatisation, It Shifted Towards A More Flexible Divisional Structure, Aligning With Its Objective Of Becoming More Competitive Globally.
• Unilever (Product-Based Divisions)
  • Organised Around Product Divisions Such As Food, Beverages, And Personal Care.
  • This Aligns With Its Objective Of Being A Global Market Leader In Diverse Consumer Goods.
• Tesla (Flat And Flexible Structure)
  • Elon Musk Uses A Relatively Flat Structure To Encourage Innovation And Rapid Decision Making.
  • This Aligns With Tesla’s Objective Of Rapid Innovation In Electric Vehicle Technology.
• Procter & Gamble (Matrix Structure)
  • Uses A Combination Of Geographic And Product Divisions To Serve Different Markets While Maintaining Innovation.
  • Supports The Objective Of Delivering Tailored Products To Local Markets While Leveraging Global Resources.

Strategic Implications Of Organisational Structure

• Impact On Efficiency
  • A Suitable Structure Reduces Waste, Ensures Proper Coordination, And Improves Productivity.
  • Example: A Functional Structure Allows Specialisation, But May Reduce Flexibility.
• Impact On Decision Making
  • Centralised Structures Facilitate Consistency In Decision Making But May Reduce Speed.
  • Decentralised Structures Allow Faster Decisions But Risk Inconsistencies.
• Impact On Motivation
  • Structures With Greater Delegation And Empowerment Encourage Employee Motivation.
  • Example: Google’s Team-Based Structure Allows Creativity And Autonomy.
• Impact On Growth
  • A Flexible Structure Supports Expansion Into New Markets And Products.
  • Example: McDonald’s Uses A Geographical Divisional Structure To Adapt To Local Tastes In Different Countries.
• Impact On Stakeholders
  • Shareholders Benefit From Structures That Deliver Profits Efficiently.
  • Employees Value Structures That Provide Career Progression And Clear Responsibilities.
  • Customers Benefit From Structures That Prioritise Service And Quality.

Written And Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course

Connection Between Organisational Structure And Business Objectives

• Growth Objectives
  • Businesses Aiming For Growth Must Shift From Simple Flat Structures To More Complex Divisional Or Matrix Structures.
  • Growth In International Markets Requires Geographical Divisions To Handle Local Operations.
• Cost Efficiency Objectives
  • Functional Structures Can Minimise Duplication And Control Costs More Easily.
  • Example: A Supermarket Chain May Centralise Purchasing To Achieve Economies Of Scale.
• Quality And Innovation Objectives
  • Businesses With A Focus On Innovation Adopt Matrix Or Project-Based Structures.
  • This Encourages Cross-Functional Collaboration And Creative Problem Solving.
  • Example: Pharmaceutical Firms Organise Research Teams Across Functions To Speed Up Drug Development.
• Corporate Social Responsibility (CSR) Objectives
  • Structures That Promote Intrapreneurship And Cross-Functional Teams Encourage CSR Projects.
  • Example: Companies Create Special Departments For Sustainability To Align With Ethical Objectives.
• Strategic Flexibility Objectives
  • Dynamic Industries Require Structures That Can Adapt To Rapid Market Changes.
  • Example: Technology Start-Ups Maintain Flat Structures To Respond Quickly To Innovations.

Evaluation Of The Relationship

• Strengths
  • Alignment Between Structure And Objectives Leads To Greater Efficiency, Better Coordination, And Strategic Success.
  • Clear Structures Help Businesses Achieve Objectives By Defining Roles And Reducing Confusion.
  • A Flexible Structure Encourages Innovation And Adaptability.
• Limitations
  • Constantly Changing Structures To Match Objectives Can Create Uncertainty And Confusion.
  • Complex Structures Such As Matrix May Lead To Conflicts Of Authority And Slow Decision Making.
  • Some Objectives, Like Balancing Profitability With Social Responsibility, May Be Difficult To Reflect In A Single Structure.
• Overall View
  • While A Suitable Structure Supports The Achievement Of Objectives, It Is Only One Factor Among Many.
  • Leadership, Culture, Resources, And External Environment Also Play Critical Roles.
  • Businesses Must Regularly Review Their Structures To Ensure They Remain Fit For Purpose.

Written And Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course