Adapting Organisational Structures to Improve Competitiveness
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Transcript Adapting Organisational Structures to Improve Competitiveness
AQA GCE Business Studies
A2 UNIT 3
HUMAN RESOURCE STRATEGIES
COMPETITIVE
ORGANISATIONAL STRUCTURES
Adapting Organisational Structures to
Improve Competitiveness
© APT Initiatives Limited, 2009
Introduction
Organisational structure can affect:
Motivation of staff
Efficiency, costs, profitability
Speed of response to changes
In increasingly competitive market place
one way to improve competitiveness is to
adapt the organisational structure
© APT Initiatives Limited, 2009
Centralisation & Decentralisation
Extent to which authority and responsibility for
decisions is passed down (delegated) to
divisions, departments, sections
Highly centralised
Power in upper levels of MGT
Decentralised
Lower levels of MGT responsible for
many important decisions
© APT Initiatives Limited, 2009
Centralisation & Decentralisation
Appropriateness depends upon:
Nature of business and activities
Size and geographical spread
Environment in which it operates
Ability of employees
Risk eg greater - centralisation likely
A standardised approach (ie cent or decent)
may not be appropriate for all MGT functions,
depends on… cost, efficiency
© APT Initiatives Limited, 2009
Centralisation
Potential advantages:
Greater control
Uniformity of decision making
Economies of scale
Economies of staffing
Economies of specialisation
© APT Initiatives Limited, 2009
Centralisation
Potential disadvantages:
Decisions might be too general
Overload / pressure on senior MGRs
Too much power to senior MGRs
Slower decision making
Poor motivation of lower level staff
Loss of initiative of lower level staff
© APT Initiatives Limited, 2009
Decentralisation
Potential advantages:
Reduced workload/stress of senior MGRs
Power dispersed
Better quality decisions, MGRs
Faster decision making / response
Improved morale and motivation of lower
level MGRs
Increased respect from staff
Lower supervision costs
© APT Initiatives Limited, 2009
Decentralisation
Potential disadvantages:
Loss of direction and control
Lack of uniformity and consistency
Loss of economies
Inter-unit conflict – narrow view
© APT Initiatives Limited, 2009
Decentralisation
Requirements:
MGRs to be capable of doing more
High degree of trust
MGRs to feel confident in own ability
Potential problems:
Unwillingness to accept responsibility due to:
Feel extra responsibility without extra pay
Lack confidence
Concern over greater accountability
© APT Initiatives Limited, 2009
Decentralisation
Overcoming barriers / changing attitudes:
Shorter-term:
Training
Financial rewards
Longer-term:
Adapt recruitment and selection – recruit individuals
happy with empowered culture
NB Feedback to centre still a necessary feature
– to maintain effective control - assess if delegated
authority being used effectively
© APT Initiatives Limited, 2009
Delayering
The removal of one or more supervisory /
managerial layers
Problems with tall structures:
Poor and / or slow communication
Slower decision-making
Slower response to change
The flatter, leaner the organisation, the fitter, more able
to cope with rapidly changing EVT
Often used when business faces difficult times, needs
to cut costs to survive
© APT Initiatives Limited, 2009
Delayering
Can…
speed up communication, decisions
enable more rapid response
Widens span of control of lower level
managers, which can…
improve motivation, morale
lower supervision costs
But, if too wide – can…
over-burden MGRs - lead to inefficiency
© APT Initiatives Limited, 2009
Delayering
Potential problems:
Often leads to redundancies if staff
cannot be redeployed, which…
…increases costs - redundancy pay
…cause ill feeling, lower morale
Minimising the problems:
Explain reasons behind the decision
© APT Initiatives Limited, 2009
Flexible Workforces
Examples - overview:
Part-time (under 40hrs) instead of full-time
eg am, pm, weekends, term time
Temporary (under 1 yr) not permanent
Flexitime, self-rostering, compressed
working week
Annualised hours contracts
Zero hours contracts
Home working (teleworking)
Outsourcing
© APT Initiatives Limited, 2009
Flexible Workforces
Potential benefits for employee:
Alleviate stress in balancing home life
and work
For employer:
Increase productivity, efficiency – not
paying for labour not fully utilised
Help to recruit staff more easily
Lower labour turnover & associated costs
© APT Initiatives Limited, 2009
Core and Peripheral Workers
Core - permanent, full-time
Important roles
More trained, skilled
Provide skills for competitive advantage
Provide functional flexibility
Peripheral - temporary, part-time…
May not be as skilled or well trained, or
Skilled workers for specific purpose
Provide numerical flexibility
© APT Initiatives Limited, 2009
Peripheral Workers
Use of part-time and temporary can…
increase flexibility to meet fluctuations in
demand, maximise capacity utilisation
However, may be…
more costly than other methods eg overtime
- extra recruitment (unless agency staff),
induction/training & admin
In addition…
such staff may be less motivated and
committed than permanent, full time staff
© APT Initiatives Limited, 2009
Annual Hours & Zero Hours Contracts
Annualised Hours
Employees required to work certain no. of hours
each year. Hours worked each week vary
according to the needs of the business
Zero Hours
Employees expected to be available for work as
and when required - no set hours or times
© APT Initiatives Limited, 2009
Home Working
Arisen from developments in ITC
Common to: sales and marketing,
accounting, proof-reading and editing
Benefits – can reduce…
fixed costs eg rent, rates
travel expenses
need to invest in social facilities
© APT Initiatives Limited, 2009
Home Working
May have positive effect on motivation…
Employees feel trusted - self esteem
Alleviates stress - commuting rush hour
May be more productive as…
fewer interruptions
more time working, less travelling
Can also cut down on air pollution!
© APT Initiatives Limited, 2009
Home Working
However…
Cost involved to provide the technology
Difficult to monitor working hours
Worker isolation - out of touch with business
goals
Lack of social interaction - social needs negatively affect motivation
Obviously not possible on full-time basis if the
job requires direct contact with customers
© APT Initiatives Limited, 2009
Outsourcing
Employing outside contractors to
perform tasks which, although are not
core activities of the organisation,
were previously performed in-house
Moving internal activities and
decision making responsibilities to
outside providers
© APT Initiatives Limited, 2009
Outsourcing
Eg Outsourcing manufacture - may be used:
when not able to produce efficiently
when not have specialist knowledge or eqt
when already at maximum capacity
to cope with seasonal demand
to cope with ‘one-off’ peaks in demand
© APT Initiatives Limited, 2009
Outsourcing
Potential advantages:
Cost reduction (particularly labour)
Improved efficiency
Specialist expertise
Enhanced flexibility
Minimise inventory, materials handling
Allows focus on critical / core activities
© APT Initiatives Limited, 2009
Outsourcing
Potential problems / disadvantages:
Depends on availability of lower cost firm
Quality of product, reliability of supply
Danger in being tied to outside supplier
Protection of intellectual property
Involves great deal of trust
Danger of information leaks
Less flexibility re: unexpected orders
Possible loss of control
Effect on workforce - redundancies
© APT Initiatives Limited, 2009
Steps in Outsourcing Decisions
1. Distinguish between core (competitive
2.
3.
4.
5.
6.
advantage) and non-core activities
Be prepared to outsource non-core (not
core) activities
Identify possible providers
Compare the cost with the in-house costs
and non quantifiable factors eg quality
If external firm can provide at lower price,
same in-house quality, then proceed
If no suitable provider - keep activity inhouse but continue the search!
© APT Initiatives Limited, 2009
Closing Comments
Implementing changes to the workplace
is a sensitive issue. If not managed well,
can create conflicts with staff and
negatively affect performance. Businesses
should ensure that any changes:
are fully discussed and agreed with
employees and their representatives
comply with UK/EU legislation eg Working
Time Directive, Sunday Trading Act 1994
© APT Initiatives Limited, 2009