Labour turnover 26 Revision questions (27 marks; 27 minutes) 1 Define the following terms: (a) labour productivity (2) Output per worker it can be calculated by output/number of workers (b) labour turnover. (2) The rate of change in the workforce. 2 Why might an increase in labour productivity help a firm to reduce its costs per unit? (3) Because, as labour productivity increases, the labour cost per unit falls as the cost of labour is spread over a greater number of units. 3 In what ways might a hotel business benefit if labour turnover rose from 2% to 15% per year? (4) The new staff might bring in new ideas, new and improved attitudes, lower wages and more upto-date skills (e.g. computer skills). 4 Some fast food outlets have labour turnover as high as 100% per year. What might be the effects of this on the firm? (4) High training costs, low levels of motivation, high labour cost per unit due to low level of skills. 5 How might a firm know if its personnel strategy was working effectively? (5) By considering current measures in comparison with the past, other firms and/or targets. Revision exercises B1 Data response (15 marks; 15 minutes) (Refer to questions on page 190 of the textbook.) 1 Calculate the following ratios for both years: (5)
Labour turnover 26 (a) labour productivity Year 1: 50,000/250 200 Year 2: 55,000/220 250 (b) labour turnover. Year 1: 12/250 100 4.8% Year 2: 8/220 100 3.6% 2 Explain what questions these figures might raise in the minds of the firm s management. (10) 1 mark for each question raised, with up to 4 marks for explaining why the question might be asked. Possible questions could be: Why have the figures changed? Are the positive changes reflected in other areas of the firm, such as the firm s profit, its market position, etc.? How do they compare with competitors? How can the firm ensure the favourable changes continue into the future? B2 Data response (25 marks; 30 minutes) (Refer to questions on page 190 of the textbook.) 1 Calculate labour turnover and labour productivity at Best Motors for all five years. (10) Labour turnover Productivity 4 years ago 13.04% 33.91% 3 years ago 8.00% 32.12% 2 years ago 16.00% 32.20% 1 year ago 25.00% 32.92% This year 26.92% 31.19%
Labour turnover 26 2 Using your results, evaluate the effectiveness of Best Motors human resources management. (8) Productivity is decreasing slightly, which implies motivation is falling. Furthermore, labour turnover is increasing, which implies employees have either lost motivation or the human resources department is getting more ruthless in terms of firing workers (probably the former). There is little cause for optimism and there needs to be significant improvement in the firm s human relations management. 8 marks Level 3 Analysis of information in context (8-7) Level 2 Application of knowledge in context (6-4) Level 1 Knowledge and understanding of business concepts (3-1) 3 What additional information would you seek in order to help James gain a better understanding of how staff have been managed at Best Motors? Explain your reasoning. (7) Other data could be used (e.g. labour satisfaction surveys). Another important factor is quality of output (e.g. number of defects per car and wastage levels). Cost of labour data. B3 Case study (30 marks; 45 minutes) (Refer to questions on page 191 of the textbook.) 1 Briefly outline your observations on each of the three shops in terms of their human resources management. (12) 4 marks for each shop. Up to 2 for observations, and up to 3 for discussing them. Grayton Road: moderate throughout, but low sales. St John s: high turnover and absence fair sales per employee.
Labour turnover 26 Lark Hill: best performing stable staff, low absences and high sales per employee. 2 Give possible reasons for the factors you described in answer to question 1. (9) Up to 3 marks for each shop. Grayton Road two new staff perhaps staff left following absence and poor sales per employee. St John s high turnover possibly temporary staff, but possibly poor management. Lark Hill staff staying, loyal and working well. 3 Taking the business as a whole, make justified recommendations as to how any problems could be tackled by the management. (9) Look at Lark Hill and see if lessons can be applied elsewhere. Grayton Road needs to improve output look at motivation and/or organisation. Stabilise labour situation at St John s.
Motivation in theory 27 Revision questions (44 marks; 44 minutes) 1 Which features of the organisation of a McDonald s could be described as Taylorite? (3) High division of labour; high degree of mechanisation; de-skilled jobs. 2 Explain the meaning of the term economic man. (3) Man is focused upon financial self-interest, not the social good. 3 Explain how workers in a bakery might be affected by a change from salary to piece rate. (3) According to Taylor they would be motivated to work harder and units of output would increase. However, this increase in productivity could result in a fall in quality as workers rush to produce units quickly in order to earn more money, and do not focus on quality. 4 Give a brief outline of Mayo s research methods at the Hawthorne plant. (4) In the Relay Assembly Test Mayo found six volunteers who tried out a new way of working every 12 weeks. These included individual versus group bonuses, different work layouts and so on. Before and after every change there was detailed consultation with the women. Productivity stayed consistently high. 5 How may group norms affect productivity at a workplace? (3) May be social loafing, i.e. common pattern of low level of effort; or there may be a positive culture of effort and suggestions for improvement. 6 Explain the meaning of the term the Hawthorne effect. (2) The effect on worker morale and motivation of a manager taking an interest in what they do. 7 Which two levels of Maslow s hierarchy could be called the lower-order needs? (2) Physical and safety needs. 8 Describe in your own words why Maslow organised the needs into a hierarchy. (3) To emphasise the underpinning role of the lower-order needs. To show that the fulfilment of a set of needs would mean they cease to motivate. To show how a threat to lower-order needs would mean they become of supreme importance once more.
Motivation in theory 27 9 State three business implications of Maslow s work on human needs. (3) Importance of job security; the importance of status; the need for continual challenges to keep the brightest interested. 10 Herzberg believes pay does not motivate, but it is important. Why? (3) To avoid dissatisfaction; to avoid a feeling of being exploited (avoid a remembered pain); important as a signal of recognition for achievement. 11 How do motivators differ from hygiene factors? (3) Motivators can cause upward motivation, hygiene factors can only prevent dissatisfaction. 12 What is job enrichment? How is it achieved? (3) Job enrichment is a programme to give staff the opportunity to use their ability. It is achieved by providing a complete unit of work and automatic feedback on achievement. 13 Briefly explain what is meant by motivation. (3) Motivation refers to those factors which channel behaviour towards a goal. It is seen by most business leaders as the factors that prompt people to work hard. It may be seen as internally driven the will to work due to enjoyment of the work itself; or externally driven the desire to achieve a goal resulting from the promise of a reward or the threat of punishment. 14 Suggest two reasons why employee motivation is important to a business. (2) high levels of motivation result in low levels of absenteeism high levels of motivation mean low labour turnover highly motivated employees have higher levels of productivity. 15 Give two examples of hygiene factors and two examples of motivators. (4) Possible hygiene factors include: company policy and administration supervision salary
Motivation in theory 27 interpersonal relationships working conditions. Possible motivators include: achievement recognition work itself responsibility advancement. Revision exercises B1 Data response (20 marks; 25 minutes) (Refer to questions on page 199 of the textbook.) 1 Which of the factors had the least effect on satisfaction or dissatisfaction? (1) Security. 2 One of Herzberg s objectives was to question whether good human relations were as important in job satisfaction as claimed by Elton Mayo. Do you think he succeeded? (6) The graph shows human relations factors such as Relationship with supervisor, Relationship with peers, Relationship with subordinates and Status. None of these causes large responses as the result of satisfaction or dissatisfaction. Therefore Herzberg s research did suggest that human relations were of less importance than in Mayo s theory. 3 Herzberg found that responsibility had the longest-lasting effects on job satisfaction. Why may this be the case? (5) Because of the permanent boost to self-esteem/ego.
Motivation in theory 27 Because responsibility may imply empowerment over one s whole working life, not just one task or issue. Because responsibility provides scope for achieving many of the other motivators, such as achievement, recognition and personal growth. 4 Discuss which of the factors is the most important motivator. (8) Achievement is the one quoted most often...... but responsibility is the longest lasting. Therefore the answer lies between the two. Achievement can arise even if the person has not been given responsibility (success in a task, even if someone else is responsible for the action/department); this is why it is more numerous...... but if responsibility has a longer-lasting effect, managers should view it as the more important of the two, and seek to provide it. B2 Case study (25 marks; 30 minutes) (Refer to questions on page 200 of the textbook.) 1 Analyse the working lives of the shift workers at the bakery, using Herzberg s two-factor theory. (8) hygiene factors; pay, working conditions (no break between 18.00 and 22.00), discomfort, work relationships motivators: none relating to the work itself; only motivation is towards subversion, such as dough fights and joking about the managers; the tedious job and very simple task explain the low motivation, as shown by cheering when machines break down. 8 marks Level 3 Analysis of information in context (8-7) Level 2 Application of knowledge in context (6-4) Level 1 Knowledge and understanding of business concepts (3-1)
Motivation in theory 27 2 If a managerial follower of Taylor s methods came into the factory, how might s/he try to improve the productivity level? (7) time and motion study to decide on the one best way financial incentives such as differential piece rate to stimulate greater effort (and self-regulation) a system of penalties put in place, such as that throwing dough would result in instant dismissal. 3 Later on in this (true) story, Tania read in the local paper that the factory was closing. The reason given was lower labour productivity than at our other bakeries. The newspaper grumbled about the poor attitudes of local workers. Consider the extent to which there is some justification in this view. (10) Workers are behaving childishly, perhaps even dangerously. The workplace culture seems unproductive. But is this because of a poor example from unofficial leaders...... or is it an inevitable result of what appears to be incompetent management? A theory Y manager would accept that, if a workforce is misbehaving or under-achieving, the fault lies with management. Staff have not been given the scope for fulfilling work; the poor attitude is the consequence. To what extent: very largely the managers fault. The staff should have little or no blame attached to them (on the basis of the evidence provided). Of course there may be other points of view/ evidence. 10 marks Level 4 Evaluation and judgement of information in context (10-9) Level 3 Analysis of information in context (8-7) Level 2 Application of knowledge in context (6-4) Level 1 Knowledge and understanding of business concepts (3-1)
Motivation in practice 28 Revision questions (49 marks; 49 minutes) 1 Job design is the key to motivation. Outline one reason why this might be true, and one reason why it might not. (4) Reasons this might be true include: If the job is designed in a way that allows employees/managers to have independence and/or authority it will be more motivating. If the job is not designed in such a way, you may only be able to move people (threaten or reward) them into doing the job, not actually motivate them (Herzberg). Reasons this might not be true include: Many people believe in a more Taylorite approach (i.e. that money is the key to motivation); in some industries this may be the only way to motivate employees. Maslow believed that the high-level motivators were more to do with personal feelings such as esteem and actualisation, and would have said that they were the key to motivation, not job design. 2 Look at the famous saying by Lee Iacocca earlier in this. Explain in your own words what he meant by this. (3) He meant that it is impossible for a manager to really change things by working harder as s/he could never cover as much ground merely by working hard as s/he could by motivating subordinates to work harder. 3 How should a manager deal with a mistake made by a junior employee? (4) It depends on the mistake if it is a mistake due to lack of knowledge, that is different from a mistake due to lack of care. Find out why the mistake was made and, if necessary, give the employee extra training. Make sure the employee knows what her/his mistake was so as it doesn t happen again. 4 State three reasons why job enrichment should improve staff motivation. (3) Completing a whole unit of work is more satisfying, as staff are achieving something (one of Herzberg s motivators).
Motivation in practice 28 Working in groups may fulfil Maslow s social needs and thus improve motivation. Being responsible for a whole unit of work may make employees feel more important as they, in effect, become the manager of their work area. This responsibility may lead to increased motivation. 5 Distinguish between job rotation and job enrichment. (4) Job rotation means swapping jobs of comparable difficulty and responsibility, whereas job enrichment means increasing the scope of a job, providing a range of activities and responsibilities. 6 How does empowerment differ from delegation? (4) The empowered worker not only has the authority to manage a task but also some scope to decide what that task should be. Whereas delegation only means passing authority down the hierarchy. 7 Identify three advantages to an employee of working in a team. (3) More social interaction; more variety; more of a chance to discuss ideas. 8 State two advantages and two disadvantages of offering staff performance-related pay. (4) Pros: may encourage greater effort; may prevent a sense of unfairness if great efforts gain no extra reward. Cons: performance is hard to measure it is often subjective, and therefore gives scope for bias and disharmony; risk of distorting behaviour staff only doing what they think is being measured. 9 What might be the implications of providing a profit share to senior managers but not to the workforce generally? (5) Share options give scope for huge rewards at zero risk to the receiver. If the cause of a high share price is the excellent management, other staff might not mind. The real problem comes when share prices rise for other reasons (perhaps a bullish stock market), meaning the gains by the managers can seem undeserved and unfair to ordinary staff. Companies like Wal-Mart are careful to give share options to all. 10 What problems might result from a manager bullying staff to motivate them? (6) Bullying in the workplace (as in schools) is a serious problem. It is bound to lead to a bad atmosphere, which would encourage good young staff to go elsewhere. Bullying can also lead to overwork and stress, which may cause an increase in absenteeism and/or stress-related illnesses. All these factors would result in an increase in labour turnover and a reduction in productivity, and therefore an increase in fixed cost per unit, thus making the firm less competitive.
Motivation in practice 28 11 Identify three key characteristics of a meaningful and well-designed job. (3) Key characteristics of a meaningful and well-designed job include: workers are given clear and challenging goals, allowing them to identify their contribution to the business workers carry out tasks that lead to a definite end product opportunities for planning and checking the work carried out. 12 State three ways in which employers can reward staff financially. (3) Examples of ways in which employers can reward staff financially include: competitive salaries/wages fringe benefits (e.g. company car, private health insurance) performance-related pay and bonuses profit sharing share options. 13 Briefly explain the difference between job enlargement and job enrichment. (3) Job enlargement increases the number of tasks involved in carrying out a job. These tasks tend to be similar in terms of the degree of complexity and responsibility. Job enrichment occurs when employees are given tasks that vary in terms of their level of responsibility and complexity.
Motivation in practice 28 Revision exercises B1 Data response (30 marks; 35 minutes) (Refer to questions on page 208 of the textbook) 1 How might motivation be affected by taking away the rule book? (6) Taking away the rule book forces staff to make up their own minds when faced with a decision or a new situation. This might be worrying but should also be empowering and therefore motivating. One of Herzberg s key motivators is responsibility. Removing a rule book forces people to take more responsibility for themselves. 2 Explain the importance to staff motivation of freely flowing, accurate communication. (6) Free flowing information is necessary to provide feedback on achievement...... and it can be a way of democratising the workplace and encouraging greater trust between staff and management. Accurate communication is also necessary for successful delegation; you cannot hold someone responsible for a task if they don t know all the relevant facts. 6 marks Level 2 Application of knowledge in context (6-4) Level 1 Knowledge and understanding of business concepts (3-1)
Motivation in practice 28 3 Explain how the views of McGregor were put into practice by P&G s Dave Swanson. (8) Some of the key findings of McGregor s research were that employees seek job satisfaction at work; they can be trusted to take responsibility and are keen to contribute to the decisionmaking process. Introducing worker empowerment would lead to increased levels of responsibility and involvement in decision-making, whereas learning new skills should hopefully create greater job enrichment. 8 marks Level 3 Analysis of information in context (8-7) Level 2 Application of knowledge in context (6-4) Level 1 Knowledge and understanding of business concepts (3-1) 4 In this case, high motivation boosted productivity by 30%. Discuss whether increased motivation need always result in increased productivity. (10) Increased motivation should result in falling absence, less labour turnover and reduced industrial action. These points, plus increased levels of effort, could be expected to boost output per person. It will depend, though, on the focus of the extra motivation; a more motivated painter/decorator might take longer to complete a task because of a greater commitment to quality. It would be risky to assume, therefore, that motivation up always means productivity goes up. 10 marks Level 4 Evaluation and judgement of information in context (10-9) Level 3 Analysis of information in context (8-7) Level 2 Application of knowledge in context (6-4) Level 1 Knowledge and understanding of business concepts (3-1) B2 Activity Write a questionnaire for self-completion by full-time employees. When the research is completed, analyse the results carefully and write a summary of them in report form. Student s own answer.
Motivation in practice 28 B3 Data response (25 marks; 25 minutes) (Refer to questions on page 208 of the textbook.) 1 Describe two costs associated with training employees. (3) Relevant answers include: the cost of the administration time needed to set up and evaluate the training course the fees paid to external training agencies the loss of production as a result of staff absence the cost of paying for cover (e.g. agency staff) to minimise the loss of production while workers are away being trained. Award one mark for each correct answer identified. 2 Using a suitable theory, examine the link between training and worker motivation. (8) Relevant answers include: Herzberg according to Herzberg, personal achievement, growth and advancement act as motivators; training allows workers to gain new skills or develop existing ones, allowing them to become more competent and gain promotion into more senior jobs. Maslow according to Maslow, esteem is one of the higher-order needs; training would increase opportunities for greater recognition and achievement by improving workers skills. 8 marks Level 3 Analysis of information in context (8-7) Level 2 Application of knowledge in context (6-4) Level 1 Knowledge and understanding of business concepts (3-1) 3 To what extent do you believe that the research carried out for Ernst & Young confirms the view that money does not motivate? Explain your answer. (14) Relevant answers include: A number of motivational theorists claim that money may not be an effective motivator this appears to be supported by the research findings.
Motivation in practice 28 Many motivational theorists claim that other factors, such as the opportunity for personal development, are more important, especially among more highly qualified employees, such as graduates. However: Although money may not motivate, theorists such as Herzberg would still accept that unsatisfactory levels of pay can lead to demotivation (a hygiene factor). The survey results may be misleading job recruits may wish to create a favourable impression by not focusing on the financial aspects of a job.
Leadership 29 Revision questions (40 marks; 45 minutes) 1 Distinguish between autocratic and paternalistic management. (4) Autocratic authoritarian; focus on getting the task done. Paternalistic acts in best interests of employees; interested in social and security needs of employees. 2 Identify two features of democratic management. (2) listening approach delegation. 3 Outline one advantage and one disadvantage of an autocratic management approach. (4) Advantage: quicker decisions Disadvantage: may not have as much commitment from employees. 4 Distinguish between McGregor s Theory X and Theory Y. (4) Theory X managers assume employees are lazy and do not want to work. Theory Y managers assume employees can find work as natural as play and want to contribute. 5 Why is it clear that Theory Y managers would be inclined to adopt a democratic leadership style? (4) Theory X managers believe employees have ideas and want to contribute. As a result, this type of manager would want to listen and empower staff, i.e. a democratic approach. 6 Is there one correct leadership style for running a football team or a supermarket chain? (4) No, the correct style depends on the type and size of the business, its current situation and the personalities of the employees. 7 Explain why autocratic managers may be more use in a crisis than democratic ones. (4) In a crisis some tough decisions will have to be made which may not be popular amongst
Leadership 29 employees. An autocratic leader is more likely to make these decisions. Furthermore it may be imperative that decisions are made quickly in order to minimise disaster and an autocratic style lends itself better to speedy decision-making. 8 Explain a circumstance in which an autocratic approach to leadership may be desirable. (4) if the task is very risky if employees do not have the necessary skills to solve the problem themselves if the job needs doing quickly. 9 Many managers claim to have a democratic style of leadership. Often their subordinates disagree. Outline two ways of checking the actual leadership style of a particular manager. (4) Up to 2 marks should be allocated for any sensible way of checking. ask employees which style they think the manager adopts look at how decisions are made look at the extent of control by the manager. 10 Analyse the leadership style adopted by your teacher/tutor. (6) Student s own answer. 2 marks should be allocated for the identification of leadership style plus up to an additional 4 marks for analysis of the effect that this style has on the class. Revision exercises B1 Data response (26 marks; 25 minutes) 1 Identify and explain the sections of the text that fit in with the ideas of Theory X and Theory Y. (5) 2 marks should be allocated for an understanding/explanation of theory X and theory Y leadership plus up to an additional 3 marks for use of the information provided in the text.
Leadership 29 McGregor s theory X leaders are leaders who set out clear objectives, give orders and expect those orders to be strictly followed. The autocratic leaders mentioned in the text fit in with McGregor s theory X leaders. A theory Y leader is a leader who trusts employees to word hard and take responsibility and therefore is less autocratic in his/her approach. The managers described as sensitive or trusting in the text are likely to be theory Y leaders. 2a What types of leader would be suggested by a bureaucratic style of management? (2) A bureaucratic style is more likely to be indicative of an autocratic style of management. 2b Outline two possible effects on a large business of this type of management style. (4) One mark should be allocated for the identification of each point plus an additional mark for explanation. Positive effects include: good management of administration and possibly finance. Negative effects include: less creative input less of a focus on innovation lack of new ideas. 3 Discuss the implications for a company such as Apple of operating as a centrally planned dictatorship set up to take orders from the chief executive rather than the customer. (15) Possible positive effects include: clear objectives employees should have a good understanding of the goals of Apple decision-making may be faster as fewer people have an input in decisions. Possible negative effects include: employees may fear bringing new ideas for products or process up with management employees may become demotivated creativity may be stifled
Leadership 29 a brand such as Apple thrives on dynamism and innovation any stifling of this could have a negative effect on their reputation and, in turn, their sales. Level 4 Evaluation and judgement of information in context (15-13) Level 3 Analysis of information in context (12-9) Level 2 Application of knowledge in context (8-5) Level 1 Knowledge and understanding of business concepts (4-1) B2 Data response (25 marks; 30 minutes) 1 Analyse how Terry Leahy s approach compares with that of a charismatic leader. (6) Terry Leahy does not seem like a charismatic manager but rather a quiet leader who observes, listens and makes thoughtful, intelligent and well-informed decisions. 6 marks Level 2 Application of knowledge in context (6-4) Level 1 Knowledge and understanding of business concepts (3-1) 2 Explain which leadership style is closest to (Sir) Terry Leahy s leadership of Tesco. (8) There is no correct answer here. Any sensible answer should be credited provided it is backed up with relevant evidence/implication. 8 marks Level 3 Analysis of information in context (8-7) Level 2 Application of knowledge in context (6-4) Level 1 Knowledge and understanding of business concepts (3-1) 3 Discuss whether it is a good use of senior managers time to spend a day working on the shopfloor. (11) Possible reasons to say yes include: Improves their knowledge of shop floor problems and difficulties. May improve their ability to communicate with lower level staff. May improve their credibility with subordinates. Possible reasons to say no include: Any opportunity cost of managers spending time on the shop floor.
Leadership 29 B3 Assignment 1 Arrange to interview an employee. Preferably this person should be a full-timer who has worked for at least a year. The employee could be a manager but should not be a director. 2 Your objective is to gain a full understanding of the leadership style prevailing at the employee s workplace, and the style employed by the individual s own manager. 3 Devise your own series of questions in advance, but make sure to include the following themes: a) How open are communications within the business? b) Are staff encouraged to apply a questioning or critical approach? c) Are there any forums for discussion or debate on important policy issues affecting staff? d) What does the organisational hierarchy look like? Where is your employee on that diagram? How powerful or powerless does he or she feel? e) How exactly does the employee s boss treat him or her? Is there delegation? Consultation? How effective is communication between the two of them? Write at least 600 words summarising your findings and drawing conclusions about how well the experience conforms to the leadership theory dealt with in this. Student s own answer. Essay questions 1 A good leader can always turn an ineffective business into a successful one. To what extent can good management make a difference to the success of a firm? Possible lines of argument include: Good management can ensure objectives are clear, communication is good and employees are well-trained and motivated, but that does not mean they can always make a business into a success. It is impossible to say a good leader can always turn an ineffective business around as it would depend on the extent of the problem, the available time to make it a success and how good the leader is. Some leaders may be capable of turning any business around given the resources and the finance but that does not mean that any good leader could do the same.
Leadership 29 2 Management is no longer about leading others; it is about working with them. Critically assess this view. It depends on the culture and style of the organisation in question. In some organisations management is still very much about leading a team whereas in others it may be more about getting the best out of every member of a team be it leading them or not. It is possible to lead a team without being autocratic so, in fact, just because a manager is working with a team does not mean that he or she is not also leading that team. 3 Consider the view that autocratic management has no place in today s business world. Reasons to agree: It is an old-fashioned style of management which is not readily accepted by today s business society as people expect to be treated with respect at work. It may stifle creative thinking and innovation. It may reduce motivation levels which today s management are possibly more conscious of than management in the past. Reasons to disagree: It depends on the culture of the organisation. Some organisational cultures are well-suited to autocratic management e.g. the army, the stockmarket. In some situations autocratic management may be preferable for any firm e.g. in times of financial difficulty. With the UK economy heading toward a recession, autocratic management may come back into fashion as cost cutting and efficiency become key strategies of survival in harsh market conditions. 4 Good managers are born and not made. Discuss this view. Entrepreneurs such as Richard Branson started at such a young age that it implies that good managers are born. Management is largely about the ability to communicate with people this is usually considered a skill which is natural, although it can be improved with training and development. It may depend on the individual and their life experiences. If good managers are just born and not made, why do so many big companies have graduate management programmes?
Organisational structure 30 Revision questions (47 marks; 47 minutes) 1 What is meant by the chain of command? (2) The chain of command is the line of communication through which orders are passed down from the top to the bottom of the organisation. 2 Define span of control. (2) The span of control is the number of people who report to a given manager in the hierarchy. 3 Some theorists believe that the ideal span of control is between three and six. To what extent do you agree with this? (5) Fayol s maxim of five has merit for the following reasons: it should mean that the superior can know subordinates personally and be familiar with their work; furthermore, it should allow each subordinate to have sufficient access to the superior when needed; however, in some situations, it may not be realistic or efficient to have a span of control of between three and five. 4 Explain two implications of a firm having too wide a span of control. (4) The manager may struggle to communicate effectively with all employees. Subordinates may feel they do not have a close enough relationship with the manager. Subordinates may become demotivated as they have just a slim chance of promotion. The manager may not have quite enough knowledge and/or control of subordinates. 5 Explain what an organisational chart shows. (4) An organisational chart shows the structure of a given organisation and the relationships between the employees within the organisation. It shows who is responsible for whom and each manager s span of control. 6 Why is it important for a growing firm to think carefully about its organisational structure? (4) As firms grow, organisational structures may have to change. The change may come in the form of more employees, or more drastic change such as new departments being formed or additional teams being added to existing departments.
Organisational structure 30 7 State three possible problems for a business with many levels of hierarchy. (3) A long chain of command may mean that messages from the top of the organisation may not get to the bottom of the organisation, or may get confused. Lots of expensive middle-management salaries to pay. Productivity may be low as there are too many managers and not enough doers. 8 What is meant by the term accountable? (2) To be accountable is to have to answer to a superior. 9 What do you think would be the right organisational structure for a hospital? Explain your answer. (4) Student s own answer. 10 Identify two reasons why a business might use an organisational chart. (2) to clearly illustrate the roles and responsibilities of employees to demonstrate channels of communication and the flow of information to demonstrate the layers of hierarchy and the lines of authority. 11 Explain what is meant by a narrow span of control. (3) a situation in which a manager has a small number of staff directly answerable to him/her. 12 Describe one benefit and one drawback for a business of reducing the levels within its hierarchy. (4) Benefits include: allows managers to offer close supervision, which may be useful if staff are inexperienced, labour turnover is high, or the task is complex or difficult allows better communication between managers and the employees for whom they are responsible may increase employees chances of promotion as a narrow span of control may mean many layers of hierarchy in which promotion chances arise regularly.
Organisational structure 30 Drawbacks include: workers may feel over-supervised which prevents staff from gaining increased responsibility, an important motivator. communication may suffer as a whole because a narrow span of control may result in many levels of hierarchy through which information has to pass. may restrict the scope for staff to use their initiative or to experiment. 13 Outline two elements required for successful delegation. (4) Answers include: the delegation of meaningful tasks in which employees can take pride staff who take pride in the responsibility they are able to show and the trust that is shown in them good communication between managers and the employees to whom tasks will be delegated a decentralised organisational structure in which employees can work on delegated tasks without feeling over-supervised. 14 Outline two potential barriers to communication within a firm. (4) Answers include: wide spans of control may make it difficult for a manager to communicate effectively with all the employees for whom he/she is responsible, and may create a need for more formal rather than informal communication many layers of hierarchy may make vertical communication slower and less effective. 15 Draw up a table showing the advantages and disadvantages to the business and to the workforce: a centralised business a decentralised business by product a decentralised business by geographical area.
Organisational structure 30 Centralised Decentralised by product Decentralised by region Advantages Standardisation Easy to control costs Could encourage collaboration between departments May need fewer middle managers thus cutting costs Motivates product managers Gives the person who knows most about the product the ability to make key decisions Employee motivation may increase as their ideas are more likely to be considered Local knowledge can be used to make the right decisions in the area Motivates regional managers Employee motivation may increase as their ideas are more likely to be considered Disadvantages Middle and lower management may be less motivated as they have less decision-making power May stifle creativity Less control Costs are likely to be higher May increase the layers of the hierarchy Top management may have a lack of information Less control Costs are likely to be higher Regional differences may threaten the standardisation of the brand
Organisational structure 30 Revision exercises B1 Data response (25 marks; 30 minutes) (Refer to questions on page 224 of the textbook.) 1 Describe the chain of command that Sara would use if she needed to discuss overtime with Pete. (3) Sara would have to discuss the issue with James, who would, in turn, discuss the issue with Pete. 2 What symptoms would indicate that James span of control was too wide? (5) Problems communicating with subordinates, resulting in misunderstandings and delays messages may not be communicated correctly or in time. Problems motivating staff because of a lack of personal contact with James as manager. This may cause staff to feel alienated, which may have a negative impact on performance. An increase in James workload which may cause him to suffer from work overload, leading to stress and poor decision-making. 3 Explain the usefulness of this chart for a new member of staff. (2) This chart would help a new employee to understand the relationship between different members of staff, and who is responsible for whom. 4 How might Crazy Beetles use a matrix management approach? (5) For the purpose of project management it might take one member from each department to form a matrix; this may improve the chances of the project succeeding as it would speed up communication between departments and ensure that all department opinions were taken into account. 5 To what extent would Sara benefit if she introduced a more decentralised approach? (10) Possible benefits include: Higher level of motivation due to more decision-making power.
Organisational structure 30 Employees may take on more responsibility, which would increase their level of skills and improve productivity. Decisions are made by those who know the most about the task in hand, which may improve decisions. Possible problems include: If decisions are not being made by Sara, she may not always be aware of what is happening in her business. If subordinates are not aware of business objectives, decisions made may not be in line with business objectives. 10 marks Level 4 Evaluation and judgement of information in context (10-9) Level 3 Analysis of information in context (8-7) Level 2 Application of knowledge in context (6-4) Level 1 Knowledge and understanding of business concepts (3-1) B2 Data response (25 marks; 30 minutes) (Refer to questions on page 224 of the textbook.) 1a What is the Managing Director s span of control? (1) According to Figure 30.2, the Managing Director s span of control is three. 1b Comment on the strengths and weaknesses of this organisational structure. (6) Strengths: The business is organised along functional lines this should make it relatively easy for staff to understand their roles, who does what and who answers to whom. Relatively narrow spans of control of three making supervision and communication within departments relatively quick and easy. Weaknesses: Organising the business on functional lines may encourage staff to function in their individual roles and departments, rather than adopt a whole business attitude, e.g. staff in marketing may not consider the financial implications of their ideas.
Organisational structure 30 Relatively narrow spans of control may lead to over-supervision and a lack of opportunity for individual workers to use their initiative, leading to demotivation. 1c How important does Human Resources seem within this business? (3) There is a Human Resources Director within Chicken Little, meaning that the function is recognised and given some importance. However, the Director has no subordinates, whereas the Marketing and Operations Directors have three subordinates each, suggesting that the role is considered to be less important than the other two. 2 Explain why vertical communications may not be as effective today as they used to be in the past at Chicken Little. (5) There are now two layers of middle management between the company s Managing Director, Paxo, and the workforce. For example, official communication from the five quality staff has to pass through a Quality Manager and an Operations Director before reaching Paxo. This will inevitably slow down communication. Junior staff may also be discouraged from approaching Paxo because of the formal structure. 3 Discuss the ways in which the Factory Manager might benefit or suffer from the organisational structure shown in the diagram. (10) Possible benefits include: The Factory Manager will have a clear idea of how (s)he fits into the organisational structure, who (s)he is responsible for. This should make the process of supervision and delegation easier. The Factory Manager will also have a clear idea of who (s)he is accountable to for example, the Operations Director is the Factory Manager s line manager. Possible drawbacks include: The structure may reduce the amount of horizontal communication i.e. it may be relatively difficult to liaise with managers in other departments, such as marketing. It may be more difficult to communicate directly with the Managing Director, as messages may need to go through the Operations Director. This may discourage the Factory Manager from passing on ideas about making the factory run more efficiently. 10 marks Level 4 Evaluation and judgement of information in context (10-9) Level 3 Analysis of information in context (8-7) Level 2 Application of knowledge in context (6-4) Level 1 Knowledge and understanding of business concepts (3-1)
Organisational structure 30 B3 Data response (18 marks; 20 minutes) (Refer to questions on page 225 of the textbook.) 1 Explain two reasons why marketing is centralised at the head office of Activities4U. (6) Reasons for centralising marketing: consistency of approach/message/control one marketing budget/cost centre centralised advertising centralised market research economies of staffing, specialisation. 2 Argue the case for centralising training at head office rather than within each activity centre. (12) Case for centralising training at Head Office: legislation e.g. Health and Safety to ensure consistency, CRB legislation to maintain a consistent standard/uniform policy one cost centre centralised control easier communication. This case has to be analysed in terms of making a comparison with decentralising to each activity centre.