Welcome to Human Resource Decisions!
Hello there! In this chapter, we are going to explore how businesses organize themselves and how they manage the movement of people within the company. Think of organisational design as the "skeleton" of a business—it provides the structure that holds everything together. We will also look at HR flow, which is essentially the "journey" an employee takes from the moment they are hired to the moment they leave. Don't worry if some of the terms sound a bit technical at first; we'll break them down using simple, real-world examples!
1. Models of Organisational Structure
A business can't just have everyone doing whatever they want. They need a structure. Depending on what the business does, they might choose one of these four models:
A. Functional Structure
This is the most common type. Employees are grouped by their skills or the part of the business they work in (their "function"). For example, all the accountants are in the Finance Department, and all the advertisers are in the Marketing Department.
Analogy: Like a school where all the Maths teachers are in one building and all the PE teachers are in another.
B. Product-Based Structure
Large companies that sell very different things often group people by the product they work on. Example: A company like Samsung might have one whole division for "Smartphones" and another for "Washing Machines."
C. Regional Structure
If a business operates in many locations, it might group people by where they are. Example: McDonald’s might have a "UK Division" and a "European Division" because the tastes and laws in those areas are different.
D. Matrix Structure
This is the most complex one. Employees work in teams based on their function but are also assigned to specific projects. This means they often have two bosses: their department head and their project manager.
Quick Review: - Functional: Grouped by job role. - Product: Grouped by what they sell. - Regional: Grouped by location. - Matrix: Grouped by both job role and specific projects.
2. Key Influences on Organisational Design
When a manager is designing the structure, they have to make decisions about how power and communication will work. Here are the "building blocks" they use:
Hierarchy and Span of Control
The hierarchy refers to the number of levels in an organization. A "tall" hierarchy has many levels (lots of middle managers), while a "flat" hierarchy has very few.
The span of control is the number of employees who report directly to one manager. - A narrow span means a manager looks after only a few people (usually 2-4). - A wide span means a manager looks after many people (maybe 10 or more!).
Authority and Delegation
Authority is the power to make decisions. Delegation is when a manager gives some of that power to a subordinate (someone lower down the hierarchy). Example: A store manager might delegate the task of creating the weekly staff rota to a shift supervisor.
Centralisation vs. Decentralisation
This is all about where the big decisions are made: - Centralisation: Most decisions are made at the very top (Head Office). This keeps things consistent but can be slow. - Decentralisation: Decision-making power is pushed down to local managers. This is faster and uses local knowledge, but it can lead to different branches doing things differently.
Memory Aid: The "C" Trick - Centralised = Centre (Head Office) makes the calls. - Decentralised = Distributed (Local managers) make the calls.
Key Takeaway: There is no "perfect" structure. A small cupcake shop might be very centralised, while a global tech giant might be decentralised to stay creative.
3. Managing the Human Resource Flow
The Human Resource Flow is the movement of employees into, through, and out of the organisation. Managers must plan this carefully so they don't end up with too many or too few workers.
Step 1: Human Resource Plan
This is a "forecast." The business looks at its goals and asks: "How many people will we need next year, and what skills must they have?"
Step 2: Recruitment
This is finding and hiring the right people. It can be internal (hiring someone who already works for the company) or external (hiring someone new from outside).
Step 3: Training
Once hired, people need to learn. This could be induction training (learning the basics on day one) or on-the-job training (learning while working).
Step 4: Redeployment
Sometimes, one part of a business is quiet while another is busy. Instead of firing people, the business moves them to a different department or location. Example: A bank might close a physical branch and move the staff to work in their "Online Banking" call centre.
Step 5: Redundancy
This is a sad part of the flow. Redundancy happens when a job no longer exists. This isn't the employee's fault—it's usually because the business is struggling or a machine is now doing the job.
Common Mistake to Avoid: Don't confuse dismissal with redundancy! - Dismissal: You are "fired" because you did something wrong or performed poorly. - Redundancy: Your job has disappeared, and the business no longer needs anyone in that role.
4. Why Change Organisational Design?
Businesses aren't static; they grow and change. A business might change its structure because: - It has grown too large for its old structure. - It wants to reduce costs (delayering—removing a whole level of middle management). - It needs to be more competitive and react faster to customers.
Did you know? Google uses a very flat structure and often uses matrix teams to keep their employees thinking like entrepreneurs. This helps them stay innovative!
Quick Review Box: HR Flow 1. Inflow: Recruitment and Selection. 2. Internal Flow: Training, Promotion, and Redeployment. 3. Outflow: Retirement, Resignation, or Redundancy.
Final Key Takeaway: Managing the HR flow and designing a good structure ensures that the right people are in the right place at the right time. This is the secret to a high-performing business!