3.6.3 Making Human Resource Decisions: Improving Organisational Design and Managing the Human Resource Flow

Welcome! In this section, we are going to look at how a business organizes its "people power." Think of a business like a giant sports team or a movie production. For it to work, you need the right people in the right roles, a clear understanding of who is the boss, and a plan for when people join or leave the team. Don't worry if some of these terms seem like business-speak at first; we’ll break them down into simple pieces!

Part 1: Models of Organisational Structure

An organisational structure is basically the "blueprint" of a company. It shows who reports to whom and how tasks are divided. Businesses usually choose one of these four models: 1. Functional Structure This is the most common way to organize. The business is split into departments based on what people do (their function). You’ll have a Marketing department, a Finance department, and a Human Resources department. Example: In a clothing brand, all the designers work together in one team, and all the accountants work in another. 2. Product-based Structure The business is split based on the specific products they sell. Each product "division" has its own mini-team. Example: A tech giant like Apple might have one division for iPhones and another for MacBooks. Each division acts almost like its own little business. 3. Regional Structure If a business operates in many places, they might organize by location. Example: A supermarket chain might have a "North UK" manager and a "South UK" manager to handle local tastes and needs. 4. Matrix Structure This is the "double boss" system. Employees work in their functional departments but are also assigned to specific projects. Example: An engineer might report to the "Engineering Boss" but also work on a "New Electric Car Project" led by a Project Manager. Quick Takeaway: Structure depends on the size of the business and what they sell. Functional is simple; Matrix is flexible but can be confusing!

Part 2: Influences on Organisational Design

When a manager sits down to design how the business works, they have to make decisions about these five key concepts: Authority and Hierarchy Authority is the power to give orders and make decisions. The Hierarchy is the number of layers of management in a business. Analogy: Think of a ladder. A tall hierarchy has many rungs (lots of bosses), while a flat hierarchy has only a few. Span of Control This is simply the number of people a manager is directly responsible for. - A Narrow Span means a manager looks after only 2 or 3 people. - A Wide Span means a manager might look after 15 or 20 people. Delegation This is when a manager gives some of their tasks or authority to a junior employee. Why do it? It frees up the manager’s time and makes the employee feel trusted and motivated. Centralisation vs. Decentralisation This is about where the big decisions are made. - Centralisation: All major decisions are made at the very top (Head Office). - Decentralisation: Decision-making power is pushed down to local branches or junior managers. Quick Review: - Tall Hierarchy = Many layers, narrow spans, usually more centralised. - Flat Hierarchy = Few layers, wide spans, usually more decentralised.

Part 3: The Value of Changing Organisational Design

Businesses don't stay the same forever. Sometimes they need to change their design (this is often called restructuring). Why change? - To reduce costs: Removing a layer of management (delayering) saves money on high salaries. - To speed up communication: Fewer layers mean messages get from the boss to the shop floor faster. - To react to the market: If a competitor is faster, a business might decentralise so local managers can make quick choices. Common Mistake to Avoid: Don't assume "Delayering" is always good. While it saves money, the remaining managers might feel stressed because their "span of control" just got much wider!

Part 4: Managing the Human Resource Flow

The Human Resource Flow is the journey an employee takes through a business, from the day they are hired to the day they leave. Managers must handle this flow carefully to ensure they always have enough staff. 1. Human Resource Plan This is the starting point. The business looks at its future goals and decides how many people it needs. "If we want to open 10 new shops next year, we need 10 new managers." 2. Recruitment Finding and hiring the right people. This can be Internal (promoting someone already in the company) or External (hiring a stranger). 3. Training Helping employees learn new skills. This ensures they are productive and can handle new technology. 4. Redeployment Instead of firing someone when their job isn't needed anymore, the business moves them to a different department or location. Example: A bank closes a branch but moves the staff to work in their call centre instead. 5. Redundancy This happens when a job no longer exists. It’s not the employee's fault (unlike being "fired" for doing a bad job). Example: A factory replaces a packaging team with a robot. The workers are now redundant. Memory Aid: The "R" Flow To remember the flow, think of: P-R-T-R-R Plan -> Recruit -> Train -> Redeploy -> Redundant.

Summary Table: Key Terms

Term: Span of Control Simple Meaning: How many people report to one boss. Term: Delegation Simple Meaning: Giving a task to someone junior. Term: Delayering Simple Meaning: Removing a whole level of management to flatten the structure. Term: Centralised Simple Meaning: Decisions are made at the top. Key Takeaway for 3.6.3: Managing HR is a balancing act. A business needs a structure that is clear but not too "heavy" with bosses, and a flow that keeps people trained and motivated while keeping costs under control. Don't worry if this seems like a lot to remember! Just keep thinking about the "People Journey" (the flow) and the "People Map" (the structure), and the rest will fall into place.