Revision Notes: People in Business (HR) | Business Studies for GCSE/IGCSE - Year 11 PDF Download

 Page 1


• The business must offer jobs and employ local employees. 
• The production process of the business must in no way harm the environment. 
• Products must be socially responsible and must not pose any harmful effects from consumption. 
Public- sector businesses: 
Government owned and controlled businesses do not have the same objectives as those in the private sector. 
Objectives: 
• Financial: Although these businesses do not aim to maximize profits, they will have to meet the profit target set 
by the government. This is so that it can be reinvested into the business for meeting the needs of the society. 
• Service: The main aim of this organization is to provide a service to the community that must meet the quality 
target set by the government. 
• Social: Most of these social enterprises are set up in order to aid the community. This can be by providing 
employment to local citizens, providing good quality goods and services at an affordable rate, etc. 
Conflicts of stakeholders’ objectives: 
As all stakeholders have their own aims they would like to achieve, it is natural that conflicts of stakeholders’ interests 
could occur. Therefore, if a business tries to satisfy the objectives of one stakeholder, it might mean that other 
stakeholders’ objectives could go unfulfilled. 
For example, workers will aim towards earning higher salaries. Shareholders might not want this to happen as paying 
higher salaries could mean that less profit will be left over for payment of return to the shareholders. 
2.1 – Motivating Workers 
People work to earn money and fulfil their necessities and wants. But there are several other reasons for work as well. 
Motivation is the reason why employees want to work hard and work effectively for the business. Money is the main 
motivator, as explained above. Other factors that may motivate a person to choose to do a job may include social needs 
(need to communicate and work with others), esteem needs (to feel important, worthwhile), job satisfaction (to enjoy 
good work), security (knowing that your job and pay are secure- that you will not lose your job). 
Why motivates workers? Why do firms go to the pain of making sure their workers are motivated? When workers are 
well-motivated, they become highly productive and effective in their work and thus increases the firm’s efficiency and 
output, leading to higher profits. For example, in the service sector, if the employee is unhappy at his work, he may act 
lazy and rude to customers, leading to low customer satisfaction, more complaints and ultimately a bad reputation and 
low profits. 
Motivation Theories 
• F. W. Taylor: Taylor based his ideas on the assumption that workers were motivated by personal gains, mainly 
money and that increasing pay would increase productivity (amount of output produced). Therefore, he 
proposed the piece-rate system, whereby workers get paid for the number of outputs they produce. So, in 
order, to gain more money, workers would produce more. 
However, this theory is not entirely true. There are various other motivators in the modern workplace, some 
even more important than money. The piece rate system is not very practical in situations where output cannot 
be measured (service industries) and will lead to (high) output that doesn’t guarantee high quality. 
• Maslow: Abraham Maslow’s hierarchy of needs shows that employees are motivated by each level of the 
hierarchy going from bottom to top. Mangers can identify which level their workers are on and then take the 
Page 2


• The business must offer jobs and employ local employees. 
• The production process of the business must in no way harm the environment. 
• Products must be socially responsible and must not pose any harmful effects from consumption. 
Public- sector businesses: 
Government owned and controlled businesses do not have the same objectives as those in the private sector. 
Objectives: 
• Financial: Although these businesses do not aim to maximize profits, they will have to meet the profit target set 
by the government. This is so that it can be reinvested into the business for meeting the needs of the society. 
• Service: The main aim of this organization is to provide a service to the community that must meet the quality 
target set by the government. 
• Social: Most of these social enterprises are set up in order to aid the community. This can be by providing 
employment to local citizens, providing good quality goods and services at an affordable rate, etc. 
Conflicts of stakeholders’ objectives: 
As all stakeholders have their own aims they would like to achieve, it is natural that conflicts of stakeholders’ interests 
could occur. Therefore, if a business tries to satisfy the objectives of one stakeholder, it might mean that other 
stakeholders’ objectives could go unfulfilled. 
For example, workers will aim towards earning higher salaries. Shareholders might not want this to happen as paying 
higher salaries could mean that less profit will be left over for payment of return to the shareholders. 
2.1 – Motivating Workers 
People work to earn money and fulfil their necessities and wants. But there are several other reasons for work as well. 
Motivation is the reason why employees want to work hard and work effectively for the business. Money is the main 
motivator, as explained above. Other factors that may motivate a person to choose to do a job may include social needs 
(need to communicate and work with others), esteem needs (to feel important, worthwhile), job satisfaction (to enjoy 
good work), security (knowing that your job and pay are secure- that you will not lose your job). 
Why motivates workers? Why do firms go to the pain of making sure their workers are motivated? When workers are 
well-motivated, they become highly productive and effective in their work and thus increases the firm’s efficiency and 
output, leading to higher profits. For example, in the service sector, if the employee is unhappy at his work, he may act 
lazy and rude to customers, leading to low customer satisfaction, more complaints and ultimately a bad reputation and 
low profits. 
Motivation Theories 
• F. W. Taylor: Taylor based his ideas on the assumption that workers were motivated by personal gains, mainly 
money and that increasing pay would increase productivity (amount of output produced). Therefore, he 
proposed the piece-rate system, whereby workers get paid for the number of outputs they produce. So, in 
order, to gain more money, workers would produce more. 
However, this theory is not entirely true. There are various other motivators in the modern workplace, some 
even more important than money. The piece rate system is not very practical in situations where output cannot 
be measured (service industries) and will lead to (high) output that doesn’t guarantee high quality. 
• Maslow: Abraham Maslow’s hierarchy of needs shows that employees are motivated by each level of the 
hierarchy going from bottom to top. Mangers can identify which level their workers are on and then take the 
necessary action to advance them onto the next level. 
 
One limitation of this theory is that it doesn’t apply to every worker. For some employees, for example, social 
needs aren’t important, but they would be motivated by recognition and appreciation for their work from 
seniors. 
• Herzberg: Frederick Herzberg’s two-factor theory, wherein he states that people have two sets of needs- one 
basic animal needs called ‘hygiene factors’, the other needs that allow the human being to grow 
psychologically, called the ‘motivators’. 
 
According to Herzberg, the hygiene factors need to be satisfied, if not they will act as de-motivators to the 
Page 3


• The business must offer jobs and employ local employees. 
• The production process of the business must in no way harm the environment. 
• Products must be socially responsible and must not pose any harmful effects from consumption. 
Public- sector businesses: 
Government owned and controlled businesses do not have the same objectives as those in the private sector. 
Objectives: 
• Financial: Although these businesses do not aim to maximize profits, they will have to meet the profit target set 
by the government. This is so that it can be reinvested into the business for meeting the needs of the society. 
• Service: The main aim of this organization is to provide a service to the community that must meet the quality 
target set by the government. 
• Social: Most of these social enterprises are set up in order to aid the community. This can be by providing 
employment to local citizens, providing good quality goods and services at an affordable rate, etc. 
Conflicts of stakeholders’ objectives: 
As all stakeholders have their own aims they would like to achieve, it is natural that conflicts of stakeholders’ interests 
could occur. Therefore, if a business tries to satisfy the objectives of one stakeholder, it might mean that other 
stakeholders’ objectives could go unfulfilled. 
For example, workers will aim towards earning higher salaries. Shareholders might not want this to happen as paying 
higher salaries could mean that less profit will be left over for payment of return to the shareholders. 
2.1 – Motivating Workers 
People work to earn money and fulfil their necessities and wants. But there are several other reasons for work as well. 
Motivation is the reason why employees want to work hard and work effectively for the business. Money is the main 
motivator, as explained above. Other factors that may motivate a person to choose to do a job may include social needs 
(need to communicate and work with others), esteem needs (to feel important, worthwhile), job satisfaction (to enjoy 
good work), security (knowing that your job and pay are secure- that you will not lose your job). 
Why motivates workers? Why do firms go to the pain of making sure their workers are motivated? When workers are 
well-motivated, they become highly productive and effective in their work and thus increases the firm’s efficiency and 
output, leading to higher profits. For example, in the service sector, if the employee is unhappy at his work, he may act 
lazy and rude to customers, leading to low customer satisfaction, more complaints and ultimately a bad reputation and 
low profits. 
Motivation Theories 
• F. W. Taylor: Taylor based his ideas on the assumption that workers were motivated by personal gains, mainly 
money and that increasing pay would increase productivity (amount of output produced). Therefore, he 
proposed the piece-rate system, whereby workers get paid for the number of outputs they produce. So, in 
order, to gain more money, workers would produce more. 
However, this theory is not entirely true. There are various other motivators in the modern workplace, some 
even more important than money. The piece rate system is not very practical in situations where output cannot 
be measured (service industries) and will lead to (high) output that doesn’t guarantee high quality. 
• Maslow: Abraham Maslow’s hierarchy of needs shows that employees are motivated by each level of the 
hierarchy going from bottom to top. Mangers can identify which level their workers are on and then take the 
necessary action to advance them onto the next level. 
 
One limitation of this theory is that it doesn’t apply to every worker. For some employees, for example, social 
needs aren’t important, but they would be motivated by recognition and appreciation for their work from 
seniors. 
• Herzberg: Frederick Herzberg’s two-factor theory, wherein he states that people have two sets of needs- one 
basic animal needs called ‘hygiene factors’, the other needs that allow the human being to grow 
psychologically, called the ‘motivators’. 
 
According to Herzberg, the hygiene factors need to be satisfied, if not they will act as de-motivators to the 
workers. However, hygiene factors don’t act as motivators as their effect quickly wear off. Motivators will truly 
motivate workers to work more effectively. 
Motivating Factors 
Financial Motivators 
• Wages: often paid weekly. They can be calculated in two ways:  
• Time-Rate: pay based on the number of hours worked. Although output may increase, it doesn’t mean 
that workers will work sincerely use the time to produce more- they may simply waste time on very few 
outputs since their pay is based only on how long they work. The productive and unproductive worker 
will get paid the same amount, irrespective of their output. 
• Piece-Rate: pay based on the no. of output produced. Same as time-rate, this doesn’t ensure that 
quality output is produced. Thus, efficient workers may feel demotivated as they’re getting the same 
pay as inefficient workers, despite their efficiency. 
• Salary: paid monthly or annually. 
• Commission: paid to salesperson, based on a percentage of sales they’ve made. The higher the sales, the more 
the pay. Although this will encourage salespersons to sell more products and increase profits, it can be very 
stressful for them because no sales made means no pay at all. 
• Bonus: additional amount paid to workers for good work 
• Performance-related pay paid based on performance. An appraisal (assessing the effectiveness of an employee 
by senior management through interviews, observations, comments from colleagues etc.) is used to measure 
this performance and a pay is given based on this. 
• Profit-sharing: a scheme whereby a proportion of the company’s profits is distributed to workers. Workers will 
be motivated to work better so that a higher profit is made. 
• Share ownership: shares in the firm are given to employees so that they can become part owners of the 
company. This will increase employees’ loyalty to the company, as they feel a sense of belongingness. 
Non-Financial Motivators 
Fringe benefits are non-financial rewards given to employees 
• Company vehicle/car 
• Free healthcare 
• Children’s education fees paid for 
• Free accommodation 
• Free holidays/trips 
• Discounts on the firm’s products 
  
Job Satisfaction: the enjoyment derived from the feeling that you’ve done a good job. Employees have different ideas 
about what motivates them- it could be pay, promotional opportunities, team involvement, relationship with superiors, 
level of responsibility, chances for training, the working hours, status of the job etc. Responsibility, recognition and 
satisfaction are in particular very important. 
Page 4


• The business must offer jobs and employ local employees. 
• The production process of the business must in no way harm the environment. 
• Products must be socially responsible and must not pose any harmful effects from consumption. 
Public- sector businesses: 
Government owned and controlled businesses do not have the same objectives as those in the private sector. 
Objectives: 
• Financial: Although these businesses do not aim to maximize profits, they will have to meet the profit target set 
by the government. This is so that it can be reinvested into the business for meeting the needs of the society. 
• Service: The main aim of this organization is to provide a service to the community that must meet the quality 
target set by the government. 
• Social: Most of these social enterprises are set up in order to aid the community. This can be by providing 
employment to local citizens, providing good quality goods and services at an affordable rate, etc. 
Conflicts of stakeholders’ objectives: 
As all stakeholders have their own aims they would like to achieve, it is natural that conflicts of stakeholders’ interests 
could occur. Therefore, if a business tries to satisfy the objectives of one stakeholder, it might mean that other 
stakeholders’ objectives could go unfulfilled. 
For example, workers will aim towards earning higher salaries. Shareholders might not want this to happen as paying 
higher salaries could mean that less profit will be left over for payment of return to the shareholders. 
2.1 – Motivating Workers 
People work to earn money and fulfil their necessities and wants. But there are several other reasons for work as well. 
Motivation is the reason why employees want to work hard and work effectively for the business. Money is the main 
motivator, as explained above. Other factors that may motivate a person to choose to do a job may include social needs 
(need to communicate and work with others), esteem needs (to feel important, worthwhile), job satisfaction (to enjoy 
good work), security (knowing that your job and pay are secure- that you will not lose your job). 
Why motivates workers? Why do firms go to the pain of making sure their workers are motivated? When workers are 
well-motivated, they become highly productive and effective in their work and thus increases the firm’s efficiency and 
output, leading to higher profits. For example, in the service sector, if the employee is unhappy at his work, he may act 
lazy and rude to customers, leading to low customer satisfaction, more complaints and ultimately a bad reputation and 
low profits. 
Motivation Theories 
• F. W. Taylor: Taylor based his ideas on the assumption that workers were motivated by personal gains, mainly 
money and that increasing pay would increase productivity (amount of output produced). Therefore, he 
proposed the piece-rate system, whereby workers get paid for the number of outputs they produce. So, in 
order, to gain more money, workers would produce more. 
However, this theory is not entirely true. There are various other motivators in the modern workplace, some 
even more important than money. The piece rate system is not very practical in situations where output cannot 
be measured (service industries) and will lead to (high) output that doesn’t guarantee high quality. 
• Maslow: Abraham Maslow’s hierarchy of needs shows that employees are motivated by each level of the 
hierarchy going from bottom to top. Mangers can identify which level their workers are on and then take the 
necessary action to advance them onto the next level. 
 
One limitation of this theory is that it doesn’t apply to every worker. For some employees, for example, social 
needs aren’t important, but they would be motivated by recognition and appreciation for their work from 
seniors. 
• Herzberg: Frederick Herzberg’s two-factor theory, wherein he states that people have two sets of needs- one 
basic animal needs called ‘hygiene factors’, the other needs that allow the human being to grow 
psychologically, called the ‘motivators’. 
 
According to Herzberg, the hygiene factors need to be satisfied, if not they will act as de-motivators to the 
workers. However, hygiene factors don’t act as motivators as their effect quickly wear off. Motivators will truly 
motivate workers to work more effectively. 
Motivating Factors 
Financial Motivators 
• Wages: often paid weekly. They can be calculated in two ways:  
• Time-Rate: pay based on the number of hours worked. Although output may increase, it doesn’t mean 
that workers will work sincerely use the time to produce more- they may simply waste time on very few 
outputs since their pay is based only on how long they work. The productive and unproductive worker 
will get paid the same amount, irrespective of their output. 
• Piece-Rate: pay based on the no. of output produced. Same as time-rate, this doesn’t ensure that 
quality output is produced. Thus, efficient workers may feel demotivated as they’re getting the same 
pay as inefficient workers, despite their efficiency. 
• Salary: paid monthly or annually. 
• Commission: paid to salesperson, based on a percentage of sales they’ve made. The higher the sales, the more 
the pay. Although this will encourage salespersons to sell more products and increase profits, it can be very 
stressful for them because no sales made means no pay at all. 
• Bonus: additional amount paid to workers for good work 
• Performance-related pay paid based on performance. An appraisal (assessing the effectiveness of an employee 
by senior management through interviews, observations, comments from colleagues etc.) is used to measure 
this performance and a pay is given based on this. 
• Profit-sharing: a scheme whereby a proportion of the company’s profits is distributed to workers. Workers will 
be motivated to work better so that a higher profit is made. 
• Share ownership: shares in the firm are given to employees so that they can become part owners of the 
company. This will increase employees’ loyalty to the company, as they feel a sense of belongingness. 
Non-Financial Motivators 
Fringe benefits are non-financial rewards given to employees 
• Company vehicle/car 
• Free healthcare 
• Children’s education fees paid for 
• Free accommodation 
• Free holidays/trips 
• Discounts on the firm’s products 
  
Job Satisfaction: the enjoyment derived from the feeling that you’ve done a good job. Employees have different ideas 
about what motivates them- it could be pay, promotional opportunities, team involvement, relationship with superiors, 
level of responsibility, chances for training, the working hours, status of the job etc. Responsibility, recognition and 
satisfaction are in particular very important. 
So, how can companies ensure that they’re workers are satisfied with the job, other than the motivators mentioned 
above? 
• Job Rotation: involves workers swapping around jobs and doing each specific task for only a limited time and 
then changing round again. This increases the variety in the work itself and will also make it easier for managers 
to move around workers to do other jobs if somebody is ill or absent. The tasks themselves are not made more 
interesting, but the switching of tasks may avoid boredom among workers. This is very common in factories with 
a huge production line where workers will move from retrieving products from the machine to labelling the 
products to packing the products to putting the products into huge cartons. 
• Job Enlargement: where extra tasks of similar level of work are added to a worker’s job description. These 
extra tasks will not add greater responsibility or work for the employee but make work more interesting. Eg: a 
worker hired to stock shelves will now, as a result of job enlargement, arrange stock on shelves, label stock, 
fetch stock etc. 
• Job Enrichment: involves adding tasks that require more skill and responsibility to a job. This gives employees a 
sense of trust from senior management and motivate them to carry out the extra tasks effectively. Some 
additional training may also be given to the employee to do so. Eg: a receptionist employed to welcome 
customers will now, as a result of job enrichment, deal with telephone enquiries, word-process letters etc. 
• Team-working: a group of workers is given responsibility for a process, product or development. They can 
decide as a team how to organize and carry out the tasks. The workers take part in decision making and take 
responsibility for the process. It gives them more control over their work and thus a sense of commitment, 
increasing job satisfaction. Working as a group will also add to morale, fulfill social needs and lead to job 
satisfaction. 
2.2 – Organization and Management 
Organizational Structure 
Organizational structure 
refers to the levels of management and division of responsibilities within a business. They can be represented on 
organizational charts (left). 
  
Advantages: 
• All employees are aware of which communication channel is used to reach them with messages 
Page 5


• The business must offer jobs and employ local employees. 
• The production process of the business must in no way harm the environment. 
• Products must be socially responsible and must not pose any harmful effects from consumption. 
Public- sector businesses: 
Government owned and controlled businesses do not have the same objectives as those in the private sector. 
Objectives: 
• Financial: Although these businesses do not aim to maximize profits, they will have to meet the profit target set 
by the government. This is so that it can be reinvested into the business for meeting the needs of the society. 
• Service: The main aim of this organization is to provide a service to the community that must meet the quality 
target set by the government. 
• Social: Most of these social enterprises are set up in order to aid the community. This can be by providing 
employment to local citizens, providing good quality goods and services at an affordable rate, etc. 
Conflicts of stakeholders’ objectives: 
As all stakeholders have their own aims they would like to achieve, it is natural that conflicts of stakeholders’ interests 
could occur. Therefore, if a business tries to satisfy the objectives of one stakeholder, it might mean that other 
stakeholders’ objectives could go unfulfilled. 
For example, workers will aim towards earning higher salaries. Shareholders might not want this to happen as paying 
higher salaries could mean that less profit will be left over for payment of return to the shareholders. 
2.1 – Motivating Workers 
People work to earn money and fulfil their necessities and wants. But there are several other reasons for work as well. 
Motivation is the reason why employees want to work hard and work effectively for the business. Money is the main 
motivator, as explained above. Other factors that may motivate a person to choose to do a job may include social needs 
(need to communicate and work with others), esteem needs (to feel important, worthwhile), job satisfaction (to enjoy 
good work), security (knowing that your job and pay are secure- that you will not lose your job). 
Why motivates workers? Why do firms go to the pain of making sure their workers are motivated? When workers are 
well-motivated, they become highly productive and effective in their work and thus increases the firm’s efficiency and 
output, leading to higher profits. For example, in the service sector, if the employee is unhappy at his work, he may act 
lazy and rude to customers, leading to low customer satisfaction, more complaints and ultimately a bad reputation and 
low profits. 
Motivation Theories 
• F. W. Taylor: Taylor based his ideas on the assumption that workers were motivated by personal gains, mainly 
money and that increasing pay would increase productivity (amount of output produced). Therefore, he 
proposed the piece-rate system, whereby workers get paid for the number of outputs they produce. So, in 
order, to gain more money, workers would produce more. 
However, this theory is not entirely true. There are various other motivators in the modern workplace, some 
even more important than money. The piece rate system is not very practical in situations where output cannot 
be measured (service industries) and will lead to (high) output that doesn’t guarantee high quality. 
• Maslow: Abraham Maslow’s hierarchy of needs shows that employees are motivated by each level of the 
hierarchy going from bottom to top. Mangers can identify which level their workers are on and then take the 
necessary action to advance them onto the next level. 
 
One limitation of this theory is that it doesn’t apply to every worker. For some employees, for example, social 
needs aren’t important, but they would be motivated by recognition and appreciation for their work from 
seniors. 
• Herzberg: Frederick Herzberg’s two-factor theory, wherein he states that people have two sets of needs- one 
basic animal needs called ‘hygiene factors’, the other needs that allow the human being to grow 
psychologically, called the ‘motivators’. 
 
According to Herzberg, the hygiene factors need to be satisfied, if not they will act as de-motivators to the 
workers. However, hygiene factors don’t act as motivators as their effect quickly wear off. Motivators will truly 
motivate workers to work more effectively. 
Motivating Factors 
Financial Motivators 
• Wages: often paid weekly. They can be calculated in two ways:  
• Time-Rate: pay based on the number of hours worked. Although output may increase, it doesn’t mean 
that workers will work sincerely use the time to produce more- they may simply waste time on very few 
outputs since their pay is based only on how long they work. The productive and unproductive worker 
will get paid the same amount, irrespective of their output. 
• Piece-Rate: pay based on the no. of output produced. Same as time-rate, this doesn’t ensure that 
quality output is produced. Thus, efficient workers may feel demotivated as they’re getting the same 
pay as inefficient workers, despite their efficiency. 
• Salary: paid monthly or annually. 
• Commission: paid to salesperson, based on a percentage of sales they’ve made. The higher the sales, the more 
the pay. Although this will encourage salespersons to sell more products and increase profits, it can be very 
stressful for them because no sales made means no pay at all. 
• Bonus: additional amount paid to workers for good work 
• Performance-related pay paid based on performance. An appraisal (assessing the effectiveness of an employee 
by senior management through interviews, observations, comments from colleagues etc.) is used to measure 
this performance and a pay is given based on this. 
• Profit-sharing: a scheme whereby a proportion of the company’s profits is distributed to workers. Workers will 
be motivated to work better so that a higher profit is made. 
• Share ownership: shares in the firm are given to employees so that they can become part owners of the 
company. This will increase employees’ loyalty to the company, as they feel a sense of belongingness. 
Non-Financial Motivators 
Fringe benefits are non-financial rewards given to employees 
• Company vehicle/car 
• Free healthcare 
• Children’s education fees paid for 
• Free accommodation 
• Free holidays/trips 
• Discounts on the firm’s products 
  
Job Satisfaction: the enjoyment derived from the feeling that you’ve done a good job. Employees have different ideas 
about what motivates them- it could be pay, promotional opportunities, team involvement, relationship with superiors, 
level of responsibility, chances for training, the working hours, status of the job etc. Responsibility, recognition and 
satisfaction are in particular very important. 
So, how can companies ensure that they’re workers are satisfied with the job, other than the motivators mentioned 
above? 
• Job Rotation: involves workers swapping around jobs and doing each specific task for only a limited time and 
then changing round again. This increases the variety in the work itself and will also make it easier for managers 
to move around workers to do other jobs if somebody is ill or absent. The tasks themselves are not made more 
interesting, but the switching of tasks may avoid boredom among workers. This is very common in factories with 
a huge production line where workers will move from retrieving products from the machine to labelling the 
products to packing the products to putting the products into huge cartons. 
• Job Enlargement: where extra tasks of similar level of work are added to a worker’s job description. These 
extra tasks will not add greater responsibility or work for the employee but make work more interesting. Eg: a 
worker hired to stock shelves will now, as a result of job enlargement, arrange stock on shelves, label stock, 
fetch stock etc. 
• Job Enrichment: involves adding tasks that require more skill and responsibility to a job. This gives employees a 
sense of trust from senior management and motivate them to carry out the extra tasks effectively. Some 
additional training may also be given to the employee to do so. Eg: a receptionist employed to welcome 
customers will now, as a result of job enrichment, deal with telephone enquiries, word-process letters etc. 
• Team-working: a group of workers is given responsibility for a process, product or development. They can 
decide as a team how to organize and carry out the tasks. The workers take part in decision making and take 
responsibility for the process. It gives them more control over their work and thus a sense of commitment, 
increasing job satisfaction. Working as a group will also add to morale, fulfill social needs and lead to job 
satisfaction. 
2.2 – Organization and Management 
Organizational Structure 
Organizational structure 
refers to the levels of management and division of responsibilities within a business. They can be represented on 
organizational charts (left). 
  
Advantages: 
• All employees are aware of which communication channel is used to reach them with messages 
• Everyone knows their position in the business. They know who they are accountable to and who they are 
accountable for 
• It shows the links and relationship between the different departments 
• Gives everyone a sense of belonging as they appear on the organizational chart 
  
The span of control is the number of subordinates working directly under a manager in the organizational structure. In 
the above figure, the managing director’s span of control is four. The marketing director’s span of control is the number 
of marketing managers working under him (it is not specified how many, in the figure). 
The chain of command is the structure of an organization that allows instructions to be passed on from senior 
managers to lower levels of management. In the above figure, there is a short chain of command since there are only 
four levels of management shown. 
Now, if you look closely, there is a link between the span of control and chain of command. The wider the span of 
control the shorter the chain of command since more people will appear horizontally aligned on the chart than 
vertically. A short span of control often leads to long chain of command. (If you don’t understand, try visualizing it on an 
organizational chart). 
Advantages of a short chain of command (these are also the disadvantages of a long chain of command): 
• Communication is quicker and more accurate 
• Top managers are less remote from lower employees, so employees will be more motivated and top managers 
can always stay in touch with the employees 
• Spans of control will be wider, this means managers have more people to control This is beneficial because it will 
encourage them to delegate responsibility (give work to subordinates) and so the subordinates will be more 
motivated and feel trusted. However, there is the risk that managers may lose control over the tasks. 
  
Line Managers have authority over people directly below them in the organizational structure. Traditional 
marketing/operations/sales managers are good examples. 
Staff Managers are specialists who provide support, information and assistance to line managers. The IT department 
manager in most organizations act as staff managers. 
Management 
So, what role do manager really have in an organization? Here are their five primary roles: 
• Planning: setting aims and targets for the organizations/department to achieve. It will give the department and 
its employees a clear sense of purpose and direction. Managers should also plan for resources required to 
achieve these targets – the number of people required, the finance needed etc. 
• Organizing: managers should then organize the resources. This will include allocating responsibilities to 
employees, possibly delegating. 
• Coordinating: managers should ensure that each department is coordinating with one another to achieve the 
organization’s aims. This will involve effective communication between departments and managers and decision 
making. For example, the sales department will need to tell the operations dept. how much they should produce 
in order to reach the target sales level. The operations dept. will in turn tell the finance dept. how much money