Business Studies – Organisational Structure
Evaluate the consequences for Poppies if de-layering is allowed to take place (16 Marks)
De-layering is the process of removing levels from within a business. The primary reason for doing this is to reduce costs, however there can be many consequences if de-layering takes place.
Some positives could be that in the long term removing a layer from a business should lead to reduced costs. The reason for this is that you will no longer have that layer of your business on your payroll meaning you will not need to pay them a wage any more. The flip side of this is that in the short term you may need to pay the workers of the layer you removed a redundancy pay.
Removing a layer of a business can also be seen as a method of making your business smaller. This is the opposite of what Tim wanted to do with his plans for expansion. Conversely, de-layering may lead to Tim needing to hire new staff for new job purposes. This would be expansion and would also give Tim the chance to hire “enough staff of the right quality”, something he was previously worried about. However as I have said, de-layering should in the long term reduce costs and so increase chances of finance towards expansion.
Another effect of de-layering is that it increases the decision making process and decreases the channels of communication. This means that as there are less people to go through and thusly less people to confirm what needs to happen with. Because of this efficiency should be improved within the business when orders are given.
The negative aspects must also be considered. Arguably one of these is that employees would be given more responsibility and more authority, something that Tim specifically wanted to avoid as he was “Not prepared to let the good name of the business be threatened by managers doing their own thing.”, though this point is arguable as if the managers were allowed to make their own decisions then they would feel more motivated and this would also likely lead to higher efficiency.
De-layering also increases the span of control on other levels. This is not necessarily a bad thing in some cases but on some levels of the business the optimum span of control of 4 – 5 may be lost.
Also if a layer of the business is removed, you must consider the impact...