Part II. Company structures (UK and US)

PART II. COMPANY STRUCTURES (UK and US)

One of the most important tasks for the management of any organisation employing more than a few people is to determine its organisational structure, and to change this when and where necessary.

UNIT 1

Study the following.

 

Most companies are made up of three groups of people: the shareholders (Am.: stockholders) who provide the capital, the management and the workforce. The management structure of a typical company is shown in the organisation chart below.

At the top of the company hierarchy is the Board of Directors (Am.: Executive Management), headed by the Chairperson (or President). The Board is responsible for making policy decisions and for determining the company’s strategy. It will usually appoint the Managing Director (or Chief Executive Officer) who has overall responsibility for the running of the business. People at the head of an organisation are senior executives or senior managers, top executives or top managers. Senior managers head the various departments or functions within a company, which may include the following:

Marketing	Personnel (or Human Resources)	Public Relations
Finance	Research and Development	Production

Middle managers are those in the hierarchy between senior management and front-line managers or line managers, the people managing employees. Middle managers are now often mentioned in the context of re-engineering, delayering, downsizing, or rightsizing: all these expressions describe the recent trend for companies to reduce the numbers of people they employ, often by getting rid of layers of managers from the middle of hierarchy.

An organisation that has undergone this process is lean and its hierarchy flat.

 

Language notes: Downsizing and delayering are also spelled with a hyphen.

 

All the directors are the board. They are legally responsible for the company. They meet in the boardroom. Executive directors on a board are high-level managers of the company. Non-executive directors are not managers of the company, they are outsiders, often directors of other companies who have particular knowledge of the industry or of particular area and may bring their knowledge and experience to several company boards.

The Marketing Director is the head of Marketing; the Human Resources Director is the head of Human Resources, etc. These people head their departments.

An executive, or informally an exec, is usually a manager at quite a high level (for example, a senior executive). But “executive” can be used in other contexts to suggest luxury, e.g. executive house, even for things that are not actually used by executives.

Managers and executives: UK

In the US the top position may be that of Chairman, Chairwoman or President. Again, the responsibilities of this post vary from company to company, and the post may be combined with another, usually with the position of Chief Executive Officer (CEO). Some companies have a Chief Operating Officer (COO) to take care of the day-to-day running of the company. The Financial Director may be called the Chief Financial Officer.

In the US, senior managers in charge of particular areas are often called Vice-Presidents (VPs) and may be on the board. One vice-president may have responsibility for running the company, or may not.

Managers and executives: US

 

President Chief Executive Officer or CEO Chief Operating Officer or COO	Non-executive directors
Chief Financial Officer or CFO Vice-President (VP) marketing Vice-President (VP) research	Senior Executives/ Top Executives/ Executive Directors

Study the following sentences paying attention to the words in italics.

The company is headed by the MD. At the head of the company is the Board of Directors. The company is run by the Board of Directors. The Board of Directors runs the company. The Finance Director reports to the MD. The Finance Director is accountable to the MD. The Finance Director is responsible to the MD. The Finance Director subordinates to the MD. The Finance Director is answerable to the MD. The Finance Director is under the MD. The MD is over the Finance Director. The Sales Director is supported by a Sales team. The Sales Director is assisted by a Sales Assistant. The Finance Department is responsible for accounting. The R&D Department takes care of new product development. The Administration Manager is in charge of personnel.

 

Study this organisation chart, and then complete the description of the organisation.

EXECUTIVE MANAGEMENT

The h _______ of the company is the President. He is also the Chief Executive Officer and a m ______ of the Board of Directors. U____ him there are four e _______ managers, responsible for research and d________, production, f ______, personnel and administration and m ________ and sales.

The company’s activities are d ______ into five business areas, h_____ by different d ______ managers. These managers r ______ directly to the Chief E ______ Officer.

Complete the sentences.

1. The Managing Director _________ to the Board.

2. The Managing Director ________ for running the company.

3. The Managing Director __________ by four executive departments.

4. _________ the Managing Director there are five regional divisions.

5. Each Regional Manager _________ of a territory.

6. The five regions _________ by two other sections – Marketing and Technical Services.

7. The Section Leaders __________ the Regional Managers.

8. The subsidiaries _________ to the Export Sales Department.

9. The Export Sales Department _________ to the Board.

 

Complete the organisation chart from the information provided. Two examples have been done for you. (Note that there are various ways of constructing an organisation chart. This is one of the most usual.)

The Managing Director (sometimes called the Chief Executive or President in the USA) is the head of the company.

The company is run by the Board of Directors; each Director is in charge of a department. However, the Chairman of the Board is in overall control and may not be the head of any one department.

Most companies have Finance, Sales, Marketing (sometimes part of Sales), Production, Research and Development (R&D) and Personnel Departments. These are the most common departments, but some companies have others as well.

Most departments have the Manager who is in charge of its day-to-day running and who reports to the Director; the Director is responsible for strategic planning and for making decisions.

Various personnel in each department report to the Manager. One example, present in almost all companies, is the Sales Representative who reports to the Sales Manager.

 

Translate into English.

1. Членами совета (директоров) являются директора, несущие юридическую ответственность за деятельность всей компании.

2. Торговый представитель подчиняется менеджеру по продажам.

3. Начальник отдела кадров занимается вопросами, связанными с персоналом.

4. Наверху иерархической структуры компании находится совет директоров.

5. Управляющие среднего звена в иерархической структуре компании занимают место между управляющими высшего звена и линейными управляющими.

6. В последнее время наметилась тенденция сокращать количество работников и в первую очередь избавляться от управляющих среднего звена.

7. Г-н Роджерс – начальник отдела по связям с общественностью, он занимается имиджем компании.

8. В обязанности совета директоров входит принятие решений и определение стратегии компании.

9. Управляющий отделом внутренних продаж отвечает за действия всей команды.

10. Директор по научным исследованиям и разработкам управляет очень важным отделением компании.

11. Стив недавно был назначен заместителем коммерческого директора.

12. Директор по персоналу набирает новых сотрудников и занимается вопросами, связанными с выходом на пенсию.

 

UNIT 2

Study the following.

The Board of Directors

The board of directors of a limited company is primarily responsible for determining the objectives and policies of a business. It is the directors who determine the direction the business is going to take. They will need to ensure that the necessary funds are available and will appoint key staff to whom they will delegate the authority to run the business on a day-to-day basis. They will need to design an effective organisation structure so that there is both a chain of command linking one level of management with another and an effective communication network so that instructions can be passed downward and information passed upward.

The directors are appointed by the shareholders, normally at the company’s annual general meeting (AGM), at which the chairman of the board will be expected to account for their stewardship during the previous year. The company’s accounts will be presented to the shareholders at that time so that they can judge for themselves whether or not the board has been successful.

Direction in business is like strategy in a war situation. The strategic decisions determine the areas in which the company’s resources will be employed. Above all it involves planning to ensure that the business first survives and then flourishes. Strategic decisions, made by the board of directors, are concerned with the disposition of resources. These contrast with the tactical decisions by means of which the senior executives (appointed by the directors) carry out in detail the plans conceived or approved by the board of directors.

The fact that the boards of directors tend to meet rather infrequently, say once a week, means that part-time directors can be elected to the board. Since they will not have departmental responsibilities within the company they are often described as non-executive directors. There are arguments in favour of such directors though they may lack a detailed knowledge of the company’s activities. They may bring expertise to the board. Some are lawyers, or experts in tax affairs. Some represent influential groups of shareholders whose support is necessary if the board is going to carry out its plans, while others are directors in a number of companies and are used to interlock boards within a group of companies. For example, a holding (or parent) company may appoint a director from their board to serve on the board of a subsidiary company, with a view to keeping a watching brief on the director’s activities.

 

2. Having read the above passage, answer the following questions in your own words.

 

1. How would you describe the role of the board of directors?

2. And the role of the senior executives?

3. What happens at the annual general meeting?

4. What is the difference between a strategic and a tactical decision?

5. What part can non-executive directors play in the proceeding?

6. What objections might be raised against the appointment of non-executive directors?

7. What is meant by an interlocking board of directors?

8. How is it that a board of directors can control a company though they only meet, say, once a week?

 

Executive Directors

 

A modern ___________ enterprise is often a complex system ____________ a lot of capital, which is provided by the __________ when they buy _________ in the company. Since they have provided the __________, it is appropriate that they choose the people who are to run the company for them, namely the ___________. Many of the directors also have _________ responsibilities. Thus, a marketing director might be a full director in the board, appointed by the _________ at the _________ general meeting like the other directors. Yet he might also be _________ for the day-to-day management of the _________ department. Most of his time will be spent on administrative ___________, organising marketing research, ___________ with advertising and generally ensuring that the company’s sales are maximised. But he will __________ as a director when the _________ of directors meets. The post of managing _________ also combines the roles of chief _________ with membership of the board and this allows him to act as a vital link between the board of directors and their appointed management ________. The managing director is often also the _________ of the board of directors.

Executive directors have the advantage that they are actively involved with the ________ affairs. If the board of directors wish to ________ in a certain direction the executive _________ will know whether such a course of ________ is practicable. For __________, the board might wish to sell their products in a particular overseas__________. The market would be __________ for the company, but the marketing director knows that his team of __________ lack the experience to take the _________ of the situation. Or perhaps the board would like to increase the advertising __________ during the coming year but the financial director knows that the company will have to __________ some heavy commitments during the coming months and it would be better to delay the _________.

Perhaps the best board is one which contains a mixture of executive and __________ directors. In this way the board has the benefit of some directors who know the practical problems faced by the business, while others will bring their own brand of expertise to the boardroom discussions.

 

marketing shares company’s market chairman board of directors

director directors business shareholders salespeople dealing executive executive

matters action team meet function public

profitable expenditure capital non-executive advantage move

campaign responsible requiring example board annual

Translate into English.

1. Направление движения бизнеса подобно стратегии на войне.

2. В совет могут избираться директора, также работающие (по совместительству) в других фирмах.

3. Решения могут быть стратегическими и тактическими.

4. Заседания совета директоров проводятся не очень часто, один раз в неделю.

5. Обычно на ежегодном собрании акционеров председатель совета директоров делает отчет о проделанной работе.

6. Акционеры назначают совет директоров, а те, в свою очередь, назначают управляющих, которым они передают полномочия по управлению бизнесом.

7. Стратегические решения определяют области, в которых будут использоваться ресурсы компании.

8. Исполнительные директора имеют преимущество: они знают внутренние дела компании.

9. Возможно, наилучший совет директоров тот, в котором присутствуют как исполнительные, так и неисполнительные директора.

10. Стратегические решения связаны с размещением ресурсов.

11. Финансовый директор может быть полноправным членом совета директоров и одновременно возглавлять отдел финансов.

12. Известно, что рабочей группе не хватает опыта, чтобы извлечь выгоду из ситуации.

13. Неисполнительный директор – это обычно «человек со стороны», не имеющий какого-либо отдела в своем подчинении.

14. Он приносит в компанию ценные знания и опыт в определенной отрасли промышленности.

15. Человек, занимающий эту должность, не имеет властных полномочий.

16. Все работники в такой организации знают, кто их непосредственный начальник, какие решения они могут принимать, за что они отвечают и кто находится у них в подчинении.

17. Менеджер на предприятии, работающем в рыночных условиях, всегда является ответственным за персонал, и чем меньше предприятие, тем выше его ответственность.

Translate into English.

Руководитель – это человек, наделенный полномочиями принимать решения: что делать, как делать. Он несет за это ответственность. Руководитель обладает реальной властью, непосредственно воздействует на персонал управления, а через него – на характер и результаты функционирования всей компании. Умелый руководитель четко формулирует задачи коллектива, ясно понимает свою роль в их решении, способен задействовать внутренние стимулы к самостоятельным действиям и предвидеть возможные трудности, предупреждать неудачи и находить наилучшие решения в каждой конкретной ситуации.

На руководителей возлагаются разнообразные задачи, диктуемые конкретными условиями производственной деятельности, уровнем их подготовки. Однако всем им приходится выполнять некоторые общие функции, свойственные статусу руководителя, к которым относятся административные, организационные, профессиональные, воспитательные и общественные обязанности.

UNIT 3

Study the following.

People working for a company are referred to as its workforce, employees, staff, or personnel and are on its payroll.

In some contexts, especially more conservative ones, employees and workforce refer to those working on the shopfloor of a factory actually making things. Similarly, staff is sometimes used to refer only to managers and office-based workers.

This traditional division is also found in the expressions white-collar and blue-collar.

White-collar workers often work in offices, banks etc., they work in management or administration.

Blue-collar workers often work with their hands, for example on the production line in a factory.

Another traditional division is that between management and labour.

Language notes: Shopfloorandworkforce are also spelled with hyphens and as two words. White-collarandblue-collar are also spelled as two words. In American English they may be spelled as one word. Labour is spelled labor in American English.

Organisational structure

The need for a solid structure within all business entities is absolutely fundamental. Organisational structure concerns who reports to whom in the company and how different elements are grouped together. A new company cannot go forward without this and established companies must ensure their structure reflects their target markets, goals and available technology.

Depending on their size and needs there are several organisational structures companies can choose from. In the constantly evolving business environment, many firms are opting for a kind of hybrid of all of them.

In most organisations there is a clear line or chain of command running down the pyramid. This is called a hierarchical or pyramidal structure. All the people in the organisation know what decisions they are able to make, who their superior is and who their immediate subordinates are. The main benefit of this system is clear lines of communication from top to bottom but it is generally accepted that it can also be a bureaucratic set up which does not favour speedy decision-making.

Some people have assistants to help them. For example, an Assistant to the Sales Manager. This is a staff position. Its holder has no line authority and is not integrated into the chain of command, unlike, for example, the Assistant Sales Manager, who is number two in the Sales Department.

But the activities of many companies are too complicated to be organised in a single hierarchy. Today most large manufacturing organisations have a functional structure including production, finance, marketing and sales, personnel, and other departments. This means that the production and sales departments can not take financial decisions without consulting the finance department. Functional organisation is efficient but people are usually more concerned with the success of their department than that of the company, so there are permanent battles between departments which have incompatible goals. Also, separating functions is unlikely to encourage innovation.

More and more companies are organising themselves along product lines where companies have separate divisions according to the product that is being worked on.

An inherent problem of hierarchies is that people at lower levels are unable to make important decisions, but have to pass on responsibility to their boss. One solution to this is matrix management in which people report to more than one superior. For example, a product manager with an idea might be able to deal directly with managers responsible for a certain market segment and the managers responsible for finance, sales and production. Essentially the matrix structure organises a business into project teams, led by project leaders, to carry out certain objectives. Training is vitally important here in order to avoid conflicts between the various members of the teams. This is one way of keeping authority at lower levels but it is not necessarily a very efficient one. A further possibility is to have wholly autonomous, temporary teams that are responsible for the entire project and split up as soon as it is successfully completed. But teams are not very good for decision-making and they still require a definite leader, on whom their success probably depends.

Select the correct words.

 

1. A line / staff manager works directly on the production of goods or the provision of services.

2. A line / staff manager gives support to the managers who produce the goods or provide the services.

3. White collar / blue collar workers work in the factory.

4. White collar / blue collar workers work in the office.

There are 8 layers or levels in the organisation chart of this company. The company has four white-collar grades and four blue-collar grades. Write the names of all grades in the list, from the top (1) to the bottom (8).

 

clerical grades	semi-skilled grades	supervisory grades
junior management	senior management	unskilled grades
middle management	skilled grades

 

White-collar grades
Blue-collar grades

 

Translate into English.

 

Компания имеет весьма сложную структуру: ее отделения разбросаны по всей территории Российской Федерации, а офис находится в Москве. В условиях становления рыночных отношений происходит медленный переход от иерархического управления с жесткой системой администрирования к отношениям, основанным на экономических методах. В организационной структуре некоторые подразделения автономны при принятии решений, а некоторые всецело подчиняются руководству. Существует так же другая возможность – это использовать независимую команду, образованную на временной основе, которая отвечает за весь проект целиком.

REVISION

1. The organisation chart. This is a public limited company. Its shares are quoted on the London Stock Exchange. The chart below shows the lines of communication and command between the company’s senior officials. After studying the chart you are required to answer the following questions.

 

1. From whom do the Marketing Director, the Production Manager, the Personnel Manager and the Financial Director (in other words the Departmental Heads) take their orders?

2. From whom do the Line Managers and the Chief Engineer take orders?

3. If the Managing Director or the Production Manager had a meeting, what do you think they might discuss?

4. How many executive directors are there in the company?

5. If the Computing Manager was sending information to the Managing Director should he send it through the Financial Director? Why?

6. How many immediate subordinates does each of the Departmental Heads have?

7. In what circumstances do you think the Marketing Director and the Production Manager might have conflicting interests?

8. Would you expect the Chief Engineer to be paid more or less than the Production Manager? Why?

9. What sort of work would you expect the Wages Officer to do?

10. If there was a dispute between one of the line managers and the Chief Engineer how would you expect it to be settled?

11. If there was a dispute between the Marketing Director and the Financial Director how would you expect it to be settled?

 

Answer the questions.

1. What kind of organisation do you want to work for?

2. In which department?

3. Do you think it will later be possible to change departments?

4. What do you think your first position will be?

5. Do you expect to have one immediate boss, to work for more than one superior, or to be a part of a team?

 

If you worked:

1. What is your function or job title?

2. What are you responsible for?

3. Who do you report to?

4. Is anybody responsible to you?

5. What other units, departments or divisions do you regularly have to work with?

6. What other departments do you occasionally have conflicts with?

 

Think and answer.

 

The functional organisational structure has clear lines of communication. In contrast, where things are organised along product lines or with a matrix structure, people often report to two people at the same time – their boss in the functional structure and their manager or team leader in the other structure. What, if any, problems could you imagine in the second case?

Complementary text.

 

A company with only a few levels has a flat organisation. A company with a lot of levels is often very hierarchical because decisions have to travel through several layers.

During the 1980s a wave of restructuring went through industry around the globe. This process, known as delayering, saw a change in the traditional hierarchical structures with layers of middle management being removed. This development was driven by new technology and by the need to reduce costs. The overall result was organisations that were less bureaucratic.

The delayering process has run its course now. Among the trends that currently influence how a company organises itself is the move towards centralisation and outsourcing. Restructuring has evolved along with a more “customercentric” approach that can be seen to good effect in the banks. They now categorise their customers and their complex borrowing needs into groups instead of along rigid product lines.

Another development can be seen in larger companies, which are giving their employees more freedom to innovate in order to maintain a competitive edge. In many companies and organisations, employees do only what they expect to do, and what they are expected to do, within their level of hierarchy. However, there are now a number of organisations around the world that have adopted different management styles in order to “empower” their employees. This means that they encourage individuals to use their own initiative and to play an active role in the success of the organisation.

The leading software company Microsoft has a very flat organisational structure. There would not be more than around seven levels between the average software tester and Bill Gates.

Microsoft is a good example of a company that is structured along product lines. In Ireland, where 1,000 employees work on localisation of the software for all Microsoft’s markets, the company is split up into seven business units. Each unit controls the localisation of their specific products while working closely with the designers in Microsoft’s Seattle Headquarters.

It works because everyone who works in the unit is “incredibly empowered”. Without a huge, bureaucratic infrastructure people can react a lot more quickly to any challenges and work towards the company’s objectives.

 

Answer the questions.

 

1. What main kinds of organisational structure do you know?

2. List them and define each of them.

3. Is one kind of organisational structure more common than the others?

4. Do the companies use just one kind? Give your reasons.

5. What is delayering?

6. When did “delayering” take place?

7. What were the reasons to use delayering and what were the results?

8. How is Microsoft’s organisational structure described?

Give the definitions of.

Middle manager Top executive Human Resources Director Flat Exec Chief Financial Officer Line manager Financial Controller Foreman Division

Customer services Staff Shopfloor Blue-collar Executive Director Non-executive Director Board of Directors Strategic decision Department Managing Director

Case study.

 

Either use your own company’s organisational structure (of management), or choose from any known companies, and give a presentation of it to your classmates.

 

PART II. COMPANY STRUCTURES (UK and US)