Flexible Organisations (AQA A Level Business): Revision Note

The value of flexible organisations

• A flexible organisation is one that can quickly change its structure, processes or resources in response to new challenges, such as shifting customer tastes, emerging technologies or unexpected events

Why is flexibility valuable?

• Ultimately, flexibility will help to increase sales revenue or decrease costs

• Several benefits of being a flexible business include:

1. Rapid adaptation to change

   • When markets or customer needs change suddenly, a flexible firm can alter its products, prices or distribution channels without long delays, helping it stay competitive

2. Efficient use of resources

   • Flexibility lets a business move staff, equipment or budgets to its busiest areas, so it avoids waste and makes the most of its available assets

3. Boosts innovation

   • By encouraging teams to experiment and adjust how they work, flexible organisations create space for creative ideas and continuous improvement

4. Stronger resilience

   • If there’s a supply chain disruption, new regulations or a sudden cost rise, a flexible company can reconfigure operations fast, reducing downtime and protecting profits

The flexibility to restructure

• Restructuring is when a business makes significant changes to its organisation, operations or finance

• It is intended to improve efficiency, cut costs or adapt to new circumstances

• Restructuring might involve

  • Redrawing the organisational structure

    • Merging or splitting departments, redefining reporting lines and changing management roles

  • Divesting or combining business activities

    • Selling off non-core divisions or bringing separate activities under one roof

  • Outsourcing or insourcing functions

    • Shifting activities (e.g. payroll, IT or customer service) either to specialist external providers or back in-house

  • Financial reorganisation

    • Refinancing debt, renegotiating loans or altering the business's capital structure to reduce interest costs or improve cash flow

  • Workforce changes

    • Offering voluntary redundancies, making compulsory layoffs or redeploying staff to new roles

Advantages and disadvantages of restructuring

The flexibility to delayer

• Delayering is the process of removing one or more tiers of management from an organisation’s hierarchy to create a flatter structure

Tall organisational structure	Flat organisational structure

• It usually means cutting out middle management levels and expanding the number of workers reporting directly to each remaining manager

Evaluating delayering

Flexible employment contracts

• Flexible working is the development of a culture where workers are equipped to do different roles or where they work in a range of employment patterns (full-time, part-time, zero hours contracts, work from home, etc)
   

• Developing a flexible workforce can bring many benefits to a business

  • Each specific approach should be assessed, as there are potential disadvantages to each

Ways to develop a flexible workforce

1. Multi-skilling

• Multi-skilling is the process of training workers to fulfil multiple job roles within a business

  • E.g. South West Airlines trains staff to handle multiple roles including check-in, baggage handling and customer service

Evaluating multi-skilling

2. Part-time and temporary working

• Someone who works part-time may only work two or three days a week

• Someone who works temporarily shows up for work whenever the business needs them

  • E.g. Amazon employs temporary workers to handle seasonal spikes in demand such as Christmas

Evaluating part-time and temporary working

3. Outsourcing

• Apple outsources much of its manufacturing to Foxconn in China

  • This allows the company to produce products at a lower cost and maintain competitive pricing

Evaluating outsourcing

4. Flexible hours

• Flexible hours allow employees to schedule working hours around their individual needs and accommodate their commitments outside of work

• A flexible hours schedule usually involves working some set hours, with the remainder of hours organised according to the employees' needs

  • E.g. An employee may be expected to be at work between the hours of 10am and 2pm, but can choose when they complete the rest of their working hours

5. Home working

• Advances in communication technology have enabled a larger proportion of workers than ever before to work from home

  • Employees use tools such as email, instant messaging, collaborative software, scheduling apps and videoconferencing to carry out work remotely

• Home working has a range of advantages and disadvantages for both the business and its employees

Evaluating homeworking

Organic versus mechanistic structures

1. Mechanistic structures

• A mechanistic structure is a rigid, hierarchical design where decision-making is centralised, roles are clearly defined and communication follows formal channels

  • Everyone knows exactly who reports to whom and what procedures to follow

  • E.g. McDonalds staff follow standardised routines, managers make decisions centrally, and every restaurant follows the same strict operating manual

Evaluating mechanistic structures

2. Organic structures

• An organic structure is flexible and adaptive, with decentralised decision-making, few formal rules and open communication

  • Teams form and reform around tasks, and employees often take on broad, collaborative roles

  • E.g. Google’s engineers choose which projects to join, ideas flow between departments informally and decisions often happen at team level rather at the top of the business

Evaluating organic structures

Knowledge and information management support organisational flexibility

1. Faster decision-making

   • Access to real-time data helps staff make quick, informed decisions—essential in flat, decentralised structures

2. Better collaboration

   • Shared systems enable teams across departments to work together smoothly in project-based or matrix structures

3. Protects organisational memory

   • Captures key knowledge when roles change or layers are removed during restructuring or delayering

4. Supports Flexible Working

   • Cloud-based systems allow remote teams to access and update information securely, anytime

5. Encourages Innovation

   • Shared ideas, learnings and feedback loops help build a culture of continuous improvement