Definitions Fixed Cost­ a cost which does not change as a result of a change in output in the short run
Average Cost/Unit Cost­ the cost of producing one unit, calculated by dividing the total cost by output Indirect Cost/ Overhead Cost­ a cost which cannot be identified with a particular unit of output
(It is incurred by the whole organization or department)
Marginal Cost­ the cost of increasing output by 1 more unit
Variable Cost­ a cost which rises as output rises
Formal Organization­ relationship between employees and the organizational structure determined by the business, as shown in an organization chart
Hierarchy­ the order or levels of management of a business, from the lowest to the highest
Delegation­authority (and sometimes responsibility) to pass down from superior to subordinate
Span of Control­ the number of subordinates working under a superior
Hawthorne Effect­ the idea that workers are motivated by recognition given to them as a group
Hygiene Factors­ those things that can lead to workers being dissatisfied
Self­actualization­ a level of Maslow’s hierarchy where an employee realizes his or her full potential MBO (Management by Objective): a management theory which suggest that managers set goals and communicate them to subordinates
Human Resources: the personnel within a business or an organization
Job Analysis: a study of what the job entails, such as the skills, tasks and performance expected
Motivation: desire to do something and the reasoning behind doing something
Commission: payment made, typically for achieving a target such as a sales target
Piece Rate: payment system where employees are paid an agreed rate for every item produced
Time Rate: rate of pay based on an amount of time, usually per hour
Autocratic Leadership: manager sets objectives, allocates tasks, and insists on obedience
Democratic Leadership: encourages participation. 2 forms: Persuasive and Consultative
Paternalistic Leadership: leaders make all the decisions and expect subordinates to make these decisions Laisse­Faire Leadership: employees carry out activities freely within broad limits
Job Evaluation: systematic way of determining the value/worth of a job
Severance Pay: amount payable to an employee on termination of a contract
Vicarious Liability: when employees are liable for the wrongful actions of their employees
Channel of Communication: route by which a message is communicated from sender to sender

Communication Networks:
1. The Circle: Departments can