Organisational structures

18.11.2020
What is an
organisational structure?
It identifies specific job roles in the organisational hierarchy and
indicates who reports into whom and who is responsible for which
particular staff members.

The organisational structure therefore identifies the relationship

between different employees, departments and locations.
Why does a business need an organisational
structure?
In pairs, make a list of all the reasons/benefits of an organisational
structure.

Reasons:
1. As a business grows, it will need a formal organisational structure to

ensure that it runs as efficiently as possible.

2. The organisational structure will make it clear of the direct

reporting lines found within the business and identify specific job
roles.
3. This will ensure that all staff have clear responsibilities and

therefore can operate as productively as possible.

How do we present an organisational
structure? Organisational chart
This shows the management
hierarchy in a business and
works from top to bottom.
Roles are identified and lines of
management and responsibility
are clearly shown.

Task: Explain the responsibilities and

job roles within his chart.
Tip: Look at the title, think about who
they are responsible for.
•
In this example, the Managing Director is
at the top of the organisational structure
and he/she has four people reporting
directly to him i.e. the different directors.
The Finance Director has the Finance
Supervisors reporting into him directly.
The Accounts Assistants then report
directly into the Finance Supervisors.
 Different job roles –
Managing Director/CEO

The Managing Director or CEO is the highest ranking person in an

organisation and has ultimate authority within the business.

In a plc, the CEO/MD will be voted into position by the shareholders at the
AGM.
Different job roles –
Directors
Below the CEO/MD in the hierarchy, there will
be several directors. In a large company, a
director will be in charge of a department of
functional area, for example the Finance
Director.

Collectively, directors will form the Board of

Directors who manage the company at a
strategic level.
Different job roles –
Directors In a large organisation, there may be
several levels of management in the
hierarchy. Senior managers will
directly report into the Directors.

Managers will be responsible for a

significant part of the business
operation and will be in charge of the
performance of a number of
employees.
Different job roles –
Team Leaders/Supervisors
In a large business, teams of workers will
often have one person who is more senior
than them, who will, in turn, report into a
manager.

As well as working as part of the team, a

team leader will have some
responsibilities in making sure that the
team operates effectively.
Different job roles –
Operatives/Shop floor workers
Operatives or shop floor
workers carry out basic tasks
that keep the business running
smoothly.

Examples include working on

a production line, re-stocking
shelves in a retail store or
completing basic duties in an
office, such as photocopying
or filing.
 Different job roles –
Support staff
Alongside the operational hierarchy of
the business, there may be some
employees whose role is to provide
assistance to any area of the
organisation.

They generally have specialist knowledge

or skills. IT support staff are a good
example, but this may include less
specialist roles, such as cleaning, catering
and caretaking staff.
Let’s assess your knowledge
Identify the job role which will be responsible for each of the following:

Responsibility Which job role?

In charge of basic duties, such as working on the sales floor in a shop or
performing tasks on a production line
Establishes the long-term vision of the organisation and sets the
business’s overall aims
In charge of simple decisions, such as staff rotas and allocating tasks to
different employees, for example which area of a supermarket to
replenish stock

Sets the long-term goals for a specific functional area to ensure that they
are aligned with the overall vision of the business
Accountable for meeting the short and long term targets in a specific
area of business; decides how best to allocate resources and
on the workload in their specific team
Responsibility Which job role?

In charge of basic duties, such as working on the sales floor in a shop or SHOP FLOOR
performing tasks on a production line WORKER/OPERATIVE

Establishes the long-term vision of the organisation and sets the business’s CEO/MD
overall aims

In charge of simple decisions, such as staff rotas and allocating tasks to TEAM LEADER
different employees, for example which area of a supermarket to replenish
stock

Sets the long-term goals for a specific functional area to ensure that they are DIRECTORS
aligned with the overall vision of the business

Accountable for meeting the short and long term targets in a specific area of MANAGERS
business; decides how best to allocate resources and
on the workload in their specific team
Final plenary:

Discuss one benefit of an organisational structure.

Span of control

One of the features of an organisation chart is it shows the span of control.

Span of control is the number of employees for whom a manager is directly
responsible. The two diagrams below illustrate two different spans of control
Is there an ideal span of control?

•
Experts say that a span of control should be no more than 6 people. However, the
exact number in an organisation will depend on a number of factors:

•
The experience and personality of the manager
•
The type of business - if being a line manager requires a great deal of close
supervision, then a narrow span might be appropriate
•
The skills and attitudes of the employees – if employees are highly motivated,
highly skilled and highly qualified, then adopting wider spans of control could be
more suitable
 Chain of command
The chain of command in an organisation chart, shows
the lines of authority within the business upon which
communication passes.

In this example, Sam is responsible for Eve, Chris and

Brenda. Further down the chain, Brenda is responsible
for Sharon and Dawn. This means that Sam would
directly communicate with his three subordinates.
Brenda would then pass on any relevant messages to her Task:
team, as she would be their line manager.
1) Define and explain

Any issues that Sharon and Dawn may have should be directly communicated to Brenda, the term
rather than these two members of staff communicating with Eve, Chris or even missing a
layer and going directly to Sam. If Sharon or Dawn, had a particular concern regarding
subordinate
Brenda however, they could directly communicate with Sam, as he is ultimately in 2) Explain the role of
charge of everybody.
a line manager
 Delegation
Definition: Delegation is the
passing down of authority to
more junior employees.

Why might a business pass down •

As a business grows, there are more decisions that
authority to junior employees need to be made.
within a business?
•
Some decisions may require a specialist.
The subordinate employee is given permission
or authority to do the job that has been
•
Lack of time to make decisions due to the size of the
business.
delegated, but does not take responsibility for
the work.

Responsibility remains with the manager who

delegated the job.
 Delegation
Sometimes a manager or senior employee
might choose to give some of their workload
to another less senior employee. This is
known as delegation and normally takes
place down the chain of command.

The subordinate employee is given

permission or authority to do the job that has
been delegated, but does not take
responsibility for the work.

Responsibility remains with the manager

who delegated the job.
 Pro Con
Narrow or wide span of control
Less mistakes and increased efficiency, as staff are closely
supervised
Possibility of an increased workload, as less managers exist
within the organisation
Less layers of management can motivate employees, as they
have more contact with senior staff
More promotional opportunities can exist within the
organisation
Communication may become difficult, due to lots of layers of
management for messages to pass through
Number of managers can be reduced, lowering labour costs
Tall and flat organisational structures:

There are various ways of arranging

the business organisational structure.
These are often summarised as:

Tall: the organisational structure has

many layers, long chains of command
and narrow spans of control

Flat: the organisational structure has

few layers, short chains of command
and wide spans of control
 What is delayering?
When a business grows, it becomes more difficult to control, coordinate and organise.
Therefore in some cases it might be necessary to add in additional managerial positions
into the hierarchy, creating another layer in the organisation.

In reverse if a business is decreasing in size or aiming just to reduce costs, it may well
decide to take out a layer of management. This process is known as delayering.
 Benefits of delayering within an organisation:
þ
It may help to improve communication within the business
þ
Decision making should be quicker/the business should be
more flexible
þ
Reduced wage costs, as less staff employed
ý
It will reduce promotion opportunities, as a layer of
management has now been removed
ý
Employee motivation levels may fall, as staff will be expected
to take on more responsibility with possibly no extra pay
ý
The business may incur additional costs to train staff in their
new role
•
Tall
•
Flat
•
Passing of authority to others is commonplace
•
Wide spans of control exist
•
Short chain of command
•
Junior managers have very little involvement in decision making
•
Democratic managers prefer this type of organisational structure
•
Less chance of workers making the wrong decisions