OCR National Level 2 Award in Business

Miss Nation
September 2010

ORGANISATIONAL STRUCTURES
LEARNING OBJECTIVES

By the end of this lesson you should be able to:

1. Discuss what is meant by an organisation chart
2. Discuss how organisation charts are used by
businesses
3. Analyse an organisation chart using key
terminology
ORGANISATIONAL STRUCTURE
 Organisational structure or hierarchy illustrates how employees
are organised and managed within a business.
 They show how responsibilities within an organisation are
divided up between different departments and people within
those departments.
 It will show:
 Levels of authority
 Chain of command
 Span of control
 Layers in the hierarchy
 How responsibilities are divided
TYPICAL ORGANISATION STRUCTURE

Managing
Director

Human
Finance Marketing Production
Resources
Director Director Director
Director

Finance Sales HR Production

Manager Manager Manager Manager

Accounts Area Sales HR Shop-floor

Dept Teams Assistants x 3 Supervisors x 6
UNDERSTANDING ORGANISATION
CHARTS
 Departments are usually organised by
FUNCTION.

 This means that each department has a specific

job to do.
 For example, the Personnel Department would
be responsible for ensuring there are enough
staff and that the staff are trained to do the job.
UNDERSTANDING ORGANISATION
CHARTS
 The organisation is also a HIERARCHY – it
has several LAYERS.
 People in the higher layers have more
responsibility and authority than those below.
MANAGEMENT

 There is a CHAIN OF COMMAND with those

at the top sending instructions to those below.

 The lines in the organisation chart show who

managers are responsible for.

 The number of people that a manager is

responsible for is known as their SPAN OF
CONTROL.
FORMAL AND INFORMAL GROUPS
 Organisation charts show the departments that
people work in and their line managers

 They do not show informal or friendship groups.

ALTERNATIVE ORGANISATIONAL
STRUCTURES
TALL VS. FLAT HIERARCHIES

FLAT HIERARCHY

TALL
HIERARCHY
MATRIX STRUCTURE
This structure emphasises the importance of getting people to
work together in cross functional teams.
MATRIX STRUCTURE
 Individuals from different departments will
work together on a project in a team.

 Individuals within the team have their own

responsibilities and have to do the job they
would have done in functional organisation.
MATRIX STRUCTURE
Advantages
 Thought to encourage creativity
 Individual workers will have
greater understanding of the
challenges faced by different
departments
 Individuals will have more
opportunity for responsibility as
they could be the only person
with their skills in the team
 Flexibility as workers get used
to working in different teams
Disadvantages
 Often requires extensive support
such as clerical and secretarial
staff to ensure adequate
communication between team
members and with the
organisation management
 May make individuals feel
insecure and isolated
KEY TERMS
 Organisation structure - is the way in which a business is organised.
 Span of control – the number of people a manager has direct
responsibility for.
 Chain of command – the way authority and power are passed down
a business. This will often serve as a useful guide to the channels of
communication also.
 Layers or levels – number of layers of management in an
organisation, or how many different levels of management position
there are.
 Delayering – the process of removing layers of management through
making the people in these positions redundant.
 Delegation – passing the responsibility and authority for completing
a task to subordinate.
 Empowerment – same as enrichment, giving workers more
responsibility for the work that they do.
LO1 & LO2 – YOUR TASK
 Using the blue OCR Business Studies books
complete the worksheet

 You will need to be able to apply this theory to

PGL so try and include as much detail as possible
LO3 – PGL’S ORGANISATION CHART
 Look at the organisation chart for PGL
 Can you see any similarities between their
organisation chart and the school?
 How many layers are there?
 What is the span of control of the operations
director?
 What is the chain of command from the Groupies
to the MD?