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Organisational structures
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An organisational structure shows who is in charge of whom and how decisions flow through a business.
Key terms
Hierarchy: the levels of management.
Chain of command: the line of authority from the top to the bottom.
Span of control: the number of people who report directly to one manager.
Delegation: passing authority to do a task down to someone lower in the hierarchy.
Chain of command: the line of authority from the top to the bottom.
Span of control: the number of people who report directly to one manager.
Delegation: passing authority to do a task down to someone lower in the hierarchy.
Tall and flat
Centralised and decentralised
Centralised: important decisions are made at the top (head office). Consistent, but slow and less responsive to local needs.
Decentralised: decisions are delegated to branches or lower levels. Faster and suits local needs, and motivates staff, but less consistent.
Decentralised: decisions are delegated to branches or lower levels. Faster and suits local needs, and motivates staff, but less consistent.
A manager has 12 staff reporting directly to her. What is her span of control?
- Span of control = number of direct reports.
Answer: 12
Hierarchical structures have many levels, narrow spans and long chains; flat structures have few levels and wide spans. Centralised: decisions at the top. Decentralised: decisions delegated down.
The interactive lesson includes the diagrams for this topic.
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