Organisation Charts (OCR GCSE Business)

An Introduction to Organisation Charts

• An organisational structure is visually represented in an organisation chart

• These charts show who is responsible for whom and how these responsibilities are shared across a business

Diagram explanation

• This example shows a hierarchy with six layers

  • The Board of Directors and Managing Director have the most authority

  • The chain of command runs from those at the top of this business to the operatives, administrators and quality checkers at the most junior level

• A manager oversees each of the the four functional areas

  • Subordinates of each manager are easily identified and the span of control of each manager can be seen

    • E.g. The Operations Manager has a span of control of three subordinates, while the Production Manager has a span of control of six operatives

Authority and Subordinates

• Authority refers to the power an individual has to make and implement business decisions

  • Managers have authority to make and implement decisions within their remit

  • They also have the authority to direct others to carry out instructions

    • E.g. In the above example, the Marketing Manager has authority over three sales representatives

• Subordinates are workers for whom those in authority are responsible

  • Subordinates are on a lower level of the hierarchy than their line managers

  • They implement their managers' decisions

  • They carry out tasks as directed

    • E.g. The three Quality Checkers are subordinate to the Quality Supervisor

Delegation

• Delegation is where a manager gives authority to another person to carry out specific activities

• In the above example, there are some indications that managers delegate responsibility for some tasks to subordinates

  • E.g. The Purchasing Manager delegated control of stock management to the Stock Administrator

• Delegation requires managers to have trust in their subordinates

  • Subordinates must also possess appropriate skills, confidence and experience to make and implement decisions

• Delegation is particularly important in businesses with a flat organisational structure where managers have wide spans of control

Benefits of Organisation Charts

• There are a range of business benefits to drawing up organisation charts

• Organisation charts clarify the way a business is structured:

  • Drawing up an organisation chart helps define workers' responsibilities and shows to whom they are responsible

  • Managers can identify the team members over whom they have authority and where authority is delegated to others

  • The chain of command indicates the routes through which communication flows

  • Links to other functional areas may be shown, and individuals across the business can see their own position within it