Organisational Charts & Roles (Cambridge (CIE) O Level Business Studies)

Organisational Structures

An organisational structure outlines the reporting relationships, roles, and responsibilities of employees in the organisation

• Businesses must determine what the best structure is for them so as to effectively implement ideas and achieve their objectives

  • They should consider how the structure may affect the management and effectiveness of operations and communications

  • A well-designed organisational structure helps to promote clarity, efficiency and accountability

Diagram: an organisational chart

1. Hierarchy

• A hierarchy refers to the levels of authority within an organisation

  • It describes the ranking of positions from top to bottom

  • The higher the position in the hierarchy, the more authority and power it holds

  • The hierarchy usually includes top-level management, middle-level management, and lower-level employees

2. Chain of command

• The chain of command is the formal line of authority that flows downward from the top management to lower-level employees

  • It defines who reports to whom and who is responsible for making decisions

  • The chain of command helps to establish a clear communication channel and helps to maintain accountability within the organisation

3. Span of control

• Span of control refers to the number of employees that a manager or supervisor can effectively manage

• It is based on the principle that a manager can only effectively manage a limited number of employees

  • A narrower span of control means that there are more layers of management

  • A wider span of control means that there are fewer layers of management

Tall & Short Organisational Structures

• The chain of command and span of control are closely linked

  • A long chain of command usually results in a narrow span of control

    • This is known as a tall organisational structure

  • A short chain of command usually results in a wide span of control

    • This is known as a flat organisational structure

Characteristics of tall and Short Structures

Tall Organisational Structure	Flat Organisational Structure
Multiple levels of management  A long chain of command and narrow span of control Common in large organisations with complex operations E.g. government agencies and universities	Fewer levels of management  A short chain of command and wide span of control Common in small organisations or start-ups E.g. tech start-ups and small businesses
Advantages	Advantages
Provides a clear hierarchy of authority and defined roles and responsibilities Promotes specialisation and expertise within each department or function	Promotes a culture of collaboration and open communication Decision-making can be faster and more efficient
Disadvantages	Disadvantages
Can create communication barriers between upper and lower levels of the hierarchy Decision-making can be slow as information must pass through multiple layers of management	Can lead to a lack of clear hierarchy May require employees to take on multiple roles and responsibilities leading to burnout and overwhelm

• Some businesses may choose to remove layers from their hierarchy which shorten the chain of command

  • This is known as delayering