Organisational structure

Understand business organization charts, hierarchy, and delegation benefits.

An organisational structure is how people and departments are organised within a business. An organisation chart is a way of displaying the organisation structure. They show how responsibilities in an organisation are divided up amongst different departments and people.Many businesses are organised by function. This means that each department has a certain job to do, e.g. the purchasing department buys the materials the business needs. Sometimes departments will have the responsibility of helping all the other departments. They are known as staff departments, e.g. IT and research. Below is an example of an organisation chart. Who is at the top of the hierarchy? Production Manager Managing Director 3 Assistants Board of Directors Who is the line manager for the sales representatives? Who are the subordinates of the finance director? What is the span of control of the production manager? 1 2 3 4 How many layers are there in the organisation? 2 4 5 6 To whom would the production manager delegate responsibility for the stocks of raw materials? Quality control manager Stock control manager Production supervisor Distribution manager Who would be involved in the line of communication between the managing director and the accounts clerks? Sales manager 6 Clerical officers Human resources manager Finance director Who would be accountable if the sales of the business did not reach the target set by the managing director? The human resource manager delegates responsibility for advertising jobs and dealing with application forms to a subordinate. Which of the following statements are benefits from delegating in this way? Benefits of the delegation The subordinate may work harder because they feel that they have been given a specific area of responsibility The human resource manager may have more time to oversee work of all the members of the department rather than getting tied down by detailed work. The subordinate may improve their management skills and this could lead to future promotion. The work will be done by a specialist and so the quality of the work should improve. Not benefits of the delegation The subordinate may feel that the human resource manager is taking advantage of them. The human resource manager may feel that they are losing responsibility and may not be paid as much by the firm.