👋 Welcome to Organisation Structure and Employees!

Hello future Business experts! This chapter is incredibly important because it explains the skeleton of any business. Just like your body needs a structure to function, so does a company.
We will explore how businesses arrange their staff, how authority flows, and why good communication is the secret ingredient for success. Don't worry if this seems tricky at first—we'll break down every concept step-by-step!

⭐ Why is Organisation Structure Important?

  • It clearly defines who is in charge of whom.
  • It ensures tasks are completed efficiently without overlap.
  • It helps staff understand their role and who they report to.

Section 1: The Basics of Organisation Structure

Every organisation, whether it’s a small local shop or a giant multinational company, needs an internal structure. We use an Organisation Chart to show this structure visually.

Key Terminology You MUST Know

1. Hierarchy

The Hierarchy refers to the arrangement of people in an organisation according to their rank or authority. Think of it like a pyramid: the most senior people are at the top, and the lowest ranking staff are at the bottom.
Example: In school, the hierarchy goes Headteacher → Deputy Heads → Subject Leaders → Teachers → Students.

2. Chain of Command

The Chain of Command is the line of authority that runs from the top of the hierarchy to the bottom. It shows the path that instructions and decisions follow.
Memory Aid: If you have a question, you must follow the 'chain' of command—you ask your immediate supervisor first, not the CEO directly!

3. Span of Control

The Span of Control is the number of subordinates (employees) who report directly to one manager.

  • Narrow Span: The manager supervises a small number of people (e.g., 3-5 staff). This allows for closer supervision and more detailed feedback.
  • Wide Span: The manager supervises a large number of people (e.g., 15+ staff). This requires the manager to delegate more often.

Quick Review Box:
Hierarchy = Layers of rank.
Chain of Command = Line of authority.
Span of Control = Number of direct reports.

Section 2: Types of Organisation Structure (Tall vs. Flat)

Businesses usually choose between two main structural layouts based on their size and needs: Tall or Flat.

1. Tall (or Hierarchical) Structure

This structure has many levels of hierarchy (many layers).

  • Characteristics:
    • Narrow Span of Control (managers supervise few people).
    • Long Chain of Command.
  • Advantages (Pros):
    • Clear lines of authority and control.
    • Managers have more time for detailed supervision and training.
    • Staff know exactly who to report to.
  • Disadvantages (Cons):
    • Communication is slow (messages must pass through many layers).
    • High costs due to paying many managers and supervisors.
    • Staff can feel less important and demotivated.

2. Flat Structure

This structure has few levels of hierarchy (fewer layers).

  • Characteristics:
    • Wide Span of Control (managers supervise many people).
    • Short Chain of Command.
  • Advantages (Pros):
    • Communication is faster (messages don't travel through many layers).
    • Lower management costs (fewer managers needed).
    • Staff are often more motivated because they are trusted and given more responsibility (delegation).
  • Disadvantages (Cons):
    • Managers can become overloaded and stressed by supervising too many staff.
    • Less direct supervision may lead to poor quality control.
    • It can be difficult to manage discipline across a large group.

Did You Know? Many modern technology companies favour a flat structure because they need fast decision-making and want to encourage creativity among employees.

Section 3: Important Organisational Concepts

Beyond the basic structure, managers need to understand how to share power and responsibility effectively.

1. Delegation

Delegation is the act of passing down authority to a subordinate to perform a task. It means the manager trusts the employee to complete the job, but the manager remains ultimately responsible.
Example: A manager tells a junior sales assistant to handle a specific customer complaint on their own. The assistant has the authority to solve the problem (delegation).

Why Delegate?
  • It reduces the workload on the manager.
  • It develops the skills and confidence of the subordinate (employee training).
  • It is crucial in flat structures where managers have a wide span of control.

Common Mistake to Avoid: Delegation means passing down authority, not avoiding responsibility. If the employee fails, the manager still takes the blame!

2. Centralisation vs. Decentralisation

This concerns where decision-making power lies within the organisation.

A. Centralisation

In a Centralised organisation, the majority of decisions are made by senior managers (those at the top of the hierarchy).

  • Good for: Maintaining tight control, ensuring consistency across all branches (e.g., all McDonald’s restaurants look and operate the same way).
B. Decentralisation

In a Decentralised organisation, decision-making authority is spread out and passed down to middle and lower-level managers.

  • Good for: Businesses operating in many different locations or countries, as local managers can respond quickly to customer needs and local market changes. It also increases staff motivation.

Key Takeaway: Centralisation is about control and consistency. Decentralisation is about speed and flexibility.

Section 4: Roles and Functions within the Organisation

People at different levels of the hierarchy have different responsibilities. Understanding these roles is vital for coordination.

1. Director (or Board of Directors)

These are the most senior leaders, often reporting to the shareholders/owners.

  • Function: Setting the overall strategy and long-term goals of the company. Making major investment decisions.

2. Manager

Managers operate beneath the Directors. There are often different levels (Senior Managers, Middle Managers).

  • Function: Implementing the strategic plans set by the Directors. They supervise teams, allocate resources, and make tactical decisions.

3. Supervisor

Supervisors work directly with the operational staff.

  • Function: Overseeing the day-to-day operations and ensuring tasks are completed correctly and on time. They are the link between management and the staff carrying out the work.

4. Subordinate / Shop Floor Staff

These are the workers who report to the supervisor or manager, carrying out the practical work of the business (e.g., production, sales, admin).

  • Function: Completing tasks assigned to them to meet company output targets.

Section 5: Communication in Business

A perfect structure is useless if people cannot talk to each other! Communication is the transfer of information from a sender to a receiver, with the information being understood.

1. Types of Communication

A. Internal vs. External
  • Internal Communication: Happens inside the business (e.g., a manager sends an email to employees).
  • External Communication: Happens between the business and outside individuals or groups (e.g., talking to customers, suppliers, banks, or the government).
B. Methods of Communication

The best method depends on the message's urgency, confidentiality, and complexity.

  • Verbal (Oral): Talking face-to-face, telephone calls, video conferences. (Quick feedback, but no permanent record).
  • Written: Emails, letters, reports, memos. (Provides a clear record, good for complex details, but feedback can be slow).
  • Visual: Charts, graphs, posters, body language. (Can explain complex data quickly, useful for training).

2. The Importance of Effective Communication

Effective communication means the message is delivered clearly and understood correctly.

  • It motivates staff: Employees who understand their role and objectives feel more involved.
  • It improves decision-making: Managers have accurate information to make the best choices.
  • It helps coordination: Different departments (like production and marketing) work together smoothly.
  • It avoids mistakes: Clear instructions reduce errors and waste.

3. Barriers to Effective Communication

A barrier is anything that prevents the message from being understood as intended.

Don't worry if these happen in real life—it's normal! Businesses just need strategies to overcome them.

  • Jargon: Using overly technical or complex words that the receiver doesn't understand. (Imagine a doctor explaining a medical problem using only complex Latin terms to a patient).
  • Information Overload: Sending too much information at once, causing the receiver to miss important details.
  • Technical Failure: A broken phone line, a lost email, or a poor internet connection.
  • Emotional Barriers: The sender or receiver is stressed, angry, or distracted, leading to misinterpretation.
  • Poor Structure/Timing: Sending a critical instruction late, or routing a message through too many layers (common in tall structures).

Key Takeaway: Effective communication is about clarity, precision, and choosing the right method for the right audience.

🎉 Chapter Summary: What You Need to Master

To ace your exams on Organisation Structure and Employees, make sure you can define and differentiate between:

  • Organisation Structures: Tall (Narrow Span) vs. Flat (Wide Span).
  • Key Terms: Hierarchy, Chain of Command, Span of Control, Delegation.
  • Decision-Making: Centralisation vs. Decentralisation.
  • Communication: Internal/External, and the common Barriers (Jargon, Overload).

Keep practising these terms, and you'll build a solid foundation for the rest of your Business studies! Good luck!