interpret simple organisational charts

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Simple Organisational Structures

Learning objective (Cambridge AO)

Students will be able to draw, interpret and understand simple organisational charts. They will recognise:

  • the hierarchy (levels of management),
  • the chain of command,
  • the span of control (wide vs narrow),
  • whether the hierarchy is tall or short,
  • the typical roles and responsibilities in the three basic structures used by small businesses.

Assessment objectives:

  • AO1 – recall terminology and identify parts of a chart.
  • AO2 – interpret information presented in a chart.
  • AO3 – analyse the advantages/disadvantages of a given structure.
  • AO4 – evaluate the impact of the structure on decision‑making, communication and delegation.

Why organisational structure matters

  • Provides a clear line of authority and responsibility.
  • Shows who employees report to and who they can delegate to.
  • Facilitates communication and coordination of activities.
  • Supports efficient decision‑making and resource allocation.

Key terminology (Cambridge wording)

Chain of command: the line of authority that runs from the top of the organisation (owner/CEO) down through managers to front‑line staff.

Span of control: the number of sub‑ordinates who report directly to a manager. A wide span = many sub‑ordinates; a narrow span = few sub‑ordinates.

Tall hierarchy: many levels of management (usually a narrow span of control).

Short hierarchy: few levels of management (usually a wide span of control).

Delegation: the process of assigning authority and responsibility for a task to a subordinate. Effective delegation depends on an appropriate span of control.

Three simple structures used by small businesses

  1. Owner‑manager (sole trader) structure
  2. Functional structure
  3. Divisional (product) structure

Comparison of the three structures

Structure Key features & typical roles Span of control & hierarchy Advantages Disadvantages
Owner‑manager (sole trader)
  • Owner acts as director, manager and supervisor.
  • Front‑line staff report directly to the owner.
  • Informal communication; no formal middle managers.
  • Chain of command: Owner → staff (single line).
  • Span of control: Very wide – the owner may supervise all employees directly.
  • Hierarchy: Short (only 1‑2 levels).
  • Quick decision‑making.
  • Low administrative costs.
  • Clear ultimate responsibility.
  • Heavy workload for the owner.
  • Limited career progression for staff.
  • Risk of over‑dependence on one person.
Functional structure
  • Departments organised by function (Marketing, Finance, Production, etc.).
  • Each department has a Manager who supervises a Supervisor and front‑line staff.
  • Functional managers report to the Owner/CEO.
  • Chain of command: Owner/CEO → Functional Managers → Supervisors → Staff.
  • Span of control: Moderate – each manager oversees a department; supervisors may have a wider span within the department.
  • Hierarchy: Usually short‑to‑medium; can become tall if many supervisory layers are added.
  • Specialisation improves efficiency.
  • Clear career paths within each function.
  • Easier supervision of similar tasks.
  • Risk of “silos” – poor communication between functions.
  • Decision‑making may be slower when several managers must be consulted.
  • Less flexibility to respond quickly to market changes.
Divisional (product) structure
  • Separate divisions for each product line or market segment.
  • Each division contains its own functional departments (e.g., Marketing Manager, Finance Officer, Production Supervisor).
  • Division Managers report directly to the Owner/CEO.
  • Chain of command: Owner/CEO → Division Managers → Functional Managers (within the division) → Supervisors → Staff.
  • Span of control: Varies – division managers usually have a narrow span (few divisions); functional managers inside a division have a moderate span.
  • Hierarchy: Often tall because of an extra “division” layer, but can be short if only two product lines exist.
  • Focus on specific products/markets improves responsiveness.
  • Clear accountability for profit and loss of each division.
  • Encourages innovation within divisions.
  • Duplication of resources can increase costs.
  • Potential rivalry between divisions.
  • More complex coordination at corporate level.

Quick‑reference table: typical roles and their main responsibilities

Role Typical responsibilities (exam‑relevant)
Owner / Managing Director Sets overall objectives, makes final decisions, delegates authority, monitors performance of managers.
Functional Manager (e.g., Marketing Manager) Plans and controls activities within the function, supervises supervisors, allocates resources, reports to owner.
Division Manager (Product A Manager) Responsible for profit‑and‑loss of the division, coordinates functional managers within the division, reports directly to owner.
Supervisor (e.g., Production Supervisor) Directly oversees front‑line staff, ensures tasks are carried out to standards, reports to functional or division manager.
Front‑line staff (e.g., Sales Assistant) Delivers the core product or service, follows instructions from supervisors, provides feedback on operations.

How to read a simple organisational chart

  1. Identify the top‑most box – usually the Owner, Managing Director or CEO.
  2. Follow the solid lines downwards to see who reports directly to each level (solid = direct reporting).
  3. Notice any dotted lines – they indicate dual or advisory reporting.
  4. Observe the grouping of boxes:
    • Owner‑manager chart – few boxes, single vertical line of authority.
    • Functional chart – boxes clustered under department headings (Marketing, Finance, Production).
    • Divisional chart – separate clusters for each product/market division, each with its own mini‑functional structure.
  5. Read the titles – they reveal the role (e.g., “Marketing Manager”, “Finance Officer”).
  6. Determine span of control by counting the number of direct reports for each manager.
  7. Determine hierarchy depth by counting the number of levels from the top box to front‑line staff (tall vs short).
  8. Link delegation – note where authority is passed down; a wide span of control usually means more delegation.

Step‑by‑step drawing activity (exam practice)

Using the information in Box A, sketch a functional organisational chart. Show the chain of command, span of control and indicate whether the hierarchy is tall or short.

Box A – Data for a small manufacturing firm
  • Owner/CEO
  • Marketing Manager – supervises 2 Marketing Assistants
  • Finance Manager – supervises 1 Accountant
  • Production Manager – supervises 1 Production Supervisor who in turn supervises 4 Operatives

Suggested steps for students:

  1. Write “Owner/CEO” at the top centre of the page.
  2. Draw three boxes beneath it, label them “Marketing Manager”, “Finance Manager”, “Production Manager”. Connect each to the Owner with solid lines.
  3. Under each manager, add the subordinate boxes as described and connect with solid lines.
  4. Count the direct reports for each manager (Marketing = 2, Finance = 1, Production = 1) – note the span of control.
  5. Count the levels: Owner → Manager → Supervisor/Assistant → Operative (4 levels) – identify the hierarchy as tall.
  6. Check that delegation is shown by the downward arrows from the Owner to each manager.

Example charts (labelled)

Owner‑manager (sole trader) chart – short hierarchy, wide span of control
Simple chart showing Owner at the top with direct lines to three staff members
Functional structure chart – moderate span of control, short‑to‑medium hierarchy
Chart with Owner at the top, three functional managers (Marketing, Finance, Production) below, each linked to their supervisors and staff
Divisional (product) structure chart – taller hierarchy, mixed spans of control
Chart showing Owner at the top, two Division Managers (Product A, Product B) below, each with their own functional managers and staff

Exam‑style quick‑reference checklist (with AO mapping)

  • Identify the top authority (Owner/CEO) – AO1
  • Determine the chain of command – follow solid lines from top to bottom – AO1
  • Count the number of direct reports for each manager to decide the span of control (wide vs narrow) – AO2
  • Count the number of levels between top and front‑line staff to decide if the hierarchy is tall or short – AO2
  • Note any dual reporting lines (dotted lines) and explain their purpose – AO3
  • Match the chart to one of the three basic structures and list the typical roles you would expect – AO1
  • Explain how the structure affects delegation and decision‑making speed – AO4

Mini mark‑scheme (linking checklist items to assessment objectives)

Checklist item Marks awarded Assessment objective
Top authority identified correctly 1 AO1
Chain of command traced accurately 2 AO2
Span of control classified (wide/narrow) with justification 2 AO2
Hierarchy classified as tall or short 1 AO2
Dual (dotted) reporting lines identified and purpose explained 2 AO3
Chart matched to Owner‑manager, Functional or Divisional structure and key roles listed 2 AO1
Evaluation of impact on delegation, communication and decision‑making 3 AO4

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