Cambridge Syllabus Notes

7.1 Organisational Structure – Control, Authority, Trust and Delegation

Learning Objective

Explain how the choice of organisational structure supports a business’s strategic objectives and analyse the conflicts that can arise between control and trust when managers delegate authority.

1. Relationship Between Business Objectives and Structure

Organisations select a structure that best enables them to achieve their primary business objectives. The most common objectives in the Cambridge A‑Level syllabus are:

Profit‑maximisation / cost‑leadership – aim to produce at the lowest possible cost and achieve high profit margins.
Market‑share growth / differentiation – aim to offer unique products or services and increase the firm’s share of the market.
Geographic expansion / product‑line growth – aim to enter new regions or add new product ranges.

How the structure supports each objective:

Strategic Objective	Most Suitable Structure	Why the Structure Fits
Profit‑maximisation / cost‑leadership	Functional (or hierarchical‑narrow)	Specialisation and tight chain of command keep unit costs low and processes standardised.
Market‑share growth / differentiation	Matrix or hierarchical‑flat	Cross‑functional collaboration and wide spans of control speed up innovation and response to market trends.
Geographic expansion / product‑line growth	Divisional (product, geographic or market division)	Each division operates as a semi‑autonomous profit centre, allowing local responsiveness while retaining overall corporate direction.

2. Types of Organisational Structure

The Cambridge syllabus expects a description of five main structures, together with their advantages and disadvantages.

Structure	Key Features	Typical Industries	Advantages (Pros)	Disadvantages (Cons)	Impact on Control ↔ Trust
Functional	Departments grouped by specialist function (e.g., Marketing, Finance). Clear chain of command.	Manufacturing, utilities, public sector.	High specialisation → efficiency. Clear career paths within functions.	Silos can impede communication across functions. Limited flexibility for rapid market changes.	High control (narrow span of control), relatively low trust for cross‑functional decisions.
Hierarchical‑Flat (wide span)	Few hierarchical layers, wide span of control, informal communication.	Start‑ups, creative agencies, tech‑service firms.	Fast decision‑making. Greater employee empowerment.	Managers may become over‑stretched. Risk of insufficient supervision for complex tasks.	More trust in employees, less bureaucratic control.
Hierarchical‑Narrow (tight span)	Many layers, narrow span of control, detailed procedures.	Large public‑sector bodies, traditional manufacturing.	Clear supervision and close monitoring. Reduced chance of errors in critical processes.	Slower decision‑making. Potential demotivation due to perceived micromanagement.	Strong control, low trust; suitable where risk is high.
Matrix	Dual reporting – employees answer to both a functional manager and a product/project manager.	Technology firms, R&D‑intensive companies, aerospace.	Facilitates sharing of expertise across projects. Encourages flexibility and innovation.	Potential for role conflict and confusion. Requires strong coordination mechanisms.	Requires high trust and robust coordination; control is shared.
Divisional (product / geographic / market)	Each division is a semi‑autonomous profit centre with its own functional departments.	Multinational retailers, automotive groups, consumer‑goods conglomerates.	Local responsiveness and market focus. Clear profit‑and‑loss accountability for each division.	Duplication of functions across divisions can raise costs. Risk of inconsistent corporate policies.	Decentralised control, high trust in divisional heads.

3. Formal Structure Features (Key Terminology)

Feature	Definition	Example
Levels of Management	Number of hierarchical layers between top management and front‑line staff.	Three‑level hierarchy in a small manufacturing firm.
Chain of Command	Line of authority linking each employee to a superior.	Store assistant → Store manager → Regional manager → Head office.
Span of Control	Number of sub‑ordinates reporting directly to a manager.	Narrow span (5) in a finance department; wide span (15) in a sales team.
Authority	Right to make decisions and command resources.	Budget‑approval authority given to a product‑line manager.
Responsibility	Obligation to carry out assigned tasks.	Responsibility for monthly inventory reconciliation.
Delegation	Assigning responsibility and authority to a subordinate while the manager remains ultimately accountable.	Head office delegating ordering authority to store managers.
Accountability	Being answerable for outcomes of delegated tasks.	Store manager must explain any stock‑out incidents to head office.
Centralisation / Decentralisation	Degree to which decision‑making authority is concentrated at the top (centralised) or dispersed throughout the organisation (decentralised).	Centralised pricing policy vs. decentralised store‑level promotions.

4. Delegation & Accountability

Delegation links the formal structure to day‑to‑day performance. An effective delegation process should contain four elements:

Clear definition of the task – what is to be done, why it matters, and the expected outcome.
Explicit authority limits – budget caps, product ranges, time‑frames, or approval thresholds.
Accountability mechanisms – performance metrics, reporting schedules, and post‑action reviews.
Support & resources – training, information systems, and access to expertise.

When these elements are in place, managers can retain overall responsibility without resorting to micromanagement.

5. Control, Authority & Trust – Core Conflict

Delegating authority creates a tension between two managerial imperatives:

Control – ensuring activities are performed as intended and minimising risk.
Trust – believing employees will act in the organisation’s best interest without constant supervision.

Potential Conflict Areas

Aspect	Control‑Focused Approach	Trust‑Focused Approach	Typical Conflict
Decision‑making speed	Detailed procedures, multiple approvals.	Employees empowered to decide within set limits.	Control can cause delays; trust can produce inconsistent choices.
Performance monitoring	Frequent reports, check‑lists, audits.	Self‑reporting, outcome‑based evaluation.	Too much monitoring signals distrust; too little raises error risk.
Risk tolerance	Low – tight oversight, limited experimentation.	Higher – allowance for trial‑and‑error.	Managers may view experimentation as reckless; employees may see restrictions as stifling.
Motivation & empowerment	Control can undermine intrinsic motivation.	Trust can boost confidence and ownership.	Over‑control → disengagement; over‑trust without support → anxiety.

Illustrative Example

Scenario: A national retail chain delegates inventory ordering to its store managers.

Control view: Head office requires a weekly order form, manager’s signature, and a post‑order audit.
Trust view: Each store receives a budget and the authority to order stock as needed, with performance reviewed quarterly.
Conflict: During a local promotion a store manager orders extra stock to meet demand. Head office sees this as a breach of control; the manager sees it as exercising trusted authority.

6. Centralisation vs Decentralisation

These concepts describe where decision‑making power resides and shape the control‑trust balance.

Centralised organisations keep key decisions (e.g., pricing, strategic planning) at top level. They enjoy strong control but may suffer from slow response and low employee empowerment.
Decentralised organisations push authority down to divisions, regions or teams. This raises trust, speeds up local decisions, but can increase coordination costs and the risk of inconsistent policies.

Most modern firms adopt a hybrid approach – strategic decisions remain centralised, while routine operational decisions are decentralised, creating a “controlled‑trust” continuum.

7. Managing the Conflict Between Control and Trust

Effective managers blend control mechanisms with trust‑building practices:

Set clear boundaries – specify the scope of authority (budget limits, product categories, time‑frames).
Use transparent performance metrics – objective criteria such as sales growth, stock turnover, error rates.
Provide regular feedback loops – review results, discuss deviations, and adjust without immediate punitive action.
Foster a culture of accountability – employees explain decisions, learn from outcomes, and own results.
Adjust control mechanisms over time – as competence and trust increase, reduce monitoring intensity.
Balance centralisation and decentralisation – keep strategic control central, delegate routine operational authority.

8. Decision‑Making Framework for Delegation

Use the following step‑by‑step guide to decide the appropriate mix of control and trust for any task.

Step	Key Question	Guidance for Managers
1	Is the task strategic or routine?	Strategic tasks → tighter control (e.g., approvals). Routine tasks → greater trust (e.g., self‑service).
2	What is the employee’s competence level?	High competence → more autonomy; low competence → closer supervision and training.
3	What are the potential risks?	High risk → additional safeguards (dual‑sign‑off, audits). Low risk → broader discretion.
4	Which performance indicators will be used?	Define measurable outcomes (e.g., % of target met, error rate) to reduce the need for micromanagement.
5	How will feedback be provided?	Schedule regular, constructive feedback sessions and post‑action reviews.
6	Is the decision area centralised or decentralised in the overall structure?	Align the level of control with the organisation’s centralisation strategy.

9. Summary

Organisational structure is deliberately chosen to support a firm’s primary objectives (profit‑maximisation, market‑share growth, geographic/product expansion).
Five main structures – functional, hierarchical‑flat, hierarchical‑narrow, matrix, and divisional – each have distinct pros, cons and implications for the control‑trust balance.
Formal features (levels, chain of command, span of control, authority, responsibility, delegation, accountability, centralisation) determine how much control a manager can exert.
Delegation creates tension between the need for control (risk‑management, consistency) and the need for trust (motivation, speed).
Conflicts are mitigated by setting clear boundaries, using objective performance metrics, fostering accountability, providing feedback, and gradually reducing controls as competence grows.
A hybrid centralisation‑decentralisation model usually provides the most effective “controlled‑trust” continuum.

Suggested diagram: A horizontal continuum labelled “Control” (left) – “Trust” (right). Plot examples such as “Strict procedures”, “Frequent audits” near the control end and “Empowerment”, “Self‑reporting” near the trust end. Use arrows to illustrate how an organisation can move gradually from control‑heavy to trust‑heavy as employee competence and confidence develop.

the conflicts between control and trust that might arise when delegating