the relationship between span of control and levels of hierarchy

7.1 Organisational Structure – Control, Authority, Trust and the Link to Business Objectives

Learning Objective

Explain how an organisation’s structure (including span of control, levels of hierarchy, centralisation, line‑vs‑staff functions and delegation) helps it achieve its objectives and supports strategy, leadership and human‑resource management.

1. Linking Business Objectives to Organisational Structure

Key principle: The choice of organisational structure is driven by the firm’s strategic objectives. The structure must provide the mechanisms (decision‑making speed, control, coordination, empowerment) required to deliver those objectives.

• Cost‑leadership objective → functional structure (tight control, economies of scale).
• Innovation & rapid product development → matrix or flat (horizontal) structure (flexibility, cross‑functional teamwork).
• Market diversification / multinational expansion → divisional structure (autonomous product or geographic profit centres).

Example 1: A technology start‑up aiming to launch new apps every quarter adopts a flat, matrix‑style structure. Wide spans of control give developers autonomy, while dual reporting to product and technical leads ensures rapid coordination.

Example 2: A global consumer‑goods company pursuing market diversification creates separate geographic divisions (Europe, Asia‑Pacific, Americas). Each division has its own marketing, finance and production units, allowing local responsiveness while maintaining overall corporate control.

2. Main Types of Organisational Structure

3. Span of Control and Levels of Hierarchy

• Span of Control (or Span of Management): the number of sub‑ordinates a manager can supervise effectively.
• Levels of Hierarchy: the number of management layers between top management and front‑line staff.

Relationship: A wider span reduces the number of hierarchical levels; a narrower span increases them.

Quick estimation formula (useful for exam questions):

where N = total number of employees (excluding top management).

Implications of a Wide Span

• Fewer managerial layers → faster decision‑making and communication.
• Greater employee autonomy → higher reliance on trust and empowerment.
• Potential for manager overload if tasks are highly complex.
• Lower cost of management (fewer salaries, less bureaucracy).

Implications of a Narrow Span

• More managerial layers → slower flow of information and decisions.
• Closer supervision – useful for routine, highly standardised work.
• Higher administrative overhead (more managers, more reporting).
• Risk of bottlenecks and reduced employee empowerment.

Factors Influencing the Appropriate Span

1. Complexity of tasks – complex or non‑routine tasks favour a narrower span.
2. Geographical dispersion – distant teams often need closer supervision.
3. Managerial competence – experienced managers can handle wider spans.
4. Technology – effective communication tools (e‑mail, intranet, video‑conferencing) support wider spans.
5. Organisational culture – cultures that value empowerment and trust tend to adopt wider spans.

Practical Example

A retail chain employs 1,200 store staff (excluding senior corporate staff).

• Average span = 12
  Levels = log(1200) / log(12) ≈ 2.85 → roughly three layers (store manager → area manager → regional manager).
• Average span = 4
  Levels = log(1200) / log(4) ≈ 5.11 → about five layers, increasing overhead and slowing response.

Suggested diagram: A side‑by‑side pyramid showing a “wide span” (short, flat hierarchy) versus a “narrow span” (tall, steep hierarchy) with arrows indicating the flow of authority and communication.

4. Delegation, Empowerment and Accountability

• Delegation = assigning authority and responsibility for a specific task to a subordinate while retaining overall accountability.
• Empowerment = the degree to which employees are given discretion, resources and authority to make decisions. Delegation is the primary mechanism for creating empowerment.
• Trust underpins effective delegation – managers must trust subordinates to act responsibly.

Delegation Process (5 steps)

1. Define the task and expected outcome – be clear about what is to be achieved.
2. Allocate appropriate authority – give the subordinate the decision‑making power needed.
3. Specify resources and time‑frames – ensure they have what they need to succeed.
4. Establish performance standards – set measurable targets and quality criteria.
5. Monitor and provide feedback – review progress, offer guidance and recognise achievement.

Link to Hierarchy

Each successful delegation removes a layer of supervision, effectively reducing the number of hierarchical levels. For example, if a manager with a span of 5 delegates a routine task to a senior employee, the senior can now supervise two sub‑ordinates themselves, creating a flatter structure.

Quick calculation (delegation effect)

Original span = 5, 25 employees → Levels = log(25)/log(5) = 2.
If the manager delegates to two team‑leaders (each with a span of 5), the structure becomes:

• Top manager → 2 team‑leaders → 10 front‑line staff → 13 remaining staff.
• New Levels = log(25)/log(5) ≈ 2 (unchanged), but the *effective* span at the top widens, illustrating how delegation flattens the hierarchy without increasing headcount.

5. Control, Authority and Trust

• Authority: formal right to give orders, make decisions and allocate resources.
• Control:
  • Formal control – written policies, procedures, performance targets, budgets and standard operating procedures.
  • Informal control – organisational culture, shared norms, peer pressure. Example: A “customer‑first” culture that encourages staff to go beyond written policies when handling complaints.
• Trust: confidence that managers and employees will act fairly, competently and in the organisation’s best interest.

Interaction matrix (exam‑friendly)

6. Centralisation vs. Decentralisation (within structures)

7. Line and Staff Functions

• Line functions – directly involved in producing the organisation’s primary output (e.g., production, sales, operations).
• Staff functions – provide specialist support and advice to line managers (e.g., HR, finance, legal, R&D).
• Potential conflicts:
  • Line managers may view staff advice as bureaucratic and time‑consuming.
  • Staff specialists may feel their expertise is undervalued or ignored.
• Coordination mechanisms:
  • Clear reporting lines (staff report to a senior line manager).
  • Joint committees or project teams that bring line and staff together.
  • Formal communication protocols (e.g., briefing documents, SOPs).

8. Impact of Structure on Stakeholders & Change

• Restructuring (e.g., flattening, introducing a matrix, or moving to a network) can affect:
  • Employees – job security, career paths, workload and empowerment.
  • Managers – authority, span of control, skill requirements.
  • Shareholders – cost efficiency, profitability and risk profile.
  • Customers – service speed, product variety and responsiveness.
• Effective change management must link to the Stakeholders (5.1) and Leadership (4.2) sections of the Cambridge syllabus.

9. Summary Checklist

• Choose a structure that directly supports the organisation’s strategic objectives.
• Understand that a wider span of control reduces the number of hierarchical levels; a narrower span adds layers.
• Use delegation to create empowerment, build trust and, where appropriate, flatten the hierarchy.
• Match the degree of centralisation to the size of the firm, its environment and the required speed of decision‑making.
• Clearly differentiate line‑vs‑staff roles and put coordination mechanisms in place.
• Consider the impact of any structural change on all stakeholder groups and manage the transition with appropriate leadership.