A formal structure is the skeleton of a business – it shows who reports to whom, how decisions flow, and who has the power to act. Think of it as the organisational chart of a company, much like a family tree that tells you who is the boss and who does what.
Hierarchy is the vertical arrangement of roles from top to bottom. Each level is a layer of authority.
📊 Analogy: Imagine a pyramid of power – the apex is the CEO, the middle rings are managers, and the base is the workforce.
The chain of command is the formal line of authority that shows who reports to whom.
🔗 Analogy: Think of a relay race – each runner (role) passes the baton (information) to the next runner up the chain.
The span of control is the number of subordinates that a manager can effectively supervise.
📏 Analogy: A teacher with a wide span has many students; a teacher with a narrow span can give more individual attention.
Responsibility = the tasks you must complete. Authority = the power to make decisions and enforce them.
| Role | Responsibility | Authority |
|---|---|---|
| Manager | Plan, organise, lead, control | Approve budgets, hire staff, set targets |
| Employee | Execute tasks, report progress | Limited decision‑making, follow instructions |
Delegation is the process of assigning responsibility and authority to someone else.
🚀 Analogy: Like a coach handing a ball to a player to score – the coach trusts the player to make the right move.
Accountability is the obligation to answer for outcomes.
🔍 Analogy: Think of a student who must turn in homework – they are accountable to the teacher.
Centralised: Decision‑making is concentrated at the top.
Decentralised: Decision‑making is spread across lower levels.
| Feature | Centralised | Decentralised |
|---|---|---|
| Speed of Decision | Slow (many approvals) | Fast (local decisions) |
| Control | High (top control) | Low (empowered staff) |
| Employee Motivation | Low (less autonomy) | High (more responsibility) |
Exam Tip: Remember the difference between responsibility and authority. In exam questions, if a role can make decisions but not enforce them, you should note that they have authority but limited responsibility. Also, when asked about centralised vs decentralised, use the table above to highlight key contrasts.