Hierarchical Structures (Cambridge (CIE) IGCSE Business): Revision Note

Organisational charts

• An organisational chart is a visual representation of the reporting relationships, roles and responsibilities of employees in an organisation

  • Businesses must determine what the best structure is for them so as to effectively implement ideas and achieve their objectives

    • They should consider how the structure may affect the management and effectiveness of operations and communications

    • A well-designed organisational structure helps to promote clarity, efficiency and accountability

An organisational chart

Chain of command

• The chain of command is the formal line of authority that flows downward from the top management to lower-level employees

  • It defines who reports to whom and who is responsible for making decisions

  • The chain of command helps to establish a clear communication channel and helps to maintain accountability within the organisation

Span of control

• Span of control refers to the number of employees that a manager or supervisor can effectively manage

• It is based on the principle that a manager can only effectively manage a limited number of employees

  • A narrower span of control means that there are more layers of management

  • A wider span of control means that there are fewer layers of management

Tall and flat structures

• The chain of command and span of control are closely linked

  • A long chain of command usually results in a narrow span of control

    • This is known as a tall organisational structure

  • A short chain of command usually results in a wide span of control

    • This is known as a flat organisational structure

Characteristics of tall structures

• Multiple levels of management 

• A long chain of command and narrow span of control

• Common in large organisations with complex operations

  • E.g. government agencies and universities

A tall structure

Evaluating tall structures

Characteristics of flat structures

• Fewer levels of management 

• A short chain of command and wide span of control

• Common in small organisations or start-ups

  • E.g. technology start-ups and small businesses

A flat structure

Evaluating flat structures