Human Resource Decisions
Organisational structures, charts and hierarchy terms
Organisational structure is the way people and roles are arranged in a business. It shows who reports to whom and how work is divided, so everyone knows where they fit. For example, a garden centre might divide work into plant sales, the cafe and the checkout, with each team reporting to a manager.
An organisational chart is a diagram of that structure. It shows the levels of hierarchy, lines of responsibility and channels of communication. The chart is only a picture of the structure, not the structure itself, and it can become out of date when roles change. It also cannot show informal communication, such as two colleagues sorting out a problem in a quick chat.
Hierarchy terms
| Term | Meaning | Example |
|---|---|---|
| Hierarchy | The number of levels of management in an organisation. A taller hierarchy has more levels. | A director, a manager, a supervisor and an assistant form four levels of hierarchy. |
| Chain of command | The route through which instructions and information pass down the hierarchy. | An instruction may pass director to manager to supervisor to assistant. |
| Span of control | The number of employees who report directly to a manager. | A supervisor who directly manages six assistants has a span of control of six. |
A worked example
A garden centre has a director, a retail manager, three department supervisors and twelve assistants. The retail manager directly manages the three supervisors, so the retail manager's span of control is three. Each supervisor directly manages four assistants, so a supervisor's span of control is four. The business has four levels of hierarchy, so its hierarchy is taller than a business with only a director and assistants. An instruction from the director to an assistant travels along the chain of command: director, then retail manager, then supervisor, then assistant.
Practise this
Edexcel GCSE Business · 2.5.1 Organisational structures