Organisational Structures

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Internal Organisational Structures

An organisational structure is the system that defines a hierarchy in an organisation. An organisational structure identifies every job in an organisation, the responsibilities of each job and how each job is related to other jobs.

Hierarchy

A hierarchy just means layers, with certain jobs within the organisation having authority over others.
Jobs higher up in the hierarchy will therefore have more power in decision making.
The manager of a football team manages the players and guides them on what to do in a game. Jose Mourinho manages Paul Pogba in the hierarchy at Manchester United.

Directors

Directors are at the top of an organisation’s hierarchy. They have the most influence over a company’s decisions.
Directors decide what the firm’s strategy is and make important decisions for the business as a whole.

Managers

Managers are the next rung down on the ladder.
They help to communicate the strategy of the firm to their subordinates (people below them in the hierarchy).
They also organise the people below them in the hierarchy (span of control) to achieve the firm’s objectives.
- Note – there may be more than 1 layer of managers within a firm.

Supervisors

Supervisors are the lowest level of people in a hierarchy that are still responsible for managing other people.
They manage the people at the lowest level of the organisation.
These people usually manage specific projects that are conducted (done) in small teams.

Operatives

Operatives are at the lowest level in an organisation. These people are not responsible for anyone else.
In a hotel, a normal cleaner is usually an operator.
Similarly in a restaurant, a pot washer is usually an operative and does not manage anyone else.
- Factory workers are often operatives.

Business Functions and Definitions

A business is not just organised into a hierarchy. It is also organised according to the different functions (roles) of different parts of a business. E.g. A business might have a sales division, a customer service team and a human resources team. Some key definitions are:

Chain of command

Chain of command refers to the line of communication from the top of the hierarchy all the way to the bottom of the hierarchy. The directors are at the top and operatives are at the bottom.

Span of control

The span of control is the number of employees that a person in a position of power is responsible for. This number depends on the type of organisational structure at a business.

Delayering

Delayering is when an organisation decides to remove a layer in the hierarchy.
Often, companies remove a layer of middle managers. This can reduce labour costs and shorten the chain of command.

Delegation

Delegation means giving responsibility for certain tasks or functions to someone lower down in the organisational hierarchy. A manager may delegate responsibility for part of a project to someone lower down the hierarchy.