Two hundred rolls for a wedding: A customer at the High Street shop wants 200 rolls for a wedding on Saturday, at a discount. Who can say yes?
Up the chain
Counter assistant
She cannot say yes. She asks Aisha, the shop manager.
Aisha, shop manager
She can agree small discounts, but not one this size. She phones Lena.
Lena, managing director
She says yes before lunch.
Nobody wrote a rule for weddings. Everyone simply knew who could decide, and whom to ask.
That knowledge comes from the layers of the business. Each layer of authority is a level of hierarchy: a row on the organization chart, where each row up has more authority to decide and oversees the rows below it. Lena's Bakery Ltd has three levels.
| Level | Who | What they can decide |
|---|---|---|
| 1 (top) | Lena, the managing director, and Marco, the finance director | Where to open, prices, pay, big spending |
| 2 | The three shop managers and Priti, the head baker at Mill Lane | The staff rota, daily orders, small discounts, problems on the day |
| 3 | Counter assistants and bakers | How to serve a customer, how to shape tonight's loaves |
The route the wedding order took, counter assistant to Aisha to Lena, is the chain of command: the official line of authority from the top of the business to the bottom. It says who reports to whom, and who can give instructions to whom. At Lena's the chain is short: two steps from the counter to the top.
Goldcrust plc runs 400 bakeries, so it needs far more levels: six. The same wedding order there has five steps to climb.
The chain of command at Goldcrust plc
Chief executive
One person at head office. Decides prices and plans for all 400 bakeries.
Regional directors
Four of them, each in charge of a region of 100 bakeries.
Area managers
Forty, each looking after ten bakeries and visiting them in turn.
Bakery managers
One per bakery, 400 in all. Runs the bakery day to day.
Shift supervisors
Three per bakery, one for each shift. Hands out the work and deals with problems on the floor.
Counter staff and bakers
Serve the customers and bake. A request from here takes five steps to reach the chief executive.
Why the levels matter. Everyone knows who their boss is and who answers for each decision, and each level is a step someone can be promoted to. But every level is also one more person a message has to pass through. Going down, an instruction can be shortened or misread; going up, bad news gets softened, and decisions wait for someone higher to be free. A tall structure like Goldcrust's feels this far more than Lena's flat one.
Going around the chain: Last winter an oven broke at a Goldcrust bakery. The bakery manager hired a replacement for $4,000 the same day, without asking his area manager.
Why the chain matters: The oven saved the week, but spending that size needs the area manager's approval. The chain of command decides who may say yes; skip a step and the budget has no one checking it, and nobody above knows what was promised.
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Lena's four phone calls: Every morning at eight, Lena makes four phone calls: to each of the three shop managers and to Priti, the head baker at Mill Lane.
Lena's Bakery Ltd employs 22 people. Lena talks to four of them every day. Everyone else she reaches through those four.
The number of people a manager or supervisor directly supervises is their span of control. 'Directly' is the word that matters: the people who report straight to that manager, not everyone below them. Lena's span of control is 4, not 22. Priti, who looks after six bakers at Mill Lane, has a span of 6.
| Manager | Who reports straight to them | Span of control |
|---|---|---|
| Lena | Three shop managers and Priti, the head baker | 4 |
| Aisha, High Street shop | Four counter assistants | 4 |
| Priti, head baker at Mill Lane | Six bakers | 6 |
| Goldcrust chief executive | Four regional directors | 4 |
| A Goldcrust area manager | Ten bakery managers | 10 |
Switch between a narrow and a wide span. Count the people who report straight to the manager.
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A narrow span (few people)
- Close supervision: the manager can check work and help quickly
- Suits new staff, complex work, or work where mistakes are costly
- Needs more managers, so it costs more and adds levels
A wide span (many people)
- Staff are trusted to get on with the work
- Suits skilled staff and routine work, such as a night shift that bakes the same loaves
- Fewer managers, so cheaper, but the manager can be stretched thin
Directly, and a manager: Two slips cost the precise meaning. Counting everyone below: Lena's span is not 22. And writing 'the number of people a person is in charge of': 'person' does not say it is a manager or supervisor doing the supervising.
Say it whole: the number of people a manager or supervisor directly supervises.
Why the span matters. Span and levels pull against each other. Goldcrust's 400 bakery managers cannot all report to one person, so they are grouped: ten to each area manager, ten area managers to each regional director, four regional directors to the chief executive. Narrow spans need more levels; wide spans need fewer. That is why a flat structure always has wide spans, and a tall one narrow spans.
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Lena's Sunday nights: Until this spring Lena did the flour order and the staff rota for all three shops herself, every Sunday night.
It took three hours, and she knew less about each shop than the managers did. Now each shop manager orders her own shop's flour and writes her own rota. Lena looks at the figures on Monday.
Passing the authority for a task to someone lower down the business is delegation. The manager who delegates stays accountable: if it goes wrong, she still answers for it. Lena can hand over the flour order; she cannot hand over being the one who answers for the bakery.
What passes down and what stays
The task passes down
Ordering the High Street shop's flour each week.
The authority passes down
Aisha decides how much to order and signs orders up to $1,500 a week without asking Lena.
Accountability stays with Lena
If the shop runs out of flour on a Saturday, Lena answers for it to Marco and to the customers. So she still checks the weekly figures.
Switch between the chain of command and delegation. The task and the authority pass down; the manager stays accountable.
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Why Lena delegates
- Her Sunday nights come back, and the hours go on planning a fourth shop
- The person who knows the shop makes the decision, so it is quicker and better informed
- Aisha is trusted with a real decision, which motivates her and prepares her for promotion
- Lena can manage more people directly, because each one handles her own shop's day
What can go wrong
- A manager without the skill or the information orders badly: too little flour, or too much
- Lena has less control, and a mistake is still hers to answer for
- A manager handed too much at once is overloaded
- Some tasks should stay at the top, such as setting pay or dealing with a complaint about a manager
Delegating is not dumping: A manager who hands over the flour order but still wants to approve every sack has not delegated: the authority never moved.
Nor is walking away: A manager who hands it over and never looks at the figures has not delegated either. She has walked away from a task she is still accountable for.
Delegation is
- Authority passed down
- A clear brief
- A check
Why delegation matters. It is what lets a manager's span of control grow. Lena talks to four people a day and not twenty-two because each of the four makes the daily decisions for her own team.
Three weeks for a sandwich: A Goldcrust bakery manager near a new office park wants to sell a lunchtime sandwich. She fills in a product request.
The request's route
Area manager
Her area manager signs it.
Regional director
Then her regional director signs it.
Head office
The product team at head office sets the price.
Approved
Three weeks later the sandwich is approved.
Aisha added the same kind of sandwich at the High Street shop on a Tuesday, after one phone call to Lena.
An organization with many layers of authority, fixed rules and formal approval for decisions is a bureaucracy. Decisions pass through several people and forms, so they are slower. The word is often used about governments, but any large business can become one, and Goldcrust has.
What the rules give Goldcrust
- Every bakery sells the same loaf, at the same price, to the same safety standard
- Head office keeps control of spending across 400 bakeries
- Staff are treated by the same rules wherever they work, and there is a record of every decision
What the rules cost Goldcrust
- Slow decisions: the office-park lunch trade is lost for three weeks
- Staff learn to follow the form instead of thinking about the customer
- Checking and paperwork need managers, and managers cost money
So Goldcrust decides to take out a level. Its three shift supervisors per bakery go, and the counter staff and bakers report straight to the bakery manager. Removing one or more levels of hierarchy from an organization is delayering.
| Before | After delayering | |
|---|---|---|
| Levels of hierarchy | 6 | 5 |
| Steps from the counter to the chief executive | 5 | 4 |
| A bakery manager's span of control | 3 shift supervisors | 24 counter staff and bakers |
| Shift supervisor posts | 1,200 | None |
Why delayering matters: what Goldcrust gains
- 1,200 supervisors' extra pay is saved.
- Messages have one fewer person to pass through, so they arrive faster and less changed.
- Counter staff and bakers take on more of the decisions.
What it risks
- Each bakery manager now has a span of 24 and less time for each person.
- There is one fewer step to be promoted to.
- Supervisors who lose the grade, and staff who wonder who is next, lose morale, and the business loses their experience.
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How this comes up: As a short definition on the case study, for two marks: define the term span of control; define the term levels of hierarchy.
Delegation, chain of command, bureaucracy and delayering can be asked the same way.
What a definition needs: A definition needs no example and no link to the case. Two marks come from two ideas in one sentence: what kind of thing it is, and the detail that makes it exact.
The two-mark pattern
- Say what kind of thing it is. Span of control is a number of people. Levels of hierarchy are layers. Delegation is passing authority down.
- Add the detail that makes it exact. The people a manager or supervisor directly supervises. Layers where each one up has more authority. The manager stays accountable.
- Stop. One sentence, no example, no business from the case.
Three traps
- Width or height. Span of control counts the people under one manager (width). Levels of hierarchy count the layers from top to bottom (height). Swapping them loses both marks.
- Vague words. 'A person' instead of a manager or supervisor; 'people under them' instead of people they directly supervise. Each costs the second mark.
- An example instead of a meaning. 'Lena has four managers' is an example. It shows the term, but it does not define it.
Define the term levels of hierarchy.
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