Key Idea: Every business has to decide who reports to whom and who can decide what. This topic is the shapes that answer takes, the words for its parts, and how to tell which shape fits a business now.
The shape
- Tall: many levels, narrow spans, clear promotion, slow messages.
- Flat: few levels, wide spans, fast messages, busy managers.
- Grouping: by function, by product or by region; a matrix gives people two managers.
The words for the parts
- Levels of hierarchy, chain of command and span of control describe the chart.
- Delegation passes a task and the authority down; accountability stays up.
- Delayering removes a level; bureaucracy is too many rules and forms.
Who decides
- Centralized: the owners or head office decide, the rest carry it out.
- Decentralized: decisions pass down to shops and managers near the customer.
- The right answer depends on the business, its staff and what is changing outside.
The words to know
| Word | Means | Do not confuse with |
|---|---|---|
| Levels of hierarchy | the number of layers of management and staff, from the top to the bottom | the span of control, which counts across, not down |
| Span of control | the number of people a manager directly supervises | everyone below the manager |
| Chain of command | the route an instruction takes down, and a question takes up, the levels | the span of control |
| Delegation | passing a task and the authority to do it to someone lower down | accountability, which stays with the manager |
| Bureaucracy | rules, forms and approvals that slow decisions down | a tall structure on its own |
| Delayering | removing a level of the hierarchy, usually a layer of managers | cutting any jobs at all |
| Centralization | keeping decisions at the top or at head office | a tall structure: who decides is a separate question from how many levels |
| Decentralization | passing decisions down to people nearer the customer | delegation of one task |
| Matrix structure | people report to a functional manager and a project manager at the same time | a structure by product |
For a comment on a chart: say what the chart shows (levels, spans, grouping), then what that means for this business, good or bad. For a definition: the plain meaning in one sentence, with the one word that makes it precise, such as 'directly' in span of control.
Exam-style question
Lena's Bakery Ltd is run by its two directors, Lena and Marco. Reporting to them are three shop managers, Aisha, Kofi and Jonas, and Priti, the head baker. Aisha has four counter staff, Kofi and Jonas have three each, and Priti has six bakers. Construct an organization chart for Lena's Bakery Ltd.
Model answer plan
See the mark-by-mark plan — for / against / judgement, with marking guidance — in study mode.
Important: Span of control counts only the people who report directly to a manager. Lena's span is 4, not 22. And keep the two questions apart: tall or flat is about levels; centralized or decentralized is about who decides.
Tap each card to check yourself.
Priti has six bakers reporting to her. What is her span of control? Six. Only the people who report to her directly count.
Goldcrust removes its shift supervisors. What is this called? Delayering. A level of the hierarchy goes, so each bakery manager's span of control gets wider.
Lena gives Aisha the flour order. The shop runs out. Who is accountable? Lena. She delegated the task and the authority, but the accountability stayed with her.
By function, product or region: production, shops, marketing, finance? By function. Each department is a kind of job. By product would be bread, cakes and wholesale.
When does a matrix structure fit? For a project that needs several specialists at once, such as a new range, if the managers agree priorities between themselves.
Centralized or decentralized: each shop sets its own prices? Decentralized. The decision has passed down from the directors to the shop managers.
Exam tips
- Span of control means directly supervised: count across one level, not everyone below.
- Tall or flat is about levels; centralized or decentralized is about who decides.
- Delegation passes the task and the authority, never the accountability.
- To construct a chart, draw boxes in levels joined by lines, and label every box.
- No structure is best for every business: say which fits this one, at this size, now.