Organizational Structures

Chapter 10

  • Organizational Structure refers to the level of management and division of responsibilities within an organization

Advantages of an Organization Chart

  • Shows how everyone is linked together
  • Individual can see their own position in the company
  • Shows links and relationship of different departments
  • Sense of belonging

Chain of Command and Span of Control

  • Chain of Command: the structure in the organization which allows instructions to be passed down from senior to lower levels of management
  • Span of Control: number of subordinates working directly under a manager

Advantages of a Short Chain of Command

  • Better communication- quicker & more accurate
  • Top managers are less remote
  • Span of control will be wider:
    Encourages delegation
    More trust

Disadvantages of a Short Chain of Command:

  • Managers could lose control since they have a lot of people under them
  • Subordinates could be incompetent

Functional Departments

  • Line Managers: direct authority over subordinates in their department. They are able to take decisions.
  • Staff Managers: specialist advisers who provide support to the line managers and Board of Directors

Advantages of Employing Both Line and Staff Managers:

  • Staff managers provide advice to the line managers
  • Line managers have more time to concentrate on main tasks

Disadvantages of Employing Both Line and Staff Managers:

  • Conflict and frustration between the two
  • Line employees may be confused who to follow


  • Management structure in which many decisions are delegated to a lower level of management
  • Centralized management structure is where most decisions are taken at a central or higher level of management

Advantages of Decentralization:

  • Decisions are taken by managers who are ‘closer to the action’
  • More trust and satisfaction
  • Decisions made faster

Disadvantages of Decentralization:

  • Fragmentation
  • Less control

Types of Decentralization

  • Functional Decentralization:
    Specialist departments are delegated decision making authority
  • Federal Decentralization:
    Authority is divided between the different product lines
  • Regional Decentralization:
    Bases in many different regions/countries and each has authority over its own operations
  • Decentralization by Project Teams:
    Particular project is given to a team involving people from all functional areas


  • Giving a subordinate responsibilities but keeping the authority

Advantage for Managers

  • More time to make bigger decisions
  • Can assess their staff better and promote the right people
  • Less likely to make mistakes with less workload
  • Increase of trust

Advantage for Subordinates

  • Work becomes more interesting and rewarding
  • They feel more important
  • Training and career opportunities
  • Increase of trust

Why Managers Don’t Delegate

  • Subordinates may fail
  • Manager wants control
  • Subordinate may do a better job than manager
  • Manager feels insecure



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