Unit 2 - ORGANISATION CHARTS

Organisation charts show who does what in a business and who is responsible to whom. This is known as the HIERARCHY or the CHAIN OF COMMAND

Click on the names to view video (except marketing)

(In addition many businesses have a PURCHASING MANAGER who is responsible for buying in raw materials and supplies for the making of the good.)

You will notice on the organisation tree that there are lines under each manager – 3 under the production and personnel managers, 2 under the finance manager and 4 under the marketing manager.  These represent the number of workers directly under their control.  This is known as their SPAN OF CONTROL.  So the Span of Control of the production and personnel managers is 3, that of the finance manager 2 and that of the marketing manager 4.

A large span of control is good for a manager insofar as it means that they can benefit from SPECIALISATION – more different skills from a larger number of workers.  It also reduces the chance of personality clashes and means more status and a higher salary for the manager.  It can be bad if communications become poor among a larger group of people who might not work together as well as a smaller number.

The organisation tree above is fairly typical for a limited company.  It is hierarchical and centralised – all power ultimately resides in the hands of the Managing Director at the top.  There may be ‘flatter’ organisation trees that are more ‘democratic’ – for instance in a co-operative:

These involve all workers more in decisions, making them feel more part of the business and so more likely to work hard and less likely to strike, go slow or leave.  They can be chaotic however, lacking management skills and leaving it unclear who has the final say in the event of disagreements, making decision making slow.

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