KNOX ACADEMY

STANDARD GRADE
ADMINISTRATION

UNIT 1a

INTRODUCTION TO
BUSINESS
ORGANISATIONS

PUPIL NOTES

Standard Grade Administration

What does an organisation chart show? ...................................................... 3

What are the benefits of preparing an organisation chart?........................... 4

What is the usual shape of an organisation chart? ...................................... 5

Pyramid structure ...................................................................................... 5

What are the advantages and disadvantages of different types of

management structures? ............................................................................ 6

Tall structure ............................................................................................. 6

Flat structure ............................................................................................. 7

What is a chain of command? ..................................................................... 8

What are the main types of relationships within an organisation? ............... 8

How may organisations change? ................................................................. 9

Restructuring ............................................................................................. 9

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Standard Grade Administration – Unit 1a Notes 2
Unit 1a: Organisations of Departments

What does an organisation chart show?

An organisation chart shows:

¾ The management structure and the main departments
within an organisation.

¾ The titles of main jobs (posts) within an organisation and

within each department.

¾ Organisation charts may also show the names of the people holding the main
posts.

¾ The relationships between the various posts – posts which have the same
level of authority or responsibility are shown on the same level.

¾ The reporting structure – a person will usually report to, and be accountable
to, the person immediately above him/her on the organisation chart.

¾ The number of people who are accountable to each manager.

An organisation chart will not usually show all the jobs in an organisation – there
simply isn’t the space.

Organisation chart The management structure of an organisation sown in a

diagram.

Accountability The obligation an employee has to justify or explain

her/his actions or decisions (an employee will be
accountable to her/his line manager.

Authority The power that an employee has to instruct others and

take decisions.

Responsibility The obligation an employee has to carry out a range of

tasks or duties (duties may include supervising other
people).

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Standard Grade Administration – Unit 1a Notes 3
An employee will usually report to the person(s) immediately above her/him on
the organisation chart. If for some reason, that person is not available then the
employee will report to the next person further up the chart.

Employees who are on the same level within the department will usually
communicate with each other about their work. They will not usually be
expected to communicate about their work with employees in other
departments.

What are the benefits of preparing an organisation chart?

Customers or visitors to a firm:

¾ Gain an immediate impression of the overall size of

the organisation

¾ Gain an immediate impression of the type of work

carried out in the organisation

¾ Are given a better idea of who to contact within

the organisation.

Employees of a firm:

• Can immediately see the overall size and structure of the organisation (how
the various sections are grouped and the main areas of work of
departments/sections)

• Can see at a glance the reporting structures and the lines of communication
within the organisation

• Can see the number of people who are accountable to each senior manager

• Can immediately see the relationships of the departments and managers

within the organisation

• Are made aware of the range of activities undertaken by the organisation.

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Standard Grade Administration – Unit 1a Notes 4
What is the usual shape of an organisation chart?

An organisation chart is usually shaped like a pyramid with a few senior or high
status posts at the top of the pyramid, with a greater number of
lower status posts at each of the levels below. In a pyramid (or
hierarchical) structure, posts with the same level of
authority/responsibility are shown on the same level.

There may be many levels of posts within the organisation. The

pyramid structure of an organisation with four levels of posts may
appear as shown:

The span of control of a manager refers to the number of staff who report
directly to the manager. A manager with a wide span of control will have many
staff reporting directly to her/him; managers with a narrow span of control
have to be able to delegate work. Where the span of control is narrow it is
easier for the manager to supervise and keep control of the work of her/his
staff.

Pyramid (hierarchical) Posts with the same status or authority are grouped
structure together and shown above on the same level – posts
with more authority are shown above and those with
less authority below.

Span of control The number of staff reporting directly to a manager

delegate Pass on to selected employees the authority and

responsibility to carry out a task or activity

Pyramid structure

A pyramid structure with many levels of posts is known as a tall structure. In

recent years there has been a move towards removing certain levels of
management posts (known as delayering). This has resulted in flatter
structures. Delayering an organisation will lead to more posts at each of the
remaining levels.

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Standard Grade Administration – Unit 1a Notes 5
What are the advantages and disadvantages of different
types of management structures?

TYPES OF STRUCUTRES ADVANTAGES DISADVANTAGES

FEATURES
Tall structure ¾ It should be easier ¾ Employees may feel
for managers to undervalued and far
¾ A structure which has supervise staff removed from the
many levels of ¾ There are likely to real decision-making
management posts be many ¾ Employees may not
¾ Managers will usually opportunities for get the opportunity
have narrow span of promotion to suggest ideas or
control ¾ Employees are more show initiative
¾ Management posts likely to know their ¾ Decision-making may
tend to be specialised immediate boss be slow
¾ Employees are more ¾ It may take time to
likely to know the communicate
scope of their decisions throughout
duties and the organisation
responsibilities ¾ The management
structure may be
costly with many
levels of highly-paid
posts
¾ May lead to
complicated channels
of communication
with very formal
procedures

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Standard Grade Administration – Unit 1a Notes 6
TYPES OF STRUCUTRES ADVANTAGES
FEATURES
Flat structure ¾ Employees are given
more authority and
¾ A structure which has responsibility – they
few levels of are likely to feel
management more motivated
¾ Managers have wider ¾ Employees are more
span of control likely to be able to
show initiative
¾ Employees are more
likely to feel
involved in making
decisions
¾ Communication
channels are likely
to be less
complicated and less
formal
¾ Communication is
likely to be more
efficient
¾ Should take less
time to reach
decisions and for
the organisation to
react to situations
¾ Should take less
time to communicate
decisions through
the organisation
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Standard Grade Administration – Unit 1a Notes
DISADVANTAGES
¾ Workloads of
employees are likely
to increase – possibly
of stress
¾ Employees may need
training to carry out
new/wider
responsibilities
¾ Where the span of
control is too wide,
employees may feel
isolated or ignored
¾ Employees may not
be able to meet with
their line manager on
a regular basis
¾ Likely to be fewer
opportunities for
promotion to
management posts.
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 In the Admin Department
the Admin Director gives
instructions to the Admin
manager and the Admin
Manager gives instructions
What is a chain of command? to the Admin assistant. The
Admin assistant gives
instructions to the
The way in which instructions are passed down through Assistants and
various levels is known as the chain of command. Receptionists. That is the
chain of command.

Each level through which instructions are passed can be seen

as a link in the chain – having more levels of management leads to more links in
the chain of command. Instructions should be passed down through each level
within the organisation.

Chain of The way in which instructions (commands) are passed down

Command form one level of post to another within an organisation

What are the main types of relationships within an

organisation?

There are two main types of relationships within an organisation:

Line Relationship

These exist between line managers and the staff immediately below them.
Members of staff are accountable to
their line manager for any actions or
decisions they take. Line relationships The sales and Marketing Director has a
line relationship with the Sales
are shown by the vertical lines on an manager and the Marketing Manager.
organisation chart and stretch down
The Sales Manager and the Marketing
through the whole organisation. Manager have a lateral relationship
with each other.
Lateral Relationships

These exist between employees who

are on the same level and who report to the same line manager. The employees
cannot give instructions to each other or to staff out with their span of control.

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Standard Grade Administration – Unit 1a Notes 8
How may organisations change?
Restructuring
Organisations are unlikely to remain the same year after year. The internal
structure may require to be changed (restructured) because the organisation is
expanding or contracting.
Cause of Features
restructuring
Growth ¾ The organisation increases the
amount and/or range of
product/service sold.
¾ More staff is employed to meet
increased sales.
¾ The organisation may have to
increase the size of its premises
Downsizing ¾ The organisation reduces the
number of staff employed
without aiming to reduce output
– some members of staff are
likely to be made redundant
¾ Reduces the organisations
staffing costs
Delayering ¾ The organisation removes
certain levels or layers of
management posts
¾ Results in wider span of control
¾ Should lead to management cost
savings
Outsourcing ¾ The organisation buys in services
eg computer software design,
security or office cleaning, from
another firm on a contract basis
instead of getting its own staff
to carry out the work
¾ The organisations benefits from
subcontracting specialists
¾ The organisation can focus on its
core (main) activities
¾ May result from downsizing
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Standard Grade Administration – Unit 1a Notes
Effect on organisation chart
¾ More staff employed at the
various levels
¾ May result in new
departments
¾ May result in new specialist
posts
¾ May lead to more levels of
management
¾ Main departments are likely
to remain although
departments may have to
take on more duties
¾ Some posts are likely to
disappear leading to fewer
posts at each level
¾ Some workers will have
increased responsibility
¾ Will result in a flatter
structure
¾ Fewer levels of
management posts
¾ Some workers will have
increased responsibilities
¾ Should result in a simpler
organisation chart with
fewer departments and/or
fewer specialist members
of staff
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