Managing a Business - People

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Organisational Structure

  • Way in which a business is arranged to carry out activities, shown in organisational chart
  • Diagram showing lines of authority + layers of hierarchy:(

Workloads and Job Allocation

  • Decisions managers have:
    • Who is going to do which jobs?
    • How much work a person can be expected to do?
  • As small business develops entrepreneur cannot do all jobs on his own, much more importance to manage people as business gets bigger

Organisational Hierarchy

  • Each line represents a relationship
    • Instructions/Orders passed downwards - Communication flows
    • Reports and feedback passed upwards - Communication flows
  • Reporting system from top down = Chain of Command
  • Person immediately above someone = Their Line Manager
  • Communication flows = Exchange of information between levels of hierarchy

Layers of Hierarchy

  • Number of different supervisors + management levels between shop floor and chief executive within organisation

Span of Control

  • Number of subordinates whom a manager is required to supervise directly
  • Wide span of control - If manager has many subordinates to supervise
  • Span of control for senior managers is narrower than shop floor supervisors as less people doing the same job

Accountability - Responsibility

  • Extent to which an individual is held responsible for success/failure of particular policy/project
  • If companies management structure is clear staff should know the authority given to them
  • Hertzberg - Achievement + recognition produce employee motivation
  • Authority can be delegated down hierarchy

Delegation + Consultation


  • Process of passing authority down the hierarchy from manager to subordinate
    • Subordinate able to make decisions with particular task
    • Manager still accountable for decision taken


  • Asking employees their views on various issues that will affect them and business
  • Taking into account their views instead of actually passing over decision making

Centralisation Vs. Decentralisation

  • Degree to which authority delegated within organisation 
  • Centralised structure - Decision making power kept at top of hierarchy - Greater degree of central control
  • Decentralised structure - Decisions delegated from…


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