Human Resources 1 Business Management

Aitana Fernandez Sedeño



ORGANIZATIONAL STRUCTURE


Shows how a business is arranged. It explains:

• Who is responsible for what
• Who reports to whom
• How authority and communication flow

An organizational chart is a diagram that visually shows this structure, including roles, responsibilities,
and reporting lines.

DELEGATION


When a line manager gives a subordinate the authority to complete a task or role. The manager passes
down authority and decision-making but remains responsible for the outcome.

A line manager directly supervises employees shown below them on the
organizational chart and ensures that business objectives are met.

Delegation becomes more common as a business grows, because managers
cannot do everything themselves. It helps share the workload and allows
managers to focus on strategic decisions.

Advantages Disadvantages
Increases employee motivation as workers feel Can increase costs due to higher pay or training.
trusted and valued (Maslow: esteem and
belonging needs).


Improves the speed and quality of decisions, Requires training, which takes time and money.
especially in large organizations.


Reduces the workload of senior managers, Not all employees want or can handle extra
freeing time for planning. responsibility.


Develops employee skills and prepares them for Employees may feel unfairly treated if they do
promotion. more work without reward.


Improves staff retention and morale. Not suitable during crises or in businesses with
low-skilled workers.




SPAN OF CONTROL

,Aitana Fernandez Sedeño


Refers to the number of employees who report directly to one line manager. For example, if a CEO
directly manages four directors, their span of control is four.

There is an inverse relationship between the span of control and
the levels of hierarchy:

• A narrow span of control usually means more levels of
management
• A wide span of control usually means fewer levels of management

NARROW VS WIDE SPAN OF CONTROL

• A narrow span of control allows managers to closely supervise employees and maintain tight
control over decisions. This is common where little delegation is used.
• A wide span of control means a manager is responsible for many employees. This requires
effective delegation and gives workers more independence but can make communication and
control more difficult.

A wide span of control can reduce costs because fewer managers are needed, but it depends on strong
leadership and capable employees.

FACTORS AFFECTING THE SPAN OF CONTROL

1. Employee competencies
Skilled, experienced, and well-trained employees need less supervision, making a wide span of
control more suitable.
2. Managerial competencies
Managers who trust employees and prefer delegation are more likely to use a wide span of
control.
3. Business context
Large organizations and multinational companies (MNCs) often use wider spans of control,
while small businesses tend to have narrower spans.

There is no fixed number that defines a wide or narrow span of control. It depends on the organization,
industry, and situation.

LEVELS OF HIERARCHY


Refer to the number of layers of authority in an organization. These levels are shown in an
organizational chart, where each horizontal layer represents a different level of seniority.

The hierarchy shows:

• Where employees fit in the organization
• Lines of communication
• Decision-making authority
• Responsibilities and accountability




Tall (vertical structure) Flat (horizontal structure)
Has many levels of hierarchy Has few levels of hierarchy

,Aitana Fernandez Sedeño



Usually has a narrow span of control Usually has a wide span of control


Decisions are more centralized Decisions are more decentralized


Allows closer supervision and clearer authority Improves communication speed


Can be expensive due to many managers Fewer promotion opportunities


Can benefit from delegation but may slow Managers may be overworked
communication




CHAIN OF COMMAND


Shows the formal lines of authority in an organization. It explains how decisions and instructions move
from senior management to lower-level employees through the organizational hierarchy.

KEY POINTS

• Commands and decisions are passed downwards through each
level of management.
• Communication follows a clear and formal path, helping
employees know who they should report to.
• Larger organizations and tall (vertical) structures usually have
longer chains of command.
• Flat structures have shorter chains of command.

Advantages Disadvantages
Improves communication, as messages follow a Long chains of command can slow down
clear and structured path. decision-making.


Ensures clarity of authority, so employees know Information may become distorted or
who they report to. misunderstood as it passes through many levels.


Increases accountability, as responsibilities are Can reduce flexibility, especially in large, tall
clearly defined organizations.


Helps decisions and instructions to be Not always practical to shorten the chain in
understood and followed correctly. complex or large businesses.




BUREAUCRACY

, Aitana Fernandez Sedeño


Refers to the administrative system of a business. It includes the company’s formal rules, policies, and
procedures. Bureaucratic organizations rely on clear guidelines and paperwork to control how work is
done.

• These organizations usually have a clear hierarchy, well-defined
roles, and strong accountability, which helps managers maintain
control over business operations.
• Bureaucracy is common in large and well-established
organizations, which often have tall organizational structures
and centralized decision-making.

Advantages Disadvantages
Clear rules and procedures ensure consistency in Inflexible, making it slow to react to change.
decision-making.


Employees understand their roles and Decision-making is slow due to many rules and
responsibilities. approvals.


Improves control and accountability within the Limits creativity and innovation.
organization

Helps managers monitor performance through High levels of paperwork increase inefficiency.
records and audits.




CENTRALIZATION


When decision-making is mainly done by senior managers at the top of the organizational hierarchy. It
is common in tall structures with many levels of management.

FEATURES OF CENTRALIZED ORGANIZATIONS

• Usually has a narrow span of control.
• Leadership tends to be autocratic or paternalistic.
• Ensures better control and all employees follow the objectives set by top
management.
• Decisions can be made quickly in emergencies.

Example: Emergency services (ambulance, fire, police) use centralized structures to maintain strict
control and protect the public.

Advantages Disadvantages
Fast decision-making in critical situations. Delegation is limited, so employees may feel
demotivated.