2.5 Organisation structure and employees

2.5.1 Organisational charts for different types of business

An organisational chart is a diagram that visually conveys a business’s internal structure. There are different types based on business structures such as:

Hierarchical and Flat

Hierarchical - A structure with multiple layers of management. It is better suited for large businesses and the many layers of structure create a pyramid shape.

Flat - When there are little to no layers of management between employees and those of higher authority. It is more common among small businesses as there are fewer employees and messages as quickly passed along.

Centralised and Decentralised

Centralised - A structure where authority to decision-make is located a the top of the hierarchy. Decisions are usually made by senior leadership in a head office or headquarters.

Decentralised - When decision-making authority is distributed among several levels. Here, lower-level employees will have more authority and decisions will usually be made faster.

2.5.2 Roles and responsibilities of employees in terms of compliance and accountability

Span of control

Definition: The number of employees a manager or supervisor directly oversees.

  • A wide span of control means that a single manager supervises many employees. This means there would be fewer levels such as in a flat structure.

  • A narrow span of control refers to a manager overseeing fewer employees. Therefore, there would be more levels to the hierarchy.

Chain of command

Definition: The structure of an organization that allows instructions to be passed on from senior managers to lower levels of management.

  • Represents how authority is passed down in an organisation.

  • Managers are responsible for those directly below them in the hierarchy.

Delegation

Definition: The process of assigning tasks and responsibilities from managers to subordinates.

  • Managers assign tasks to subordinates for which they become responsible.

  • Managers are accountable for their subordinates and their work.

2.5.3 The different functional areas within a business

Human Resources

Definition: The department/function responsible for managing the workforce of a business.

Responsibilities:

  • Workforce planning

  • Recruitment and selection

  • Training

  • Health and Safety

  • Staff welfare

  • Employment issues

  • Industrial relations

  • Disciplinary and grievance procedure

  • Dismissal

  • Unfair dismissal

  • Redundancy

Finance

Definition: The department/function responsible for the financial resources of a business.

Responsibilities:

  • Wages/salaries

  • Cash-flow forecasting

  • Budgets

  • Accounting

Marketing

Definition - The department/function within a business that helps to promote its brand, products and services.

Responsibilities:

  • Market research

  • Product planning

  • Pricing

  • Sales promotion

  • Advertising

  • Customer service

  • Public relations

  • Packaging

  • Distribution

Production

Definition - The department/function that is directly involved in manufacturing products.

Responsibilities:

  • Manufacturing the product

  • Designing new products

  • Quality control

  • Stock control