Organisation Design

Organisational hierarchies

A hierarchy describes the structure of the management of the business, from the top to
the bottom of the business.

The hierarchy is usually best understood by drawing an organisation chart showing which
levels of management and employees report to whom.

The organisation chart can be tall or flat depending on the number of levels of authority.

The flatter the structure the more decentralized the decision making.
Hierarchy can be both formal and informal. In a formal hierarchy job roles are clearly
defined with clear lines of accountability and responsibility. I.e. a clear chart can be
drawn and is understood by managers and employees.

In an informal hierarchy roles and responsibilities are more fluid and may change on a
daily basis. There will be no formal chart.

Wide span of control

A manager has many subordinates under his control for whom he is directly responsible.

It is normal for the span of control to be narrower at the top of a business as the senior
managers have more complex and important roles that are more difficult to supervise.
Lower down the hierarchy managers can have wider spans as they are supervising
individuals who do similar and less complex jobs.

Narrow span of control

A manager has few subordinates under his control for whom he is directly responsible.


When a business removes an entire layer of the hierarchy

Functional management

The business structure or hierarchy is organised traditionally under separate

Matrix management

The business structure is made up of different project teams working on separate tasks,
each of which will include people from different departments and at different levels of the
Very useful for project-based type of businesses e.g. advertising, as can meet customer
needs quickly and can have specialists working together.