Organizational Structure of Business

This is defined as a well-planned relationship among the individuals in

the organization and the functions they are performing according to the
stated goals of the firm. In other words, it sets out what everybody in
the organization should do.

These duties are shown in a diagram called an organizational chart. This

diagram is a pictorial representation of the different management
employee positions in a business. They show the lines of authority, the
departments, and specialists, as well as the span of control. (A span of
control represents the number of subordinates a person assigned with
the authority and responsibility can monitor.)

Most organizational. charts of companies show the so-called pyramid

effect where most senior managers and executives have a smaller span
of control than a supervisor at the lowest level.

The supervisor may have several clerical workers and the clerk-typist
reporting to her, whereas the chief executive’s officer will have only top
managers reporting to her. Organizations relies on two types of
relationship between personnel. This relationship consists of Formal
and informal.

Formal Organizational Structure:

There are four basic formal organizational structures:

1. Line
2. Staff
 3. Functional
4. Committee.

Line organization.

The structure of a line organization is based on a direct flow authority

from top management to the lowest level of workers in a company. The
chain of command is straightforward. Each person is directly
responsible to the person immediately above him/her and lines of
authority are very clear. Everyone knows to whom they report.

Line organization chart of a small firm

Owner /Manager

Accounts
Manager
Human
Resource
Manager

Production
Manager
Sales or
Marketing

│ │

Clerks
Foreman
Supervisors

Line organization in a secondary school

Principal

Vice Principal

Deans of college

Head of Department

Senior Teachers

Form Teachers

Subject Teachers

Prefects

Student council

Students

Line organization is particularly suited to small business because

1. It is simple and easy to understand

2. Quick decisions can be made
3. It is easy to control
4. It is very flexible and can adapt as circumstances change.

Staff Organization:

As the organization grows, there is the need for specialist help to

support staff and advice the managers and their departments. The
direct flow of authority from top to bottom (line organization) combines
with a staff department which serves, advises, and supports the
departments. The role of staff personnel is advisory only. Workers
receive daily supervision from a line manager, but a staff manager
advises, suggest and recommend only. A staff person does not have the
authority to direct-to-direct subordinates unless a line manager
delegates that responsibility to her.

Functional Organization:

In this type of organization, it attempts to overcome the weakness of

line organization, the concentration of more duties on a manager than
he can effectively or efficiently carry out. It is an organization structure
based on a downward flow of authority for each specialized activity or
function.
 In this form of organization, one specialist is placed in charge of
one function. In the accounting department, we might have one
supervisor who is responsible for collecting receivables (owed funds
to the Business), one for all disbursements, one for entering the books
etc. Each supervisor manages a team

Committee organizational structure

This type of organization is the grouping of experts and specialists in

committees to advice Management will lead to meaningful and
effective decision-making.

The purpose of the committee type organization is for subordinates to

advice supervisors

CXC questions and suggested answers

Q (1) Explain the difference between a line relationship and staff

relationship.
● In a line relationship, authority contributes directly to
production, while in a staff relationship it is indirect, as staff
functions to support managers.
● In a line organizational structure, authority is exercised directly
over subordinates, while a staff structure provides the secondary
functions of the organization, where it is seen as authority
without responsibility.
● In a line structure, authority “tells and acts’ while in the staff it
“thinks and advises”.
● In a line relationship there is direct flow of authority from top to
bottom and no doubt as to the person in charge. This is typical of
small operation whereas with staff it is like line, but
departments are added, making it much larger in operation.