BUSINESS EDUCATION

GRADE 9: Planning and Organizing the Business March 2021

Organizational Chart
A simple way to show how activities and individuals are organised within a business is to use an
organizational chart. An organizational chart is a diagrammatic/pictorial representation of the flow of
responsibility and authority in an organisation. It illustrates the roles of people in an organization and the
relationship between them.

The pyramid shape of an organizational chart illustrates the hierarchy system that exists in the
organization. The most senior position is placed by itself at the top. Each level in the hierarchy represents
a grade/rank of staff. Lower ranks are subordinate to superiors of a higher rank.

Authority flows
General
Manager Responsibility
downwards
flows upwards

Consultant

Production Sales Accounts

Manager Manager Manager

Quality Sales Sales Accounts Accounts

Operations
Control Supervisor Supervisor Payables Receivables
Supervisor
Supervisor North South Supervisor Supervisor

Sales Clerk Sales Clerk Slaes Clerk Sales Clerk

Figure 1. PARTIAL ORGANIZATIONAL CHART FOR ESSENCE LTD.

Those who have power to issue commands and make decisions, have authority in the organization. The
organizational chart above shows that there is a clear line of authority running down the organisation:
from the General Manager to the departmental managers to the various supervisors. All persons with the
same level of authority are placed at the same level on the chart. For example the Sales Manager and the
Accounts Manager have the same level of authority in their various departments.

Responsibility is the capacity to accept duties and carry out their tasks. Both Sales Supervisors are
responsible (report) to the Sales Manager. Likewise, the Accounts Payables Supervisor and Accounts
Receivables Supervisor are responsible to the Accounts Manager.

An organisational chart for a business shows the following:

• Each person’s position

• The organisational hierarchy: This is the different levels of management within the
organisation. For example, the General Manager would be upper level management, the
department managers would be middle management and the supervisors would be lower level
management.
• The span of control - This refers to the number of employees that report directly to a supervisor
or manager. For example, the Production Manager would have a span of control of two (2)
workers; the Quality Control Supervisor and the Operations Supervisor. Another example would

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 be the Sales Supervisor North, who also has a span of control of two (2) workers; two sales
clerks.
• The chain of command - This refers to the flow of authority within an organisation that dictates
who is in charge of whom and of whom permission must be asked. In other words, it answers the
question of “who reports to whom?” For example, the Production Manager, Sales Manager and
Accounts Manager all have to report to the General Manager because he is in charge of them.
Another example would be of the Quality Control Supervisor and Operations Supervisor; they
have to report to the Production Manager.
• The support staff – This refers to individuals who provide supplementary support to managers
within the organisation and include: secretaries, administrative assistants, legal advisors etc. For
example, the General Manager receives support from a Consultant.

ACTIVITY

A. Use the organizational chart below to answer the questions that follow.

Chief
Executive
officer

Human
Finance Marketing Production
Resources
manager Manager Manager
Manager

Bill Recruit- Warehous-

Invoicing Wages Sales Promotions Training
Payment ment ing
supervisor Supervisor Supervisor Supervisor Supervisor
supervisor Supervisor Superrvisor

Staff Staff Staff Staff Staff Staff Staff Staff

Organizational Chart for Thompson Pet Foods Limited

1. What is an organizational chart? (2 marks)

2. Explain what is meant by “chain of command”. ( 2 marks)
3. According to the chain of command, to whom do the following workers report to? (3 marks)
a. Sales Supervisor and Promotions Supervisor
b. Recruitment Supervisor
c. Human Resources Manager
4. Define the term “span of control. (2 marks)
5. Identify the span of control for the following managers (6 marks)
a. Finance Manager
b. Marketing Manager
c. Production Manager TOTAL: 15 MARKS

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 B. Use the organizational chart below to answer the questions that follow.

Organizational Chart for Jamison Company Limited

Managing Director

Secretary

Production Marketing Human Resources

Finance Manager
Manager Manager Manager

Sales Salse
Operations Clerk Operations Clerk Accounts Clerk HR Officer
Representative Representative

1. Identify the employee within the company who may be referred to as ‘support staff’. (2 marks)
2. What is the span of control of each departmental manager? (8 marks)
a. Production Manager
b. Finance Manager
c. Marketing Manager
d. Human Resources Manager TOTAL: 10 MARKS

REFERENCES

Balliram, R., Budd, P., Emmanuel, E., Guiness, M., Husbands, R., McCloskey, J., & Ragoo Bitu, R.
(2016). Principles of Business for CSEC Examinations. London: Macmillan Publishers Limited.

Caribbean Examinations Council ®. (2011) Principles of Business for CSEC (for self-study and distance
learning). Oxford, United Kingdom: Oxford University Press.

Robinson, K. and Hamil, S. (2011) Principles of Business for CSEC with SBA, Study Guide and
Exercises: Carlong Publishers

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