2.2.1 Simple Organisational Structures

This section focuses on understanding basic organisational structures, particularly simple ones. These structures are commonly found in small businesses where there are few employees and a clear chain of command.

What is an Organisational Chart?

An organisational chart (also known as an org chart) is a diagram that shows the structure of an organisation. It illustrates the different roles within the business and how they relate to each other. It visually represents the hierarchy and reporting lines.

Types of Simple Organisational Structures

There are a few common simple organisational structures:

• Line Organisation: This is the simplest structure. It has a clear line of authority from the top (owner/manager) down to the employees.
• Line and Staff Organisation: This structure adds staff specialists (staff departments) who provide advice and support to the line managers.

Interpreting Simple Organisational Charts

To interpret an organisational chart effectively, you need to understand the following:

• Hierarchy: The chart shows the levels of authority within the organisation. Higher levels have more power and responsibility.
• Reporting Lines: These lines indicate who each employee reports to.
• Departments/Divisions: The chart may show different departments or divisions within the business.

Example: A Simple Line Organisation Chart

Consider the following simple line organisation chart for a small retail shop:

Position	Reports To
Owner/Manager	N/A
Sales Assistant	Owner/Manager
Stock Assistant	Owner/Manager

Interpretation:

1. The Owner/Manager is at the top of the hierarchy and has authority over everyone else.
2. The Sales Assistant and Stock Assistant both report directly to the Owner/Manager.
3. There are no staff specialists in this simple structure.

Example: A Line and Staff Organisation Chart

Here's an example of a line and staff organisation chart for a small manufacturing company:

Position	Reports To
Owner/Manager	N/A
Production Manager	Owner/Manager
Production Worker	Production Manager
Quality Control Manager (Staff)	Owner/Manager

Interpretation:

1. The Owner/Manager is at the top.
2. The Production Manager reports to the Owner/Manager and is responsible for overseeing production.
3. Production Workers report to the Production Manager.
4. The Quality Control Manager is a staff specialist who advises the Owner/Manager and the Production Manager on quality issues. They do not have direct line authority over the workers.

Key Advantages of Simple Organisational Structures:

• Easy to understand and implement.
• Clear lines of authority.
• Quick decision-making.

Key Disadvantages of Simple Organisational Structures:

• Can become inefficient as the business grows.
• Limited specialization and expertise.
• Can lead to overload for the top manager.