Is the unbroken line of authority linking each employee with the top most position in the Organisation through a series of management posts?

Doing business today can be a complicated proposition. Sometimes companies adopt complex organizational structures to try to meet the demands of multiple products, locations and customers. Line authority establishes clear connections between departments and positions, helping to create order. Indeed, a structure built around normal line authority provides a solid, simple framework upon which a small business can grow.

Definition

1. The link between superior and subordinate is called line authority. Organizational charts show this link by connecting a supervisor and employee with a solid line. Charts also show entire departments linked to a superior by a line. Such line departments -- production, finance and marketing — are essential to a company. A line manager heads each department and is usually an expert on its activities. Each line manager answers to a superior. In a small business, that superior is likely the owner.

Structure

1. It's sensible to build line departments around essential business functions. Putting together all the people who are responsible for producing a certain product or service, for instance, allows them to share resources, communicate and coordinate efforts toward the same end. Building an organization this way -- employees grouped in line departments, supervised by a line manager, who serves under an owner -- creates what is called the functional organizational structure. It's the structure used most often by small businesses.

Unity

1. Line authority establishes a clear chain of command that reaches from top to bottom in an unbroken line. This creates unity of command: Every person take orders from one boss, eliminating confusion and creating accountability. Power increases with every management level and decision-making authority is largely concentrated at the top, resting in the owner’s hands. Fueled by a vision, the owner sets the company's agenda. Traveling down the chain, each line manager sets departmental goals, guided by the owner’s vision and strategy. Without competing agendas, the company can gain momentum in one direction.

Clear Lines of Communication

1. Communication also travels along authority lines, as managers issue commands to subordinates. Employees use the lines to ask for guidance and resources. Company directives, meanwhile, flow down lines of authority to managers, who become sources of official information for their subordinates and also the subordinates’ representative to management above. Because all company activities depend on communication for accomplishment, the clear channels created when establishing line authority facilitates work.

Divisional

1. If a small business adds new locations, product lines or distinct customer groups, the company can graduate from the functional to the divisional organizational structure. The owner creates separate divisions that, in effect, operate like small businesses, each division devoted to its own region, product or demographic. Each of these strategic business units can adopt a functional structure, gaining the benefits of its line authority. The company as a whole benefits because each small business unit unites behind its own focus, increasing responsiveness.

In an organizational structure, “chain of command” refers to a company's hierarchy of reporting relationships – from the bottom to the top of an organization, who must answer to whom. The chain of command not only establishes accountability, it lays out a company’s lines of authority and decision-making power. A proper chain of command ensures that every task, job position and department has one person assuming responsibility for performance.

Command Chain Formation

The command chain doesn't happen accidentally. Organizational designers lay it out as the last step in creating an organizational structure. Planners first consider a company’s goals since organizational structure must support strategy. Designers next determine the tasks needed to reach the goals.

Departmentalization follows as designers decide how to group the tasks. Grouping affects resource sharing and the ease with which people communicate and coordinate work. After departmentalizing, designers assign authority for tasks and areas. Once authority is assigned, planners can finally lay out the relationships between positions, thereby creating a chain of command.

Reporting Relationships and Organizational Chart

The reporting relationships established in the final step of organizational design are easy to see on an organizational chart, which depicts a company’s structure. Starting at the bottom, each position is connected to one above it by a line. Following the line vertically from position to position reveals the chain of command. Each person is one link in the chain.

Span of Control

A manager may be linked to many or few subordinates. The number of people reporting to a manager is called a manager’s span of control. Managers with wide spans of control have many subordinates, and it’s not possible for a manager to closely examine activity. Consequently, employees under such managers have more authority to perform their jobs and even make decisions than do employees reporting to managers with narrow spans of control.

Flat Organizational Structures

When a manager has a wide span of control, the organizational chart takes on a horizontal, flattened appearance. Fewer managers are needed in middle management, so the company has less of a power hierarchy. These are characteristics found in organic organizational structures. In organic structures, the chain of command’s importance is de-emphasized, since power is distributed among employees.

The chain may only consist of employees and the owner or employees to a manager to the CEO, making for a very short chain of command. Lacking bureaucracy, flat organizations can readily mobilize to meet market conditions.

Vertical Organizational Structures

Managers closely supervising subordinates can only manage a few. These managers have narrow spans of control. Narrow spans require more managers to make sure all employees are properly supervised. These managers must also be managed closely, given their involvement in details and decision-making.

This results in tall organizations with several layers of middle management. The chain of command is important and is used to exert control from the top. Many rules govern activities. Such structures are rigid and mechanistic, leaving little room for innovation and creativity.