Page 94 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 2 People in business

In a typical business situation, instructions are passed down the chain of
command, whereas information about performance, for example monthly sales
figures, are passed up the chain of command.

KEY TERM Delegation
When authority is passed down the chain of command this is known as delegation.
Delegation: passing authority

In Figure 7.2, the Marketing Director delegates authority for specific tasks to the two
down through the organisational

hierarchy to a subordinate. Sales Managers. They, in turn, delegate authority for the performance of certain tasks
to the sales staff. However, it is important to know that responsibility for the successful

completion of a task remains with the manager. If mistakes are made, or the task is not
completed, then the manager who delegated the task will have to take the blame.

The advantages and disadvantages of delegation, to both the business and
employees, are discussed later in this chapter.
ACTIVITY 7.3

Using Figure 7.2, are the following statements true or false?
1 The Factory Manager of Team B delegates authority to ten workers.
2 The Human Resources Director delegates authority to the Recruitment Manager.
3 The CEO delegates authority to the Cashier.
4 The Factory Manager delegates authority to two supervisors.
5 The Cashier delegates authority to the Credit Controller.

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KEY TERM Span of control
Each manager or supervisor is in charge of a number of employees, or subordinates.
Subordinate: an employee who

The number of subordinates reporting to each supervisor or manager is called the
is below another employee in the

organisation’s hierarchy. span of control. In Figure 7.2, the CEO has a span of control of five – the directors of
each business function.
ACTIVITY 7.4

In Figure 7.2, who has exactly the same size span of control as the CEO?

KEY TERM A span of control can be described as ‘wide’ or ‘narrow’ depending on how many
subordinates a person is responsible for. For example, using Figure 7.2 we could
Span of control: the number of say the supervisor of Team A has a wide span of control because they are directly
subordinates reporting to each
responsible for eleven workers. However, the Factory Manager, who is only directly
supervisor/manager.
responsible for two workers, has a narrow span of control.

There are a number of factors that affect the size of the span of control including:

■ The difficulty of tasks – if the work that subordinates do involves simple and
repetitive tasks, then a wide span of control can be used. The more complex the
task subordinates do, the more likely that a narrow span of control will be used.
■ The experience and skills of workers – highly skilled and experienced workers
may require less control than those who are less skilled and less experienced. The
span of control will often be wider when subordinates are more skilled and more

experienced.