Organisational Structure: Control, Authority And Trust (Copy)

1. Meaning Of Control, Authority, And Trust

• Control
  • The ability of managers to monitor, supervise, and influence employee performance.
  • Ensures tasks are completed according to plans and standards.
• Authority
  • The formal right to give orders, make decisions, and allocate resources.
  • Flows down the hierarchy (from senior managers to subordinates).
• Responsibility
  • The duty of employees to complete assigned tasks effectively.
  • Can be delegated, but accountability remains with the manager.
• Trust
  • Confidence managers place in employees to work independently.
  • A key factor in effective delegation, motivation, and teamwork.

2. Relationship Between Span Of Control And Levels Of Hierarchy

• Span Of Control (SoC):
  • Number of subordinates reporting directly to a manager.
  • Formula:
    SoC = (Number of subordinates ÷ Number of managers)
• Levels Of Hierarchy:
  • Layers of authority and responsibility in an organisation.
  • More layers = tall structure, fewer layers = flat structure.

• Business Link:
  • Businesses with a growth objective may increase levels of hierarchy (tall).
  • Innovative firms may prefer flat structures for flexibility.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course

3. Difference Between Authority And Responsibility

Quick Rule:
Authority can be given, responsibility is accepted, but accountability always remains.

4. Conflicts Between Control And Trust In Delegation

• Control vs Trust:
  • Control requires monitoring, checking, and strict supervision.
  • Trust requires giving employees autonomy and decision-making freedom.
• Potential Conflicts:
  • Too much control → demotivation, lack of creativity.
  • Too much trust without monitoring → risk of mistakes, fraud, or poor decisions.
  • Balance is necessary → enough freedom to motivate, but enough control to ensure accountability.

Examples:

• Google uses high trust (flexible working, 20% time for innovation) → encourages creativity.
• Manufacturing plants often require strict control for safety and quality reasons.
• Banking sector requires tighter controls due to risk of fraud.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course

5. Strategic Implications Of Control, Authority, And Trust

• Centralised Structure (High Control, High Authority)
  • Best for cost leadership, mass production, and standardisation.
  • Risk: slow decisions, low flexibility, demotivated staff.
• Decentralised Structure (High Trust, Shared Authority)
  • Better for dynamic industries requiring innovation and quick decisions.
  • Risk: inconsistency, loss of control, duplication of effort.
• Balanced Approach
  • Effective organisations mix control (to ensure accountability) and trust (to empower employees).
  • Improves innovation, motivation, and efficiency.

6. Quick Revision Table

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course

7. Evaluation Points For Exams

• Businesses must balance control and trust:
  • Too much control → slow decisions, bureaucracy.
  • Too much trust → risk of poor decisions or mistakes.
• Span Of Control:
  • Narrow → more control, less delegation, slower decisions.
  • Wide → faster decisions, more responsibility for staff, risk of errors.
• Levels Of Hierarchy:
  • More levels = clear authority, but expensive and slow communication.
  • Fewer levels = flexible, but less supervision.
• Cultural Fit:
  • Some cultures value hierarchy (e.g., Japan), others value decentralisation (e.g., US start-ups).
• Stakeholder Perspective:
  • Employees may prefer trust and autonomy (increases motivation).
  • Shareholders may prefer tighter control to reduce risk.
• Effective leadership and intrapreneurship encouragement requires trust.

8. Quick Examples For Revision

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course