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The chain of command Traditionally, organizations have a hierarchical or pyramidal structure, with one person or a group of people at the top, and an increasing number of people below them at each level. This is sometimes called line structure. There is a clear chain of command running down the pyramid. All the people in the organization know what decisions they are able to make, who their line manager (or boss) is (to whom they report), and who their immediate subordinates are (over whom they have line authority, and can give instructions to).   Functional structure Yet the activities of most organizations are too complicated to be organized in

a single hierarchy. Most large manufacturing companies, for example, have a functional structure, including, specialized production, finance, marketing, sales, and human resources departments. This means, for instance, that the production and marketing departments cannot take financial decisions without consulting the finance department. Large organizations are often further divided into separate operating divisions.

A disadvantage of functional organization is that people are often more concerned with the success of their own department than that of the company as a whole, so there are permanent conflicts between departments over what the objectives are.

Flattening hierarchies and delegating responsibility A problem with very hierarchical organizations is that people at lower levels can't take important decisions, but pass on responsibility to their boss. However, the modem tendency is to reduce the chain of command, take out layers of management, and make the

organization much flatter. Advanced IT systems reduced the need for administrative staff and enabled companies to remove layers of workers from the structure. Many companies cut back and eliminate jobs in recessions. Typically, the owners of small firms want to keep as much control over their business as possible, whereas managers in larger businesses want to motivate their staff and often delegate decision making and responsibilities to other people.