An organisation chart is a diagram of who reports to whom inside a business. To read one, count three things: the levels of hierarchy, the chain of command and each manager’s span of control. Then say what each count means for the business, because that is the part a case question rewards.
This is the first lesson in organisation and communication. It prepares you for delegation in a concrete task and for centralised and delegated decisions.
What do the main terms mean?
- Hierarchy: the layers of authority from the owner or director downwards. The number of levels is the number of layers from the first box to the last box, counting both ends.
- Chain of command: the line of authority from the director or owner to one particular employee. It shows who passes instructions to whom.
- Span of control: the number of subordinates who report directly to one manager. Count direct reports only, not everyone further down.
- Line manager and subordinate: your line manager is the person directly above you. You are their subordinate.
A chart with many levels and narrow spans is called tall. A chart with few levels and wide spans is called flat. Check which exact terms your syllabus version names on the Cambridge subject page for 0450 or 0264.
How do you read a chart, step by step?
- Find the first box and note who is in charge of the whole business.
- Count the levels by following the longest line from the first box to the last box.
- Count the span of any manager by counting only the boxes directly beneath them.
- Trace the chain of command for one employee by moving upwards box by box.
- Say what it means: speed of messages, how much control each manager has, and how many managers the business pays for.
Worked example
Bakeri Kasturi is a bakery in Melaka with this chart:
Managing Director (Puan Aini)
├── Production Manager (Encik Zul)
│ ├── Head Baker (Cik Mei Ling)
│ │ └── 4 bakers
│ └── Packing Supervisor (Encik Ravi)
│ └── 3 packers
├── Sales Manager (Puan Siti)
│ └── 5 sales assistants
└── Finance Manager (Encik Lee)
└── 1 clerkLevels. The longest line is Managing Director, Production Manager, Head Baker, baker. That is 4 levels.
Span of control. Puan Aini has 3 managers reporting to her, so her span is 3. Encik Zul has 2 (the Head Baker and the Packing Supervisor), so his span is 2. Puan Siti has 5.
Chain of command for a packer. Packer, Packing Supervisor, Production Manager, Managing Director.
Total people. 1 + 3 (managers) + 2 (Head Baker and Packing Supervisor) + 4 + 3 + 5 + 1 = 19. Check again by adding the groups: 1 + 3 = 4, plus 2 = 6, plus 4 = 10, plus 3 = 13, plus 5 = 18, plus 1 = 19.
What it means. A message from Puan Aini to a baker passes through 2 people, while a message to a sales assistant passes through only 1. The bakery floor therefore hears news later than the sales team, so Puan Aini may need to brief the Head Baker directly when a change is urgent.
The mistake to watch for
A common slip is to count everyone below a manager as their span of control.
Mistaken answer: “The Managing Director’s span of control is 18, because 18 people work below her.”
The 18 are all her subordinates, but span of control counts only direct reports. The baker reports to the Head Baker, not to Puan Aini.
Correction: “The Managing Director’s span of control is 3, because only the three managers report directly to her.”
Check yourself
Use this chart. The owner of a print shop, Encik Dev, has 2 supervisors. Supervisor A has 7 staff and Supervisor B has 5 staff.
1. What is Supervisor A’s span of control, and how many people work in the shop altogether?
Show answer
Supervisor A’s span is 7. Total people: 1 owner + 2 supervisors + 7 + 5 = 15.
2. How many levels of hierarchy are there?
Show answer
Owner, supervisor, staff: 3 levels.
3. Encik Dev adds a deputy supervisor between Supervisor A and her 7 staff. What happens to the number of levels on that side, and why might it matter?
Show answer
That line now has 4 levels: owner, supervisor, deputy, staff. Messages to those staff pass through one extra person, so they may arrive later or be changed on the way. The deputy may, however, give each person closer supervision.
Where this leads next
Once you can read a chart confidently, move on to explaining delegation in a concrete task, then test the whole module with the organisation and communication practice set. When a case adds figures such as wages or sales next to the chart, the cash versus profit bridge and the ratios tool help you keep the numbers separate from the structure.
Some students can count every box correctly yet still lose marks because they never say what the structure means for this business. That is the kind of pattern our teachers look for in online one-to-one Business tuition.