1. Level 2 Diploma in Business Administration
Unit 2 – Understand employer organisations
1.2 The functions of different organisational structures
1.3 The functions of different types of legal structures

2. Understand employer organisations
This presentation will help you to understand different structures within organisations and also the features of different legal structures
This will improve your knowledge about your own and other employer organisations
This presentation should be used alongside the activities listed throughout
Ask your assessor if you are unsure about anything.

3. Understand employer organisations
Organisational structure:
All organisations that consist of more than one person need a structure to show how different parts of the organisation fit together, how information is communicated and who is responsible for tasks and people.
Think of the structure as the skeleton supporting the organisation and giving it shape. Just as each bone in a skeleton has a function, so does each branch and level of the organisational structure. The various departments and job roles ensure the organisation performs its vital tasks and goals.

4. Understand employer organisations
There are a number of technical terms that you may need to familiarise yourself with:
Hierarchy refers to the management levels within an organisation
Line managers are responsible for overseeing the work of other staff
Subordinates report to other staff higher up the hierarchy. Subordinates are accountable to their line manager for their actions
Authority refers to the power managers have to direct subordinates and make decisions
Delegation is when managers entrust tasks or decisions to subordinates
The chain of command is the path of authority along which instructions are passed
Lines of communication are the routes messages travel along.

5. Understand employer organisations
Organisation charts are diagrams that show the internal structure of the business.
They make it easy to identify the specific roles and responsibilities of staff. They also show how different roles relate to one another and the structure of departments within the whole organisation.
Charts can be made up in different ways depending on the type of structure chosen by the organisation.

6. Understand employer organisations
Here’s a useful video about organisational structures.
If this video does not play correctly it can be found here:

7. Understand employer organisations
Managing Director
Manager
Staff
This is an example of a ‘tall hierarchy’
There are many levels of hierarchy, and opportunity for promotion.
Lines of communication can be long which can impact the speed at which decisions or changes can be made.

8. Understand employer organisations
Managing Director
Staff
This is an example of a ‘Flat Hierarchy’.
Lines of communication are short which means decisions and changes can be made quickly. There is a wide span of control so tasks will need to be delegated.

9. Understand employer organisations
Managing Director
Sales Manager
Sales Staff
Administration Manager
Admin Staff
Finance Manager
Finance Staff
This is an example of a ‘functional hierarchy’ each strand of the chart is controlling a certain function of the organisation. Issues or queries can be directed to a single point of contact.

10. Understand employer organisations
Manager
Finance Staff
Sales Staff
Marketing Staff
Admin Staff
This is an example of a ‘Matrix Structure’
this shows that staff are often involved in more than one functional area.
For example – Admin staff carry out tasks with finance staff and marketing staff.

11. Understand employer organisations
Legal structures
Organisations must have structures in place to comply with legal requirements.
For example:
Public sector organisations must have staff in place to ensure budgets are met.
Private sector organisations must have staff in place to teach employees about Health, Safety, Equality and Diversity.
A legal structure can help to show who is ultimately responsible for each area of the organisation covered by law.

12. Understand employer organisations
Legal structures
Sole trader
If you work on your own as a sole trader YOU are responsible for everything. YOU must ensure all laws are followed.
The benefit of this is……
YOU get to keep the profits

13. Understand employer organisations
Legal structures
Partnerships
If your organisation works in a formal partnership with others you are all responsible for legal practices. You are equally responsible for debts and profits.

14. Understand employer organisations
Legal structures
Limited Company
Shared ownership through shareholder investment.
Must be registered (articles of association)
All profit is owned by the company after Corporation Tax has been paid.
Find out more here:

15. Understand employer organisations
Legal structures
Unincorporated Association
set up through an agreement between a group of people who come together for a reason other than to make a profit, eg a voluntary group or a sports club.
Does not have to register with any regulatory body.
If the association is a charity with an income above £5000 it must register with the Charity Commission.

16. Understand employer organisations
Legal structures
Public sector
The government is ultimately responsible for ensuring public sector organisations comply with the law. On a day to day level staff are appointed to oversee this.
Public sector organisations must prove how their money is spent and show this to the public.

17. Understand employer organisations
Legal structures
Legal structures are vital within organisations.
Who is responsible if you injure yourself at work?
How do you know if you need to be a member of a regulatory body?
The people that are put in charge of this ensure the law is followed.

18. Understand employer organisations
Further reading:
This activity will cover Assessment Criteria 1.3