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When you draw a dotted line on your organisation chart do you think that you are causing confusion? May I suggest that you should? I have seen many dotted lines in my time and drawn more than a few and I have observed the damage they can do if not handled properly. Line managers run a business and carry the profit responsibility; staff functions are there to serve them, not to boss them.

That is not to say that staff functions are unimportant. They are vital to the smooth running of a business. Whether accountants, HR, marketing services, CSR, Health & Safety or compliance of any sort, business would be in deep trouble without them. But, as the old saying goes, ‘accountants should be on tap not on top’. One of the reasons that capitalism as a concept has performed less well in recent years is that it has become purely finance oriented. It is now dominated by ROI and KPI at the expense of the sustainable and socially acceptable.

Unravelling this situation will not be solved simply by making the lines of authority clearer. There will need to be a change of purpose imposed by – or at least accepted by – shareholders. Moral behaviour of business people as well as their better treatment of the planet is a prerequisite to making a new capitalism work. However, clarity of control and responsibility will help to achieve these aims.

I have come across organisations – not just businesses – where, for example, HR controls pay and conditions, overriding line managers whatever their seniority. That is clearly wrong. It is desirable that a line manager should consult the experts in any function in order that he may be well informed and keep within the law in making his decisions. It is wrong that they should normally have control over him.

One of the keys to good management is leadership. Leaders’ styles will differ but they must be accountable and responsible, something that can only happen when they have authority to make decisions. How is the balance between line and staff to be maintained?

Since line managers make the profits of a business the staff functions are indirectly paid by them. This gives rise to some antagonism between the profit centres of a business and the so-called head office costs. The simplest way to make sure that services are used is to charge the profit centres for them. This may sound contradictory. If the profit centres have to pay won’t they resist using the services? The evidence is to the contrary.

A modest time-based contribution for the use of services actually makes them more efficiently used and more appreciated. It is not necessary to charge the full economic rate; an element of subsidy is normal and leaves the centre in part control of what service is to be provided. We all appreciate what we pay for more than we appreciate the wholly “free” – even when we know perfectly well that ‘free’ is a rare occurrence in this world.

Next time you draw a dotted line on your organisation chart, think about how confusing it can be – and how easily the confusion can be mitigated.