Formal authority in the organization can be traced all the way back to the U.S. constitutional right to own property. The owner of the organization has the authority to make decisions. For example, entrepreneurial firms have an informal arrangement of employees and centralization of decision-making authority, the owner. Forms of Authority Three forms of authority are line authority, staff authority, and team authority. Line authority is direct supervisory authority from superior to subordinate.
Authority flows in a direct chain of command from the top of the company to the bottom.
Chain of command is an unbroken line of reporting relationships that extends through the entire organization that defines the formal decision-making structure. It helps employees know to whom they are accountable, and whom to go to with a problem. Line departments are directly linked to the production and sales of specific products. Unity of command within the chain states that each person in an organization should take orders from and reports to only one person. This helps prevent conflicting demands being placed on employees by more than one boss.