Please watch the video below if you'd like to see how to do this.
Find the user you need to set a line manager for and click on their name to go to the administration area (see how do I find a User if you're unsure how to do this).
Click on the Set Line Manager link within the Common Tasks area (you can also click on the Line Manager tab on the left-hand side if you prefer).
Click on Set Line Manager.
In the popup window, search for the Line Manager by typing their name into the Filter box.
Click on the Search button or press the enter key on your keyboard to find them.
Select them by clicking the radio button next to their name.
The Line Manager will be displayed on the left-hand side.
Click on OK in the popup window.
The Line Manager will now be set against the User.