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Organizations
Organization
A group of people working together in a coordinated effort to reach certain goals.
In business, organizations help people achieve better results than they could working individually.
All organizations need managers to make sure everyone works together in a coordinated manner to help the organization in a positive way.
Why do Businesses Organize
Organizations are formed for 3 basic reasons1. To create a clear lines of authority2. To improve productivity3. To make it easier for people within a company to
communicate with each other. Workers feel a sense of stability and
belonging when working for an effective organization
Authority
The power based on the rights that come with a position.
Without clear lines of authority, decisions could be made by people not qualified to make them.
Establishing lines of authority means that decisions are made only at the appropriate level
Chain of Command
The line of authority within an organization.In the business world, the chain of command
starts with the CEO
Advantages of a Defined Chain of Command
Makes it easy for all members of an organization to understand who is in charge.
Allows for problems to be handled at the lowest possible level.
Only problems that cannot be handled by a lower level supervisor will be introduced to a higher level
Disadvantages of a Defined Chain of Command
Can create problems if the structure is too rigid and complicated
Too many layers make assigning responsibility difficult.
Decisions are made slowly often by people with limited understanding of the issues involved. Ford motor company reduced the levels of mgt from
15 to 9. Larger mgt numbers meant longer time to respond to
customer needs. This is a crucial advantage in a highly competitive
industry
Improving Productivity
In early industrial times, it was proven that assigning specific tasks to individuals or groups will improve productivity
This technique is called Division of Labor.Division of Labor may include:
Specialization Job Rotation Job Scope Job Depth
Specialization
In many companies, groups of workers perform very specific tasks or sets of tasks.
Makes training workers easy due to only needing to master a limited set of skills.
Specialization can increase productivityToo much specialization may result in
employee boredom.
Job Rotation
Periodically moving of workers from one job to another.
This will help prevent workers from becoming bored
It also creates a multiskilled workforce
Job Scope
Refers to the number of operations involved in a job.
A narrow scope means a worker performs a small number of operations frequently A narrow scope may result in boredom and decline in
job performance qualityA broad scope means performing many job
functionsMost people find a broad scope more
satisfying.
Job Depth
The freedom employees have to: Plan and organize their work Interact with co-workers Work at their own pace
A job with depth allows for the workday to be much less regulated than those with minimal job depth
Improving Communication Review
Members of an organization need to communicate to help their organization achieve goals
Managers must communicate Goals, Strategies, Policies, and Procedures to their staff
Employees must communicate ideas, results, and problems to their managers
Improving Communication
Organizational structure allows companies that employ hundreds of thousands to communicate in an organized manner.
This is done through: Meetings Memos Emails Telephone Informal Encounters between employees
Communication ensures all employees understand company expectations.
What makes an Organization Effective
Responsive to the MarketCustomer CenteredCommitted to maintaining networks and alliancesDeveloped around a visionFocused on creating top-quality products and servicesDedicated to positive learning and changeAttentive to meeting responsibilities to customers,
employees, suppliers, and societyCommitted to measuring their progress against world-
class standards of excellenceAble to respond to changing market conditions quickly
Tomorrow
DecentralizationAuthorityUnity of CommandSpan of ManagementAccountability
Decentralization
The process by which decisions are made by managers at various levels within an organization.
During industrial times (late 19th and early 20th centuries) many companies were centralized: Power was held by a few senior managers who were
responsible for making most important decisionsManagers at all levels making decisions is
found to be more effective
Decentralization
Advantages: Increase an organizations ability to respond to market
changes by allowing mgrs to make them close to their customers
Frees many senior mgrs from day-to-day tasks and allows them to concentrate on higher-level issues, like planning.
Giving decision making authority to lower level mgrs increases their job scope and makes work more interesting
Disadvantages: May result in a loss of managerial control Duplication of effort.
Maintaining Authority
Authority is not effective when abusedAn effective manager must delegate
responsibility to others inside the organization This empowers employees And relieves the manager of all responsibility
Delegate
To assign responsibility and authority for certain tasks to another person
Delegating responsibility to a subordinate means that the manager obligates the subordinate to carry out certain duties, giving the subordinate the ability to act and make decisions.
Responsibility
The obligation to perform assigned duties
Subordinate – Person holding a lower position within the organization
Unity of Command
Principle that states an employee should have only one immediate supervisor to report to.
Confusion may result if the employee has to report to more than one person
Span of Management
The number of subordinates a manager can effectively control.
AKA – SPAN OF CONTROLToo many subordinates might cause the
manager to feel overwhelmed and not manage effectively
Managers with too few subordinates may have too little to do, not justifying his position
Giving Subordinates the Authority to Make Decisions
Managers cannot delegate responsibility without delegating the authority to perform the task.
Employees must be accountable for the responsibility and actions that ensue.
Accountability
The obligation to accept responsibility for ones actions.
NO T.O.B.Accountability allows managers to monitor
the work of subordinates
Organization Structure
All organizations serve a purpose and have a set of goals. What about the FBLA? What about the Christian Club? What about the Alexandria Football Team? What about Wal Mart?
Organizational Structure
Business organizations exist to meet their preset goals, and ultimately earn profits.
To meet goals, they organize their employees into some kind of structure. This helps minimize confusion over job expectations. Structure clearly identifies who is responsible for
which tasks.
Types of Organizational Structures
Line StructureLine and Staff StructureMatrix StructureTeam Structure
Each type can be shown by an organizational chart, which is a visual representation of a businesses structure.
Shows who reports to whom and what type of work each department does.
Line Structure
Authority originates at the top and moves downward in a line.
All managers perform line functions. Line functions – functions that contribute directly to
company profits. EX. Production mgrs, sales reps, marketing mgrs
What type of companies have a line structure?
Line Structure Chart
CEOSenior
ManagersMid-level Managers
Lower Level Managers
Nonmanagement Operatives
Line and Staff Structure
In a mid to large sized company, line managers cant perform all tasks required to run their department.
Other employees are hired to help by performing staff functions. Advise and support line functions EX. Legal dept, human resources, public relations
Contribute only indirectly to company profitsStaff are usually specialists in one field, and
only advise line managers.
Line and Staff Structure Chart
Staff mgrs
Line mgrs
Top mgrsPresident
Vice President,
Sales
Advertising Sales Personnel
Vice President,
Manufacturing
Fabrication Assembly
Matrix Structure
Allows employees from different departments to come together temporarily to work on special project teams.
Allows flexibility to respond quickly to customer needs by a team of people devoting time to the project, then return to their departments after completion. Common for companies that take on very large
projects EX. Boeing, new aircraft design
Matrix Structure Chart
Team Structure
Brings together people with different skills in order to meet a particular objective.
More and more companies are using this over Line and staff. Allows them to meet customer needs quicker than
traditional structuresTeams make their own decision instead of
having to get approval of senior mgrs
Team Structure Chart
Senior MGT
Team A
Marketing,
Production
Research,Finance
Team BMarketing
, Productio
nResearch, Finance
Team C
Marketing,
Production
Research, Finance
Flat Structure
An organization that has a small number of levels and a broad span of mgt at each level. This calls for a good bit of delegation on the part of
the mgr. Employees have more power within the company.
Advantages Greater job satisfaction More delegation Increased communication between levels of mgt.
Tall Structure
Organization that has many levels with small spans of management. Power is centralized on the top levels and there is
more employee control by senior mgrs. Advantages
Greater control Better performance