my notes - organization

8/8/2019 My Notes - Organization

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Organization ChartOrganization Chart



Organizational ObjectivesOrganizational Objectives

Generally Financial Objectives

± Profitability

± ROCE

± EPS

Subordinate goals

- Market Position

- Product Development- Technology

- Employees & Management



Druker Druker-- ObjectiveObjective

Market standing

Innovation

Productivity Physical & Financial Resources

Profitability

Manager performance & development Worker performance & attitude

Public relationship



Business FunctionBusiness Function

Business Function include production

(direct service delivery) sales & marketing,

accounting & finance & human resourcemanagement



Business ActivityBusiness Activity-- FayolFayol

Technical activity

Commercial activity

Financial activity Security activity

Accounting activity

Managerial activity

These elements will change based on

Size, Activity, Complexity, Structure



Business as a systemBusiness as a system



Organizational StructureOrganizational Structure

The frame work for allocating tasks

delegating authority, coordinating activity

and channeling communication betweenindividuals & groups within the

organization.



Objective of the OrganizationalObjective of the Organizational

StructureStructure To lone the individual and establish network of

relationship

Group the tasks required to fulfill the objective of

the organization, allocating to suitable individual

Delegates the authority and accountability

To co-ordinate the objectives & activities of

separate units To enable the flow of information and other

resources through the organization



Influence on organizationalInfluence on organizational

StructureStructure Certain internal principal of the organization

Objectives of the organization

Tasks or activities of the organization The size of the organization

The human resource of the organization

The environment of the organization The culture of the organization



StrategyStrategy

Why DoWhy Do

StructuresStructuresDiffer?Differ?

Why DoWhy Do

StructuresStructuresDiffer?Differ?

OrganizationOrganizationSizeSize

TechnologyTechnology Environment Environment



Organizational ChartOrganizational Chart

Traditional way of depicting the various

roles and relationships of formal structure

± Shows how the organization is divided ± Formal communication and reporting

channels

± Structure of authority, responsibility and

delegation



Organization ChartOrganization Chart

The Org. Chart is a representation of:

The hierarchy of authority:

the vertical structure or

the chain of command

The division of labour:the horisontal coordination or

the work specialization



Chain of CommandChain of Command

Unbroken line of authority that links all

persons in an organization.

Shows who reports to whom. Associated with two underlying principles.

Unity of Command.

Scalar Principle



Work SpecializationWork Specialization

Tasks are subdivided into individual jobs.

Division of labor concept.

Employees perform only the tasks relevantto their specialized function.

Jobs tend to be small, but they can be

performed efficiently.

Many organizations are moving away from

this principle.



Authority Authority

Formal and legitimate right of a manager tomake decisions, issue orders, and to allocate

resources to achieve organizationally desired

outcomes.

Authority is distinguished by three

characteristics:

Authority is vested in organizational positions,

not people. Authority is accepted by subordinates.

Authority flows down the vertical hierarchy.



Span of ControlSpan of Control

The number of employees reporting to a

supervisor.

Generally if supervisors must be closelyinvolved with employees span should be

small.




Arguments for a narrow span of control

± Better control, coordination & communication ± Efficient use of managerial time & cost

± Reduced need of manager to delegate




Arguments for a wide span of control

± Efficient use of managerial time & cost ± More responsibility & discretion for

subordinate



Henri FayolHenri Fayol

Engineer and French industrialist

In France works as a managing director in coal-

mining organization

Recognizes to the management principles rather

than personal traits

While others shared this belief, Fayol was the

first to identify management as a continuousprocess of evaluation.



Fayol¶s 5 Management FunctionsFayol¶s 5 Management Functions

Fundamental roles performed by all managers:

Planning

Organizing

CommandingCoordinating

Controlling

Additionally Fayol recognizes fourteen principles that

should guide the management of organizations.



Fayol¶s 14 Principles:Fayol¶s 14 Principles:

1. Division of Work ²improves efficiency through a

reduction of waste, increased output, and

simplification of job training

2. Authority and Responsibility²authority: the right togive orders and the power to extract obedience ±

responsibility: the obligation to carry out assigned

duties

3. Discipline²respect for the rules that govern theorganization



4. Unity of Command²an employee should receive

orders from one superior only

5. Unity of Direction²grouping of similar activities that

are directed to a single goal under one manager

6. Subordination of Individual Interests to the General

Interest²interests of individuals and groups should

not take precedence over the interests of theorganization as a whole.

7. Remuneration of Personnel²payment should be fair

and satisfactory for employees and the organization

8. Centralization²managers retain final responsibility ±subordinates maintain enough responsibility toaccomplish their tasks



9. Scalar Chain (Line of Authority)²the chain of command from the ultimate authority to the lowest

10. Order²people and supplies should be in the rightplace at the right time

11. Equity²managers should treat employees fairly andequally

12. Stability of Tenure of Personnel²managerialpractices that encourage long-term commitment fromemployees create a stable workforce and therefore asuccessful organization

13. Initiative²employees should be encouraged to

develop and carry out improvement plans14. Esprit de Corps²managers should foster andmaintain teamwork, team spirit, and a sense of unityamong employees



HierarchyHierarchy

It refers distribution of authority,

responsibility and accountability with in the

organization

± Authority

The right to exercise power

- Responsibility

The allocation of tasks to individuals and

groups within the organization



HierarchyHierarchy

Accountability

The need for individuals to explain and justify

any failure to fulfill their responsibility to their

superior in the Hierarchy.

The essential feature of the hierarchy is that

within the organization authority passesdownwards & accountability upwards.



Tall versus Flat StructureTall versus Flat Structure

Span of control used in an organization

determines whether the structure is tall or

flat.

Tall structure has a narrow span and morehierarchical levels.

Flat structure has a wide span, is horizontally

dispersed and fewer hierarchical levels.

The trend has been toward wider spans of

control.



Flat Structure Tall Structure



Flat Organizational StructureFlat Organizational Structure

Flat organizations have few levels of

hierarchy. Lines of communication are

short, making the firm responsive to

change. A wide span of control means

that tasks must be delegated and

managers can feel overstretched.



Advantages of flat OrganisationsAdvantages of flat Organisations

More/Greater communication between

management and workers.

Better team sprit.

Less bureaucracy and easier decision

making.

Fewer levels of management which includes

benefits such as lower costs as managersare generally paid more than worker.



Disadvantages of flatDisadvantages of flat

OrganisationsOrganisations

Workers may have more than one manager/boss.

May limit/hinder the growth of the organisation

Structure limited to small organisations such as

partnerships, co-operatives and some private

limited companies.

Function of each department/person could be

blurred and merge into the job roles of others.



Tall Organizational StructureTall Organizational Structure

Tall organizations have many levels of

hierarchy. The span of control is narrow

and there are opportunities for promotion.

Lines of communication are long, making

the firm unresponsive to change.



Advantages of tallAdvantages of tall


There is a narrow span of control ie each

manager has a small number of employees

under their control. This means that

employees can be closely supervised.

There is a clear management structure.

The function of each layer will be clear and

distinct. There will be clear lines of responsibility and control.

Clear progression and promotion ladder



Disadvantages of tallDisadvantages of tall


The freedom and responsibility of employees

(subordinates) is restricted.

Decision making could be slowed down as approval

may be needed by each of the layers of authority. Communication has to take place through many

layers of management.

High management costs because managers are

generally paid more than subordinates. Each layer

will tend to pay its managers more money than the

layer below it.



Pros of CentralizationPros of Centralization

Decisions are made at the one point & soeasier to co-ordinate

Can keep a proper balance between

different department and function Quality of decision is high

Low cost of over head

Decision taken quickly in crisis situation

Policies, procedures and documentation

can be standardized as organization whole



Pros of DecentralizationPros of Decentralization

Avoids over burdening top management

Improves motivation of more junior manager

Greater awareness of local problems by

decision maker

Greater speed of decision making and

response to changing environment

Separate sphere of responsibility can beidentified



Functional OrganizationFunctional Organization

Setting up departments for people who do

similar jobs



Functional StructureFunctional Structure

Advantages

Specialisation ± each

department focuses on its

own work

Accountability ± someone

is responsible for the

section

Clarity ± know your andothers¶ roles

Disadvantages

Closed communicationcould lead to lack

of focus Departments can become

resistantto change

Coordination

may take too long Gap between top and

bottom



Geographic organizationGeographic organization

Structured according to geographic area,

some authorities are retained at Head

Office but day- to-day operation are

handled on territorial basis




Advantages

Serve local needs

better Positive competition

More effective

communication

between firm and localcustomers

Disadvantages

Conflict between local

and centralmanagement

Duplication of resources

and functions



Product/BrandProduct/Brand DepartmentationDepartmentation

Structured on the basis of product or product line



Product/BrandProduct/Brand DepartmentationDepartmentation

Advantages

Clear focus on marketsegment helps meetcustomers¶ needs

Positive competitionbetween divisions

Better control as eachdivision can act asseparate profit centre

Disadvantages

Duplication of functions

(e.g. different sales

force for each division)

Negative effects of

competition

Lack of central control

over each separate

division



Matrix StructureMatrix Structure

It is essentially crosses functional &

product/project organization, so that staff

in different functional or regional

department are responsible

± To their department manager in regard to the

activities of the department

± To a product/project manager, in regard to thegiven product/project.




Advantage Combines the efficiency benefits of special situation with

the accountability benefits of product/project structure

Supports inter-disciplinery cooperation & multi-functionalworking.

Develops tolerance of flexibility & ambiguity

Encourages big picture thinking

Encourage product/market/customer awareness Bring authority conflicts & ambiguities into the open,

encourage intentional co-operation




Disadvantage

Possible conflict & competition between the dual

mangers

Stress on staff caught between conflicting demand

Potential slower decision making referring to two

authorities

Cost o added management positions & meetings

my notes - organization

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