6.3 Organizing

Organizational structure forms the backbone of any business, defining how tasks are divided and authority is assigned. From top-level executives to front-line supervisors, each level plays a crucial role in achieving company goals and maintaining efficiency.

Managers are tasked with key organizing functions that shape a company's operations. They develop the organizational structure, establish communication channels, allocate resources, coordinate activities, and promote efficiency. These functions create a framework for success and guide daily operations.

Organizational Structure and Management

Levels of managerial hierarchy

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• Top-level managers
  • Consist of board of directors, president, vice president, and CEO (chief executive officer)
  • Control and oversee entire organization by establishing goals, defining strategic direction, and making critical decisions
  • Examples: setting long-term objectives, approving major investments, and representing company to external stakeholders
• Middle-level managers
  • Include general managers, branch managers, and department managers (marketing, finance, human resources)
  • Execute and interpret top management's policies and plans, oversee and coordinate activities of lower-level managers, and serve as link between top-level and low-level management
  • Examples: developing departmental budgets, implementing new policies, and reporting performance to top management
• Low-level managers
  • Consist of supervisors, section leads, forepersons, and team leaders
  • Assign tasks to employees, ensure quality and quantity of production, make recommendations and suggestions to employees on their work, and serve as link between workers and middle-level management
  • Examples: scheduling work shifts, training new employees, and addressing employee concerns or grievances

Task division and authority assignment

• Division of labor
  • Process of dividing work activities into separate job tasks, allowing employees to specialize and become experts in their roles
  • Examples: assembly line workers focusing on specific tasks (welding, painting) and customer service representatives handling specific types of inquiries (billing, technical support)
  • Specialization: The result of division of labor, where workers become highly skilled in specific tasks
• Departmentalization
  • Basis by which jobs are grouped together, such as functions (marketing, finance), products (smartphones, laptops), geography (North America, Europe), or customer type (retail, wholesale)
  • Examples: organizing a company by product lines (clothing, accessories) or by region (East Coast, West Coast)
• Span of control
  • Number of subordinates a manager can efficiently and effectively direct, determining number of levels and managers an organization needs
  • Examples: a narrow span of control with fewer subordinates per manager, or a wide span of control with more subordinates per manager
• Centralization and decentralization
  • Centralization: decision-making authority concentrated at top of organization
  • Decentralization: decision-making authority pushed down to lower levels of organization
  • Examples: a centralized company where all major decisions are made by top executives, or a decentralized company where managers at various levels have more autonomy
• Formalization
  • Degree to which jobs within organization are standardized, with highly formalized jobs having clearly defined procedures and rules, while less formalized jobs allow employees more discretion in how they work
  • Examples: a highly formalized fast-food restaurant with strict protocols for food preparation and customer service, or a less formalized creative agency with more flexibility in project execution

Key organizing functions of managers

• Developing organizational structure
  • Create framework that defines how tasks are divided, resources are deployed, and departments are coordinated by designing organizational hierarchy, determining span of control, and deciding on centralization or decentralization
  • Examples: creating an organizational chart, defining job roles and responsibilities, and establishing reporting relationships
  • Organizational design: The process of creating and implementing an organizational structure that aligns with the company's goals and strategy
• Establishing communication channels
  • Ensure information flows freely and efficiently throughout organization by creating formal and informal communication networks and utilizing various communication methods (meetings, emails, intranets)
  • Examples: holding regular team meetings, sending company-wide newsletters, and implementing a company intranet for information sharing
• Allocating resources
  • Determine how to distribute organization's resources (financial, human, physical) by creating budgets, hiring employees, and acquiring necessary equipment and facilities
  • Examples: setting departmental budgets, recruiting and onboarding new employees, and purchasing new software or machinery
• Coordinating activities
  • Ensure all departments and employees work together effectively to achieve organizational goals by creating cross-functional teams, establishing standard operating procedures, and monitoring progress
  • Examples: forming a project team with members from different departments, documenting step-by-step processes for key tasks, and conducting regular progress reviews
• Promoting efficiency
  • Continuously seek ways to improve work processes and reduce waste by implementing lean management techniques, automating tasks, and encouraging employee innovation and suggestions for improvement
  • Examples: using Six Sigma methodologies to reduce defects, automating data entry processes, and implementing an employee suggestion program for process improvements

Authority, Responsibility, and Accountability

• Authority: The right to make decisions, give orders, and utilize resources
• Responsibility: The obligation to perform assigned tasks and duties
• Accountability: Being answerable for one's actions and decisions
• Delegation: The process of assigning tasks and authority to subordinates, promoting efficiency and employee development

Organizational Culture

• Shared values, beliefs, and norms that shape employee behavior and attitudes within an organization
• Influences how employees interact, make decisions, and approach their work
• Can be reinforced through company policies, leadership behaviors, and organizational rituals or traditions