Presentation on theme: "VII. Organizing as a management function. Organizational structure and its elements When we manage some venture we have one objective or a collection."— Presentation transcript:
Organizational structure and its elements When we manage some venture we have one objective or a collection of objectives in the plan. We need to organize the realization of organizational objectives in such a way that will enable to achieve them. Our activities should enable to group these objectives and methods necessary to achieve them as well as to use possessed resources in an optimal way. This kind of activities is called organizing and a system, that was created to realize planned objectives is called organization.
In order to build an organization we need to design: organization's elements, that is, its structure, size of these elements and criteria of their differentiation, relations between these elements (hierarchical, independent and cooperation).
The elementary part of organization is a job position. Connected job positions and their agglomerates form organizational structure
Job position is separated and described by the following elements: objective, that is realized by a given job position within the global objective of organization, entries, that is: ingoing information, materials tools, etc., exits, that is, all that is done at a given job position, for example: production, information, environment, that is: social conditions, organizational and technical conditions etc., equipment and ways of planning and using it, human factor and requirements facing it.
When designing a job position we should pay attention to all presented elements and on their basis determine the scope of employee's duties. Job positions are combined in organizational units and these units are combined in bigger organizational departments. Organizational units consists of a manager and his/her subordinates. Organizational department is a bigger collection of organizational units. It consists of a higher-level manager and subordinate organizational units. Organizational section is a specific type of organizational department. It is managed by one of top managers.
The process of separating organizational units: 1.knowledge and skills; 2.progress of working process – eg.: fermentation department in a brewery, 3.functions in executive and management system that are the basis for grouping job positions in departments, for example: marketing, accounting, HR, IT, 4.time of work- the basis for joining tasks and their performers, for example: morning shift, evening shift, night shift, 5.product - the basis for separating: production department of engines in a car factory, 6.customer - under this criterion are separated: retail stores, warehouses, markets, 7.market or territory, for example: departments for customer service in Poland, Slovakia, Hungary etc.
Such criteria as: knowledge, progress of production process or functions in executive system are called functional criteria as these elements need to cooperate with each other. The remaining criteria are called market or autonomous criteria and as a result of using them such units can be created that are able to exist and act independent from each other.
Individual organizational units are of different importance according to their position in an organization. Taking into account position of an organizational unit in an organization means creating levels of management.
For organization's functioning it is necessary to establish written regulations that determine: goals and tasks of organization and its units, scope of responsibility and competencies, models of actions for example organizational schemas as well as documents.
Such a presentation of the above mentioned regulations in the form of a written document is called formalization of organization. Formalization of organization is created in its statute and in such documents as instructions, plans, orders.
Organizational regulations form a collection of documents, that most often include: graphical organizational model, that is, organizational scheme, document, which includes the description of activities of individual organizational units as well as descriptions of tasks, competencies and responsibilities of managers and other employees; collection of fundamental instructions and bylaws of organization's management.
Organizational structures can be analyzed and evaluated according to various criteria. One of the fundamental criteria is span of management. Span of management describes the number of subordinate organizational units that report directly to higher hierarchical level. Under this criterion we can differentiate between flatter and tall structures.
In a tall structure there are many layers of management, span of management is narrow, units are quite small but there are many managers of different ranks. In a flatter structure there are fewer layers of management, span of management is wide, organizational units are larger than in the tall structure. In a graphical way both situations are presented below. Introducing a given structure in an organization depends on various factors.
Comparison of management span in a tall and flatter structure: 1.Competency of subordinates and supervisors. The bigger this competency is, the wider potential span. 2.Physical dispersion of subordinates. The bigger it is, the narrower potential span. 3.Scope of manager's activities other than controlling activities. The wider this scope is, the narrower potential span. 4.Level of desirable interaction. The higher this level is, the narrower is potential span. 5.Existence of standard procedures. The more procedures, the wider potential span. 6.Probability of supervised tasks. The more probable tasks are, the wider potential span is. 7.Frequency of appearance of new problems. The higher this frequency, the narrower potential span. 8.Preference of subordinates and supervisors.
In some situations the above factors are not enough to choose tall or flatter type of organizational structure. Each of described factors forms in a different way. That's why managers in a given situation weigh these factors and adopt an optimal span of management. With span of management, but not only, is connected centralization and decentralization of organization, that is line of power.
Centralization is a process by which activities of an organization, particularly those regarding decision making, become concentrated within top management.
Decentralization means delegating power to lower hierarchical levels. Wide span of management promotes decentralization whereas narrow span of management promotes centralization. Fundamental types of organizational structures, that can be identified according to relations between managers and performers, are: line, line-staff, functional, matrix and amorphous.
Line structure is the oldest type of relations in organization described for example in the Bible. The basis for building this structure is unity of command. Manager is responsible for all activities of the organizational unit he/she manages. A subordinate has only one superior to whom he/she is directly responsible. The line is a line of command but also a line of knowledge and delegation of competencies.
In this type of structure there is a domination of hierarchical thinking. It is an inflexible structure. In fact there is no specialization of management functions. In case of lack of one manager in chain of command there are often disturbances in organization's functionning. That's why sometimes, in particular in important fields such as space flights or power engineering, every manager has his/her double.
Similarly to the line structure, there is unity of command here. Additional important characteristic is the creation of special support for management in the form of staff units. Manager makes decisions and is responsible for organization's functioning, whereas staff unit: collects information, prepares decisions, gives recommendations etc. Sometimes staff unit prepares whole decisions, including the preparation of necessary legal acts. However the decision about introducing a given decision has to be made by line manager. In line-staff structure staff unit can be located universally as an unit in the role of consultant for all levels, for example solicitor.
In line-staff structure there is a separation of decision competencies and professional competencies. Structure of this type is one of the most often applied structures in economic reality. The disadvantage of this structure are possible conflicts between line and staff units. Correctly applied line-staff structure combines the advantages of line structure (unity of command and clear power structure and responsibilities) with professional knowledge of staff units.
Functional structure may be created as a result of transforming line-staff structure. In this type of structure the rule of unity of command doesn't hold true. Subordinate has got many managers. Each manager is responsible for some piece of organization's functioning. Organizational units are grouped by specialization. The advantage of this structure is that it allows task specialization and expertise to develop. The disadvantage is poor communication across functional areas. This structure enforces cooperation between managers. In case of lack of such a cooperation hard to solve conflicts can appear. This structure is applied in practice on a limited scale.
Matrix structure - considered to be modern but very difficult to apply in practice. Built of columns and rows. In most cases in columns are placed frequently recurrent functions and in rows untypical, changeable tasks. An employee has got two bosses so the rule of double subordination is applied. That's why this structure is often called "system of multiple subordination" and its scheme is called two-dimensional organizational structure.
Matrix structures were used for the first time in air and cosmic industry. The government, that ordered research and project studies, set the condition that each task had to have its own boss responsible to government for proceed of studies and achieved results. That's why a person was appointed who was responsible together with managers from other departments. This solution developed into matrix structure.
Advantages of structures of this type: combining characteristics of functional and line structures, that is, creating support for managers in tasks realization; ability to analyze and manage a project integrally; shortened channels of information flow; flexibility; equality of task fields. Disadvantages: lack of unity of command, possibility of competency conflicts between managers due to double subordination, high implementation costs.
It is quite commonly used in: consulting firms, designing computer systems, advertising agencies. But in few organizations we can meet with the integrated matrix structure. Most often this is applied to some parts of organization or to particular activities. An employee in this kind of structure can work in different organizational units. He/she can act in different roles, that is, as a manager and as a member of a team.
Choosing and designing organizational structure Choosing an optimal structure for an organization is a hard task. We need to take into account many factors that change over time. Peter Drucker proposed the following criteria that managers should take into account while choosing organizational structure:
clarity, as opposed to simplicity; gothic cathedral is not a simple construction but a place that a human should occupy in it is clear: one knows where to stand and where to go. A modern office building has a very simple construction but it is easy to get lost in it as this construction is not clear for someone from the outside. saving of efforts needed to keep control and minimize conflicts,
focus on product not on process, focus on results instead of on efforts, understanding by each person his/her tasks and tasks of organization as a whole, decision making concentrated on exact problems, focus on performance, stability, ability to adapt to new conditions, self-regeneration requires that organization should be able to prepare future leaders and help everybody do develop constantly. The structure should also be opened to new ideas.