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 reasons
1.
To create a clear lines of authority
2.
To improve productivity
3.
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.
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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:
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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 productivity
 Too 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 quality
 A broad scope means performing many job functions
 Most 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
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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:
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Meetings
Memos
Emails
Telephone
Informal Encounters between employees
 Communication ensures all employees understand
company expectations.
What makes an Organization Effective
 Responsive to the Market
 Customer Centered
 Committed to maintaining networks and alliances
 Developed around a vision
 Focused on creating top-quality products and services
 Dedicated to positive learning and change
 Attentive to meeting responsibilities to customers,
employees, suppliers, and society
 Committed to measuring their progress against worldclass standards of excellence
 Able to respond to changing market conditions quickly
Tomorrow
 Decentralization
 Authority
 Unity of Command
 Span of Management
 Accountability
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 decisions
 Managers 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 abused
 An effective manager must delegate responsibility to
others inside the organization
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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 CONTROL
 Too 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.
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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.
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This helps minimize confusion over job expectations.
Structure clearly identifies who is responsible for which tasks.
Types of Organizational Structures
 Line Structure
 Line and Staff Structure
 Matrix Structure
 Team 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.
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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
CEO
Senior
Managers
Mid-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.
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Advise and support line functions
EX. Legal dept, human resources, public relations
 Contribute only indirectly to company profits
 Staff are usually specialists in one field, and only
advise line managers.
Line and Staff Structure Chart
Top mgrs
Line mgrs
Staff mgrs
President
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.
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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.
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Allows them to meet customer needs quicker than traditional
structures
 Teams make their own decision instead of having to
get approval of senior mgrs
Team Structure Chart
Team A
Senior
MGT
Team B
Marketing,
Production
Research,
Finance
Marketing,
Production
Research,
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.
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This calls for a good bit of delegation on the part of the mgr.
Employees have more power within the company.
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Advantages
 Greater job satisfaction
 More delegation
 Increased communication between levels of mgt.
Tall Structure
 Organization that has many levels with small spans
of management.
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Power is centralized on the top levels and there is more
employee control by senior mgrs.
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Advantages
 Greater control
 Better performance