Week 8: 23 March 2015
Principles of organising
Objectives:
1. Explain the principles of organizing that should be considered in designing an
organizational structure.
2. Explain the concepts of authority
3. Differentiate between Formal and Informal Authority, Line and Staff Authority,
Centralized and Decentralised Authority.
4. Discuss the Advantages and Disadvantages of centralized and decentralization
Authority.
1. Principles of organising
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Unity of command and direction: Each employee report to only one
supervisor. Unity of direction: all tasks and activities should be directed toward
the same mission and goal.
•
Chain of command: Clear unbroken chain of command should link every
employee with someone at a higher level – to top of org.
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Span of control: Refers to the number of subordinates reporting to a manager.
The fewer employees supervised, smaller the span of control.
The more employees – wider.
•
Division of work: Determine how the work should be divided. Specialised jobs
in functional areas: Accounting, administration, marketing, HR, etc.
•
Standardization: Principle of uniform practices that employees are to follow in
doing their jobs. Develop a certain level of conformity.
•
Coordination: All units work together to accomplish the goals.
Balanced Responsibility and Authority
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Responsibility
The obligation to achieve objectives by performing required activities.
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•
Authority
The right to make decisions, issue orders, and use resources.
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Accountability
The evaluation of how well individuals meet their responsibilities.
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Power: the ability to influence the behavior of others.
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Delegation: The process of assigning responsibility and authority for
accomplishing objectives.
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Downsizing: Aiming at reducing the size of the workforce. (Cost
effective/competitive).
•
Delayering: Process of reducing the number of layers in the vertical
management hierarchy.
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Flexibility: The ability to adapt to exceptions to the rules, policies, and
procedures of the organisation.
2. Power
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Power of Reward – power to give or withhold rewards.
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Coercive Power – to force other persons to action by means of disciplinary
action - Fear
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Legitimate Power – stems from position or rank of person. Authority granted to
a particular position.
•
Referent Power – has reference authority if others want to identify with your
personal actions Egg. Charismatic leaders – Personal power: like, respect.
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Expert Power: – stems from special knowledge or skills with reference to a task.
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3. Organising process: The point of departure is the formulation of vision, mission,
goals and strategy of the organization. Management first needs to outline the tasks
and activities in order to achieve goals. After the outlining of tasks jobs must be
designed and assigned to staff members. Define worker relationships between
workgroups and individuals. Next will be the development of an organisational
design that will support the strategic, tactical and operational plans – grouping
members, coordinate efforts, Centralisation or decentralisation of decision making.
Management should then put a control mechanism in place to ensure that the
organizational structure enable organization to attain mission and goals.
4. Authority: Is the right to make decisions, issue orders and use resources. It
includes the right to take action to compel the performance of duties and to punish
default or negligence. Authority resides in in position rather than in people –
managers acquire authority by means of their hierarchical position in the
organisation, rather than from their person characteristics.
5. Types of authority
Formal authority refers to the specified relationships amongst people illustrated by
organisational chart; and
Informal authority – patterns of relationship and communication that evolve as
employees interact and communicate
Line authority (originates at top management)– responsibility to make decisions and
issue orders down the chain of command; and
Staff authority- responsibility to advise and assist other personnel egg HR department,
Company secretary, economists in staff position
Centralized Authority – important decisions re made by top management, and
Decentralised organisational authority - important decisions are also made by middle
and lower level management.
6. Centralize or Decentralize authority?
Factors to consider
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External environment : The more complex the environment and the greater the
uncertainty, the greater the tendency to decentralize.
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The History of the Organisation: Organisations tend to do whatever they have
done in the past. Hence there will be a tendency to follow the history of the
organisation when it comes to centralization or decentralization.
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Nature of the decision – risky and costly – centralize
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Strategy of the organisation - depends on size of business, how products are
developed etc. – larger businesses/ ones doing research with product
development diversify and look at decentralized structures. Predictable business
centralized
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Skills of lower level managers – if not properly equipped/qualified – centralize
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Size and growth rate of organisation – larger organisation - decentralize
7. Advantages of decentralisation
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Workload of top management is reduced
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Decision making improves i.e. close to action
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Improved morale and initiative at lower levels
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Faster and more flexible NB in rapidly changing environment
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Fosters a competitive climate in organisation – managers performance constantly
compared with that of colleagues
8. Disadvantages of decentralisation
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Danger of loss of control with too much decentralisation
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Danger of duplicating tasks i.e. HR at head office and sub unit
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Decentralisation requires more expensive and intensive management training
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Decentralisation demands sophisticated planning and reporting methods
References
Smit, P.J., Cronje, G. J., Brevis, T., Vrba, M. J. (2011). Management principles. A
contemporary edition for Africa. (5th Ed.). Cape Town, Juta.
Robbins, S. P, DeCenzo, D. A. (2005). Fundamentals of Management: essentials
concepts and applications. (5th ed.). New Jersey, Pearson Prentice Hall.
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