CHAPTER 6
ORGANIZATIONAL STRATEGIES
Organising is arranging the firm's resources in such a way that its activities contribute to the firm's
goals. In this chapter we will discuss organisation of human resources of a firm.
ORGANIZATION CHARTS
PRESIDENT
Secretary
ACCOUNTING
PERSONNEL
____________________________________
VP
PRODUCTION
__________________
1
VP
ADMIN
VP
MARKETING
2
3
_________________________
1 2
3
4
5
6
7
An organisation chart is a graphic representation of the organisation structure. It shows the title
of each manager's position and, by means of connecting lines, shows who is accountable to whom
and who is in charge of what department. This chart is an active element of the management. It
can change at any time there is a need or there is a change in the operation of the firm. An organisation chart is never stable.
The organisation chart also shows the chain of command. The chain of command (scalar chain
or line of authority) is the line through which authority flows from the president to the employees
at the bottom of the organisation chart
PRINCIPLES of ORGANIZATION
SCALAR PRINCIPLE
UNITY of COMMAND
PRINCIPLE
The scalar principle states that there should be a clear chain of command from the highest to the lowest position in an organisation, and everyone should know where he or she stands in this organisation.
The unity of command principle states that each person in an organisation should report to only one supervisor. Each element of an organisation should be under one supervisor.
SPAN of CONTROL
A manager's Span of Control (or Span of Management) is the number of subordinates reporting
directly to the manager. Ideal span of control for someone depends on the work situation. A banquet manager might have ten employees under him whereas a Human Resource Manager will
only need a secretary to fulfil his duties.
In general, first-line supervisors have a wide span of control, whereas top-level managers tend to
have a narrow span because they spend considerable time supervising Vice-Presidents, each of
whom has a complex job
Factors that effect the span of control are:
- Manager’s personal traits
- Employee's motives
- Technology and computerisation
- Requirement of the work
AUTHORITY in ORGANIZATIONS
AUTHORITY is the right to take action, the right to make decisions, the right to direct the work of
others, and the right to give orders. It is the crucial factor in organising, since managers and employees must be authorised to carry out jobs assigned to them.
DELEGATION (tayin, yetki devri) is the process of assigning responsibility, granting authority and
establishing accountability.
AUTHORITY
(POWER)
DELEGATION
(Transfer of POWER)
RESPONSIBILITY
(Obligation to perform a certain task)
ACCOUNTABILITY
(Act of holding subordinate liable)
RESPONSIBILITY (sorumluluk) is the obligation of a subordinate to perform an assigned task. In
delegating a task, the superior assigns a responsibility to the subordinate and subordinate accepts
the responsibility. If a bartender is given the task of making cocktails, then he is assigned the responsibility of keeping drinks within his reach.
ACCOUNTABILITY (mesuliyet) is the philosophy of holding subordinates liable for performing
their tasks and reporting the result to their bosses. If we look at the same example above, the
same bartender is accountable to his supervisor for selling a certain amount of cocktails during his
shift at the bar. And if he doesn’t, he has to answer why.
DECENTRALIZATION versus CENTRALIZATION
Decentralisation and Centralisation refers to the extent to which authority has been passed
down to lower levels or retained at the top.
Decentralisation is delegating authority to subordinates while maintaining control over company
wide matters.
Centralisation, on the other hand, is when decision-making authority is concentrated in the hands
of a few people at the top of the firm.
EMPOWERING EMPLOYEES
Giving employees more authority is very popular in today’s business. Empowerment means giving more authority to employees to make decisions themselves, without first checking with higher
levels of management. However, employees should not be given more authority than they need.
Actually the authority given should be equal to cover the resposibility they are under.
TYPES of AUTHORITY
68
LINE AUTHORITY
The authority to issue orders to subordinates down the
chain of command.
STAFF AUTHORITY
The authority only to assist and advice line managers.
FUNCTIONAL AUTHORITY
The authority of staff managers to exercise authority over
line people in a specific, narrow area.
(Organisation Chart)
LINE and STAFF ORGANIZATIONS
A LINE ORGANIZATION is an organisational structure in which each manager is directly responsible for a crucial activity required accomplishing the organisation’s goals.
LINE-STAFF ORGANIZATION is an organisational structure that has both lines and staffs departments.
PRESIDENT
Comptroller ---------------------------------------Personnel
_____________________________________
Vice-President
Vice -President
Vice-President
DEPARTMENTALIZATION
Departmentalisation is the process through which a firm's activities are grouped together and
assigned to managers.
69
There are 5 main ways to organise departments. They include organising departments around:
1. Functions grouping activities around essential functions and basic processes (production,
marketing, finance).
2. Products grouping activities around products or product line (milk, cheese, and ice cream in
a dairy firm).
3. Customers Grouping activities around the needs of particular customers (private, government,
foreign).
4. Territories Grouping activities around geographical areas in which the firm does business.
5. Matrix
Grouping activities around a functional set of departments but with specialist from
each department working together on specific projects
FITTING THE ORGANIZATION TO THE SITUATION




What determines how a company should be organised?
How do you know which way to select?
Should you have a wide span or narrow span?
Centralised or decentralised decision-making?
70
Organisational Theory is the body of knowledge concerned with understanding, explaining, and
predicting how best to structure an organisation to fulfil its goal.
The two types of organisations that illustrate the different approaches to organising are the bureaucracy and the adhocracy.
BUREAUCRACY
is an approach to organising that is characterised by:





A well defined chain of command,
A division of work between departments
A system of rules covering the rights and duties of all employees,
A system of procedures for dealing with routine decisions,
A selection process for employment and promotion based on
technical competence,
 An impersonality of relationships in which everyone is rewarded
and punished on the basis of the same set of rules.
ADHOCRACY
An approach to organising in which there is a deliberate attempt to avoid
pigeonholing employees into specialised jobs and to forbid blind adherence to chain of command.
A CONTINGENCY APPROACH to ORGANIZING
Above discussions of bureaucracy and adhocracy show that different organisational structures are
suitable for different tasks. The managers must, therefore, take a contingency (beklenmedik olay)
approach to organising.
ORGANIZING TODAY
ADHOCRACY! type of organisations is becoming more popular than ever. The main reason for
this movement is the increased need for responsiveness many firms’ face.
ORGANIZING for CHAOS (Düzensizlik)
According to Tom Peters, to be organised for chaos the managers should try and make their organisation more flexible and, to be able to do this first of all they must simplify their organisation
charts by reducing the layers of management.
Next step would be to remove the staff
people from reporting to the president and
placing them in the same level as first line
managers. Front-line managers should
have more people reporting to them. Then
managers should eliminate bureaucratic
rules. Peters suggests that policy manuals
should be cut by half removing some of the
factors that tend to slow down work.
Finally, horizontal style of management
should be installed where interdepartmental cooperation is encouraged to get
the work done faster, and more efficiently.
Hürriyet, INSAN KAYNAKLARI, April 9, 2000
CULTURAL DIVERSITY
Cultural diversity (çeşitlilik), the existence of two or more cultural groups within an organisation.
Japanese love for smallness has led them to create and organise their firms under the “small-team
approach”.
71
Small (Business) is beautiful
Now the world is realising what the Japanese
tried to do for such a long time, and many
firms today are setting up mini firms within
their organisations. One way the firms try to
manage this is through intrapreneurship. Intrapreneur is a company employee who is allowed and encouraged to act entrapreneurially
within the firm.
Firms are now encouraging intrapreneurs to
create, push, and implement new ways and
produce new goods and services.
Koreli
Hyundai
5
parçaya
bölünüyor
ETHICS and REORGANIZING
Downsizing - reducing cost by dismissing employees and reassigning their duties to the employees
who remain in the organisation. In recent years downsizing, or reorganising to cut various layers in
management and personnel, to lower the costs as a responsibility towards their shareholders. Yet
is it ethical to terminate thousands of people as was the case with the automotive industry in Bursa
when reorganisation in these companies were inevitable. Early retirement schemes applied by
companies like Texaco was another way of reducing the number of employees.
THE GLOBAL ORGANIZATION
HOW GLOBAL FIRMS REORGANIZE
Multinational Structure - An organisation structure in which the firm sets up foreign subsidiaries
that are basically miniature, independent replicas of the parent firm.
International Structure - where the firm’s foreign subsidiaries are not as autonomous (özerk) or
as self sufficient as those in the multinational structure.
Global Structure - An organisational structure in which the firm is highly centralised and foreign
subsidiaries are closely controlled from the head office.
TOMORROW’S TRANSNATIONAL STRUCTURE
An organisation structure that looks much like the matrix structure on paper but encourages employees around the world to share a single vision of what their company stands for.
THE INFORMAL ORGANIZATION
The informal contacts communications and ways of doing things those employees develop among
themselves.
COMMUNICATION in ORGANIZATIONS
Communications in organisation is the process of influencing the behaviour of others by sharing
ideas, information, or feelings with them.
72
Communication means the transfer of information from one source, the sender, to another, the
receiver.
The Informal Organisation represents the informal contacts, communications, and ways of doing
things those employees develop.
Attitude Surveys are surveys used for getting information from employees about such things as
their attitudes towards hours of work and supervisors’ styles.
Open-door policy is a policy that allows employees to feel free to drop by the boss’s office and
talk to him or her.
RUMORS and the GRAPEVINE
Rumours (söylenti, dedikodu) and Grapevine (fısıltı gazetesi) are ways by which certain information is communicated from one source to a number of receivers.
The reason for these to get started is:
a) Lack of information
b) Insecurity
c) Emotional conflicts
DISCUSSION
1. Why is having an organisational structure important in a firm?
2. Grapevine and rumors are unavaoidable in any organisation. In your opinion,
what steps could be taken to minimise these?
3. Is informal organisation important in a firm? Or should it be stopped?
73
KEY WORDS
accountability
adhocracy
authority
beauracracy
centralisation
decentralisation
delegation
departmentalisation
flat organisation
global structure
grapevine
informal organisation
international structure
line organisation
line-staff organisation
multinational structure
organisational chart
responsibility
span of management
74