Organizational Structure, Design and Management Principles
Organization
Organization is a pattern of many interwoven, simultaneous relationships through which people under a director or manager pursue their goals.
Task in Organization
Organizational Design is the determination of the organizational structure that is most appropriate for a strategy, people, technology, and tasks of the organization.
Organizational Structure
The organizational structure is the way in which the organization's activities are divided, organized, and coordinated. It is a basic framework within which managers' decision making takes place.
Building Blocks
- Division of work
- Departmentalization
- Organizational hierarchy
- Tall: narrow span; many levels between high and low managers; long chain of command
- Flat: wide span; fewer management levels between top and bottom
- Coordination: integration of activities of separate parts of the organization to accomplish organizational goals
Types of Organizational Structure
1. Functional Organization
A functional organization is a form of departmentalization where individuals engaged in one functional activity are grouped in one unit, e.g., finance and marketing.
- The most logical and basic form of organization
- Used mainly by small firms that offer a limited product line
- Makes supervision easier
- Fails when the product line starts expanding
2. Product/Market Organization
Divisions by product, geography, or customer.
3. Formal and Informal Organization
- Formal organization: a fixed set of rules of intra-organizational procedures and structures. It is usually set out in writing with a language of rules that leaves little discretion for interpretation.
- Informal organization: undocumented, officially unrecognized relationships between members of the organization that initially emerge out of the personal and group needs of employees.
4. Matrix Organization
- Also referred to as a multiple command system
- It combines both designs to avoid their drawbacks
- Each employee reports to both a functional or divisional manager and a project or group manager
Hierarchy of Organizational Plans
1. Strategic Plans
- Plans designed to meet an organization's broad goals
- Designed by high-ranking managers
- Deal with relationships between people within and between organizations
- Time horizon: look ahead several years
2. Operational Plans
- Plans that contain details for carrying out or implementing strategic plans in day-to-day activities
- Deal with people within the organization
- Time horizon: relevant time period is often one year
3. Mission Statement
The broad organizational goal, based on planning premises, which justifies an organization's existence.