Organizational Structure and Management Principles

What Is an Organization?

An organization is a group of people working together in a structured way to achieve a common objective. It requires planning, coordination, and clear roles to be effective and efficient. A manager acts as a planner and coordinator, ensuring specialized tasks are harmonized.

Basic Elements of an Organization

Every organization includes:

• A common objective
• People and resources
• Coordinated efforts
• A system of relationships to align roles and responsibilities

Management Skills and Functions

Managers must possess technical, human, and conceptual skills. Their core responsibilities include planning, organizing, leading, and controlling. Effective managers guide the organization toward its goals while correcting deviations.

Organizational Structure and Charts

Organizational structure defines the relationships between tasks and departments. Organizational charts visually represent hierarchy, functions, and authority lines within a company. Structures can be formal (planned, rule-based) or informal (based on social interactions).

Elements of Organizational Structures

1. Division of Labor: Specialization increases efficiency through focused tasks.
2. Departmentalization: Tasks grouped by function, product, geography, process, customer, time, or project.
3. Hierarchy / Chain of Command: Authority flows from top to bottom.
4. Coordination and Control: The number of direct subordinates (span of control) impacts efficiency.
5. Delegation, Centralization & Decentralization: Formal authority can be delegated; decision-making can be centralized or distributed.
6. Formalization: Standardization of tasks via rules and procedures.

Chain of Command and Authority

Power is the ability to influence; authority is granted and accepted. Max Weber identified three sources of authority: tradition, legality, and charisma.

There are different types of authority:

• Line Authority: Direct decision-making.
• Staff Authority: Advisory roles.
• Functional Authority: Control over specific functions across units.