The Study of Business and Globalisation@Limkokwing

October 13, 2008

Day 5 – Basic Organisation Designs

Filed under: Uncategorized — Dr. Derek W. Nicoll Ph.D. @ 11:40 am

Organizational design is the process by which managers alter the structure of their organization to meet the implementation demands of its chosen strategy.

Division of labor, or work specialization, describes the degree to which organizational tasks are subdivided into separate jobs. An entire job is not done by one person. Instead, it is divided into discrete steps, each one completed by a different person.

Early proponents believed that work specialization could lead to indefinitely increasing productivity. Since specialization was not widely practiced at the turn of the twentieth century, their belief was reasonable.

By the late 1940s, work specialization enabled manufacturing firms to make the most effective use of their employees’ skills. So, managers believed that division of labor offered an unending source of increased productivity.

By the 1960s, however, the human diseconomies resulting from work specialization began to offset the economic advantages. Managers today realize that while division of labor is appropriate for some jobs, productivity in other jobs can be increased through enlarging, not narrowing, job activities.

How many employees can a manager efficiently and effectively direct?
Some advocate small spans of control because they help managers maintain close control; but, there are several drawbacks: they require more managers and are more costly, they retard vertical communication, and they foster tight controls and limited employee autonomy.

In contrast, wide spans of control reduce costs, cut overhead, expedite decision making, increase flexibility, empower employees, and promote customer contact.

All things being equal, the broader the span of control, the more efficient the organization.
Organizational variables that influence how a company will determine an appropriate span of control: similarity and complexity of employee tasks, the proximity of employees, the presence of standardized procedures, the capabilities of the information management system, the strength of the firm’s value system, and the preferred style of management.

As a link in the chain of command, a manager with line authority has the right to direct the work of employees and to make certain decisions without consulting anyone. Of course, in the chain of command, every manager is also subject to the direction of his or her superior.

Authority refers to the rights inherent in a managerial position, such as giving orders and expecting that the orders will be obeyed. Authority, therefore, is related to one’s position within an organization and ignores the personal characteristics of the individual manager. When managers delegate authority, they must allocate commensurate responsibility to perform.

How does the contemporary view of authority and responsibility differ from the historical view? Early management scholars assumed that the authority and rights inherent in one’s formal position were the sole source of influence; so, managers were all powerful.

Authority refers to the rights inherent in a managerial position, such as giving orders and expecting that the orders will be obeyed. Authority, therefore, is related to one’s position within an organization and ignores the personal characteristics of the individual manager. When managers delegate authority, they must allocate commensurate responsibility to perform.

How does the contemporary view of authority and responsibility differ from the historical view? Early management scholars assumed that the authority and rights inherent in one’s formal position were the sole source of influence; so, managers were all powerful.

Early management writers distinguished between two forms of authority: line and staff.

Line authority entitles a manager to direct the work of an employee. It is the employer-employee relationship that extends from the top of the organization to the lowest echelon, according to the chain-of-command (see the following chart).

If the term line is used to differentiate between levels of management, line managers contribute directly to the achievement of organizational objectives. Managers with staff authority support, assist, and advise those who hold line authority. The chart above illustrates line and staff authority.

Early organizations were simpler; staff was less important, and management was only minimally dependent on technical specialists. Modern theorists now realize that nonmanagers can have power and that power is not perfectly correlated with one’s job.

Authority is a right based on one’s position in an organization. It goes with the job. Power, on the other hand, refers to an individual’s capacity to influence decisions. Authority, therefore, is a part of the larger concept of power. Authority and power are compared in this slide and the one that follows.

As the slide above illustrates, authority is a two-dimensional concept: that is, the higher one is in an organization, the more authority he or she has.

Day 4 – The Foundations of decision-Making

You can go directly to slideshare HERE to download the PowerPoint slides and print the notes pages.

Advertisements

Leave a Comment »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: