Chapter 7 - Organization and Management
Learning Objectives: To understand how businesses are organized
Now that we know that there are three main types of leadership (democratic, autocratic, and leissez-faire) as well as understand the different functions of management (planning, organizing, commanding, coordinating, and controlling) we should focus on the roles, responsibilities, and inter-relationships between management positions:
There are 3 main levels of management position:
1. Directors: responsible for long-term business plans (strategy) and the allocation of resources towards meeting objectives;
They are also the ones who review the performance of managers and provide leadership towards objectives;
Their duty is to protect the interests of shareholders and other stakeholders.
A CEO is a director and is responsible for the roll out of decisions through the organization.
2. Managers: responsible for the day-to-day running of departments. They:
Delegate tasks to other department members;
Make decisions to reach department objectives;
Motivate workers;
Deal with daily challenges within departments.
3. Supervisors: lower level managers responsible for delegating and checking the quality of work from other workers that are not part of the management.
3 Paragraphs Essay: What is the role/importance of Directors, Managers, and Supervisors?
It is clear now that organizations have what's called organizational structures - in other words, how functional departments are organized within a business so that workers' responsibilities are clear and the business more efficient.
The most common organizational structure we have is called hierarchical structure.
Let's look at some of its characteristics:
1. Hierarchy are the different levels of the structure - people within the same level have the same status and there are usually more people at the bottom;
2. Chain of Command: the route which authority is passed down from top to bottom;
It's about giving orders to people below you on the organizational structure;
Executives can't be responsible for a large amount of workers and therefore lower managers fill the gap.
3. Span of Control: the number of subordinates a manager is responsible for;
The span of control is the actual number of subordinates under a certain manager;
Span of Control can be narrow or wide.
Example:
Which leads us to:
4. Organizational Structure Height (Tall or Flat):
- Tall Organizations have a narrow span of control due to the various levels of managers in between;
- Slow communication and decision-making;
- Long chain of command.
- Flat Organizations have fewer levels of hierarchy and wide span of control;
- The chain of command is short and therefore communication and decision-making is faster.
There are many factors that impact on the decision of the size of the span of control:
Difficulty of tasks: simple tasks require less supervision (narrow ) whereas complex tasks require more supervision (wide span);
Workers Experience/Skills: more skilled and experienced workers require less control (wide ) whereas unexperienced ones require more control (narrow span);
Business Size: larger businesses can afford more middle managers (wide span);
Levels in the Hierarchy: more levels (narrow span) and less levels (wide span).
Some organizations go through a process of delayering:
Reducing the number of levels in an organization;
Cutting costs;
Cut middle-level managers/supervisors;
Makes decision-making more effective;
Increases opportunity for delegation (motivation).
On the other hand, delayering disadvantages are:
Increases the workload for the ones staying;
It may decrease quality;
Tasks may take longer to complete;
It reduces job security (fear of redundancy);
Creates a wider span of control which can reduce management efficiency.
Speaking of who makes the decision within an organization a company can either be centralized or decentralized:
All the important decisions-making is held at the Head Office - top of the organization;
Quick decision-making;
Decision-making by an expert with objectives in mind;
Slower communication making it hard to respond quickly to market changes;
May reduce workers' motivation.
Decision-making power is passed down the organization to lower levels - outside of the Head Office;
Decisions can be better - localized;
Lower level managers practice decision-making;
Delegation improves workers' motivation;
Decisions may be too localized and not on the interest of the whole business;
No expert decision-maker (lower managers) can lead to bad decisions.
To-Do-List:
Exam Practice Question #1 (p. 105)
Chapter 7 - Organization and Management
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