PRINCIPLES OF MANAGEMENT

ORGANISING

Chain of Command

A R

AUTHORITY < RESPONSIBILITY

Chain of Command

A R

AUTHORITY > RESPONSIBILITY

A R

Chain of Command

AUTHORITY = RESPONSIBILITY

Concepts in organizing

Purpose of a structure Formal & informal structures Narrow & wide span of control Departmentalization Line & Staff Delegation - decentralization

Purpose of the Structure

Defines relationships between tasks and authority

Defines formal reporting relationships, levels of hierarchy, span of control

Defines individual departments Defines systems that affects the organization

Formal System

Planned structure Lines of responsibility, authority, and

position Establish patterned relationships among

components Can be described through:

Organizational ChartPolicy ManualDepartments

Based on needs, sentiments, and interests of people

Vulnerable to expediency, manipulation and opportunism

More subtle and invisible in the organizational chart

Can be classified as:Horizontal = same department or same levelVertical = different levelsMixed = combination of both

Informal System

Formal vs Informal Organizations

FORMAL INFORMAL

Have planned structure Deliberate attempts to

create patterned relationships

Usually shown by a chart

Advocated by traditional theory

Not formally planned Arise spontaneously as

a result of interactions Not depicted in a chart Stressed by human

relation theory

Span of Control

Span of 8

(Classical)

Span of 4

(Contemporary)

Classical Viewpoint

SPAN OF 8

Base level = 4096

Managers (levels 1-4)

= 585

1

8

64

512

4096

Contemporary Viewpoint

1

4

16

64

256

1024

4096

SPAN OF 4

Base level = 4096

Managers (levels 1-6)

= 1365

Departmentalization

Putting specialists together Direction of a manager Departmentation

ProcessSetting up and establishing departments

Departmentalization

Can be done by:FunctionGeography / TerritoryCustomersProductFlexibility (Matrix)SBUsVirtual

Organizing Process

Identify Activities

Selling

Accounting

Delivery

Quality Control

Advertising

Compensating

Training

Production

Purchasing

Budgeting

Recruitment

Maintaining Personnel

Classify Activities in Departments

>Selling>Advertising>Delivery

>Production>Purchasing>Quality control

>Accounting>Budgeting>Compensating

>Recruitment>Training>Maintaining personnel

MARKETING OPERATIONS FINANCEHUMAN

RESOURCES

Matrix Structure

Represents the most fluid system – dots are individuals or groups

Can function on different levels according to the requirements of the task – project

Matrix structure

Pluses (loaning employees) Allows to share information more readily

across task boundaries Allows for specialization that can increase

depth of knowledge

Minuses: Employees can get confused – conflicting

loyalties

To overcome: managers/parties must work closely together

Centralization & Decentralization

Centralization & Decentralization

CENTRALIZATIONDECENTRALIZATIO

N

Environment is stable Environment is complex, uncertain

Lower level managers (LLM) are not as capable or experienced at making

decisions as upper level mangers

LLM are capable and experienced a making decisions

LLM do not want to have a say in decisions

LLM want a voice in decisions

Decisions are significant Decisions are relatively minor

CENTRALIZATIONDECENTRALIZATIO

N

Organization is facing a crisis or the risk of company failure

Corporate culture is open to allowing managers to have a say in what

happens

Company is large Company is geographically dispersed

Effective implementation of company strategies depends on managers retaining say over what happens

Effective implementation of company strategies depends on managers

having involvement and flexibility to make decisions