Formal and Informal Organizational Structures: Key Factors
Organizational Role
The organizational role exists and is significant for people. It must include:
- Objectives: Verifiable objectives, as noted in Part II, are an important part of planning.
- Duties: A clear idea of the major duties or activities involved.
- Authority: An understood area of discretion or authority so that the person performing this role knows what they can do to achieve goals.
Organizing
- Identification and classification of required activities.
- Grouping of activities to meet objectives.
- Assigning each group a manager with the necessary authority (delegation) to monitor it.
- Provision of horizontal coordination (at the same or similar organizational level) and vertical coordination (as between corporate headquarters, division, and department) in the structure of the organization.
Organization
Organization involves an intentional, formalized structure of roles or positions.
Formal Organization
Formal organization means the intentional structure of roles in a formally organized company.
Informal Organization
An informal organization describes joint personal activities without a conscious intent, but it contributes to joint outcomes.
Organizational Division: Department
An aspect of organizing is the establishment of departments. The word department designates a specific area, division, or branch of an organization over which a manager has authority for the performance of existing activities.
Organizational Levels and Scope of Management
While the purpose of organizing is to enforce human cooperation, the reason for the levels of organization is the limitation of the scope of management.
Problems with Organizational Levels
There is a tendency to consider the organization and division among departments as ends in themselves and measure the effectiveness of organizational structures in terms of clarity and integrity of the departments and departmental levels, as well as the cost of facilities for staff.
Second, departmental levels complicate communication.
The Position of Operational Management: A Situational Approach
The classical school’s approach to the field of administration is concerned with specifying the number of subordinates for an effective field. Top management provides that there is a limit to the number of subordinates a manager can effectively supervise, but the exact number depends on the effect of underlying factors.
Factors that Determine an Effective Field
The number of subordinates a manager can manage effectively depends on the effect of underlying factors. Apart from personal skills such as easy understanding, getting along with others, and commanding loyalty and respect, the most important determinant is a manager’s ability to reduce the time they devote to their subordinates.
Need for Balance
There is no doubt that despite the desirability of a flat organizational structure, the scope of management is limited by real and important restrictions. Managers can have more subordinates than they can manage effectively. It is equally true that as a company grows, the limitations of the scope of management require an increase in the number of levels simply because there are more people to supervise.
Organizational Environment for Entrepreneurship
It is widely believed that entrepreneurship applies to small business administration, but many authors now extend the concept to large organizations and the roles played by business managers through which they initiate changes to seize opportunities. Peter Drucker suggests that this search could not be successful. Instead, we should seek a commitment to systematic innovation.
Intrapreneurs and Entrepreneurs
According to Gifford Pinchot, an intrapreneur is a person who focuses on innovation and creativity and transforms a dream or an idea into a profitable venture by operating within the organizational environment. An entrepreneur is a person who does something similar but outside the organizational scope.
Creating an Environment for Entrepreneurship
Creating an environment for the achievement of group goals is an effective and efficient management responsibility. Managers should promote opportunities for entrepreneurs to use their innovation potential. Entrepreneurs take personal risks to initiate change and expect to be rewarded for it.