Organization of Enterprises: Evolution, Principles, and Structures
Organization of Enterprises
1. Organization and its Evolution
Middle Ages
Feudalism established a self-sufficient organizational regime. Guilds of merchants and craftsmen were created for the exercise of their activities. Apprentices were under the direction of officers and masters. They acquired skills in a trade, becoming officials and then, after performing a “masterpiece,” masters.
Industrial Revolution
The advance of technology awakened the desire for maximum performance with minimal effort. This led to improvements in working methods and organization.
Scientific School of Labor Management
Frederick W. Taylor’s fundamental idea in 1882 was, “There is always a better way to do anything.” Conclusions of scientific management include:
- Develop a spirit of cooperation and teamwork.
- Provide remuneration that rewards end results.
- Pursue a division of labor between management and workers.
- Obtain maximum yield at minimum cost.
Henri Fayol’s 14 Principles of Management
Key principles include:
- Division of work (increases efficiency and productivity)
- Authority and responsibility (right to give orders)
- Unity of direction (one direction for activities)
- Unity of command (one boss per employee)
Max Weber’s Theory of Bureaucracy
This model features a hierarchical order of managers and a division of labor. It encourages supervision and has limited flexibility.
Elton Mayo’s Human Relations School
Experiments altering working conditions (e.g., shorter days, longer breaks) showed increased production. Even when conditions reverted, production remained high, suggesting the importance of collaboration.
Classical School vs. Human Relations School
| Classical School | Human Relations School |
|---|---|
| Man as a machine | Man as a person with purpose |
| Individual work | Teamwork and collaboration |
| Economic incentives | Diverse motivations |
| Formal authority | Informal authority |
| Denial of conflict | Acceptance of conflict as natural |
2. Principles of Organization
- Unity of Objective: All components contribute to the company’s objective.
- Span of Control: The number of people a boss can effectively manage.
- Unity of Command: Employees receive instructions from only one boss.
- Hierarchy: Clear lines of authority and responsibility.
- Delegation: Assigning tasks with freedom and responsibility, and monitoring performance.
- Division of Labor and Specialization: Dividing work into simpler tasks leads to specialization, increased productivity, and efficiency.
3. Centralization and Decentralization
Decentralization
Systematic delegation of authority throughout the organization. Reasons include:
- Reduce management load
- Facilitate diversification
- Enable faster, localized decision-making
Centralization
Important decisions made by a small group. Reasons include:
- Stronger leadership
- Efficient emergency decisions
4. Formal and Informal Organization
Formal Organization
- Formally established memberships and relationships
- Command held by management
- Formal information channels
- Focus on maximizing business benefits
Informal Organization
- Spontaneous formation based on shared interests
- Informal leadership and communication channels
- Specific objectives
5. The Organization Chart
A document graphically representing the formal structure of the company, showing relationships and dependencies between departments.
Types of Organization Charts
- By Purpose: Informative (overview) or Analytical (detailed)
- By Extension: General (company-wide) or Detailed (specific department)
- By Content: Structural (units and relationships), Functional (unit responsibilities), or Staff (names and titles)
- By Layout: Vertical or Horizontal