Organizational Structure and Principles
Organization
Organization involves the identification and classification of required activities, grouping activities to meet goals, assigning activity groups to an administrator, and establishing horizontal and vertical coordination.
Principles of Organization
- Principle of Specialization: The organization is based on the division of labor, leading to specialization, which increases the quantity and quality of work.
- Functional Definition Principle: Each person’s work, body, and relationships of authority and responsibility must be documented in writing.
- Principle of Equal Authority and Responsibility: Authority is the power to give orders and demand obedience. Responsibility is the duty to account to superiors. This principle emphasizes correspondence between authority and responsibility.
- Principle of Gradation: Everyone should know who to report to and who has authority over them.
Structure
Structure corresponds to the anatomy of an organization, providing the areas within which it must function. The structure functions as a framework, differentiating positions, formulating rules and procedures, and establishing authority requirements. It regulates or reduces uncertainty regarding employee conduct.
Structure signifies formal reporting relationships, identifying the grouping of individuals into departments and the organization. It includes systems design for communication to ensure coordination and integration.
Organizational Structure Components
- Specialization and Division of Labor: The degree to which tasks are divided and separated. Workers specialize in one part of the entire task.
- Departmentalization: The basis on which jobs are grouped. This can be done by function, product, geographic area, customer, or process.
- Chain of Command: A continuous line of authority extending from the top to the bottom organizational levels. It clarifies who reports to whom.
- Span of Control: The number of subordinates a manager can effectively and efficiently supervise. This determines the number of levels and managers in an organization.
- Centralization and Decentralization: The concentration of decision-making at the highest organizational levels versus the transfer of decision-making to lower levels.
- Formalization: The degree to which activities within an organization are standardized (rules, procedures).
Authority
When a superior delegates to a subordinate, they grant freedom to make decisions.
The delegation process should meet three conditions: completeness, clarity, and sufficiency. It must also comply with three principles: responsibility cannot be diluted, double subordination should be avoided, and authority and responsibility must coexist.
Power
Power is the ability to influence, manifested by a change in a person’s conduct.
- Legitimate Power: Power received due to one’s position in the formal hierarchy.
- Coercive Power: The imposition of punishment, generating frustration through restriction of movement or control of basic psychological or safety needs.
- Reward Power: The opposite of coercive power. People comply with the desires of others for positive benefits. Those who can distribute valued rewards have power.
- Expert Power: Influence derived from expertise, special skills, or knowledge. This is a powerful source of influence.
- Referent Power: Based on identification with a person who has desirable skills and resources. It develops from admiration for another.
Leadership
The process of influencing people to contribute to the goals of the organization and the group.
Fundamental Principles of Leadership
- Unity of Command: Each subordinate has one superior.
- Delegation: All activities at one level that can be executed should be.
- Span of Control: The number of subordinates each head can monitor.
- Coordination: Activities coordinated and integrated according to a common goal.