Understanding Internal Organization Principles in Companies
Internal Organization of the Company: General Principles of Organization
• The company is a coordination unit.
• It coordinates the activities of individuals and the use of material resources.
• In an enterprise, the work of coordination is referred to as management.
• The administrative function of the company consists of four basic tasks:
1. Planning (to establish what is to be done).
2. Organization (using available information to assign tasks).
3. Direction (to ensure tasks are carried out as planned).
4. Control (to ensure tasks are completed properly).
1. Principles Determining Vertical Organization
• Basic principles:
• Hierarchy.
• Authority.
• Subprinciples or basic conditions:
• Correspondence.
• Responsibility.
• Derivative principles.
• Unity of command and direction.
• Delegation and decentralization.
• Span of control (the number of subordinates under command).
2. Principles Determining Horizontal Organization
• Basic principles:
• Division of labor.
• Specialization.
• Subprinciples or basic conditions:
• Functionality.
• Derived principles.
• Departmentalization.
• Divisionalization.
• Coordination.
• Automation and mechanization.
3. Principles Establishing Organizational Balance
• Basic principles:
• Grounds.
• Participation.
• Subprinciples or basic conditions:
• Information.
• Communication.
• Legislative principles.
• Management by objectives.
The Division of Labor
The division of labor is the process of dividing tasks that has been applied naturally since humanity organized into societies. The main advantages of the division of labor are:
• Increased skill and dexterity in work.
• Prevention of time loss when switching tasks.
• Facilitation of machine creation (in some simple jobs, labor can be replaced by capital, such as a machine to tighten screws).
Despite these advantages, the division of labor cannot always be implemented or maintained with the same intensity. The impossibility of division of labor is due to:
1. Environmental conditions.
2. The nature of the tasks.
The great advantage of the division of labor is the increase in efficiency.
Specialization
The continuous emphasis on simple tasks leads to the acquisition of knowledge or skills. The set of elementary tasks assigned to a person is known as a “job” (the task or set of tasks to be carried out by a person).
In designing the workplace, it is essential to consider not only the advantages of specialization but also the drawbacks, which include:
• Increased fatigue (physical fatigue caused by repetitive activities).
• Atrophy of capabilities not needed for task development and boredom (mental fatigue).
To mitigate these negative effects, the following techniques are employed:
• Job rotation.
• Task enrichment.
This can be horizontal or vertical: Horizontal enrichment occurs when additional tasks are added at the same level, while vertical enrichment occurs when tasks are added at different levels of responsibility.
Planning
Planning involves selecting means to achieve ends. Due to the complexity of the undertaking, this activity must be divided into parts, linking planning to the division of labor.
A plan is an organized set of tools to achieve specific objectives. When the plan is very detailed, it is referred to as a program. In management, plans can be categorized into three types (each dominating from above):
• Strategic plans (long-term goals).
• Operational plans (guiding the firm’s progress towards strategic plans).
• Routine plans (used to implement operational plans).
This categorization is often represented as a pyramid, indicating that there are fewer components at the top than at the base.
Hierarchy
Hierarchy is the element that coordinates the three types of plans at both the conception and execution levels. It is also structured along a pyramid that ranks the varying degrees within a hierarchy:
• Senior management.
• Middle management.
• Operational controls.