Chapter 10

• Organizational Structure refers to the level of management and division of responsibilities within an organization

Advantages of an Organization Chart

• Shows how everyone is linked together
• Individual can see their own position in the company
• Shows links and relationship of different departments
• Sense of belonging

Chain of Command and Span of Control

• Chain of Command: the structure in the organization which allows instructions to be passed down from senior to lower levels of management
• Span of Control: number of subordinates working directly under a manager

Advantages of a Short Chain of Command

• Better communication- quicker & more accurate
• Top managers are less remote
• Span of control will be wider:
  Encourages delegation
  More trust

Disadvantages of a Short Chain of Command:

• Managers could lose control since they have a lot of people under them
• Subordinates could be incompetent

Functional Departments

• Line Managers: direct authority over subordinates in their department. They are able to take decisions.
• Staff Managers: specialist advisers who provide support to the line managers and Board of Directors

Advantages of Employing Both Line and Staff Managers:

• Staff managers provide advice to the line managers
• Line managers have more time to concentrate on main tasks

Disadvantages of Employing Both Line and Staff Managers:

• Conflict and frustration between the two
• Line employees may be confused who to follow

Decentralization

• Management structure in which many decisions are delegated to a lower level of management
• Centralized management structure is where most decisions are taken at a central or higher level of management

Advantages of Decentralization:

• Decisions are taken by managers who are ‘closer to the action’
• More trust and satisfaction
• Decisions made faster

Disadvantages of Decentralization:

• Fragmentation
• Less control

Types of Decentralization

• Functional Decentralization:
  Specialist departments are delegated decision making authority

• Federal Decentralization:
  Authority is divided between the different product lines

• Regional Decentralization:
  Bases in many different regions/countries and each has authority over its own operations

• Decentralization by Project Teams:
  Particular project is given to a team involving people from all functional areas

Delegation:

• Giving a subordinate responsibilities but keeping the authority

Advantage for Managers

• More time to make bigger decisions
• Can assess their staff better and promote the right people
• Less likely to make mistakes with less workload
• Increase of trust

Advantage for Subordinates

• Work becomes more interesting and rewarding
• They feel more important
• Training and career opportunities
• Increase of trust

Why Managers Don’t Delegate

• Subordinates may fail
• Manager wants control
• Subordinate may do a better job than manager
• Manager feels insecure