Management Organization Principles

• Organizing follows planning and is the next step in management
• An organization is people who work together, coordinate, and collaborate to achieve broad goals
• Organization can be viewed in two ways: as a process and as a structure

Organization as a Process

• It is an executive managerial function with activities like:
  • Accomplishing of business objectives
  • Division of labor
  • Departmentalization
  • Delegation of duties and responsibilities
  • Coordination of efforts
• It is continuous throughout the firm's lifetime
• Adaptations are needed as new activities arise
• The process divides work rationally and integrates it with work situations and personnel

Organization as a Structure

• It is a network of internal responsibility and authority relationships
• It's a framework of relationships across levels to achieve common objectives
• Organizational structure systematically combines people, functions, and facilities
• The main emphasis is on relationships or structure, not people

Types of Organization Structures

• Managers must deal with formal and informal organizations
• The official structure is shown in organizational charts and job descriptions, with reporting relationships known
• Informal organizations are evolving relationships and human interaction patterns, not officially prescribed
• Four formal organizational structures are:
  • Line organizational structure
  • Functional authority organizational structure
  • Divisional organizational structure
  • Matrix organizational structure

Line Organizational Structure

• It has direct vertical relationships between levels in the firm
• Line departments are directly accomplish the primary goal of the organization.
• It simplifies authority, responsibility, and accountability
• It promotes fast decision-making and simplicity
• It becomes ineffective as firms grow larger

Functional Authority Organizational Structure

• Line officers/managers have power to achieve organizational goals
• Staff officers/managers have staff authority over the line which is known as functional authority
• Line managers are not experts in all functions
• Functional authority organizations offer functional authority to specialist staff

Matrix Organizational Structure

• It uses teams of specialists for specific results
• Matrix organization decentralizes decision-making and improves environmental adaption.
• This structure is often used when the is highly responsive to a rapidly changing external environment

Organization Theories and Application

• A company's structure is key for entrepreneurs and business success
• Organizational theories can help address business issues by highlighting problems
• There are organizational theories address how a company works. focus on goals, members, environment, and success despite challenges

Classical Structure Theory

• Traditional organizations structures are either purely hierarchical or modified, like a matrix
• Employees report to one or more managers for work and disciplinary matters
• Managers use organizational structures to channel work
• Such organizations thrive in stable environments, even with limited experience/expertise

Contingency Organizations

• Contingency theory suggests that organizations adapt to changing environments
• How well the adoption addresses issues confronting the business depends on employees' and managers' knowledge and experience
• A well-adapted business shows flexibility and customer responsiveness
• A contingency organization might be the best choice when experienced team members are involved

Behavioral Organizations Theory

• Employee-focused organizations can succeed in various business environments
• Organizations assume employees complete their required tasks effectively due to a suitable business environment
• Employee-focused structures can work well in responsible workforce environments
• These structures often give teams significant authority in work-related decisions

Delegation

• Delegation of authority is the process where managers assign responsibility to subordinates with authority

Elements of delegation

• Three key elements of delegation are:
  • Responsibility: Assigning work and ensuring task completion using employee skills
  • Authority: Delegating power for independent decisions and efficient task accomplishment. Authority should equal responsibility
  • Accountability: Subordinates must check performance of responsibilities to verify work expected quality. Accountability can't be delegated; managers are responsible for any task, not subordinates.

Formal Organizations

• It is when two or more willingly come together with a common goal and collaborate to achieve it
• Formal organization is defined by rules and regulations that must be followed by the managers and employees
• There is documented coordination and authority with clear superior-subordinate relationships
• The objectives are specific and duties and responsibilities are assigned
• It is formed by top-level management
• Examples: companies, schools, and banks

Informal Organizations

• It is made up of people with personal and social relationships exists within formal organizations that meet and interact regularly and they become friends and companions
• It lacks formal rules, regulations, coordination, authority, or superior-subordinate relationships
• Objectives are not well defined
• It is formed by social forces within the organization
• Formal organizations show stability, chart depiction, and financial benefits
• There are well defined duties, responsibilities, authority and accountability
• Objectives/goals are specific
• Informal organizations are instable, do not appear on the formal chart, and offer social advantage
• The members receive intangible personal benefits
• Duties/responsibilities, authority and accountability of each member are not well defined
• Objectives/goals are not specific

Explore the fundamental principles of organization in management, including its purpose and structure. This includes understanding managerial functions, organizational structures, and the difference between formal and informal networks. Additionally, it covers hierarchical structures and their effectiveness in different firm sizes.