Introduction to Functional Areas of Management Unit 2

Introduction to Organising

• Organising involves developing a framework or organisational structure to indicate how people and resources should be deployed to achieve goals.
• Management must match the organisational structure to accommodate the particular needs of the company.

The Concept of Organisation Structure and Organising

• Organising involves combining people, capital, and raw materials to achieve the organisation's goals.
• Key aspects of organising:
  • Mechanisms to implement the plan or strategy
  • Activities and arrangements to determine what activities will be carried out
  • Resources and who will perform the various activities
  • Communication, cooperation, and coordination between people, departments, and sections
• Organisational structure:
  • Indicates the work to be done and the connections between positions and tasks
  • Lays out the reporting system and framework of the entire enterprise
  • Utilises managerial techniques such as job design, departmentalisation, establishing chains of command, and assigning authority and coordination mechanisms

The Importance of Organising

• Organising is an integral part of the management process.
• Without organising, there cannot be successful implementation of plans due to the absence of a systematic allocation of resources.
• Organising entails:
  • Detailed analysis of work to be done and resources to be used
  • Systematising methods or procedures
  • Dividing the total workload into activities that can be performed by an individual or group
  • Promoting productive deployment and utilisation of resources
  • Grouping related tasks together rationally in specialised departments

The Evolution of Specialisation as Businesses Grow

• Job design involves determining an employee's responsibilities in the organisation.
• Concept of specialisation:
  • Dates back to Adam Smith's "The Wealth of Nations"
  • Involves dividing work into smaller, manageable tasks to increase efficiency and productivity
• Phases of the evolution of specialisation as businesses grow:
  • Phase 1: Inventor-designer, single entrepreneur
  • Phase 2: Adding a bookkeeper to relieve administrative burden
  • Phase 3: Employing specialists to run departments (Human Resources, Finance, Marketing, and Production)
  • Phase 4: Expansion with multiple specialists and departments
• Reasons for specialisation:
  • Individual ability: Concentrating on one task to acquire skill and efficiency
  • Reduced transfer time: Minimising time lost when switching between tasks
  • Specialised equipment: Using equipment designed for a particular task to increase efficiency
  • Reduced training: Reducing the cost of training by focusing on a specific task
  • Coordination: Improving communication and cooperation between tasks and departments

The Unity of Command Principle

• Establishes reporting lines among departments and positions in departments
• States that an employee should have only one superior to whom they are directly responsible
• Minimises confusion and conflict, ensuring clear direction and decision-making

The Scalar Principle

• Establishes a clear and unbroken chain of command linking every person in the organisation to someone at a higher level
• Helps employees know who to report to and who is responsible for decision-making
• Often incorporated into the chain of command, with the idea that "the buck stops here" – someone is ultimately responsible for every decision

Span of Control Principle

• Also known as span of management
• Establishes the number of subordinates who report directly to a manager
• Limited to ensure effective supervision and decision-making
• Factors determining the best span of management:
  • Competence of the manager and employees
  • Similarity or dissimilarity of tasks being supervised
  • Incidence of new problems in the manager's department
  • Extent of clear operating standards and rules
  • Complexity of the subordinate's job

Line and Staff Structures

• Line authority: Managers who have the right to direct and control the activities of subordinates
• Staff authority: Those who advise, recommend, research, and offer technical expertise
• Line and staff relationships:
  • Line managers have authority over subordinates and report to higher-level managers
  • Staff specialists provide support and advice to line managers and report to higher-level managers
  • Conflicts can arise between line and staff managers due to differences in authority and responsibility

Learn about the concepts of organising and organisation structure in management. Understand how to develop a framework to achieve company goals and match the organisational structure to the company's needs.