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Organizational design

Organization structure
Show the level of management and division of responsibilities within an organization.

Organization chart
A diagram that shows the different job roles in a business and how they relate to each other.

Organization chart
shows (advantages)
1)Clear role and responsibility --- People --- know what to do --- not confuse
2)Clear chain of command--- know – to whom people are accountable --- effective
communication
3)Effective delegation --- delegation Adv

Departmentation
Refers to the way in which tasks are grouped and resources (LLK) allocated into department.
Traditionally, a business may be divided into four departments,
Production department, marketing department, finance department, human resource department
Eg
Production department
raw material process create output
input added value finished goods

Hierarchy
The levels of responsibility in an organization from the lowest to the higher.

Chain of command
The route through which orders are passed down in the hierarchy.

Scalar chain
Chain of command from the most senior to the most junior.

1)Top Chairman/ Chief Executive Officer

Board of director/ director

2)Middle Functional Managers (eg HR manager)

3)Lower Supervisor/ Foreman

Operatives Skilled workers

General staff Unskilled workers

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Chief Executive Officer (CEO)

The most senior manager responsible for the overall performance and success of the
business (Company).

Director
Appointed or elected member of the BOD of a company who have the responsibility for
determining and implementing the company policy
Some directors might also have management role, for eg a marketing director.

Manager
An individual who is in charge of a certain group of tasks or a certain area or department of the
business. For eg: Factory manager.

Supervisor
An individual who check and controls the works of subordinates.

Line manager
Line manager have responsibility over people below them in the hierarchy of an organization.

Staff manager
Staff manager are specialists who provide support, information and assistance to line manager.

Annual general meeting (AGM)

a meeting for shareholders that limited companies must hold once every year.
Include ---
1)Appoint and removal of directors
2)Appoint and removal of auditors.
3)Declare (agree) dividend
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Management
Getting things done through other people.

Functions ( roles ) of management (POCCC)

1)Planning ---- looking at where the business is now and where it wants to be future.
eg sales target / output target
2)Organizing ---- use of the resources (LLK) to achieve the planned goal and objectives.
3)Co-coordinating ----- all of the different part of business is working together towards
achieving the business’s goals.
4)Controlling and decision making ---- checking to make sure
5)Commanding and motivating ---- control and supervision of sub-ordinates

Manager’s Qualities
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1. Initiative (solve problem)

2. Communication skill
3. Assertiveness and determination
4. Intelligence
5. Self-confidence
6. Energy and enthusiasm
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Authority
Right to do something.
The right to command and make decisions.

Delegation
Authority to pass down from superior to subordinate to perform particular tasks/ make decision.

Advantages
1)Increased in efficiency -----workload spread more evenly ---- so manager can focus on more
important matter --- increase efficiency.
2) increased motivation ----give responsibility to lower rank employees ---- feel trusted/ training
/ promotion --- increased in motivation --- work harder
3)Succession planning for firm---- trained employee --- later --- can give promotion

Disadvantages
1)Costly mistake --- if unskilled labour ---- cost increased ---
2) abuse of authority --- employee abuse of authority --- but final responsibility in the hand of
management

Recommendation
Training

Delayering (empowerment) (Become flatter)

Reduction of the number of management level from bottom to tops.

Advantages
1)Less costs ---- no longer need to pay Manager’s salary --- cost lower ---- P or P
2)Less the chain of command ----- communication and decision-making should be quicker and
more effective.
3)Increased in motivation ---- Wide span of control increases the opportunities for delegation,
helps develop worker’s skills and could motivate workers are given more trust by manager.

Disadvantages
1)Increased in cost ---- Business may have to make redundancy payments to managers who
lose their jobs. This if a one-off increase in costs.
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2)Decreased in efficiency ---- Increased workload for managers who remain could mean that
tasks are not completed on time or the quality of decision-making is not as good.
3)Demotivation --- Workers who remain might fear redundancy and this reduces their job
security.

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Span of control
The number of people a person is directly responsible for in a business
The number of subordinates immediately reporting to a given superior.

Factors affecting the size of the span of control (depend on)

1. The difficulty of tasks ---- if difficult use narrow span --- need to closely supervised.
2. The experience and skills of workers ---- if high --- use wide span
3. The size of the business ----- large --- narrow ---- can appoint more manager
4. Management style ---- wants greater control --- narrow span

Wide span of control (number of subordinate high)

Advantages
1)Less expenses ------ fewer manager/ supervisors are required --- cost decline --- P or P
2)More motivation ------ Less supervision----- more chance of delegation --- increased in
motivation --- work harder --- increased in output / productivity

Disadvantages
1) Demotivation ---- Reduces promotion opportunities
2) Damage image and reputation. ---- Less control over subordinate’s work ---- poor quality
g&s / no: of complaints increased ----- damage image and reputation.

Tall organization structure (large organization/Bureaucracy/Mechanistic/narrow span )

Large number of layers in the hierarchy and narrow span of control.

Advantages
1)Increased in motivation. ------defined career ladder ---- chance of promotion --- employee
loyalty and help to motivate staff
2) Specialization – technical excellence ---- increase in skill --- efficiently and effectively do
their job

Disadvantages
1)Block initiative------ Close control fosters rigidity --- decrease in innovation and creativity
2) long chain of command ----- Lengthens communication and decision-making --- decrease in
efficiency
(-) Increased administration and overhead costs
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Recommendation
Proper delegation of authority / training

Flat organization structure (Small organization/ Organic / Wide span of control) (short chain
of command)
Few numbers of layers in the hierarchy and wide span of control.

(+) Strategic apex close to operating core and the customer --- quick communication /DM
(+) Savings on managerial costs
(+) More opportunity for delegation / empowerment --- motivation
(-) Loss of managerial control
(-) If delayer, loss of middle management knowledge.
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Centralized management structure

Most decisions are taken at the center or higher level of management

Decentralized management structure (Delegation)

Many decisions are not taken at the center of the business but are delegated to a lower level of
management.

Advantages of Centralization
1)Crisis decisions taken quickly --- suitable for quick decision
2)Standardized policies and procedures

Advantages of decentralization (advantages of delegation)

1)Avoids heavy workloads
2)Improves motivation of junior managers
3)Greater awareness of local issues
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Communication
Communication
Sending and receiving of message.
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Communication channels
Routes along which information might travel in a business.

1)Downward vertical communication

Manager give instruction to subordinate.

2)Upward vertical communication

subordinate give feedback (accountable) to manager.

3)Horizontal communication (lateral communication) (sideways)

Same level in the hierarchy exchange information.

4)Diagonal communication
One department manager communicates with another department employee.
Eg
Marketing Department’s Manager communicate with Production department’s employee.
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Internal communication
Communication between people inside the business.

External communication
Communication between the business and those outside such as customers, investors or the
authorities.
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Formal communication
the use of recognized channels when communicating.

Informal communication
The use of non- approved channels when communication.
Most informal communication is done through the grapevine, gossip and rumors.
Information passed on through the grapevine may become distorted and misleading ----
conflict ---- demotivation ---- labour turnover and labour absenteeism.
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Verbal communication
Oral and Written.

Non-verbal communication
Picture/ body-language/ diagrams/ numbers/
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Facial expression/ gestures, movements, appearance etc.

Visual communication
diagram / chart
Effective communication
Information passed between two or more people or groups, with feedback to confirm that the
message has been received and understood.

Poor communication (One-way communication)

The message sent from sender to receiver, there is no feedback/ respond.
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Barriers to communication, due to (Reasons for poor communication)
1)Message is unclear -------if information overloaded ---- too many information ---- receiver---
confuse or
If information is underload --- too little information --- receiver --- not understand
2)due to Technological breakdown----- loss of information – receiver will not receive the
message
3)Long chain of command ----- too many hierarchy ---- information may be lost
4)Problem with sender --- use different language or Jargon (technical terms)
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Overcoming the barriers to communication
Training
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The effects of poor communication (consequences)
1)Mistakes occurs ------- there is a misunderstanding, defective goods might be produced-----
Costs rise of return goods or have to pay compensation.
2)Decision making slow down and can make wrong decision----- whole process may be damage/
delay.
3)Staff motivation suffers / demotivation --- misleading ---- conflict between employees ---- job
dissatisfaction ---- labour turnover and absenteeism may increase.
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Effect of effective communication (consequences)
1)Less mistake
2)Quicker decision making / more accurate decision can be made
3)Decreased in demotivation
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Methods of communication
1)Notice boards
(+)cheap to use --- cost may be lower
(+)Use to communicate a large number of people
(-) not sure everyone may read or not
(-) no feedback --- not sure information is received or not

2)Face to face communication /Meeting /Video conferencing

Advantages
Allows immediate feedback
Allows new ideas to be generated
Encourages co-operation
Save – time
Disadvantages
Negative body language may create a barrier
A record of the message may not be kept.
Non-relevant information may be included
In a meeting some people may not listen.

3)Letters /Memorandum
Advantages Disadvantages
Can be referred to more than Not immediate (take a long time to send letter)
once Content may not be understanding
Can contain plans or drawing Not immediate feedback
Hard evidence (two-way communication is impossible)

4)Telephone
Advantages Disadvantages
Direct feedback possible Assumes the receiver can be contacted
Quick No hard evidence.

5)E-mail
Advantages Disadvantages
Quick All must have access to computer
Able to send to a large May not be read might be too many
number of people e-mails being received
immediately
Possible to circulate large
documents more quickly and
cheaply than as hard copy

6)Text message
Advantages Disadvantages
Quick to send limited information
Can be sent simultaneously to all might not receive / read the message
Reference
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