1000 Business Lessons Every Businessman Must Know

Chapter 39 Organizational Structure: Supporting the Smooth Operation of the Enterprise (1)
[-]. Organizational Structure Design Elements
Managers must correctly consider six key factors when designing an organizational structure: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization.

303 Job Specialization

The essence of work specialization is that one person does not complete a whole job, it is broken down into several steps, and each step is done independently by one person.In essence, a part of a work activity, not the whole activity.

This has proven to be a way to make the most efficient use of your workforce's skills.In most organizations, some jobs require highly skilled employees to perform, while others can be performed by the untrained.If all workers were involved in every step of an organization's manufacturing process, then all would be required to have the skills needed to perform not only the most complex tasks but also the simplest.As a result, employees spend part of their time performing low-skilled tasks in addition to performing higher-skilled or more complex tasks.Since high-skilled workers are paid more than low-skilled workers, and wages generally reflect a person's highest skill level, paying high-skilled workers to do simple tasks is undoubtedly a waste of organizational resources. waste.

Through work specialization, management also seeks to increase the efficiency of the organization in other areas.Through repetitive tasks, employees' skills will be improved, and the time spent changing tasks or installing and dismantling tools and equipment during the work process will be reduced.Equally important, from an organizational perspective, the implementation of job specialization is conducive to improving the organization's training efficiency.It is easier and less expensive to select and train employees for specific, repetitive tasks.This is especially true for highly delicate and complex manipulation work.For example, if one employee were to produce an entire plane, would Boeing be able to produce one large Boeing airliner a year?Finally, job specialization helps to increase efficiency and productivity by encouraging inventions in specialized fields and by improving machines.

304. Departmentalization

Departmentalization, the process of organizing work and people into manageable units and creating manageable units, is usually the first step in establishing an organizational structure.It is not difficult to imagine that if a person has the necessary skills, knowledge and time, he can complete all the work in a company.

For example, a food stall is an example of how a company's various functions are managed by a single person.When his business flourishes, the stall owner feels that he does not have enough time to both make food and serve customers.Thus, as a first step in organizing work, the work will be divided into units that can be completed by one person.It is possible to hire a chef who is competent for all functions related to food production, and the stall owner retains the relevant functions of serving customers and managing the enterprise; when the business of this stall owner develops further, it becomes a restaurant that can accommodate [-] customers , the chef's work will be further subdivided.The Head Chef is in charge of food preparation and is responsible for all work in the kitchen.The head chef supervises several assistants, each of whom has only the skill to prepare a certain food.There is an overseer in the dining room who directs the service of the waiters and waiters, and the owner himself performs administrative functions, coordinating the work of all personnel.If it develops into a joint restaurant, each restaurant is a manageable unit.Therefore, departmentalization occurs at all levels of the organization.

The fundamental purpose of departmentalization is the division of labor. Many units established through the process of departmentalization are combined into an overall organizational structure that is essentially work-centered.The most common bases for determining departmentalization are function, product, customer, region, process, and sequence.These bases also become the general basis for division of departments.

305. Chain of command

A chain of command is an uninterrupted line of power extending from the highest level of an organization to the lowest level, clarifying who reports to whom.It answers questions employees ask: "Who do I go to when I have a problem?" "Who am I accountable to?"

Before discussing the chain of command, two subsidiary concepts should be discussed: authority and unity of command.Authority refers to the power inherent in a managerial position to issue orders and expect them to be carried out.To facilitate collaboration, each managerial position has its own place in the chain of command, and each manager is granted a certain amount of authority to accomplish his or her responsibilities.The principle of unity of command (unityofcommand) helps to maintain the continuity of the chain of authority.It means that a person should be directly responsible to one supervisor and only one supervisor.If the unity of the chain of command is broken, a subordinate may have to contend with conflicts or priorities among different orders of multiple supervisors.

Times change, and so do the fundamental principles of organizational design.With the development of computer technology and the impact of the trend of fully empowering subordinates, concepts such as chain of command, authority, and unity of command are now greatly reduced in importance.

Especially with the development of computer technology, it is increasingly possible for employees anywhere in the organization to communicate with anyone without going through formal channels.Moreover, the notion of authority and maintenance of the chain of command is increasingly irrelevant, as decisions that used to be made only by management are now delegated to operational staff to make their own decisions.

Beyond that, with the prevalence of self-managing teams, multifunctional teams, and new forms of organizational design that involve multiple bosses, the concept of unity of command is increasingly irrelevant.Of course, there are many organizations that still believe that their productivity is maximized by strengthening the chain of command, but there are fewer and fewer such organizations today.

306. Control Span
How many subordinates can a supervisor effectively direct?This question about span of control is important because it determines to a large extent how many levels and managers an organization has.Other things being equal, the wider the span of control, the more efficient the organization can be, for example.

Assuming there are two organizations with 4096 grass-roots operating employees, if one has a control span of 4 and the other has 8, then the organization with a wide control span has two fewer layers of management than the organization with a narrow control span, and can be equipped with 800 less Managers around people.With an average executive salary of $40000 per year, organizations with a wide control span can save $3200 million per year in executive salaries.Clearly, organizations with a wide span of control are more efficient when it comes to costs.However, a wide span of control may reduce the effectiveness of the organization in some ways, that is, if the span of control is too wide, the performance of employees will be adversely affected because supervisors do not have enough time to provide necessary leadership and support to subordinates.

A narrow span of control also has its advantages. By keeping the span of control at 5-6 people, managers can exercise tight control over employees.However, the narrow control span has three main disadvantages:

(1) With more management, the management cost will increase greatly.

(2) Make the organization's vertical communication more complicated.Adding layers of management also slows decision-making and isolates top managers.

(3) If the control span is too narrow, it will easily lead to too strict supervision of subordinates and hinder the autonomy of subordinates.

The trend in recent years has been to widen the span of control.For example, in large companies such as General Electric and Reynolds Metals, the span of control has reached 10 to 12 people, twice as many as it was 15 years ago.

Widening the span of control is consistent with the trend of companies trying to reduce costs, cut corporate overhead, speed up the decision-making process, increase flexibility, shorten the distance from customers, and empower subordinates.However, in order to avoid the reduction of employee performance due to the widening of the control span, companies have greatly strengthened the intensity and investment in employee training.Managers have realized that they can navigate a broad range of control issues when their reports are fully informed about the job, or when they can get help from a colleague with a problem.

307. Centralization and decentralization

In some organizations, top management makes all the decisions, and low-level managers carry out instructions from top management.At the other extreme, organizations delegate decision-making power to the lowest level of management.The former is a highly centralized organization, while the latter is highly decentralized.

Centralization refers to the degree to which decision-making power in an organization is concentrated at one point.This concept includes only formal authority, that is, the power inherent in a position.Generally speaking, if the top management of the organization decides the main issues of the organization with little or no consideration of the opinions of the grassroots, the organization has a high degree of centralization.Conversely, the higher the degree of participation of grassroots personnel, or their ability to make decisions autonomously, the higher the degree of decentralization of the organization.

Centralized and decentralized organizations are fundamentally different.In a decentralized organization, action is taken, problems are solved faster, and more people advise on decisions, so there is little or no separation between employees and the decision makers who can affect their work lives.

In recent years, the trend toward decentralized decision-making has been prominent, which is consistent with the management idea of ​​making organizations more flexible and responsive.In large companies, lower-level managers are closer to the actual production and have a more detailed understanding of related issues than senior managers.

308. Regularization

Formalization refers to the degree to which work in an organization is standardized.If a job has a high degree of formalization, it means that the people doing the job do not have much autonomy over the job content, working hours, and working methods.Employees are always expected to engage in work in the same way, ensuring consistent output.In a highly formalized organization, there are clear job descriptions, complicated organizational rules and regulations, and detailed regulations on the work process.For jobs with a low degree of formalization, relatively speaking, the executors and schedules are not so rigid, and employees have relatively wide permission to handle their own work.Since individual permission is inversely related to the organization's rules on employee behavior, the more standardized a job is, the less power employees have to determine how they work.Job standardization not only reduces the likelihood that an employee will choose a job behavior, but also frees the employee from having to consider other behavioral options.

(End of this chapter)