Organizing

Specialisation and Coordination
Two basic steps in structuring the organisation:
Specialisation: Who will do what ?
Coordination: Linking the various parts of the organisation to achieve the overall objectives
Job specialisation:
identifying the specific jobs that need to be done and designating the people who will perform them
Coordination / departmentalisation: integration of the differentiated units and coordination of their efforts
Job specialisation
Customer Departmentalisation

Organisation Types
Management
Research
Production
Marketing
Human R.
Departmentalisation
Relevant for the distinction is the split up at the 2nd hierarchical level of the organisation
Functional organisation
jobs are specialised and grouped according to business functions and the skills they require
Object organisation
can be along customers, products, regions, processes, projects. (Includes all necessary functions)
Product
A
Management
Product
B
Product
C
Product
D
Hybrid forms
e.g. matrix organisation
Management
Research
Production
Marketing
Product
A
Product
B
Product
C

Functional vs. Product Organisation
Economies of scale can be realised
More effective monitoring of the special environment
Performance standards are better maintained
People have greater opportunity for specialised training and in-depth skill development
Technical specialists are relatively free of administrative work
Decision making and lines of communication are simple and clearly understood
Information needs are managed more easily (only product-relevant information necessary)
People have a full-time commitment to a particular product line
Task responsibilities are clear (you cannot “pass the buck” to other departments)
People receive broader training (integral perspective)

Decision-Making Hierarchy
Who makes which decisions so that the organisation achieves its common goals ?
3 Steps:
Assigning tasks: determining who can make decisions and specifying how they should be made
Responsibility: Duty to perform an assigned task
Authority: Power to make the necessary decisions
Performing tasks: implementing decisions that have been made
Delegation: Assignment of a task, responsibility, or authority by a manager to a subordinate
Accountability: Liability of subordinates for accomplishing tasks assigned by managers
Distributing authority: determining whether the organisation is to be centralised or decentralised

Centralisation vs. Decentralisation
General pattern of authority delegation throughout the company
Centralised organisation: most decision-making authority is held by upper-level managers.
Most lower-level decisions must be approved by upper management before they can be implemented.
Decentralised organisation: most decision-making authority is delegated to levels of management at various points below the top.
=> More responsiveness to the business environment !
Span of Control: Number of people supervised by one manager (depends on employees abilities, similarity and simplicity of tasks, etc.)

Three Forms of Authority
Line Authority:
Authority that flows up and down the chain of command, assigned to line departments (departments directly linked to the production and sales of specific products)
Staff Authority:
Based on special expertise, mostly assigned to counsellors and advisors (staff members), e.g. in law, accounting, human resources.
Committee and Team Authority:
Authority given to teams at all hierarchical levels, e.g. work teams which are empowered to plan and organise their own work and to perform it with a minimum of supervision