Management and Business lecture about how to structure and design your organization including a brief summary of the major functions of managers.

1. Organizational
Structure
Medical Department-Chemipharm
By: Marco Makram

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Organizing as a major role of Management
1- Planning
2-Leading/Directing
3- Controlling
4- Organizing
Functions of Manager:

3. 1- Planning:
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Planning is the function of
management that involves:
• Setting objectives
• Identify alternative courses of
action for achieving objectives.
• Evaluating the various alternatives
for achieving objectives.
• Determining a course of action for
achieving those objectives
(Strategy and tactics).
Functions of Managers

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Functions of Manager:
2-Leading/Directing
• Leading involves sources of influence that
you use to inspire others.
• If managers are effective leaders, their
subordinates will be enthusiastic about
exerting effort to attain organizational
objectives.
• Studies of motivation and motivation theory
provide important information about the
ways in which workers can be energized to
be more productive.

5. 3- Controlling
Controlling involves ensuring that performance does not
deviate from standards.
Controlling consists of three steps, which include:
(1) Establishing performance standards,
(2) Comparing actual performance against standards,
(3) Taking corrective action when necessary.
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Functions of Managers:

6. Functions of Managers:
4- Organizing
Organizing is the function of management that
involves:
Developing an organizational structure (Chain of
command & Organization chart)
 Allocating human resources to ensure the
accomplishment of objectives.
The design of individual jobs within the organization
including the duties and responsibilities of
individual jobs “job design” decisions.
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what is organizational structure?
It is how job tasks are formally divided,
grouped, and coordinated within an
organization.
 When managers develop or change
the structure, they are engaged in
organizational design.
Organizational structure &
organizational design.

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Organizational design: decisions about six key elements:
• Work specialization,
• Departmentalization,
• Chain of command,
• Span of control,
• Centralization and
decentralization,
• Formalization.
To what degree are tasks subdivided into separate jobs ?
On what basis will jobs be grouped together ?
To whom do individuals and groups report ?
How many individuals can a manager direct effectively ?
Where does decision-making authority lie ?
To what degree will there be rules and regulations
to direct employees and managers ?

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An entire job is not done by one individual
but instead is broken down into steps, and
each step is completed by a different person.
Each employee is specialized in doing part of
an activity rather than the entire activity.
• There is a debate about the role of
Specialization to improve the
productivity as when it is used to
extreme it may cause higher turnover,
boredom, fatigue and increased
absenteeism.
1- Work Specialization

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2- Departmentalization
 Once jobs have been divided up through work
specialization, they have to be grouped together so
that common tasks can be coordinated.
 The basis on which jobs are grouped together is
called departmentalization.
Common forms of departmentalization
include:
• Functional Organizational Structure.
• Divisional Organizational Structure:
• Product-based Structure.
• Geographical-based Structure.
• Market/Customer-based Structure.
• Process-based Structure.
• Matrix Organizational Structure.

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One of the most common types of
organizational structures.
The functional structure
departmentalizes an organization
based on common job functions.
So an organization with a functional
structure would group all of the
marketers together in one
department, group all of the
salespeople together in a separate
department, and group all of the
customer service people together in
a third department.
Functional Organizational structure

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Example for Functional Org. structure.
Chief Executive
Officer

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• The functional structure
allows for a high degree of
specialization for employees.
• The structure also has the
potential to create barriers
between different functions.
Pros & Cons of the functional structure

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A divisional organizational structure
is a structure that’s comprised of
multiple smaller functional
structures (i.e. each division within
a divisional structure can have its
own marketing team, its own sales
team, and so on)
In a product-based divisional
structure, each division within the
organization is dedicated to a
particular product line.
Divisional Organizational Structure:
1- Product-based Organizational Structure

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Divisional Organizational Structure

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• This type of structure
is ideal for
organizations with
multiple products and
can help shorten
product development
cycles.
In this approach, each major
product area is placed under
the authority of a manager
who is responsible for
everything having to do with
that product line.
1- Product-based divisional Organizational
Structure:

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The geographical
organizational structure
establishes its divisions
based on geography.
 More specifically, the
divisions of a geographical
structure can include
territories, regions, or
districts.
2- Geographical-based divisional Organizational
Structure:

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This type of structure is best-suited
to organizations that need to be near
sources of supply and/or customers
(e.g. for deliveries or for on-site
support).
The main drawback of a
geographical organization structure
is that it can be easy for decision-
making to become decentralized, as
geographic divisions often have a
great deal of autonomy.
Pros & Cons of geographical-based
structure:

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The market-based structure
is ideal for an organization
that has products or
services that are unique to
specific market segments
This structure type is
particularly effective if that
organization has advanced
knowledge of those
segments.
3- Market/Customer-based divisional Organizational
Structure:

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Unlike a strictly functional structure, a process-based structure considers
not only the activities employees perform, but also how those different
activities interact with one another.
This structure is ideal for improving speed and efficiency, and is best-suited
to rapidly changing business environments.
4- Process-based divisional Organizational Structure:

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In order to fully understand the
illustrated diagram, you need to
look at it from left to right:
 The customer acquisition process
can’t start until you have a fully
developed product to sell.
 And likewise, the order fulfillment
process can’t start until customers
have been acquired and there are
product orders to fill.
4- Process-based divisional Organizational Structure:

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Large organizations often combine
forms of departmentalization.
For example, a major Canadian
photonics firm organizes each of its
divisions along functional lines:
• its manufacturing units around
processes,
• its sales units around seven
geographic regions,
• and its sales regions into four
customer groupings.
Combined forms of departmentalization

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Unlike the other structures we’ve
looked at so far, a matrix
organizational structure doesn’t follow
the traditional, hierarchical model.
 Instead, all employees
(represented by the green boxes)
have dual reporting
relationships:
• A functional reporting line
(shown in blue) as well as:
• A product- based
reporting line (shown in
yellow)
Matrix Organizational Structure

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The main advantage of the
matrix structure is that it can
provide both flexibility and more
balanced decision-making (as
there are two chains of
command instead of just one).
Its primary drawback:
complexity, which can lead to
confused employees.
Pros & Cons of Matrix Org. Structure.

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The chain of command is the continuous
line of authority that extends from upper
organizational levels to the lowest levels.
Chain of command clarifies who reports
to whom.
 It helps employees answer questions
such as “Who do I go to if I have a
problem?” or “To whom am I
responsible?”
3- Chain of Command

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Line Authority Staff Authority
Line managers have the
authority to issue orders to
those in the chain of
command.
The president, the production
manager, and the sales
manager are examples of line
managers.
Staff managers work in the
supporting activities of the
organizations, such as human
resources or accounting.
Staff managers have advisory
authority and cannot issue orders to
those in the chain of command
(except those in their own
department).
Chain of Command
Line and Staff Authority

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4- Span of Control
How many employees can a manager efficiently and effectively manage?
This question of span of control is important because, to a large degree, it
determines the number of levels and managers that an organization needs.
wider spans may reduce
effectiveness in some cases.
When the span becomes too large,
employee performance can suffer
because managers may no longer
have the time to provide the
necessary leadership and support.
Drawbacks of wide span of control

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Advantages of wide span of control
The trend in recent years has been
toward larger spans of control, which
are consistent with managers’ efforts
to reduce costs, speed up decision
making, increase flexibility, get closer
to customers, and empower
employees.
However, to ensure that performance
does not suffer because of these
wider spans, organizations are
investing heavily in employee
training.
Span of Control

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 Assume that we have two organizations, both of which have 64 employees.
 As the illustration shows, if one organization has a uniform span of four and the other
a span of eight, the wider span will have one fewer level and approximately 12 fewer
managers.
 If the average manager made $50 000 a year, the organization with the wider span
would save more than $600 000 a year in management salaries alone.
 Obviously, wider spans are more efficient in terms of cost.

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The more training and experience employees
have, the less direct supervision they need.
Therefore, managers with well-trained and
experienced employees can function quite
well with a wider span.
Wider spans of control are also
possible due to technology as it
is easier for managers and their
Subordinates to communicate
with each other.
Important factors that may influence the
Span of Control decision:
 Other variables include
similarity or complexity
of employee tasks

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Centralization describes the degree to
which decision making is
concentrated at a single point in the
organization.
If top managers make the
organization’s key decisions with little
or no input from below, then the
organization is centralized.
 In contrast, the more that lower-level
employees provide input or actually
make decisions, the more
decentralization there is.
5-Centralization and Decentralization

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Another term for increased decentralization is
employee empowerment, which means giving
more decision-making authority to
employees.
Companies facing dynamic environments are
more likely to need to adapt quickly to change,
and thus decentralize decision making.
Stable environments allow for more rules and
procedures, so decision making can be
centralized more easily.
Centralization and Decentralization

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Formalization refers to the
degree to which jobs within the
organization are standardized
and the extent to which employee
behavior is guided by rules and
procedures.
If a job is highly formalized, the
person doing that job has little
freedom to choose what is to be
done.
Although some formalization is
important and necessary for
consistency and control, many
of today’s organizations allow
employees some freedom to
make decisions they feel are
best under the circumstances.
6- Formalization

35. THANK
YOU!
Marco Makram
Email
Cpi.marco.Makram@gmail.com