Organizational Structure And Chain Of Command Business Essay

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The purpose of writing this paper is to present the basic organizational methods, structure, culture and concepts that the Savings House Moznosti, LLC Skopje has implemented so far. After reading the case study analysis, the reader will have clear information about the working atmosphere at the savings house.

The case study analysis is prepared based on the materials, procedures, and politics that the managing body of the financial institution has implemented, in order to function.

With this analysis, it was conducted that on one hand Savings House Moznosti represents a positive working environment for the employees and a friendly cooperative financial institution for the clients. On the other hand, the organizational structure and culture are designed in order to make happy its workers as to increase the effectiveness of their overall performance.

Savings House Moznosti is a financial institution present on the Macedonian market for fifteen years, established in 1998 under the name of Humanitarian Association Moznosti (HZ Moznosti). Later on HZ Moznosti changed its name under Savings House Moznosti LLC, Skopje. Moznosti is headquartered in Skopje, Republic of Macedonia and the CEO is Snezhana Andova. Mrs. Andova has been the CEO of Moznosti since 1998. She has transformed the company from a small financial organization that employs 10 people, to one that employs nearly 120 professionally skilled workforce.

1.2 Mission and Vision

Savings House Moznosti's mission states that they "believe in free initiative, individual creativity and personal responsibility. Our mission is to provide opportunities - people in need to gain support for their good business ideas. We offer access to initial capital. Our goal is new jobs and our method is small loans for small businesses. We expect - people to help themselves, their families and the community with the results of their businesses, by which our organization will become respected entity in the financial market" (Savings, 2011).

Moznosti's vision is "To better world and happier people. We believe in people and their ability to change their life by personal effort. We are dedicated to fight against poverty, social marginalization. We are convinced that every human being deserves respect and support"(Savings, 2011).

Coming from the mission and vision, the savings house is known for its support provided to people that have good ideas for starting or expanding the business. Savings House Moznosti believes in people with free initiative, creativity, and personal responsibility (Savings, 2011).

1.3 Purpose

The Savings House serves micro, small and middle enterprises, which are part of the sector of trade, services, and manufacturing. Moznosti also serves physical entities by offering them credits for their needs. Moznosti's scope of operation is loaning out credits and collecting deposits.


The core of Moznosti's strategy can be defined with "dedication, innovation, and excellence". The strategies listed below are used to accomplish the mission of the company.

Moznosti has a very good reputation among the financial institutions in the country. The good reputation is a result of the hight efficiency, specialy empisising the dedication and quality of the services, through the excellent relationship with the clients and the role of offering continued advice to the clients. Every client of Savings House Moznosti has a person whom she/he can contact at any given time and receive a feedback of all questions and needs of the client (Savings, 2011).

The Savings House maintains its success through constant implementation of new services; services related to the constant knowledge of the trends and competition on the market.

Moznosti, LLC Skopje, is a partner of the global microfinancial institution Opportunity International. Opportunity International has it's headquarter in USA and is ranked on the 3th place out of the 43 financial institutions worldwide (the rating is done according to the CAMEL rating system). Being a partner of Opportunity International is a very competitive advantage and strength for Savings House Moznosti (Savings, 2011).

Before twelve years ago, Savings House Moznosti was only a small financial institution that offered small sized loans to the citizens, with a small number of branches, whereas today, Moznosti Savings House offers big sized loans to legal and physical entities and has branch networks across the entire country. Moznosti has 13 branch networks, from which 3 of them are located in the city of Skopje, and the rest of them are located in the bigger towns in the country (Savings, 2011).

Currently, Moznosti employs 118 people, from which most of them are Generation X and Generation Y. Moznosti tends to employ more of the Generation Y because of the belief that new generation is more innovative, ambitious, skilled, and dedicated to the job.


The competition that Savings House Moznosti has is Savings House MAK-BS, Savings House Forum, and some small banks that offer the same services as Moznosti does. However, the competition is strongly regulated by the NBRM. Besides the large competition on the market, Moznosti is very active into introducing new loan and deposit services on the market.

Organizational Structure and Chain of Command

According to De Canio, Dibble, Amir-Atefi (2000), organizational structure is of a major importance for a company because it affects the functioning of the company. It affects the behavior of the company in two ways. The organizational structure can have a big impact on the performance of one company, measured in terms of profitability or productivity; how ideas and creativity is accepted. Performances such this have a big impact on the company's behavior since the managers take them into account when they make decisions.

Savings House Moznosti, has a functional organizational structure as shown in picture 1. Moznosti has different departments which is a reason why the organizational structure is functional. By using the functional organizational structure, the company finds it very useful to monitor, to easy deal with the tasks and the general environment. The functional organizational structure is the most suitable for Savings House Moznosti because it is very organized and everyone knows to whom they report to. There are no misunderstandings or double reporting.

There are seven different departments within Savings House Moznosti, each of them reporting to the CEO. The departments are as follows:

Division for Development and Risk Management

Risk Department

Bad Loan Management Department

Marketing Department

Division for Transactions and Logistic of Selling

Logistics of Selling Department

Cash Management Department

Division Branch Networking

CRM Department

Product and Selling Coordination Department

Department for Branches

SME Department

Division Legal and Procurement Activities

Legal Department

Procurement Department

Division Human Resources

Division IT

Application Software Department

Computer Network and System Integration Department

Division Finance, Accounting and Treasury

Finance and Accounting Department

Treasury Department

Compliance Department

Picture 1: Savings House Moznosti, LLC Skopje, Organizational Structure


All divisions have their own Director, who is responsible for the workflow in the entire division. The departments that are under the divisions have Head Managers, whose Managers report to the division Directors. The division Directors therefore, report to the CEO. Between the CEO and the different Divisions, there are two also very important Divisions; The Information Security one and the Anti Money Laundering Division. The Directors of those two Divisions report to the CEO for their tasks. More-on, the CEO reports to the Board of Directors which is consistent of five members. The Internal Audit Division is placed between the CEO and the Board of Directors. The Internal Audit reports to the CEO, and if necessary, they also report to the Board of Directors as well.

The CEO of Moznosti meets the Board of Directors once a month and if necessary more than once in order to solve problems, look at some possible ideas for expanding or similar. The Board of Directors elects the CEO for managing the entire company for a period of four years.

According to the classical organization theory Savings House Moznosti's unity of command allows employees to clearly see the lines of authority and communication within the organizational structure and ensures clear assignment of duties and responsibilities. Unity of command means that each subordinate reports to one and only one superior and the rule of the unity of command is respected to all the levels in the Company. So we can conclude that Moznosti's organizational structure is well defined and allow smooth functioning of the Company in every aspect of the working. Flexibility in organizational structure allows task to be accomplished without being tied down by past practices or outdated procedures, but for a big company such as Roche there might be a issues of responsibility and lines of authority, and a certain amount of structure is needed that is clearly visible in Moznosti organizational structure, (Chaneski, W.S. 2010).

Other Organizational Aspects

3.1 Organizational Culture

The organizational culture of Savings House Moznosti is very ethical. Coming from here, Moznosti as a financial organization has a very high tolerance for risk and the overall focus is based on the means as well as on the outcomes. Moznosti's visible role model is the CEO. She has established a communication with ethical expectation; and unethical behavior is not tolerated. The trainings provided to the employees are also of an ethical background that is tightly connected with their scope of work.

Moznosti has always shaped its employees to be customer responsive at any given time. That means that Moznosti offers low formalization when it comes to the freedom to meet customer's services requirements. The low formalization is done through selecting employees with great personality and high customer orientation, and trainings and socialization of the current employees to be more customers oriented.

When it comes to the decision making process, Savings House Moznosti is an example of a decentralized financial institution. The main or most sensitive decisions are done by the Chief Executive Officer, whereas all Directors and Head Managers are welcome to express their ideas and thoughts for innovation or new service implementation. New ideas and innovations are the main characteristics on which Moznosti is based on.

Motivation Concepts and HRM

Trainings in Moznosti are provided in line with the yearly training plan as developed by the HR department.

Trainings arranged in Moznosti are:

Interactive that allows participants to apply the knowledge in practical work during the training.

Focusing on bringing participants not only new knowledge, but also apply this knowledge into skills that can be used in their work.

Well adjustable in its methodology to adult learning; this especially means adding room for interaction and exchange of experiences in the group.

Having the Ethics and Code of Conduct of Moznosti as an underlying aspect and set the stage for how the communication is done externally with clients and internally with colleagues.

4.1 Procedures for preparation and execution of on-the-job training/coaching

For the new stuff in Moznosti there is a developed training plan for on-the-job training during their first three months of their employment. The training period is finalized with an assessment.

In addition to that, the staff changing to a new department within Moznosti is also provided with an on-the-job training plan; depending on needs of the individual staff, this type of on-the-job training can last from three to six months.

The head of the division is responsible for setting up on-the-job training plans for new employees or employees coming from other divisions within Moznosti. This is done in a timely manner after the start of the new division employee.

The training plan is:

Tailor-made to previous experience and current training needs of the new employee.

Discussed through and agreed upon with the new employee.

Identifies other colleagues in the department that will take a mentoring role and their specific responsibilities

Clearly showing how the new employee gradually will be taking over larger responsibilities to in a step-by-step approach become independent in his/her work

By the end of the on-the-job training plan, the new employee will be assessed by his/her management team together with HR.

Savings House Moznosti has in-house trainer pool that is built up by the experienced staff in its respective field. Trainers are segmented in two levels; trainer for beginner trainings and trainers for advanced trainings

The following requirements should be fulfilled for trainers in the two levels:

Trainer for Beginner Training

Trainer for Advanced Training

At least 3 years of experience in the topic of the training

Promoted by their Head of department

Selected as appropriate candidate by HR department

At least 5 years of experience in the topic of the training

Experience from offering training on beginner level

Promoted by their Head of department

Selected as appropriate candidate by HR department

Positive participant feedback from trainings held on beginner level

Figure 1- Trainer for Beginner Training & Trainer for Advanced Training

A trainer not fulfilling the above criteria can still, upon approval from the HR, act as a co-trainer in the training process with an approved trainer.

Promoting a Beginner Level Trainer to become Advanced Level Trainer is the decision of the Director of the HR Division.

4.2 Motivation

Motivation is considered thoroughly in the company because they know that employees need that factor among others in order to help the company be successful. In a broad aspect this company is trying to be considerate and favorable as an employer, so they offer an excellent work environment, attractive development opportunities and competitive compensation packages (Procedures, 2009). Moznosti keeps motivating its employees by creating a working environment where everyone feels respected and valued, and where they can develop their fullest potential. As the most noticed motivation concept used for this company is through recognition acts; this type of motivation concept is well practiced and known to the business world and management lecturers. The so called Employee Recognition Program is an attractive motivation factor for companies; this concept is based on the idea that recognition can be a potent motivator and that it helps improve performance and productivity.

4.3 Pay Structures

According to the Procedures for Forming a Salary of Moznosti (2009), Each employee within Savings House Moznosti has a right on monthly salary. The salary is conducted based on the experience, degree of education, job position, skills and knowledge. The salary consists of:

-Salary for performed work as a basic component (fixed part of the salary)

-Compensation salary as a separate component (variable part of salary). Salaries and other employee benefits shall be determined and paid in the manner, conditions, criteria and procedure laid down by law, and collective agreement. The employee is entitled to a salary in proportion to the work performed (minimum wage and accessories) as well as wage proportional to his contribution to the creation of the income.

Employee's salary cannot be lower than the minimum wage established for individual workplace level according to the act of organization and systematization of Savings House Moznosti (Procedures, 2009).

Employee's salary is calculated and paid at least once a month in the amount previously determinated in the agreement. In accordance to the law, contributions and personal income tax on behalf of the employee is paid by the Savings House. The employer, or person authorized by the employer, has an obligation to keep records of the wages and other compensations paid taxes. The authorized person is also obliged to issue a certificate of paid salary and compensation in the gross and net amount. The salary is expressed in points for each job, determined by the articles of the organization and systematization of the jobs or by the decision of the employer (in that case the CEO).

The provided fees are expressed in points, as a percentage of the salary, expressed equivalent in euros. The value of the points is determined by the employer for each month separately, depending on the financial result of the Savings House.

Salaries of Division Directors and Executive Director are kept as strongly confidential information.

5. Conflict

Savings House Moznosti, sees conflict as something natural that cannot be avoided. Conflicts arise in all teams and situations and sometimes it is necessary in order the team to perform effectively. However, the conflict that can arise within the teams of the divisions of Moznosti is to minimal level and most of the time this minimal conflict has brought the team to come up with much creative ideas and better performance.

The conflicts that most arise are in the most complex divisions such as branch networking, finance, and business development and risk management. Reasons for arising conflict are due to the high amount of work they need to do, miscommunication, and some personal. However, there have not been conflicts that have not been resolved. The code of conduct itself says that conflicts are healthy and when they appear, they should be solved out, rather than ignored. All employees tend to compromise if conflicts happen.

6. Communication

6.1 Internal Communication

Savings House Moznosti has downward communication type. The CEO of the company is telling the employees what is important and what are the policies and the values of the company. This type of communication is used in order to boost the morale, increase the effectiveness, announce decisions, provide motivation, and to increase efficiency.

Among the different divisions, Moznosti has horizontal or literal communication. The horizontal or literal communication is used because the communication involves coordinating information, and is done among people that work in the same division, which most likely they know each other's job very well. The literal communication has brought the teams' higher effectiveness, less stress, easy solved problems, building goodwill, and accomplishing tasks.

The internal communication within the entire company is done also trough e-mails, telephone, face-to-face, and similar. E-mails and telephone are used in case there is announcement or when some employee needs something from the other one. E-mails are more often used, since it holds evidence that the sender informed, asked, or told the other employer, or some third party, the information that needed to be sent. The most effective way of communicating is transmitting the information twice. Often senior managers will send an email or will make a phone call to send the message, but later on, the senior manager will tell same message face-to-face to who ever needed to be told. Face-to-face is the most effective way of communication within the company because it eliminates misunderstandings. Luckily, obtaining face-to-face communication has never been a problem for Moznosti.

6.2 External Communication

The external communication is done through phone, e-mail, Skype, and letter. Whenever the company needs any kind of documentation from either legal or physical entity, the same is obtained though letter or email; it all depends on the subject of the message. Skype is most often used by the CEO, when international conferences are taking into place. Face-to-face communication is also present in this situation as well. Most recommended communication is face-to-face communication; if of course the parties are able to do so.

6.3 Grapevines

Customers that are not happy from the service they have received or the way they have been treated, have the right to fill in "compliance" form. All 13 branches of Moznosti can give out compliance forms to its clients. The compliance forms are filled by the clients and the same are kept confidentially. The compliance forms are further on submitted to the CRM department. The CRM reviews the grapevine and responds back to the client the soonest they can. All grapevines have been taken seriously and no grapevine has ever been ignored.

7. Teams

As innovation becomes ever more essential to growth in the face of competition, firms rely increasingly on teams to realize their innovation goals, giving these teams a new strategic significance (e.g., Ancona, Bresman, & Kaeufer, 2002). Importantly, this puts the burden on teams to learn - intensively, effectively, and rapidly. A growing literature has expanded the understanding of team learning activities - the activities through which a team obtains and processes knowledge that allow it to improve its performance (Bunderson & Sutcliffe, 2003; Edmondson, 1999; Gibson & Vermeulen, 2003).

Moznosti's teams are outperforming, flexible, and responsive to the changes in the environment. All teams within Moznosti have one common goal; the goal to help the company expand more on the market and be as much competitive as possible. Teams tend to do that through collective performance, positive attitude, mutual accountability, and complementary skills. Moznosti's teams tend to be problem solving teams, grouped from 2 to five people, from the same division or department, what meet several hours a day to discuss way of improving quality of CRM and loaning out credits, efficiency and working environment. There are also cross functional teams within the organization, as there are 13 branches in different towns. They still work as a team with one common goal; improve effectiveness, quality, and decrease the degree of credit risk exposure.

As Moznosti is expanding in employing new people, they tend to have workers from diversified background. There was a discussion once that having members in a team that are coming from different places, have different religion, and education, can create more effective teams. The new comers into the organization, who have never worked in a team, are sent on trainings of how to work effectively with a team. So far, there has not been a situation where an employee cannot fit well into the team.

When the division Director assigns a department to accomplish certain task, the team of the department is usually given enough time to perform the task on time and to use the proper skills. Whenever the team encounters a problem, the Director of the division is always at a help.

8. Decision Making

The CEO of the company has the final word when making up a decision. The decision is based on what the division Directors think about the situation. The division Directors comes up with their solution by talking to the Head Managers of the Departments. By doing so, everyone gets involved into making the decision; decentralization. Nevertheless, the CEO decides whether to or whether not to approve a certain action. The decision is always announced by the CEO, as a head senior manager of the company.

Teams can also make decisions relevant to the power they have. Teams are authorized by the division Directors what decisions they can make. Any decisions that are of a high importance for the company are in the hands of the CEO.

In situations when the CEO is on a business trip, there must be assigned CEO Deputy, in which most of the cases is the Director of Finance, Accounting and Treasury Division. Even in that case, the CFO is not fully authorized to make decisions.

Least but not last, the highest power of decision making process is held by the Board of Directors.

Figure 2- Decision Making Process-Hierarchical Model

9. Leadership

With my almost a year experience at Moznosti, I can say that if the CEO have not been a good role model of the company, she was not going to be the leader for more than ten years. The CEO has always had a positive influence on the people working at the company, which makes her a good leader.

10. Change Management

It is in the mere nature that everything evolves and changes and nothing is permanent. Businesses like other are affected by changes and some people perceive changes as opportunities, whereas some view them as stressful. One or the other management has to deal with them. Moznosti, as a financial institution, the business environment is circulating around quality of the services and by providing the customers loans suitable for their needs. Moznosti needs to recognize new trends at very early stage and be open to unusual ideas. Savings House Moznosti sees change as an opportunity and complacency as threat, thus they encourage its employees to be open to the world and new ideas.

11. Conclusion

12. Used Literature

Savings House Moznosti, 2011. Accessed on March 10, 2013.

De Canio, S. J., Diblle, K. Amer-Atefi, K. (2000). The importance of organizational structure for the adoptions of innovations. Management Science 2010, Vol 46, No.10

Ancona, D. G., Bresman, H., & Kaeufer, K. (2002). The comparative advantage of X-teams. Sloan Management Review, 43, 33-39.

Bunderson, J. S., & Sutcliffe, K. M. (2003). Management team learning orientation and business unit performance. Journal of Applied Psychology, 88: 552-560.

PoÅ¡kienÄ-, A. (2006), Organizational Culture and Innovations. Kauno technologijos universitetas Gedimino g. 43, LT-44240, Kaunas 2006

Chaneski, W.S (2010). Modern Machine Shop, Apr2010, Vol. 82 Issue 11, p34-36, 2p.

And Other Internal Procedures and Politics made within the organization.