Understanding The Effective Management Of Organizations Commerce Essay

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Deciding on the structure for an organization may often be based on convenience, however many problems can arise from such. The structure should depend on the specific needs of the organization.

To say that bureaucratic structures and roles cultures are the most appropriate means of ensuring that modern organisations are effectively managed may be possible. Before expounding on organization structures and organization cultures, let the definitions be established first.

Although there are several definitions of the term organization, Leavitt (1962) defines it as a specific configuration of structure, people (skills, attitudes, and social interaction of organization members), task (the goals of the individual and the organization), and techniques (the methodical approach used to perform tasks). The term "organization" has been viewed differently by numerous theorists. However, all definitions usually contain five common features, that is, an organization is composed of individuals and groups of individuals who are oriented towards achieving common goals, having differential functions, and seeking continuity through time (Leavitt, 1962).

Organization Principles

Basic to any organization are the following identified principles: Specialization; Coordination; Departmentalization; Decentralization and Centralization; and, Line and Staff relationships.

Specialization takes on the divide-and-conquer attitude. Based on this principle, work can be performed much better if it is divided into components and people are encouraged to specialize by components. Specialization enables application of specialized knowledge which betters the quality of work and improves organizational efficiency. At the same time, it can also influence fundamental work attitudes, relationships and communication. This may make coordination difficult and obstruct the functioning of the organization. (Anderson, 1988)

Coordination refers to integrating the objectives and activities of specialized departments to realize broad strategic objectives of the organization. Through this principle, decision is made on which units or groups should be placed together; and on the patterns of relationships, information networks and communication. For example, in agricultural research institutions, most of the research is multidisciplinary but involves specialization. Coordination of different activities is important to achieve strategic objectives of such institution. Efficient coordination can also help in resolving conflicts and disputes between scientists in a research organization.

Departmentalization is a process of horizontal clustering of different types of functions and activities on any one level of the hierarchy (Mullins, 2010). It is closely related to the classical bureaucratic principle of specialization (Luthens, 1986). Departmentalization is conventionally based on purpose, product, process, function, personal things and place.

In contrast to function-based departmentalization, product-based departmentalization has the following advantages: less conflict between major sub-units; easier communication between sub-units; less complex coordination mechanisms; providing a training ground for top management; more customer orientation; and greater concern for long-term issues. In contrast, functional departmentalization has the following strengths: easier communication with sub-units; application of higher technical knowledge for solving problems; greater group and professional identification; less duplication of staff activities; higher product quality; and increased organizational efficiency (Filley, 1978).

De-centralization refers to decision making at lower levels in the hierarchy of authority. In contrast, decision making in a centralized type of organizational structure is at higher levels. The degree of centralization and de-centralization depends on the number of levels of hierarchy, degree of coordination, specialization and span of control. According to Luthens (1986), centralization and de-centralization could be according to: 1)geographical or territorial concentration or dispersion of operations;2)functions; or 3)extent of concentration or delegation of decision making powers (Luthens, 1986) .

Every organizational structure contains both centralization and de-centralization, but to varying degrees. The extent of this can be determined by identifying how much of the decision making is concentrated at the top and how much is delegated to lower levels. Modern organizational structures show a strong tendency towards de-centralization.

Line authority refers to the scalar chain, or to the superior-subordinate linkages, that extend throughout the hierarchy (Koontz, O'Donnell, & Weihrich, 1980). Line employees are responsible for achieving the basic or strategic objectives of the organization, while staff plays a supporting role to line employees and provides services. The relationship between line and staff is crucial in organizational structure, design and efficiency. It is also an important aid to information processing and coordination.

In an agricultural research organization, scientists and researchers form the line. Administrative employees are considered staff, and their main function is to support and provide help to scientists to achieve organizational goals.

It is the responsibility of the manager to make proper and effective use of staff through their supportive functions. The staff may be specialized, general or organizational (Anderson, 1988). Some of the important situational factors which affect the span of control of a manager are: similarity of functions, proximity of the functions to each other and to the supervisor, complexity of functions, direction and control needed by subordinates, coordination required within a unit and between units, extent of planning required; and organizational help available for making decisions (Hannigan, 2005).

Line and staff personnel have different functions, goals, cultures and backgrounds. Consequently, they could frequently face conflict situations. A manager has to use his skills in resolving such conflicts.

Types of Organizational Structures

Organizations can have simple to complex structures, depending upon organizational strategies, strategic decisions within the organization and environmental complexities. Depending on the needs, the structure of the organization can be traditional (bureaucratic) or modern (organic).

The Bureaucratic Organization

In a simple centralized organizational structure, power, decision-making authority and responsibility for goal setting are vested in one person at the top. This structure is usually found in small and single-person-owned organizations. The basic requirement of a simple centralized structure is that it has only one or two functions, and a few people who are specialists in critical functions (Slack, 2009). The manager is generally an expert in all related areas of functions and is responsible for coordination. Thus, the organization has only two hierarchical levels. However, this structure has to become more complex for growth, diversification or other reasons.

In large organizations and under well defined conditions, organization structure may be bureaucratic. The essential elements of a bureaucratic organization include the use of standard methods and procedures for performing work; and a high degree of control to ensure standard performance.

There are two types of bureaucracies. They are standard and professional bureaucracy. Standard bureaucracy is based on efficient performance of standardized routine work. Professional bureaucracy depends upon efficient performance of standardized but complex work. Thus, it requires a higher level of specialized skills (Johnston & Clark, 2005). The structure of standard bureaucracy is based on functions, large technical staff and many mid-level managers. In contrast, professional bureaucracy has few mid-level managers.

Divisionalized organizational design refers to a multiproduct or service design that separates different products or services to facilitate management planning and control. Different divisions in the organization can further have simple centralized or functional designs, depending upon their size and activities. This type of organizational design is favoured when different kinds of products or services require different kinds of management (Davis & Lawrence, 1978).

Problems of Bureaucracies

Three major problems of bureaucracies are: inefficiency and rigidity; resistance to change; and perpetuation of race, class, and gender inequalities. Inefficiency and rigidity may occur when workers become more concerned with "following the rules" than getting the job done correctly. Such workers are usually able to handle routine situations effectively but are frequently incapable of handling a unique problem or an emergency. Resistance to change is a result of high-specialization that is called for in a bureaucratic organization, which can result to incompetence. The bureaucratic structure was typically created for middle- and upper-middle-class white men, who for many years were the predominant organizational participants. Some bureaucracies perpetuate inequalities of race, class, and gender as this type of structure creates a specific type of work and learning environment. Inequalities in an organization can pose disloyalty among members (Kendall, 2008).

The Organic Organization

Matrix Organization

The matrix structure groups employees by both function and product. This structure can combine the best of both separate structures. A matrix organization frequently uses teams of employees to accomplish work, in order to take advantage of the strengths, as well as make up for the weaknesses, of functional and decentralized forms. An example would be a company that produces two products, "product x" and "product y". Using the matrix structure, this company would organize functions within the company as follows: "product x" sales department, "product x" customer service department, "product x" accounting, "product y" sales department, "product y" customer service department, "product y" accounting department. Matrix structure is amongst the purest of organizational structures, a simple lattice emulating order and regularity demonstrated in nature. In order to have a strong project matrix, there should be a project manager who is primarily responsible for the project. Functional managers provide technical expertise and assign resources as needed (Davis & Lawrence, 1978).

Problems with Matrix Organizations

Responsibility and jurisdiction are not clearly defined in matrix organizations. Bosses are also not clearly identified. Consequently, matrix organizations could lean towards chaos and disorder, and even lead to power struggles unless power between line and project manager is skillfully balanced. Within the organization, matrix organizations may encourage the formation of cliques since all decisions are made in a group. This could reinforce group loyalties and create inter-group conflicts. Matrix organizations need more human resources, particularly during initial periods. This means higher overheads and increased expenditure. (Kendall, 2008).

Organizational Culture

Modern philosopher, Charles Handy (1996) wrote in his book "Gods of Management" 4 main types of organizational culture. Handy suggests that we can classify organisations into a broad range of four cultures. The formation of 'culture' will depend upon a whole host of factors including company history, ownership, organisation structure, technology, critical business incidents and environment, etc. The purpose of the analysis is to assess the degree to which the predominant culture reflects the real needs and constraints of the organisation. The four cultures he discusses are power, role, task, and people.

Handy describes the power culture as a 'web'. This reflects the concentration of power of a family-owned business, which can either be extremely large or small. The family operation with strict responsibilities goes to family members. Responsibility given to personalities rather than expertise creates the power structure of the 'web' (Handy, 1996).

The task culture is characteristic of organisations involved in extensive research and development activities they are much more dynamic. They are constantly subject to change and have to create temporary task teams to meet their future needs. Information and expertise are the skills that are of value here. The culture is represented best by a net or lattice work. There is close liaison between departments, functions and specialities. Liaison, communication and integration are the means whereby the organisation can anticipate and adapt to change quickly (Handy, 1996).

The person culture is characteristic of the concensus model of management, where the individuals within the structure determine collectively the path which the organisation pursues. If there is a formalised structure, it tends to service the needs of the individuals within the structure. Organisations which portray this culture reject formal hierarchies for 'getting things done' and exist solely to meet the needs of their members. The rejection of formal 'management control' and 'reporting relationships' suggests that this may be a suitable culture for a self-help group or a commune, etc., but it is not appropriate for business organisations (Handy, 1996).

The role culture having been typified as a Greek temple, the apex of the temple is where the decision making takes place; and the pillars of the temple reflect the functional units of the organisation which have to implement the decisions from the apex. The strength of the culture lies in specialisation within its pillars. Interaction takes place between the functional specialism by job descriptions, procedures, rules and systems. This is very much an organisation culture run by a paper system. An authority is not based on personal initiative but is dictated by job descriptions (Handy, 1996).

The role culture has often been stereotyped as portraying bureaucracy in its purest form. Like bureaucracy, this culture is controlled by procedures, roles descriptions, and authority definitions. Predictable and consistent systems and procedures are highly valued.


Modern organizations, especially those involved in quick service (i.e., fastfood chains), make use of the bureaucratic structure as they are very much dependent on the characteristics this type of organization structure has to offer. These includes division of labor, wherein each member has highly specialized tasks to fill; hierarchy of authority, wherein a lower office is supervised by a higher office; implementation of rules and regulations, highly standardized and provided to members in written format; qualification-based employment, wherein individual performance is evaluated against specific standards; and impersonality, wherein every member of the organization is required to play by the same set of rules and regulations. To say that bureaucratic structures and roles cultures are the most appropriate means of ensuring that modern organisations are effectively managed may be possible. Its rationality and efficient means of attaining organizational goals is made possible by its contribution to coordination and control. Bureaucracy can be seen in all aspects of our lives from small schools handling thousands of students, to multi-national corporations employing thousands of workers worldwide.

The choice of any type of organizational design should be in consonance with the organizational requirements, strategy and environment. The simple centralized and bureaucratic organizational design based on functional departmentation focuses on work and is thus better suited for getting work done efficiently.