Organisational Structure and Leadership

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  • Topic: Maslow's hierarchy of needs, Motivation, Abraham Maslow
  • Pages : 10 (3198 words )
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  • Published : October 27, 2009
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Functional, Divisional and Matrix. Focus on the Classical theory of Henry Fayols 14 management principles. Remember at least five. If writing about unity of command, mention about unity of direction. (Show how they are different). Organisational structure refers to the plan representing the relationships between the jobs and departments in an organisation. There are three main types of organizational structure: functional structure, Divisional structure and Matrix structure. •Functional structure: The employees are working in departments based on what they are doing, for example, finance department, research department. This structure enhances the experience of each function. This structure saves us money because of the economies of scale. This structure makes the coordination between different departments more difficult than other structures. It also does not allow for flexibility because of the centralization. •Divisional structure: It divides the employees based on the product/customer segment/geographical location. Each division is responsible for certain product and has its own resources such as finance, marketing, etc. Accordingly, this structure is a decentralized structure and thus allows for flexibility and quick response to changes. It also enhances innovation. It does not support the exchange of knowledge between people working in the same profession because a part of them are working in one division and the others are working in other divisions. •Matrix structure: It combines both structures. For example, we can have a functional structure and then assign a manager for each product. Some employees will have two managers: functional manager and product manager. This type of structure tries to get the benefits of functional structure and also of divisional structure; however, it is not easy to implement because of the dual authority. This structure is very useful for multinational companies. Henry Fayols 14 Management Principles:

Subordination of individual interest to general interest (#6): Organisation is superior to individual or groups. Organisational interests must always be given importance over individual interests. Promotion of individual interests at the cost of organisational interests must not be allowed at any cost. Superiors must serve common interests and not the individual or personal interests. They should set good examples and stay firm in their decisions. •Remuneration (#7): Remuneration payable to workers must be fair, reasonable and satisfactory to the employers and the employees. It must not only motivate higher productivity but also provide satisfaction to the concerned people. Wages, bonus, share in the profits would constitute a remuneration plan. It should be based on the expected normal standard of living, productivity of the concerned employees and capacity of the firm to pay. •Centralisation (#8): Centralisation refers to concentration of authority at one place or at one level of organisation. On the other hand, decentralisation refers to dispersal of authority to lower levels of organisation. Management has to decide to what extent the decision making authority is to be centralised or decentralised. Balance should be maintained between the centralisation and decentralisation of authority and power. •Scalar Chain/Line of Authority (#9): It refers to the hierarchy of command linking all members of the organisation from top to bottom. According to this principle, the authority flows from the top to lower level in a vertical manner. It is not just a chain of authority, but also a chain of communication from both top executive to the lowest executive and vice versa. This structure implies superior-subordinate relationship. It should not be over-stretched and should not consist of too many levels. •Order (#10): It relates to the management of things and people. Fayol believed that material order and system order alone can create a sound...
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