Core Concepts: Organizational Structure and Efficiency
Organization: The structure of relations that should exist between functions, levels, and activities of human and material elements of a social organism to achieve maximum efficiency within its plans and objectives.
Importance of Organization
- It is of a continuing nature; one could never say it is over because the firm and its resources are subject to constant change (expansion, contraction, releases, etc.).
- It is a medium through which to establish the best way to achieve the objectives of a social group.
- It provides methods to perform activities efficiently, with minimal effort.
- It avoids slowness and inefficiency in activities, reducing costs and increasing productivity.
- It reduces or eliminates duplication of efforts by clarifying roles and responsibilities and adapting to environmental conditions.
Agency: An agency is a set of dependent offices or an employment office; it is an institution governed by rules, laws, and customs for its proposed purposes.
Efficiency vs. Effectiveness
Effectiveness differs from efficiency in that efficiency refers to the best use of resources, while effectiveness refers to the ability to achieve a goal.
We can be efficient without being effective, and we can be effective without being efficient. The ideal is to be both effective and efficient.
For example, a goal to build a highway in a week might be achieved as planned (effective), but if more resources than normal were used to build it, this would not be efficient.
Characteristics of Organization
- Essential Category: It ensures the functioning of the system.
- Specificity: It defines the organization’s aspects and differentiates it from other categories and work in other branches or disciplines.
- Pre-executive: It locates the organization within the administrative process.
- Division of Work: Tasks are divided or split.
- Coordination: It is the systematization and integration of a company.
- Instrumental Value: The organization is not an end in itself but a means to accomplish its purpose.
Types and Models of Organization
Formal Model
This model is framed within the scientific aspects of administration, with formal laws, rules, procedures, and a responsibility/authority scheme preserved throughout the structure via various relationships and roles in the business world. These organizations are typically large and have their own design.
Informal Model
These are formed by employees within a company who come together to fulfill organizational objectives as well as their own individual and collective group objectives. They are typically small and emerge within formal organizations.
Formal Organizational Elements
The Division of Labor
This allows each worker to perform a specific task rather than all tasks at once. It enables control over a function or an area, making roles interchangeable. It also contributes to labor productivity, i.e., maximizing system productivity.
Departmentation
This refers to dividing the organization into departments, each with well-established functions to achieve objectives quickly and efficiently.
Hierarchy (Ranking)
This refers to the creation of hierarchical or administrative levels.
Span of Control
This refers to the number of immediate subordinates who report to a leader or manager.
Production: The generation of assets.
Productivity: This is associated with production efficiency.