Organizational Structures and Authority Types

Posted on Sep 16, 2024 in Economy

Organizational Structures

Functional Line Organization

This structure combines linear and functional organization, leveraging the strengths of both. It maintains functional specialization while preserving linear authority and responsibility through a single head for each function.

Staff Organization

This structure lacks direct authority to enforce decisions. It arises in larger organizations with advanced technology, providing expert advice and information.

Advantages:

  1. Expertise influences problem-solving.
  2. Maintains the principle of indivisible responsibility and authority while allowing specialization.

Disadvantages:

  1. Unclear responsibilities can cause confusion.
  2. Ineffectiveness due to lack of authority or support.
  3. Potential friction with linear departments.

Committee Organization

Assigns administrative matters to a group that meets to discuss and decide.

Types of Committees:

  1. Directing: Represents shareholders.
  2. Executive: Appointed by the steering committee to implement decisions.
  3. Supervisory: Oversees employee work.
  4. Advisory: Specialists providing expert opinions.

Matrix Organization

Combines departmentalization by product and function, abandoning the principle of unity of command (two bosses).

Advantages:

  1. Coordinates activities to improve products and satisfy program/budget requirements.
  2. Promotes interdepartmental communication.
  3. Allows flexibility in task assignments.
  4. Facilitates experience exchange among specialists.

Disadvantages:

  1. Confusion about reporting lines and authority.
  2. Potential power struggles between functional and product managers.
  3. Time-consuming meetings.
  4. Staff may feel undervalued by their direct boss.
  5. Potential resistance to change.

Types of Authority

  1. Formal Authority: Conferred by the organization.
    1. Linear: Exercised by a direct superior.
    2. Functional: Exercised by heads of different functions.
  2. Technical/Staff Authority: Derived from expertise.
  3. Personal Authority: Stems from individual personality.

Delegation Requirements

  1. Clear lines of authority and responsibility (preferably written).
  2. Clearly defined goals and objectives.
  3. Training for delegated staff.
  4. Performance standards to encourage initiative and loyalty.
  5. Agreement on non-delegable areas.
  6. Managerial interest in employee performance.
  7. Recognition of good performance and trust in subordinates.

Centralization and Decentralization

Centralized management retains maximum control at higher levels.

Decentralized administration delegates decision-making power, retaining only necessary controls at higher levels.

The optimal degree of centralization/decentralization depends on factors like:

  • Company size.
  • Managerial ability and experience.
  • Number of established controls.

Advantages of Decentralization

  • Faster decision-making.
  • Efficient use of staff time and skills.
  • Frees senior officials to focus on major decisions.
  • Develops motivated and aware local/regional managers.

Disadvantages of Decentralization

  • Lack of uniformity in decisions.
  • Underutilization of specialists.
  • Potential shortage of trained leaders.