BUSİNESS MANAGEMENT - Deneme Sınavı - 8

Organizational structure is a system that consists of rules and policies to outline work roles, responsibilities and reporting relationships, and how they fit within the overall system.5 A visual representation of an organization structure is an organization chart. It shows the tasks or major activities and how employees and tasks are grouped, the line of authority (who people report to) including the flow of communication and the levels in the hierarchy. A simple organization chart for a manufacturing firm is illustrated in Figure 6.1. It shows an organization chart with four departments where the tasks are grouped by functions (Sales, Production, Finance, and HR). The sales department is further divided into three groups that focus on geographical location of customers (Asia, North America and Europe). 

Authority refers to the right of a person to give instructions, make decisions and allocate resources. In an organization, a manager has the formal authority from his or her position that is accepted by subordinates. The authority flows down the hierarchy such that top managers have more authority than those at the bottom. Managers work within their authority in order to be accepted by their subordinates. However, if they give orders beyond their area of authority then they may face resistance. Also if managers are given too little authority then their jobs may be more difficult. 

Delegation occurs when a manager divides work among subordinates and gives them the responsibility and authority to accomplish tasks. A manager is responsible for all work in an area and can only complete the work by delegating part of the work to subordinates. This process continues down the chain of command. In general, the delegation process involves:

➢ Assign responsibility or the duty to perform certain tasks, 

➢ Give authority to complete those tasks, and 

➢ Create accountability for successful completion of the tasks. 

To be more effective at delegation, managers should keep in mind to select the right person for the job, to ensure that authority equals responsibility, to maintain feedback and to evaluate and to reward performance. In today’s dynamic business environment, managers may need to delegate more to lower level employees especially those who regularly face customers. This way, organizations can be more responsive to customer needs while becoming more flexible and adaptable to the changes in the environment. 

Authority is a right that comes with a professional capacity or position. Power is a personal trait or capacity to influence others’ actions, decisions, and performances. The major source of power is knowledge and expertise. While authority flows downward through the hierarchy, power flows in any direction and individuals can be powerful even though s/he has little authority. 

Another issue in designing organization structure is the span of control or span of management which refers to the number of employees directly supervised by a manager. The question is the appropriate number of subordinates each manager can efficiently and effectively manage in the hierarchy. To use human resources effectively, managers should manage as many employees as they can. However, if they supervise too many subordinates then they may lose part of their effectiveness. Therefore, managers should limit the size in order to maintain closer control. There is no magic number of how many employees a manager should supervise. In today’s organizations, the span of control is believed to be determined by various contingency variables. In other words, organizations, employees and situations are different therefore require different spans of control for managers. 

In a mass production setting for example, workers perform similar tasks and those tasks are simple. In this case, a supervisor can manage larger numbers of workers. However, a CEO of a large firm probably cannot effectively manage many top executives all at once as their work is complex and interrelated. Therefore, in general, a manager’s ability to directly control subordinates is limited by the complexity of tasks and the interrelatedness of the subordinates’ tasks.1

If the physical locations of subordinates are distant or if they need much coordination then the spans of control should be narrow. Also, when subordinates and/or supervisor are knowledgeable these factors would tend to widen the span of control. Managers can further implement some other forms of control within the company’s information systems used by employees in their jobs. This way, managers are able to widen the spans of control. For the same reason, the use of standard operating procedures would lead to a higher level of standardization of work activities and allow managers to supervise larger numbers of employees. 

The span of control in a company influences the height of its hierarchy. A flat organization structure has relatively fewer layers of management while a tall structure has multiple layers. Generally, the lower the height of the structure, the wider the span of control. It shows a typical consulting firm structure where partners/managers can supervise relatively large numbers of associates, i.e. wider span of control. This is because in these types of firms, both partners and associates are knowledgeable about the topics in which they specialize.

We can see that companies with tall structures tend to make decisions at a slower rate because the decisions need to pass through more layers of management in the hierarchy. Today’s business environment requires that organizations speed up their decision making and therefore have been flattening their structures. Also, businesses with fewer numbers of managers can reduce the human resources expenses. Larger spans of control and flattening of structures are consistent with managers’ efforts to speed up decision making, to increase flexibility and to reduce costs.

The characteristics exhibited in the question are the ones that mechanistic organizational structures.  A mechanistic structure is characterized by a rigid bureaucratic structure that is controlled by rules and procedures in a clear hierarchy of authority or chain of command. It is tightly controlled or that the span of control is narrow which leads to a relatively tall structure. Work activities are standardized with high degree of specialization.

Tasks in an accounting firm are very specific, rigid, routine, requiring strict rules and regulations. That's why accounting firms will exhibit a much more mechanistic organization structure.

A cross-functional or horizontal team is composed of employees from different departments or functions. Members are brought together to deal with a specific activity or to solve mutual problems. In large companies, members can come from different business units or divisions. Cross- functional teams may be involved in a form of matrix structure. Therefore, team members report to their functional departments and to the team leader.

Kolter and Schlesinger provide ways that managers can positively influence organizational change:

- Education and communication: Employees should be educated and communicated about any changes beforehand through discussions (one- on-one), presentations (groups) or with memos and reports. They need adequate and accurate information and analysis to understand change.

- Participation and involvement: Managers can use employees’ advice about some aspects of change that may lead to potential problems. Participation often leads to commitment and increasing the chance of successful change.

 - Facilitation and support: Managers should provide support through employees training of new skills and emotional support in order to deal with personal fear and anxiety that cause the resistance in the first place.

- Negotiation and agreement: Managers can offer incentives such as higher wages or better benefits for employees. Negotiation is needed to win acceptance and approval, especially when someone may lose out as a result of change.

- Organizations are facing rapidly changing environments such that managers need to respond and to adjust to those changes effectively to stay competitive.

- Manipulation and cooptation: Managers can try to influence others by the selective use of information or the structuring of events. Cooptation involves giving an individual or a group desirable roles in the change process.

- Explicit and implicit coercion: Managers can force people to accept a change or lose something (such as rewards, promotions or loss of jobs). This can be used when the firm is in a crisis situation or when there are no other options.

Leadership is a blend of factors shaped by the environmental impact. Goals are guides for leaders and their followers which govern the leadership process. Personality and values shape a person’s leadership skills.
The latter become most influential when charismatic individuals emerge in times of crisis—whether generated from external threats—such as economic crises, changes in the political environment, or internal threats
such as upending reorganizational change, succession, and new partnering caused by mergers and acquisitions, etc. Finally, the acceptance of followers and/or encouragement is where leaders draw most of their power.

Differing characteristics of leaders and managers are as follows:

Leader

Manager

Tool is her/his power

Tool is her/his legal authority

Does what is essential

Does things right

Creates new targets

Does the planned and required

Seeks followers’ involvement

Complies with rules and regulations

Elected, accepted, and informal

Assigned, formal, and impersonal

Leads teams

Manages hierarchy

Invisible in the formal structure

Visible in the organization chart

Based on interviews with managers and employees, this group of studies identified two basic forms of leadership behaviors: task/production oriented behaviors and people/employee oriented behaviors.7 Task-oriented behaviors indicate a focus on production and technical aspects of a job. Managers who were task-oriented were concerned about issues such as keeping low costs and scheduling meetings. People-oriented behaviors indicate a supportive approach to subordinates. Managers with this type of orientation dealt with high performance goals and human needs. Today, we must emphasize that the success and effectiveness of different behaviors depend on the necessity of the circumstances which is influenced by constant change.

Contingency models of leadership focus on the match between environmental factors and leader’s behaviors. Some of the factors examined are organizational goals, leader- employee relations, task structure, and position power.

Situational leadership emphasizes that leaders match their approach according to the degree that subordinates are ready for the task. In other words, characteristics of people which impact the leadership behaviors. Hence, the model introduces two basic parts: leadership styles and the development level of employees.  Main leadership styles are identified in groups such as: supportive (relationship oriented) and directive (task oriented).

These are all contemporary leadership models. The concept of leadership has been subject to change in organizational settings. The emerging dimensions of technology, communication, human relations, and social interaction force new leader figures and new ways of leading people. Consequently, some leadership styles that are recently introduced are charismatic/visionary leadership, leader-member exchange theory, transformational and transactional leadership servant leadership, team leadership, and authentic leadership.

contemporary leadership approach has its own details, one common feature of different contemporary leadership styles is the increasing importance of human asset, thus inclusiveness and communication.

LMX suggests that leaders create in-groups and out- groups that they decide at the beginning of their relationship with their subordinates or followers.15The leader then trusts the in-group members more than the others, consults and works closely with them, brings them to certain authority and responsibility positions, and also may reward them more in the form of their appraisals and promotions. In-groups can be formal or informal. In other words, they can take place in organizational charts or not.

Transformational leaders differ from others by their charisma and the ability to inspire radical change. Transformational leadership is more than charismatic leadership which is “inspiring and motivating people beyond what they would normally do”. Charismatic leadership is inspiring and motivating people beyond what they would normally do.

A transformational leader articulates a vision, transforms the thinking of individuals, brings out their creativity, engages in the organizational atmosphere, and empower followers to accomplish goals, and moreoever reach their full potential.

Diversity is acknowledging and understanding of differences: gender, age, background, cultural values, physical condition, nationality, religion, race, sexual orientation, language,
skills, and personality. The term is defined in various sources from different perspectives. The Business Dictionary refers to diversity as “Feature of a mixed workforce that
provides a wide range of abilities, experience, knowledge, and strengths due to its heterogeneity in age, background, ethnicity, physical abilities, political and religious beliefs, sex, and other attributes”.

A diversified work place is a blend of multi-characteristics possessed by the members of a business organization. Hence,a diversified work place is: multi-generational; composed ofa variety of backgrounds, cultures, languages, and ideologiesas well as religions; covers different ethnic groups; minorities, underrepresented and disadvantaged groups; and finallydiversified gender groups.

The steps in managerial control are:

I- Setting performance standards

II- Measuring actual Performance

III- Comparing actual standards with the performance standards

IV- Taking corrective actions if necessary