Management Skill Berde, Csaba Management Skill

ábra - Figure 6.: Horizontal coordination (based on Dobák, 1997)

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4.6. ábra - Figure 6.: Horizontal coordination (based on Dobák, 1997)

The hierarchical relationships actually determine the powers of giving orders and requiring accounts. Hierarchy is developed along the principle that the process of connecting powers must be ensured within the entire organization. The person or unit at a lower level of the hierarchy has the obligation of giving account to their superiors. Thus, the communication and information channels become strongly formal. Since no connection points are omitted, all the managers at the different levels will obtain information. The principle of hierarchy remonstrates the lines of the organizational structure must not be stepped over or the formal hierarchy must not be violated in any other manner. The clearer these determinations are, the more stable the structure is. Of course, a structure with the stability of powers is hard-and-fast at the same time. Powers are closely related to liabilities which can be interpreted as obligations to perform certain duties and to carry out certain activities and tasks. Liabilities also mean that if a given person or unit is responsible for performing a certain task, they can be held accountable for achieving a given goal.

4.7. ábra - Figure 7.: Multi line organization (based on Dobák, 1997)

Delegation is an issue which is closely related to powers and liabilities. It means that a manager at a certain level within the organization delegates the tasks within their powers to people at a lower level of hierarchy. Earlier, delegation primarily meant the transfer of tasks and powers. One can often encounter viewpoints which hold that only tasks can be delegated but liabilities cannot. Carlzon speaks about the decentralization of liabilities when he puts that a manager should thoroughly size up the medium surrounding the company, draw up the strategy of the firm and then persuade the employees of their vision but the performance of the tasks should be decentralized. Based on the principle of delegated liabilities, the employees must have the opportunity to show their abilities, to act and decide independently (Carlson, 1968).

Nowadays, more and more management methods and theories emphasizing the decentralization of liabilities are being outlined. Blanchard and his colleagues talk about the power of liabilities and they say that empowerment means the delegation of decision-making rights and the related liabilities. They outline the steps of empowerment as follows: establishing the free flow of information, autonomy, creation by determining the limits of autonomy and establishing self-governing teams instead of hierarchical decisions (Blanchard et. all., 1998).

Determining the powers means determining the number of employees who directly give accounts to a given manager. It is generally acceptable that a manager is capable of controlling a great number of employees, which means the establishment of “flatter” organizational structures. Thus, the number of levels in the hierarchy can be reduced and the organizations are controlled by fewer managers. This tendency can be recognized in the present leadership practices.

Subordination relationships are also closely related to powers. In case of single-line, linear structures, the subordination relationships are the same as powers. Subordination relationships are such managerial tasks, which include the judgment and evaluation of the employees' work, performance, conduct and behavior. Powers can determine the scope of those individuals or units whose activities and performance a manager is entitled to judge. However, subordination relationships do not only mean judgment competencies but they also mean the related motivational (rewards and awards), controlling and personnel (hiring and laying off) tasks as well.  

In function-type organizations, the powers are function-based and the hierarchical relationships are not clearly defined. The subordination relationships must be defined separately in the function-type as well as in the matrix-type organizations. The theory and system of functional management as an alternative to the idea of one-person leadership was devised by Taylor. One-person leadership is one of the basic principles of the management theory (Taylor, 1911). This principle states that one person is held accountable for only one manager and can receive orders only from one manager. Thus, the powers, the hierarchical and subordination relationships are clearly defined. This ensures that the powers within an organization cannot be mixed up. It is clear for everyone who their superior is and they do not happen to receive orders from more superiors at the same time. Taylor could not completely get rid of one-person leadership in functional structures either, the subordination relationships had to be defined in his functional organizations as well (Dobák, 1997). The situation might be much more complex in a matrix-type organization where the same person can be the member of a project team and a production unit or group at the same time. This individual may be held accountable for two or more superiors at the same time. In such cases, the subordination relationships must be regulated separately.    

1. References:

Bakacsi Gy. – Balaton K. – Dobák M. – Máriás A.(1995): Vezetés – Szervezés. I–II., Aula Kiadó, Budapest.

Baracskai Z. – Berki S. – Döfler V. - Velenczei J. – Zombori J.(1988): Vezetés. Doctus Kiadó, Nyíregyháza.

Barnard, Ch. J.(1948): Organization and Management. Harward University Press, Cambridge.

Berki S. – Berde Cs.(1999): - mondta a csiga és ..., Humánpolitikai Szemle, 7-8. szám, 1999.

Blanchard, K. – Carlos, J. P. – Randelph, A.(1998): Empowerment. A felelősség hatalma. SHL Hungary Kft., Budapest.

Carlson, J.(1968): Lapítsd a piramist. Közgazdasági és Jogi Könyvkiadó, Budapest.

Dobák M.(1997): Szervezeti formák és Vezetés. Közgazdasági és Jogi Könyvkiadó, Budapest.

Kelly, A. – Grimes, T.(1993): A menedzsment elvei. Acca Hungaria Kft., Budapest.

Levie, J.(1993): Paradigmák a vezetéstudományban. Vezetéstudomány 1-2. sz. Budapest, 1993.

Samuelson, P. A.(1988): Közgazdaságtan I. Közgazdaságtani és Jogi Kiadó, Budapest.

Taylor, F. W.(1911): The Principles of Scientific Management. New York.

Torgersen, P. E. – Weinstock, I. T.(1979): Vezetés integrált felfogásban. Közgazdasági és Jogi Kiadó, Budapest.

5. fejezet - 5. Economic classification of organizations

There are several classifications and different types for organizational forms in management literature. Dobák provides a most comprehensive classifications and summary of organizational forms. He divides organizations into four basic types, such as linear, functional, divisional and matrix (Dobák, 1997). A linear organization is defined as a classic example of the single-line type of organization (Figure 1.).

5.1. ábra - Figure 1.: Linear (Line) organization(own figure)

In fact, it is the same as Torgersen's line structure. The author states that in this type of an organization each employee may receive orders only from one person. The manager is responsible for all the activities of the unit and the subordination and professional relationships are not separated. The assignment of tasks and the orders given toward the employees and the accounts toward the superiors go along the same route. The advantage of this type of organization is that it is simple and clearly visible. It is easy to establish the units of the organization in its breadth and depth. The operation of vertical communication and information lines is especially successful. However, the horizontal coordination between units at the lower levels of hierarchy is rather awkward. The missing specialization increases the burdens of the top level managers. Due to the exuberant regulation, this type of organization is inflexible and hardly adapts to the changes of the environment (Figure 2.).

5.2. ábra - Figure 2.: Functional organization (own figure)

The author mentions functional organizations as characteristic examples of the multiple- line type. In these organizations, each employee has several superiors. Organizational units are established to carry out specific tasks (functions),division of labor is based on functional principles. This type of organization can be successful in a stable environment and with a relatively clear and not too complex product structure and activities. The decision-making powers are concentrated in the hands of the functional managers. As a result of specialization, managers are responsible only for given tasks, often in several units. Subordination relationships are not defined by a specific structure, these should be regulated separately. The regulation of the subordination relationships is linear, which gives line-type elements to the functional structure. Thus, purely functional organizations do not exist; they are rather linear-functional structures.

5.3. ábra - Figure 3: Divisional organization (based on Dobák, 1997)

Chandler was the first to give a definition of divisional organizations in management literature (Chandler, 1977). He calls divisional organizations “multi-divisional” (Figure 3.). He assumes that these types of organizations are structures consisting of independent divisions. These organizations, to some extent, are built up of units carrying out given activities and tasks. The classification of the divisions depends on the extent of the organization's independence. The divisions at the lowest level are only independent regarding cost management and cost utilization. “Profit centers” have independence in producing and utilizing income as well, while “investment centers” are independent regarding investments and developments. The independence of divisions have several areas and degrees. Sometimes even legal independence can occur but there is always dependence regarding assets. Divisions should be established in cases of diversified activities, i.e.if there is a wide range of products and the structure of products is heterogeneous. Of course, it is reasonable to establish an independent organization for a given product family or a line only if the volume is appropriate. This structure can be regarded as a linear one; the independent divisions are coordinated and controlled from a single division center. The center division structuring can lead to the establishment or development of parallel functions as well. In spite of this, the operative and strategic tasks are clearly separated since the operative tasks belong to the divisions and the strategic tasks belong to the center. In case of the divisions, the market effects are powerful and the divisions are often created on the market basis. Market conduct is characterized by compartmentalization, which means that the positive or negative market consequences concern only the activities and success of the given branch or product division. It derives from the independence of the divisions that they want to become more independent and they want more powerful lobbying capabilities (Mintzberg, 1979).

In case of the traditional structures, like the linear and the functional ones, structures crossing the vertical “lines” squarely had to be created within the organizations in order to make the horizontal coordination more efficient. These horizontally created formations, which cross the vertical structure, can be projects or product groups (see figure). Such formations are called matrix organizations (Figure 4.).

5.4. ábra - Figure 4.: A matrix organization (own figure)

In the matrix structure people are assigned to definite projects or tasks. At the same time, these people are still held accountable to their original functional or production units. Thus, control is functional and material at the same time. This type of organization is two-dimensional and decision-making is decentralized, it is shared between two dimensions. Control is based on a multiple-line principle, the regulation and determination of tasks and powers are at a lower level, that is, the organization is less formalized. Owing to this fact, the organization is more flexible and can adapt to the changes of the environment much easier. Such a structure should be created in a changing or heterogeneous environment or in case of tasks involving much novelty or risk (Bennis – Schein, 1965). Since the horizontal formations can be created in traditional structures as well, matrix organizations can be established within the traditional forms too. Thus, matrix organizations are suitable to make the traditional forms dynamic. The matrix structure can be very innovative and adaptive but requires a completely new management culture, style and perspective. This structure may be characterized by the rivalry of two management dimensions, decision-making, conflict avoidance and staying away from raking responsibility. In this type of organizations, the role of teams increases, over-dimensional and over-extended teamwork can appear. Since the organization is less formalized, the structure can become unstable, especially in crisis situations, and eventually it might very well collapse. What is emphasized as an advantage of this type can very easily become a disadvantage.    

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