Principles of Management

Not only does a business's organizational structure help determine how well its employees make decisions, but it also reflects how well they respond to problems. These responses, over time, can make or break an organization. In addition, the organizational structure influences employees' attitudes toward their work. A suitable organizational structure can minimize a business's costs, as well as maximize its efficiency, which increases its ability to compete in a global economy. For these reasons, many businesses have tinkered with their organizational structures in recent years in efforts to enhance their profits and competitive edge.

Once managers have their plans in place, they need to organize the necessary resources to accomplish their goals. Organizing, the second of the universal management functions, is the process of establishing the orderly use of resources by assigning and coordinating tasks. The organizing process transforms plans into reality through the purposeful deployment of people and resources within a decision‐making framework known as the organizational structure.

The organizational structure is defined as

• The set of formal tasks assigned to individuals and departments
• The formal reporting relationships, including lines of authority, decision responsibility, number of hierarchical levels, and span of managerial control
• The design of systems to ensure effective coordination of employees across departments