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Learning Objectives
- Identify the three levels of management and the responsibilities at each level.
- Discuss various options for organizing a business, and create an organization chart.
- Understand how specialization helps make organizations more efficient.
- Discuss the different ways that an organization can departmentalize.
- Explain other key terms related to this chapter such as chain of command, delegation of authority, and span of control.
Organizing
Once a business has completed the planning process, it will need to organize the company so that it can implement that plan. A manager engaged in organizing allocates resources (people, equipment, and money) to achieve a companys objectives. Successful managers make sure that all the activities identified in the planning process are assigned to some person, department, or team and that everyone has the resources needed to perform assigned activities.
Levels of Management: How Managers Are Organized
A typical organization has several layers of management. Think of these layers as forming a pyramid like the one in Figure 9.1, with top managers occupying the narrow space at the peak, first-line managers the broad base, and middle-managers the levels in between. As you move up the pyramid, management positions get more demanding, but they carry more authority and responsibility (along with more power, prestige, and pay). Top managers spend most of their time in planning and decision making, while first-line managers focus on day-to-day operations. For obvious reasons, there are far more people with positions at the base of the pyramid than there are at the other two levels. Lets look at each management level in more detail.
Top Managers
Top managers are responsible for the health and performance of the organization. They set the objectives, or performance targets, designed to direct all the activities that must be performed if the company is going to fulfill its mission. Top-level executives routinely scan the external environment for opportunities and threats, and they redirect company efforts when needed. They spend a considerable portion of their time planning and making major decisions. They represent the company in important dealings with other businesses and government agencies, and they promote it to the public. Job titles at this level typically include chief executive officer (CEO), chief financial officer (CFO), chief operating officer (COO), president, and vice president.
Middle Managers
Middle managers are in the center of the management hierarchy: they report to top management and oversee the activities of first-line managers. They’re responsible for developing and implementing activities and allocating the resources needed to achieve the objectives set by top management. Common job titles include operations manager, division manager, plant manager, and branch manager.
First-Line Managers
First-line managers supervise employees and coordinate their activities to make sure that t