Key Takeaways

  • Managers coordinate the activities identified in the planning process among individuals, departments, or other units and allocate the resources needed to perform them.
  • Typically, there are three levels of management: top managers, who are responsible for overall performance; middle managers, who report to top managers and oversee lower-level managers; and first-line managers, who supervise employees to make sure that work is performed correctly and on time.
  • Management must develop an organizational structure, or arrangement of people within the organization, that will best achieve company goals.
  • The process begins with specialization – dividing necessary tasks into jobs; the principle of grouping jobs into units is called departmentalization.
  • Units are then grouped into an appropriate organizational structure. Functional organization groups people with comparable skills and tasks; divisional organization creates a structure composed of self-contained units based on product, customer, process, or geographical division. Forms of organizational division are often combined.
  • An organization's structure is represented in an organization chart – a diagram showing the interrelationships of its positions.
  • This chart highlights the chain of command, or authority relationships among people working at different levels.
  • It also shows the number of layers between the top and lowest managerial levels. An organization with few layers has a wide span of control, with each manager overseeing a large number of subordinates; with a narrow span of control, only a limited number of subordinates reports to each manager.