Business Communication - Structure of Decision Making

Business organizational structures came about to simplify decision-making. The typical organization chart depicts a hierarchy of authority starting with the chairman, CEO and other executive officers at the top because the executive officers set the goals and direction of the company. Supporting layers of managers under the executive level are tasked with applying these goals to their areas of responsibility or departments, which are arranged in order of appropriate information flow from management.

History

The concept of studying and using organizational structure to improve on enterprise performance dates back to the late 19th century and the writings of sociologist and engineer Max Weber, who examined the dependence of capitalism upon bureaucracy. During the early 20th century, companies used organizational structure to enhance performance by creating specialization within the company and departmental authorities who managed those specialized areas. Henry Ford developed his assembly line production methods as a result of the then-groundbreaking theories of organizational structure.

Function

Each specialized unit is managed by its own decision maker, who theoretically is best able to understand the needs and problems of that particular unit. This allows a consolidation of performance information in the managerial level where the executive level may access only the most pertinent information for goal and directional purposes. This filters out the details of company operations and feeds only the results of operations up the ladder to the executives and board of directors.

Significance

An organizational structure that divides the operations of a company into specialized departments empowers the managers of those departments to deal with problems and create efficiencies of process and production that are customized to their particular departments. It also creates a corporate management level where enterprise knowledge is developed, tested and preserved for the future efficient operation of the department, as well as easy accessibility by those in higher management charged with enterprise planning.

Benefits

A filtered flow of information from the production level of an enterprise allows executive management to focus on the goals of the company and compare the production and administration performance with their intended corporate direction. This assists their decision making by focusing on intended results rather than the detailed process of individual management of departmental operations.

Considerations

No organizational structure works unless the flow of information works. The purpose of organizational structure is to distribute the decisions of executive management down through administrative levels where the managers interpret those decisions and put them into practice. It also creates a way for managers to send feedback and performance information up the line to assist in future executive decisions. If the line of communication in either direction does not operate, the system breaks down.

Source: http://smallbusiness.chron.com/organizational-structure-decision-making-3825.html