11. Design and Organizational Structure

According to Stoner, an organization is a pattern of relationships--many simultaneous, united relationships--through which people, under the command of managers, have common goals.

The members of an organization need a stable and understandable framework in which they can work together to achieve the goals of the organization. The organizational management process involves making decisions to create this kind of framework, so that organizations can last from the present to the future.

Continuing with Stoner we have that managers take four basic steps when they begin to make decisions to organize:

1. Divide the entire workload into tasks that can be executed logically and comfortably, by individuals or groups, that is, a division of labor is made.

2. Combine tasks logically and efficiently. The grouping of employees and tasks is often referred to as departmentalization.

3. Specify who reports to whom in the organization. This linking of departments produces an organizational hierarchy.

4. Establish mechanisms to integrate the activities of the departments into a coherent whole and to monitor the effectiveness of said integration. This process is known as coordination.

An important feature of the division of labor is that by breaking down total work into small, simple, separate operations in which different workers can specialize, total productivity multiplies.

It should be noted that in an organization chart, the boxes represent the logical grouping of work activities that we call departments.

We have that within the hierarchy, the section of administrative control means the number of people and departments that report directly to a specific manager. When work has been divided, departments created, and section of control chosen, managers can select a chain of command; that is, a plan that specifies who reports to whom.

Likewise, Stoner tells us that coordination is a process that consists of integrating the activities of independent departments in order to get the goals of the organization.

Organization Design, according to Stoner, is a process in which managers make decisions to choose the appropriate organizational structure for the organization's strategy and the environment in which the organization's members implement that strategy.

An organizational structure refers to the way in which the activities of the organization are divided, grouped and coordinated in terms of the relationships between managers and employees, between the same managers and between the same employees.

Below we will cite types of organizational structures:

1. Functional Organization. All those who are dedicated to one or several related activities, which are called functions, are brought together in a department. (For example, Marketing, Production and Sales).

2. Organization by product/market. It brings together in a work unit all those who participate in the production and marketing of a product or a related group of products, all those who are in a certain geographical area or all those who deal with a certain type of client.

3. Matrix organization. Employees have two bosses, they work with two chains of command.

Finally, in reality, the Organization chart cannot capture the Interpersonal relationships that constitute the informal structure of the Organization. Simon has described the above as: "the Interpersonal relationships of the Organization that affect its Internal decisions, but do not appear in the formal plan or are not consistent with it."