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Getting Organized

Getting Organized

Author: James Howard

This lessons give an overview of business organizations

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Hello, and welcome to this tutorial on getting organized. Now, let me ask you a question. Have you ever noticed that humans love to organize around things? Baseball teams, football teams, organizations at work, heck, even bowling leagues. We all like to organize ourselves in some-- one way or the other.

Well, it turns out businesses are no different. After all, they're made up of humans. Now during this lesson, we're going to talk about getting organized and were also going to talk about departmentalization. The key terms for this lesson are going to be chain of command, job specialization, and departmentalization.

Let's start off by defining a couple of our key terms. First of all, we're going to look at chain of command. Chain of command is the structure in which the command of a group is distributed from upper management to each individual employee. In this way, an organization can see just how the command runs from the very top person on the top of the chain all the way down to the person turning the wrench, or sweeping the floor, or doing whatever it is that business does.

Now, job specialization is the practice of concentrating on a definitive area of knowledge in the workplace. And what this does is allow a worker to become very, very good at that one particular job. So therefore, they can do that job, at least in theory, more efficiently.

Let's talk about getting organized for second. Now organizations cover a wide range of sizes. They can be one person in a sole proprietorship or they can cover very, very large organizations. Now most folks use an organizational chart to explain the chain of command. And this will include folks like the president and the vice president of the company, regional, and district managers. And this chain of command is reflected in this organizational chart.

We also have something called span of control, and this dictates how or what each person in that chain of command is responsible for, and it also helps visualize job specialization, or what job or what area within the company each person is specializing in within the organization.

So let's take a look at a quick chain of command here. Now here we have a chain of command for a place Wikimedia, or the Wikimedia Foundation, this is their organizational chart. If you look at the top, you'll see the executive director and the deputy director, they're both at the top of the organizational chart.

And you can see how the chain of command runs from the organizational-- from the executive directors up here all the way down through the chief technology officer and developers, the partnerships, and volunteer coordination, and CFOO, fundraising, business development, folks like that, all the way down to legal counsel.

So you'll notice Veronique Kessler here is the CFOO and that is her job specialization. She specializes in that area of the business. Now span of control, you'll notice that the executive director and deputy director up here, they're in control of the CTO. They're also control directly of the CFOO and the legal counsel. They're also in charge, or at least the executive director here is in charge of his partnerships, volunteer coordinator, the chapter coordination, the head of communication here, Mr. Jay Walsh.

So the Sue Gardner's span of control would include one, two, three folks. And the deputy director is in charge of the CTO here, directly. So that is Eric Moller's chain of-- span of control. The CTO in turn has a span of control of the development team and all the sys admin folks here, one, two, three, four, five.

Now, with span of control, you want to make sure you're not getting too many people under your span of control, otherwise things get really, really, really busy. So here we can also see, like I said before, the job specialization aspect of the chart. But, you know, specializing in one job or one area, well, that can get a little boring after a while, doing that one particular job all the time. Boredom can set in and complacency, and you find that people suddenly don't do that job quite as well.

In this case, you may want to move people around or rotate those jobs to keep things more interesting for the employee. So let's define departmentalization. Departmentalization is clustering employees into groups to work together in a specific division.

Now departmentalization can be split up among an organization several different ways, and as we're going to see, there's pros and cons to each. For instance, a product departmentalization where you're organizing around a specific product, or a group of products, or a product function, like selling stocks, or a particular brand of bread, or bread in general.

So it's organized around a very specific product or product function. The pros to this are, it makes decision making fairly easy, because you only have to worry about that one product or area. The cons here is, you have duplication of effort. Imagine having product department for bread, and hot dog buns, and hamburger buns, and rolls. So you see, there's duplication of effort among different products that really share the same process for getting made and sold.

Another one is process departmentalization. Now this is organized by different processes that are performed. The pros for this are, it's a streamlined process. Baking is all under one department, for instance. However, there could be duplication of equipment purchasing and use, because you're trying to buy equipment for each particular type of baking, and that could lead to duplication of equipment and cost overruns.

The next one is functional departmentalization. Now, functional departmentalization is organized by different purposes, or functions. I sell insurance, I sell bread, I sell cars, within an organization, for instance. The pros for this is, it's easy coordination. All the bread folks go over here, all the car folks go over there. So it's easy to coordinate among the people within that one functional department.

However, this can lead to slow decision making, because now I have to consider everything within this big, huge, functional department that is baking, for instance, or that is cars, and car sales. Everything within that now has to slow down a little bit because we're trying to make all those decisions through one chain.

The last-- or our next one is customer departmentalization. Now this is organized by customer type. Are these my high roller customers, are they the people who don't want to spend very much, are they the people who want to buy a particular type of product? These are all types of customers that I might departmentalize my company by.

The pros, it officially focuses on unique customer groups. These are people that really are interested in a particular type of product, for instance. The cons, well, it can mean more administrative staff keeping up with all those different types of customers for your potentially one or very few number of products.

And lastly, we have geographic departmentalization. As the name suggests, this is organized by geographic location. And this can be very, very large. For instance, everyone west of the Mississippi and everyone east of the Mississippi, or it can be very small. The New York office, for instance, or the Los Angeles office, or the Conway, Arkansas office.

The pros is, it's more responsive to specific geographic needs. So when I have a need that arises within that geographic area, I have people on the ground who can immediately respond to that need. The cons are, it has a more elaborate administration style because I'm trying to cover a lot of different, literally, ground with the organization that I have.

Now as you can imagine, these aren't exclusive to organizations. Some organizations use multiple types of departmentalization. In some cases, the, for instance, Western region will have functional departmentalization and customer departmentalization within that one department to make things more efficient and free flowing within an organization.

And different types are used at different levels. Management may use one type, top management, where middle managers or front line managers may use a different type of departmentalization.

So what did we learn today? Well, we talked about getting organized and organizing a business around an organization chart, making sure we understand what that chain of command is. And we also talked about departmentalization, the different areas of departments that a company or an organization may be divided up into in order to respond better to their customers.

Want to thank you, as always, for spending some time with me today. I hope you had a good time, and I'll talk to you next time.

Terms to Know
Chain of Command

The structure in which the command of a group is distributed from upper management to each individual employee.


Clustering employees into groups to work together in a specific division

Job Specialization

The practice of concentrating on a definitive area of knowledge in the workplace.