PHARMACY ADMINISTRATION, LEADERSHIP, AND MANAGEMENT
LECTURE NOTES ON ORGANIZING
MANAGEMENT FUNCTIONS
ORGANIZING
Deployment of organization resources to achieve strategic goals
Reflected in the organization’s division of labor into specific departments and jobs, formal lines of
authority, and mechanisms of coordinating diverse organization tasks
ORGANIZATION STRUCTURE
Set of formal tasks assigned to individuals and departments
Formal reporting relationships, including lines of authority, decision responsibility, number of hierarchical
levels, and spans of managers’ control
Design of systems to ensure effective coordination of employees across departments
ORGANIZATION CHART
Visual representation of an organization’s structure
FEATURES OF VERTICAL STRUCTURE
Work specialization
Chain of command
Authority, responsibility and delegation
Span of management
Centralization and decentralization
Formalization
WORK SPECIALIZATION
• Division of labour, or the degree to which organizational tasks are subdivided into separate jobs
• Advantage: Job can be performed efficiently
• Disadvantage: Employees are isolated and do only a single, boring job. May create separation and
hinder coordination essential for organizations to be effective.
CHAIN OF COMMAND
• Unbroken line of authority that links all persons in an organization and shows who reports to whom
• Two underlying principles:
(a) Unity of command means each employee is held accountable to only one supervisor; and
(b) Scalar principle refers to clearly defined line of authority in the organization that includes all employees.
AUTHORITY, RESPONSIBILITY AND DELEGATION
AUTHORITY is the formal and legitimate right of a manager to make decisions, issue orders, and allocate resources
to achieve organizationally-desired outcomes
• Authority is vested in organizational positions, not people.
• Authority flows down the vertical hierarchy.
• Authority is accepted by subordinates.
RESPONSIBILITY is the duty to perform the task or activity an employee or other stakeholder has been assigned.
This is usually commensurate to the authority given.
ACCOUNTABILITY means people with authority and responsibility are subject to reporting and justifying task
outcomes to those above them in the chain of command.
DELEGATION is the process managers use to transfer authority and responsibility to positions below them in the
hierarchy.
SPAN OF MANAGEMENT
• Also called span of control
• Number of employees who report to a supervisor
• When supervisors must be closely involved with subordinates, the span should be small; and when
supervisors need little involvement with subordinates, it can be large.
FEATURES OF VERTICAL STRUCTURE:
CENTRALIZATION AND DECENTRALIZATION
• CENTRALISATION means that decision authority is located at a single point, usually near the top of the
organization.
• DECENTRALISATION means decision authority is pushed out and downward to lower organization levels.
• Decentralisation relieves the burden on top managers, make greater use of worker’s skills and abilities,
ensure that decisions are made close to the action by well-informed people and permit more rapid
response to external changes.
FORMALIZATION
• Process of creating written documentation to direct and control employees
• Documentation includes rule books, policies, procedures, job descriptions and regulations
FIVE APPROACHES TO STRUCTURAL DESIGN
1. VERTICAL FUNCTIONAL
Positions are grouped into departments based on similar skills, expertise and resource use
ADVANTAGES DISADVANTAGES
Efficient use of resources, economies of scale Poor communication across functional departments
In-depth skill specialization and development Slow response to external changes, lagging innovation
Career progress within functional Decisions concentrated at top of hierarchy, creating
departments delay
Top manager direction and control Responsibility for problems is difficult to pinpoint
Excellent coordination within functions Limited view of organizational goals by employees
High-quality technical problem-solving Limited general management training for employees
2. DIVISIONAL STRUCTURE
Departments are grouped based on similar organizational outputs
ADVANTAGES DISADVANTAGES
Fast response, flexibility in an unstable environment Duplication of resources across divisions
Fosters concern for customers’ needs Less technical depth and specialization in divisions
Excellent coordination across functional departments Poor coordination across divisions
Easy pinpointing of responsibility for product problems Less top management control
Emphasis on overall product and division goals Competition for corporate resources
Development of general management skills
3. HORIZONTAL MATRIX
Utilizes functional and divisional chains of command simultaneously in the same part of the organization;
involves dual line of authority
ADVANTAGES DISADVANTAGES
More efficient use of resources than single hierarchy Frustration and confusion from dual chain of command
Flexibility, adaptability to changing environment High conflict between two sides of matrix
Development of both general and specialist Many meetings, more discussion than action
management skills
Interdisciplinary cooperation, expertise available to Human relations training needed
all divisions
Enlarged tasks for employees Power dominance by one side of matrix
4. TEAM-BASED APPROACH (CROSS-FUNCTIONAL TEAM)
Group of employees assigned to a functional department that meets as a team to resolve mutual problems
ADVANTAGES DISADVANTAGES
Some advantages of functional structure Dual loyalties and conflicts
Reduced barriers among departments, increased Time and resources spent on meetings
compromise
Less response time, quicker decisions Unplanned decentralisation
Better morale, enthusiasm from employee involvement
Reduced administrative overheads
5. NETWORK STRUCTURE
Disaggregates major functions into separate organizations that are brokered by a small headquarters
organization
ADVANTAGES DISADVANTAGES
Global competitiveness No heads-on control
Workforce flexibility/challenge Can lose organizational part
Reduced administrative overhead Employee loyalty weakened