Organization structure

A company’s strategy is supported by its organization. Strategic planning defines a company’s goals and how it will accomplish them; organization structure helps the company achieve its goals by providing a framework through which managers can divide responsibilities, hold employees accountable for their work, and effectively distribute the authority to make decisions. First, it’s important to understand how management is structured. In all but the smallest organizations, more than one manager is necessary to guide the organization’s activity. That is why most companies form a management pyramid with top, middle, and bottom management levels. More managers are at the bottom level than at the top.

Top managers are the upper-level managers who have the most power and who take overall responsibility for the organization. An example is the chief executive officer (CEO). Top managers set strategic goals, which focus on broad issues, apply to the company as a whole, and aim to enhance the company’s performance. They also make long-range plans, establish major policies and represent the company to the outside world. Middle managers report to top-level managers. They develop plans for implementing the broad goals set by top managers, and they coordinate the work of first-line managers. To accomplish this, middle managers set tactical objectives, which focus on departmental issues and describe the results necessary to achieve the organization’s strategic goals. At the middle level there are plant managers, division managers, branch managers and other similar positions. At the bottom of the management pyramid are first-line managers (or supervisory managers). These managers oversee the work of operating employees, and they put into action the plans developed at higher levels. First-line managers set operational objectives, which focus on short-term issues and define the results necessary to achieve both tactical objectives and strategic goals. Positions at this level include supervisor, department head, and office manager. All employees have a certain amount of responsibility – the obligation to perform the duties and achieve the goals and objectives associated with their job. As they work toward the organization’s goals, employees must also maintain their accountability, the obligation both to report the results of their work to supervisors and to justify any outcomes that fall below expectations. Authority is the power to make decisions, issue orders, carry out actions, and allocate resources to achieve the organization’s goals. Authority is vested in the positions that managers hold, and it flows down through the management pyramid. Thus, the vertical structure helps managers delegate authority to positions throughout the organization’s hierarchy. Delegation is the assignment of work and the transfer of authority and responsibility to complete that work.