MANAGEMENT

STRUCTURES
One of the most frequent reason and circumstances responsible for failure in its purpose of
making profit is poor management.
It is the intent of a manufacturing enterprise, through the efforts of people and machines, to
transform materials or parts into a product of greater usefulness to others who will purchase these
products. The extent to which they make efficient use of the time of these assets will largely
determine the extent of profit – the primary goal of those who have invested effort and capital in
the enterprise.
Organization is a plan for bringing these assets into the position of greatest effectiveness, or
productivity. The plan consists of the grouping of operations (people and machines) to achieve
the advantages of specialization, the designation of those who are to supervise each of these
groups of operations, and those who are to serve these operations.
In a small enterprise, the organization structure may be very simple. The owner frequently is
the manager. He may have daily contact with all the people of the company. And in a larger
enterprise, the problems of organization for grouping, supervising, and serving operations
become complex.
Two function groups in an industrial enterprise:
1. Policy Group - Although responsible for the establishment of policies for all
segments of the enterprise, has direct operating responsibility for relations with
stockholders, external investments, public relations exclusive of customer and vendor
relations, and legal relations both internal and external.
2. Administrative Group - Includes all other functions, primarily internal in nature,
which operate under broad instructions or policies established by the top management
or policy group. These functions include:
a. Product Development - In some companies, this plays a vital role, especially
in a highly competitive industry, research and design are of special
significance, and in an industry that requires more research and
experimentation.
b. Purchasing - Usually includes procurement, materials investigation, and
subcontracting.
c. Industrial Relations
Consists primarily of six parts:
- Employment
- Training and communications
- Health and safety
- Employee services and benefits
- Labor relations
- Wage and salary administration

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 d. Manufacturing - Includes the operations directly concerned with the making
of the product, including the processing of materials. It also includes various
services to these productive operations.
e. Marketing - There are two parts to be considered in the distribution of the
product – sales and promotion. A third part – service – is essential when the
company manufactures a product for which service by the company is
required.
f. Internal Finance and Offer Services - Often the individual responsible for the
supervision of internal finance is fully qualified by background and training
to supervise the office services. However, it should be recognized that these
office services extend throughout the organization and are not limited to the
“business office.” This often leads to the decentralization of office services
so that each major function of the organization has its own services.
The primary purpose of a management structure is to facilitate the coordination and control
over the activities of the company. No two companies are identical. Each company must be
studied in terms of its purposes, size, and the nature of the product manufactured or provided.
Managers must rely on other individuals to be responsible for designated phases of the work.
Second, no one person possesses the skills essential to guide personally the highly specialized
activities in a modern industry.
This principle of delegation of authority extends all the way through the company and from
the president and general manager to the heads of divisions, supervisors, straw bosses, and the
workers at the bench.
Authority and responsibility must go together. These elements not only require extensive
research but also in the end require selective experience for the exercise of judgment in making
final choices. The enterprise must continually exploit all its resources for the improvement of
processes and equipment lest it be knocked out of the market by a more efficient competitor.
Two factors of the personnel to be considered:
1. The need for close supervision as judged by the skill of the workers and the difficulty
of the operation; and
2. The availability of experienced and trustworthy personnel capable of acting in
supervisory capacities.
Four principal organization types with varying degrees of complexity appropriate to the
enterprise in terms of size and type of product:
1. Line Organization - It is the simplest form of structure. It is the framework on which
a more complex organization may be built as needs arise. It assumes a direct straight-
line responsibility and control from the general manager to the superintendent, to
foremen, and to the workers.
2. Line and Staff Organization - Industrial leaders have recognized, as their companies
grew from simple to complex organizations, that a small number of executives could
not personally assume direct responsibility for all functions such as research,
planning, distribution, public relations, industrial relations, and the many other varied
activities.
3. Functional (pure) - The development of staff departments led quite naturally to
attempts toward complete reorganization on a functional basis. This removed the
staff specialist from his assisting capacity and gave him authority and responsibility
for supervision and administration of the function, replacing the operating foreman.

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 4. Line and Functional Staff - Through this type of organization, functional staff
departments were given responsibility and authority, within company policy
established in consultation with the line organization, over specialized activities such
as inspection, time study, employment, purchasing, internal transportation, and
shipping.
In order to facilitate a cooperative relationship within a large industrial enterprise, many
companies now add a network of committees to the line and staff organization.
The test of administrators is their ability to get others to work with them toward a common
goal. They should be free to devote attention to special problems as they arise and to new
developments for the general improvement of operations.
Basic Principles of Committee Organization
1. The organization of a committee should grow out of a need that is recognized by
representatives of the departments and the personnel affected.
2. The personnel of a committee should be representative of the function and the
personnel concerned and should represent variations in opinion among personnel.
3. Duties, authority, and responsibility must be clearly defined even if, owing to
circumstances, they must be subject to change.
4. The organization and operation of a committee should be a cooperative development.