Page 199 - Introduction to Business

CHAPTER 5 Managing and Organizing Business 173

In sum, once two or more people start working together to achieve common
goals, an organization exists, and some sort of organizational structure needs to be
established. Organizational structures will differ widely, and organizations will
change their structures to meet current needs.

Chain of Command. At the heart of all organizational structure is a chain of chain of command The lines of authority
command. The chain of command is the lines of authority or reporting relation- or reporting relationships that exist
within an organization
ships that exist within an organization. When you hear the term chain of command,
you may think of the military, and the U.S. Army has very explicit and strict lines of
authority and reporting relationships. Lower-ranked personnel report and take
orders from higher-ranked personnel, and there are strict limitations on the extent
personnel at different ranks can socialize or fraternize. The rationale for this is that
it might be hard for a higher-ranked individual to give certain kinds of military
orders to their lower-ranked friends.
There are currently about 500,000 active duty military personnel in the U.S.
Army. The chain of command starts with the president of the United States, the
commander in chief, and moves through various ranks of officers into the enlisted
ranks. Enlisted ranks in the U.S. Army start with the E-1 designation for buck pri-
vate and go up through E-9 for the highest-level sergeant. The U.S. Army has
roughly 79,000 officers and 407,000 enlisted personnel. It also has roughly 4000
cadets at West Point. The current chain of command for the organization called the
U.S. Army, and the number of individuals occupying each rank, can be presented in
an organization chart. An organization chart is simply a diagram depicting an organization chart A diagram depicting
organization’s structure, including the positions and reporting relationships. an organization’s structure
Of course, there aren’t too many organizations that are as large and have as
many ranks of personnel as the U.S. Army. A more typical organization might be the
local public library in a medium-sized town of 40,000 people. A possible organiza-
tion chart for that organization, involving about 16 people, is shown in Exhibit 5.2.
In short, a chain of command exists in all organizations. Moreover, most organ-
izations develop formal organizational charts that outline their organizational
structure, including their chain of command.
JOB SPECIALIZATION. An important part of organizing is job specialization. Job job specialization Organizational
specialization involves breaking down organizational activities into specific tasks activities are broken down into specific
tasks and different people designated to
and designating different people to perform those tasks. In the local library organi-
perform those tasks
zational chart in Exhibit 5.2, one librarian is assigned full-time to work with
children in the children’s department. At Dell Computer Corporation, there is one

EXHIBIT 5.2
Public library
director–1
Organizational Chart: Small
Local Public Library
Source: Telephone interview, reference
librarian, College Station, Texas, Public
Librarian cataloging Librarian children’s Librarians Library, March 21, 2003.
and processing adult and reference
department–1 department–1 departments–3

Library clerks
(assist with circulation,
book shelving, etc.)
6 full-time, 4 part-time

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