Division of Labor

This concept means simple that each worker concentrates on a single small area of production-or a single function. The objective is always increased efficiency through increased production. Early society found that it was more efficient for one person to perform a single function than for each person to try to do everything; thus they had specialists such as blacksmiths, weavers, potters, and candlemakers. Such specialization may be by trade (plumbers, electricians, mechanics or painters) or by operation (carburetor installer on an automobile assembly line).
          The ancient bucket brigade of the fire departments proved that more water got on the fire when the buckets were passed along the line than when each person went from the well to the fire with a bucket. Adam Smith espoused the case for division of labor in his Wealth of Nations in 1776. His experiments showed that production increased in a factory when division of labor was established. Today much routine work has been mechanized, but the principle of division of labor remains important.

Minimal Levels of Authority

Each additional level of managers in a firm results in extra expenses, extends the lines of communication, and may bring confusion. Therefore, the levels of authority should be limited to the fewest possible to accomplish the goals of a specific firm. Some firms require many management levels to achieve their objectives, while others operate with only a few levels of authority.
          A centralized organization is one in which most authority and responsibility belong to top management. In such a firm, managers delegate little authority or responsibility, because top executives believe they can produce the most efficient results by holding tight reins on the entire firm. This type of centralized firm has become known as a toll organization; it has many levels of management and very narrow spans of control.
          In a decentralized organization, much authority is delegated to officers, managers, and supervisors throughout the firm. Authority may be delegated in all areas of operations: operation, procurement, personnel, financing, and marketing. In such a firm, middle managers are authorized to make many of the decisions that only top managers can make in a centralized organization. This frees top managers from administrative details and allows them more time for other high-level duties. Decentralized organizations are also known as flat organizations; they have fewer levels of management and much wider spans of control.

Span of Control

This principle recognizes that there is a limit to the number of persons or positions that one supervisor should direct. That number will vary with the type of work being supervised. There is no single "right" limit to cover all positions, and there is no uniformity among all firms. In upper-management positions, the span of control is usually limited to include only six or eight subordinates; but in routine manufacturing operations, one supervisor may direct the activities of many more employees.

Unity of Command

This principle suggest that no one in an organization should have more than one supervisor. This is important for it minimizes confusion and frustration for the supervisor, and it enables each employee to have a single supervisor who handles all the employee's relations with the firm.

Management Principles That Apply to Organizing

          Probably no aspect of business better illustrates the time-tested principles of management than does good organization. You will hear much more about management principles if you take advanced business courses, but now we shall examine the principles that apply to the organizing process.