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CHAPTER 8

EFFECTIVE MANAGEMENT AND ORGANIZATION STRUCTURE

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LEARNING OBJECTIVES1. Understand the Tauhid relationship

with management2. Understand the principle of

management from the Islamic perspective

3. Explain the levels of management and identify the key functions of managers

4. Explain the various type or organizational structure

5. Explain how accountability could be achieved through organizational structure

6. Describe the distributing authority among the job positions

7. Explain how to achieve good communication in the organization

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INTRODUCTION

MANAGEMENT IN ISLAM

Management in Islam is referring to how the social, economic and political side of a man’s life being manages with the Islamic values.

The management in Islam starts from the Muslim’s believes of the five pillars of Islam which are faith, prayer, alms, fasting, and pilgrimage which will give a direct impact on the behavior of a truthful Muslim’s.

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INTRODUCTION

DEFINITION OF MANAGEMENT

covers the process of getting activities completed efficiently and effectively with and through other people through planning, organizing, staffing, directing, coordinating, reporting and budgeting (Gulick & Urwick 1937).

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MANAGING BUSINESS CONCEPT IN ISLAM

covers a wide area of muamalah such as buying and selling, employment, paying and receiving wages. According to Surah An-nisa’ (4:29).

“ O believers, don’t you take wealth among you in a bad way, except on the basis of business of dealings that was agreed among you”

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MANAGING BUSINESS CONCEPT IN ISLAM

According to Dr Hassan Hj Mohd Ali, management objective can be accomplish through relationship of three main elements which are:

Philosophy and value which content policy, principle, motive and ethics.

Management and workers which have a combination of quality, skills and character.

System and practice through procedures, structure and working environment and customs.

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ISLAMIC PRINCIPLE IN MANAGING

ORGANIZATION Division of work Authority Discipline. Unity of command. Unity of direction. Subordination of individual

interests to the general interest.

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ISLAMIC PRINCIPLE IN MANAGING

ORGANIZATION Remuneration Centralisation Scalar chain Order EquityStability of tenure of

personnel Initiative Esprit de corps

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LEVEL OF MANAGEMENT

Top /High Level Management Set new plans to expend Communicate those plans to all managers Example: CEO, GM, President

Middle Management Determine how many new employee to

hire Determine how to obtain funds to finance

the expansion Supervisory Management

Directly deals with employee Example: branch manager

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FUNCTION OF MANAGER

Functions

Planning

Organizing

Leading

Controlling

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MANAGERIAL SKILLS

Technical

Conceptual

Interpersonal

Decision Making

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ORGANIZATIONAL STRUCTURE

Span of Control

The number of employees managed by each manager, which is determined by top management.

For example, a narrow span of control may consist of a president supervising a vice president, who supervises a sales manager, who in turn supervises salespeople.

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ORGANIZATIONAL STRUCTURE

Organizational Height

An organization can also be described by its height – that is the number of management layers from the bottom to the top.

A tall organization would have many layers, while a short (or flat) organization would have very few layers of management.

For example, many companies that use a wide span of control will also have a short organizational height, while companies with a tall organizational height have a narrow span of control

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DISTRIBUTING AUTHORITY AMONG THE JOB POSITION

Centralized

A structure where Most authority is held by the

high-level managers.

Decentralized

• A structure where authority is spread among several divisions or managers. • Each unit can make

quick decisions in response to local market conditions.

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STRUCTURE THAT ALLOW MORE EMPLOYEE INPUT

Matrix Organization

An organizational structure that enables various parts of the firm to interact to focus on specific projects.

Intrapreneurship

The assignment of particular employees of a firm to generate ideas, as if they were entrepreneurs running their own firms.

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DEPARTMENTALIZATION

Departmentalize

Assign tasks and responsibilities to different departments.

Departmentalize by function

Allocate their tasks and responsibilities according to employee functions

Departmentalize by product

Tasks and responsibilities are separated according to the type of product produced.

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DEPARTMENTALIZATION

Departmentalize by location.

Establishing regional offices to cover specific geographic regions.

Departmentalize by customer

Specialize on individuals, and others on large corporate customers.

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Tutorial Questions

How do you think the general management functions vary at each level of management within the firm?

Assume that you are thinking of becoming a manager. Define management. What are the most important skills you should have to become an effective manager?

Discuss how global competition is changing our thinking about managing firms and subsidiaries in foreign countries.

Assume that you are a high-level manager and are revising the organizational structure of your firm. Identify and explain the main methods for departmentalizing the tasks and responsibilities to the different departments.

For what kinds of businesses might a narrow span of control work best? When might a wide span of control work best?