Organising

Organizing
Copyright 2015 by McGraw Hill Education (India) Private Limited. All rights reserved
Definition of Organization
Organization implies a formalized intentional

structure of roles or positions.
2
Organizing involves
(1) the identification and classification of required
activities
(2) the grouping of activities necessary to attain

objectives
(3) the assignment of each grouping to a manager with

the authority (delegation) necessary to supervise it
(4) the provision for coordination horizontally (on the

same or a similar organizational level) and vertically
(for example, corporate headquarters, division, and
department) in the organization structure
3
Purposes of Organizing
Divides work to be done into specific jobs and

departments.
Assigns tasks and responsibilities associated with
individual jobs.
Clusters jobs into units.
Establishes relationships among individuals,
groups, and departments.
Establishes formal lines of authority.
Allocates and deploys organizational resources.
104 2007 Prentice Hall, Inc. All

rights reserved.
Organizing
An organisation structure should be designed to clarify

who is to do what tasks
who is responsible for what results,
to remove obstacles to performance caused by confusion and
uncertainty of assignment,
Defining Organizational Structure
Organizational Structure
The formal arrangement of jobs within an organization.
Organizational Design
A process involving decisions about six key elements:
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization
2007 Prentice Hall, Inc. All rights reserved.

106
Organizational Structure
Work Specialization
The degree to which tasks in the organization are
divided into separate jobs with each step completed
by a different person.
Overspecialization can result in human diseconomies
from boredom, fatigue, stress, poor quality, increased
absenteeism, and higher turnover.

107
Departmentalization by Type
Functional Process
Grouping jobs by Grouping jobs on the
functions performed basis of product or
Product customer flow
Grouping jobs by product Customer
line Grouping jobs by type of
Geographical customer and needs
Grouping jobs on the
basis of territory or
geography

108
Functional Departmentalization
Advantages
Efficiencies from putting together similar specialties and
people with common skills, knowledge, and orientations
Coordination within functional area
In-depth specialization
Disadvantages
Poor communication across functional areas
Limited view of organizational goals

109
Geographical Departmentalization
Advantages
More effective and efficient handling of specific
regional issues that arise
Serve needs of unique geographic markets better
Disadvantages
Duplication of functions
Can feel isolated from other organizational areas

1010
Product Departmentalization
+ Allows specialization in particular products and services

+ Managers can become experts in their industry
+ Closer to customers
Duplication of functions
Limited view of organizational goals

1011
Process Departmentalization
+ More efficient flow of work activities

Can only be used with certain types of products

1012
Customer Departmentalization
+ Customers needs and problems can be met by specialists

- Duplication of functions
- Limited view of organizational goals

1013
Organization Structure (contd)
Chain of Command
The continuous line of authority that extends from
upper levels of an organization to the lowest levels of
the organization and clarifies who reports to who.

1014
Authority
The rights inherent in a managerial position to tell
people what to do and to expect them to do it.
Responsibility
The obligation or expectation to perform.
Unity of Command
The concept that a person should have one boss and
should report only to that person.

1015
Span of Control
The number of employees who can be effectively and
efficiently supervised by a manager.
Width of span is affected by:
Skills and abilities of the manager
Employee characteristics
Characteristics of the work being done
Similarity of tasks
Complexity of tasks
Physical proximity of subordinates
Standardization of tasks

1016
Contrasting Spans of Control

1017
Centralization
The degree to which decision-making is concentrated
at a single point in the organizations.
Organizations in which top managers make all the decisions
and lower-level employees simply carry out those orders.
Decentralization
Organizations in which decision-making is pushed
down to the managers who are closest to the action.
Employee Empowerment
Increasing the decision-making authority (power) of
employees.

1018
Factors that Influence the Amount of Centralization
More Centralization
Environment is stable.
Lower-level managers are not as capable or experienced at
making decisions as upper-level managers.
Lower-level managers do not want to have a say in decisions.
Organization is facing a crisis or the risk of company failure.
Effective implementation of company strategies depends on
managers retaining say over what happens.

1019
Factors that Influence the Amount of Centralization
More Decentralization
Environment is complex, uncertain.
Lower-level managers are capable and experienced at making
decisions.
Lower-level managers want a voice in decisions.
Decisions are significant.
Corporate culture is open to allowing managers to have a say in
what happens.
Company is geographically dispersed.
Effective implementation of company strategies depends on
managers having involvement and flexibility to make decisions.

1020
Formalization
The degree to which jobs within the organization are
standardized and the extent to which employee
behavior is guided by rules and procedures.
Highly formalized jobs offer little discretion over what is to be
done.
Low formalization means fewer constraints on how
employees do their work.

1021
Organizational Design Decisions
Mechanistic Organization Organic Organization
A rigid and tightly controlled Highly flexible and
structure adaptable structure
High specialization Non-standardized jobs
Rigid departmentalization Fluid team-based structure
Narrow spans of control Little direct supervision
High formalization Minimal formal rules
Limited information network Open communication
(downward) network
Low decision participation Empowered employees

1022
Mechanistic versus Organic Organization
Clear chain of command Cross-functional teams

Centralization Cross-hierarchical teams
Free flow of information
Wide spans of control
Decentralization
Low formalization

1023
Contingency Factors
Structural decisions are influenced by:
Overall strategy of the organization
Organizational structure follows strategy.
Size of the organization
Firms change from organic to mechanistic organizations as
they grow in size.
Technology use by the organization
Firms adapt their structure to the technology they use.
Degree of environmental uncertainty
Dynamic environments require organic structures;
mechanistic structures need stable environments.

1024
Contingency Factors (contd)
Strategy and Structure
Achievement of strategic goals is facilitated by
changes in organizational structure that
accommodate and support change.
Size and Structure

As an organization grows larger, its structure tends to
change from organic to mechanistic with increased
specialization, departmentalization, centralization,
and rules and regulations.

1025
Technology and Structure
Organizations adapt their structures to their
technology.
Routine technology = mechanistic organizations
Non-routine technology = organic organizations

1026
Environmental Uncertainty and Structure
Mechanistic organizational structures tend to be most
effective in stable and simple environments.
The flexibility of organic organizational structures is
better suited for dynamic and complex environments.

1027
Common Organizational Designs
Traditional Designs
Simple structure
Low departmentalization, wide spans of control, centralized
authority, little formalization
Functional structure
Departmentalization by function
Operations, finance, human resources, and product
research and development
Divisional structure
Composed of separate business units or divisions with limited
autonomy under the coordination and control of the parent
corporation.

1028
Strengths and Weaknesses of Traditional Organizational Designs

1029
Organizational Designs (contd)
Contemporary Organizational Designs
Team structures
The entire organization is made up of work groups or self-
managed teams of empowered employees.
Matrix and project structures
Specialists from different functional departments are assigned
to work on projects led by project managers.
Matrix and project participants have two managers.
In project structures, employees work continuously on
projects; moving on to another project as each project is
completed.

1030
An Example of a Matrix Organization

1031
Team Structure
What it is: A structure in which the entire organization is made up of
work groups or teams.
Advantages: Employees are more involved and empowered. Reduced
barriers among functional areas.
Disadvantages: No clear chain of command. Pressure on teams to perform.
Matrix-Project Structure
What it is: A structure that assigns specialists from different functional
areas to work on projects but who return to their areas when
the project is completed. Project is a structure in which
employees continuously work on projects. As one project is
completed, employees move on to the next project.
Advantages: Fluid and flexible design that can respond to environmental
changes. Faster decision making.
Disadvantages: Complexity of assigning people to projects. Task and
personality conflicts.

1032
Contemporary Organizational Designs (contd)
Boundaryless Organization
A flexible and unstructured organizational design that is
intended to break down external barriers between the
organization and its customers and suppliers.
Removes internal (horizontal) boundaries:
Eliminates the chain of command
Has limitless spans of control
Uses empowered teams rather than departments
Eliminates external boundaries:
Uses virtual, network, and modular organizational
structures to get closer to stakeholders.

1033
Boundaryless Structure
What it is: A structure that is not defined by or limited to artificial
horizontal, vertical, or external boundaries; includes virtual
and network types of organizations.
Advantages: Highly flexible and responsive. Draws on talent wherever its
found..
Disadvantages: Lack of control. Communication difficulties..

1034
The boundaryless organization
eliminates internal and external barriers.
1035
Removing External Boundaries
Virtual Organization
An organization that consists of a small core of full-time
employees and that temporarily hires specialists to work on
opportunities that arise.
Network Organization
A small core organization that outsources its major
business functions (e.g., manufacturing) in order to
concentrate what it does best.
Modular Organization
A manufacturing organization that uses outside suppliers to
provide product components for its final assembly
operations.

1036
A network structure for a Web-based
retail business.
1037
Todays Organizational Design
Challenges
Keeping Employees Connected
Widely dispersed and mobile employees
Building a Learning Organization
Managing Global Structural Issues
Cultural implications of design elements

1038
The Learning Organization
An organization that has developed the capacity to
continuously learn, adapt, and change through the
practice of knowledge management by employees.
Characteristics of a learning organization:
An open team-based organization design that empowers
employees
Extensive and open information sharing
Leadership that provides a shared vision of the organizations
future, support and encouragement
A strong culture of shared values, trust, openness, and a
sense of community.

1039
Authority And Power
Power is the ability of individuals or groups to

induce or influence the beliefs or actions of
other persons or groups
Authority is the right in a position to exercise

discretion in making decisions affecting others
40
Different Bases of Power
Legitimate power normally arises from

position and derives from our cultural
system of rights, obligations, and duties
whereby a "position" is accepted by
people as being "legitimate"
Expert power is the power of knowledge
Referent power is influence that people

or groups may exercise because people
believe in them and their ideas
41
Different Bases of Power
- contd
Reward power is the power to grant or

withhold rewards such as high grades by a
university professor
Coercive power is closely related to reward

power and normally arising from legitimate
power, it is the power to punish
42
What is Empowerment?
Empowerment means that employees, managers,

or teams at all levels in the organization have the
power to make decisions without asking their
superiors for permission.
43
Scalar Principle in
Organization
The clearer the line of authority from the

ultimate management position in an
enterprise to every subordinate position, the
clearer will be the responsibility for decision
making and the more effective will be
organization communication.
44
Line, Staff, And Functional Authority
Line authority is the relationship in which a superior
exercises direct supervision over a subordinate
It consists of the right to make decisions and to give
order concerning the production, sales or finance related
behaviour of subordinates.
In general, line authority pertains to matters directly
involving management system production, sales, finance
etc., and as a result with the attainment of objectives.
People directly responsible for these areas within the
organization are delegated line authority to assist them
in performing their obligatory activities.
45
Staff relationship is advisory
Staff authority consists of the right to advise or assist those who possess line
authority as well as other staff personnel.
Staff authority enables those responsible for improving the effectiveness of line
personnel to perform their required tasks.
e.g. A plant manager has line authority over each immediate subordinate,
the production manager and the sales manager.
However, the human resource manager has staff authority in relation to the plant
manger, meaning the human resource manager has staff authority in relation to
the plant manager, meaning the human resource manager possesses the right to
advise the plant manager on human resource matters.
Still final decisions concerning human resource matters are in the hands of the
plant manager, the person holding the line authority.
46
Functional authority is the right that is delegated
to an individual or a department to control specified
processes, practices, policies, or other matters relating
to activities undertaken by persons in other
departments.
Functional Authority is given to a line or staff manager to
do a specific job. When the job is completed, the
authority is taken back.
47
Decentralization Of Authority
Decentralization is the tendency to

disperse decision-making authority in an
organized structure.
48
Delegation Of Authority
Determining the results expected from a

position
Assigning tasks to the position
Delegating authority for accomplishing

these tasks
Holding the person in that position

responsible for the accomplishment of
the tasks
49
The Art Of Delegation
Personal Attitudes towards Delegation:
Receptiveness
Willingness to let go
Willingness to let others make mistakes
Willingness to trust subordinates
Willingness to establish and use broad
controls
50
Elements of Delegation
Authority - in context of a business organization, authority can be defined as the
power and right of a person to use and allocate the resources efficiently, to take
decisions and to give orders so as to achieve the organizational objectives.
Authority always flows from top to bottom
Responsibility - is the duty of the person to complete the task assigned to him. A
person who is given the responsibility should ensure that he accomplishes the tasks
assigned to him..
Accountability - means giving explanations for any variance in the actual
performance from the expectations set. Accountability can not be delegated.
For example, if A is given a task with sufficient authority, and A delegates this
task to B and asks him to ensure that task is done well, responsibility rest with B,
but accountability still rest with A.
Accountability, in short, means being answerable for the end result. Accountability
cant be escaped. It arises from responsibility.
51
Guides for Overcoming Weak Delegation
1. Define assignments and delegate
authority in light of results expected
2. Select the person in light of the job to
be done
3. Maintain open lines of communication
situations
4. Establish proper controls
5. Reward effective delegation and
successful assumption of authority
52
Recentralization Of
Authority
At times an enterprise can be said to

recentralize authority-to centralize
authority that was once decentralized.
53
What organizing trends are changing the
workplace?
More delegation and empowerment (cont.)
A common management failure is
unwillingness to delegate.
Delegation leads to empowerment.
Organizing trend:
Managers are delegating more and finding more
ways to empower people at all levels.
Management - Chapter 10 54
workplace?
Decentralization with centralization (cont.)
Centralization and decentralization not an
either/or choice.
Organizing trend:
Delegation, empowerment, and horizontal
structures contribute to more
decentralization in organizations.
Advances in information technology allow
for the retention of centralized control.
workplace?
Reduced use of staff
Specialized staff
People who perform a technical service or provide
special problem-solving expertise to other parts of
the organization.
Personal staff
People working in assistant-to positions that
provide special support to higher-level managers.
Organization Culture
Organization Culture
Is a system of shared meanings within an organization that
determine how employees act.
Has shared values in its cultural elements:
Stories, rituals, material symbols, and language unique to the
organization
Results from the interaction between:
The founders biases and assumptions
What the first employees learn subsequently from their own
experiences.
Influences structure:
Strong culture substitutes for rules and regulations.
557
Characteristics of Organization Culture
Member identity
Group emphasis
People focus
Control
Risk tolerance
Reward criteria
Conflict tolerance
Meansend orientation
Open-systems focus
558

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Organising

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Organizing

Organization implies a formalized intentional

(2) the grouping of activities necessary to attain

(3) the assignment of each grouping to a manager with

(4) the provision for coordination horizontally (on the

department) in the organization structure

Divides work to be done into specific jobs and

104 2007 Prentice Hall, Inc. All

An organisation structure should be designed to clarify

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

+ Allows specialization in particular products and services

2007 Prentice Hall, Inc. All rights reserved.

+ More efficient flow of work activities

2007 Prentice Hall, Inc. All rights reserved.

+ Customers needs and problems can be met by specialists

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

Clear chain of command Cross-functional teams

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

Size and Structure

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

2007 Prentice Hall, Inc. All rights reserved.

Power is the ability of individuals or groups to

Authority is the right in a position to exercise

Legitimate power normally arises from

Expert power is the power of knowledge

Referent power is influence that people

Reward power is the power to grant or

Coercive power is closely related to reward

Empowerment means that employees, managers,

The clearer the line of authority from the

Decentralization is the tendency to

Determining the results expected from a

Assigning tasks to the position

Delegating authority for accomplishing

Holding the person in that position

Personal Attitudes towards Delegation:

At times an enterprise can be said to

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