Concepts of Organizing

Chapter 8
Concepts of Organizing
After studying this chapter, you will be able to:
1. Identify the organizing function of management.

2. Explain the unity of command principle and its
applications.
3. Define the span of management principle and
the factors that influence its applications.
4. Describe departmentation and alternative
approaches for grouping activities and
assigning work.
5. Explain the importance of authority to
supervisory management.
Chapter 8/Concepts of Organizing

Hilgert & Leonard © 2001
8-2
After studying this chapter, you will be able to:
6. Explain the meaning of line and staff authority

and how these influence organizational
structures and supervisory relationships.
7. Describe how functional authority may be
granted to specialized staff for certain purposes.
8. Discuss applications of matrix-type
organizational structure.
9. Define downsizing (restructuring) and its
implications for organizational principles.

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1
THE ORGANIZING FUNCTION OF
MANAGEMENT
Organization—Group structured by management

to carry out designated functions and accomplish
certain objectives
People are the substance and essence

of any organization.
Organizational success is more likely if employees

are given top-priority attention by their managers
and supervisors.

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2
THE UNITY OF COMAMAND PRINCIPLE
Unity of command principle—Each employee

has only one direct supervisor.
Having more than one direct

supervisor usually leads to
unsatisfactory performance by
the employee due to confusion
of authority.

8-5
3
THE SPAN OF MANAGEMENT
PRINCIPLE
The principle that there is an upper limit
to the number of subordinates that a
supervisor can manage effectively.
Also called span of supervision, span of authority,
and span of control.

8-6
3
FACTORS INFLUENCING THE
SPAN OF MANAGEMENT
• Supervisory competence: Training, experience,

and know-how have a direct impact on the number of
employees who can be supervised effectively.
• Specialized staff assistance: Quality help from
others in the organization.
• Employee abilities: The greater the employees’
capacity for self-direction, the greater the feasible
managerial span.

8-7
3
FACTORS INFLUENCING THE
SPAN OF MANAGEMENT
• Location of employees: When located in
close proximity to employee, observation and
communication are relatively easy.
• Nature and complexity of activities: The simpler,
routine, and more uniform the work activities, the
greater number of people one supervisor can manage.
• Objective performance standards: Good
performance standards support a broader span of
management. Eliminates the need for frequent
discussions concerning performance.

8-8
3
THE SPAN OF MANAGEMENT
PRINCIPLE
Relationship of Managerial Levels
Lead person—Employee placed in charge of other
employees who performs limited managerial functions
but is not considered part of management.
The narrower the span of management, the

more managerial levels have to be introduced
in organizational design. An organization’s
structures tend to be taller when spans of
management are narrower.

8-9
RELATIONSHIP
RELATIONSHIP OF
OF MANAGEMENT
MANAGEMENT AND
AND ORGANIZATIONAL
ORGANIZATIONAL LEVELS
LEVELS 4

8-10
4
DEPARTMENTATION AND APPROACHES
FOR GROUPING ACTIVITIES
Division of work (specialization)—Dividing work

into smaller components and specialized tasks to
improve efficiency and output.
Department—Organizational unit for which a

supervisor has responsibility and authority.
Flexible workforce—Employees trained in a variety

of skills to perform multiple tasks.

8-11
4
• Functional departmentation: Grouping

departments by the jobs to be done. Provides better
coordination than having the same functions
performed in different departments under different
supervisors.
• Product or service departmentation: Grouping

departments by product or service into relatively
independent units within the organization.

8-12
4
• Geographic (territorial, locational)

departmentation: Units of organization are
physically dispersed or functions performed in
different locations.
• Customer departmentation: Grouping activities

based on customer considerations to better service
differing needs and characteristics of different
customers.

8-13
4
• Process and equipment departmentation:

Grouping activities by the process involved or
equipment needed.
• Time departmentation: Grouping according to the

time period during which the work is performed. Other
factors, such as function and service, may also
influence time and shift departmentation.
• Mixed departmentation: Use of several types of

departmentation, such as functional, geographic, and
time, simultaneously.
8-14
MIXED
MIXED DEPARTMENTATION
DEPARTMENTATION 4

8-15
4
DEPARTMENTATION AND
APPROACHES FOR GROUPING
ACTIVITIES
Work Assignments and
Organizational Stability
Principle of organizational stability—No
organization should become overly dependent on
one or several key “indispensable” individuals.
A supervisor’s task of assigning departmental
work will be less difficult by consistently utilizing
the strengths and experience of all employees.

8-16
5
IMPORTANCE OF AUTHORITY TO
SUPERVISORY MANAGEMENT
Understanding Managerial Authority

and Its Delegation
Managerial authority—The legitimate right

to direct and lead others.
Delegation of authority—The process of
assigning duties and related authority to
subordinates.

8-17
5
IMPORTANCE OF AUTHORITY TO
SUPERVISORY MANAGEMENT
Understanding Managerial Authority

and Its Delegation
• In order to learn how to give an order, you

must first learn how to take an order.
• If you give people a job to do, give them
the authority they need to carry out their
responsibilities.

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5
UNDERSTANDING MANAGERIAL
AUTHORITY AND ITS DELEGATION
Acceptance Theory of Authority: A manager
only possesses authority when the employee accepts it
The origin of authority can be considered from two

viewpoints:
• The formal way that originates from the top and
reaches down
• As something subordinates confer on a supervisor
by the degree of willingness they accept or
respond to direction.

8-19
5
LIMITATIONS TO AUTHORITY
Limitations to a supervisor’s authority may arise
from many factors, both within and outside of the
company. Some of these are:
• Explicit and implicit • Ethical

• External and internal • Moral
• Political • Social
• Legal • Economic

8-20
6
LINE AND STAFF AUTHORITY AND ITS
INFLUENCE
Organization chart—Graphic portrayal of
authority and responsibility relationships
Line authority—The right to direct others and to

require them to conform to decisions, policies,
rules, and objectives.
Line-type organizational structure—Structure

that consists entirely of line authority arrangement
with a direct chain of authority relationships.

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6
LINE AND STAFF AS AUTHORITY
RELATIONSHIPS
All supervisors should know whether they are part

of the organization in a line or staff capacity, and
what these words imply in relation to their positions
and other departments.

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6
LINE
LINE TYPE
TYPE OF
OF ORGANIZATIONAL
ORGANIZATIONAL STRUCTURE
STRUCTURE

8-23
6
LINE AND STAFF TYPE
Staff authority—The right to provide

counsel, advice, support, and service in a
person’s area of expertise.
Line department—Department whose

responsibilities are directly related to
making, selling, or distributing the
company’s product or service.

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6
LINE AND STAFF TYPE
Staff department—Specialized department

responsible for supporting line
departments and providing specialized
advice and services.
Line-and-staff-type organizational
structure—Structure that combines line
and staff departments.

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6
LINE-AND-STAFF
LINE-AND-STAFF TYPE
TYPE
ORGANIZATIONAL
STRUCTURE

8-26
6
SUPERVISORS AND THE HUMAN
RESOURCES DEPARTMENT
Human resources management

(HRM) —Organizational philosophies,
policies, and practices that strive for the
effective use of employees.
Human resources department

—Staff department which provides advice
and service to other departments on

human resources matters.
8-27
6
SUPERVISORS AND THE HUMAN
RESOURCES DEPARTMENT
In most organizations, the director of human

resources and the human resources operate
in a staff capacity.
Human resources departments

are becoming more strategic
within an organization.
Effectiveness depends on how
clearly top-level managers have defined
their activities and authority.
Chapter 8 /Concepts of Organizing
8-28
7
FUNCTIONAL AUTHORITY
Principle of compulsory staff advice

(service)—Situation in which supervisors
are required to consult with specialized staff
before making certain decisions.
Functional authority—Granted to
specialized staff people to give directives
concerning matters within their expertise.

8-29
8
MATRIX-TYPE ORGANIZATIONAL
STRUCTURE
A hybrid structure in which regular functional

departments co-exist with project teams from
different departments.
Many high-tech firms employ project (matrix)

structures to focus special talents from
different departments on specific projects for
certain periods.

8-30
8
MATRIX-TYPE
STRUCTURE
P r e s i d e n t
D e p a r t m D e en p t a r t m D e en pt a r t m e n t
S u p e r v i sS o u r p e r v i s S o u r p e r v i s o r
F u n c t i o n F uX n c t i o n F Yu n c t i o n Z
M a n a g e r
P r o j e c t A
M a n a g e r
P r o j e c t B

8-31
8
MATRIX-TYPE
ORGANIZATIONAL
STRUCTURE
STRUCTURE
Problems
associated
with matrix
organization
structure
include:
• Direct accountability—violates the principle of
unit of command
• Priorities of scheduling for individuals assigned
to work on several projects
8-32
DOWNSIZING AND ITS 9
IMPLICATIONS
Also called Restructuring or Right-sizing
Large-scale reduction and elimination of jobs that

usually results in reduction of middle-level managers,
removal of organizational levels, and a widened span
of management for remaining supervisors.

8-33
9
DOWNSIZING AND ITS
IMPLICATIONS
Some middle-level management and staff
positions have been eliminated because
information technology has made it possible for
higher-level managers to acquire data quickly and
keep in close touch with operations.
Organizations that downsized most effectively are
those that have planned for it and have tried to
harmonize the new structure with the old.

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9
DOWNSIZING AND ITS
IMPLICATIONS
Re-engineering—Restructuring on the basis of
processes and customer needs and services,
rather than by department and functions.
Horizontal corporation—A firm restructured by
customer process and organizational structure is
very flattened.
Virtual corporation—Companies linking together
on a temporary basis to take advantage of
marketplace opportunities.

8-35
END

8-36

Concepts of Organizing

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Chapter 8

1. Identify the organizing function of management.

Chapter 8/Concepts of Organizing

6. Explain the meaning of line and staff authority

Chapter 8/Concepts of Organizing

Organization—Group structured by management

People are the substance and essence

Organizational success is more likely if employees

Chapter 8/Concepts of Organizing

Unity of command principle—Each employee

Having more than one direct

Chapter 8/Concepts of Organizing

Chapter 8/Concepts of Organizing

• Supervisory competence: Training, experience,

Chapter 8/Concepts of Organizing

Chapter 8/Concepts of Organizing

The narrower the span of management, the

Chapter 8/Concepts of Organizing

Chapter 8/Concepts of Organizing

Division of work (specialization)—Dividing work

Department—Organizational unit for which a

Flexible workforce—Employees trained in a variety

Chapter 8/Concepts of Organizing

• Functional departmentation: Grouping

• Product or service departmentation: Grouping

Chapter 8/Concepts of Organizing

• Geographic (territorial, locational)

• Customer departmentation: Grouping activities

Chapter 8/Concepts of Organizing

• Process and equipment departmentation:

• Time departmentation: Grouping according to the

• Mixed departmentation: Use of several types of

Chapter 8/Concepts of Organizing

Chapter 8/Concepts of Organizing

Understanding Managerial Authority

Managerial authority—The legitimate right

Chapter 8/Concepts of Organizing

Understanding Managerial Authority

• In order to learn how to give an order, you

Chapter 8/Concepts of Organizing

The origin of authority can be considered from two

Chapter 8/Concepts of Organizing

• Explicit and implicit • Ethical

Chapter 8/Concepts of Organizing

Line authority—The right to direct others and to

Line-type organizational structure—Structure

Chapter 8/Concepts of Organizing

All supervisors should know whether they are part

Chapter 8/Concepts of Organizing

Chapter 8/Concepts of Organizing

Staff authority—The right to provide

Line department—Department whose

Chapter 8/Concepts of Organizing

Staff department—Specialized department

Chapter 8/Concepts of Organizing

Chapter 8/Concepts of Organizing

Human resources management

Human resources department

and service to other departments on

In most organizations, the director of human

Human resources departments

Principle of compulsory staff advice

Chapter 8/Concepts of Organizing