Unit 3

Organizing
 Concept of organizing
 Organizing is the function of management which is followed by planning and
reflects how the organization tries to accomplish its goals or objectives.

 In relation to the structure of the company, organizing involves the assignment of

tasks, the grouping of tasks into departments and allocation of resources to
departments.

 It is a function in which the synchronization and combination of human, physical

and financial resources takes place.

 All the three resources are important to get results. Therefore, organizational
function helps in achievement of results which in fact is important for the
functioning of a concern.

 Organizing is a function by which the concern is able to define the role positions,
the jobs related and the co-ordination between authority and responsibility.
Hence, a manager always has to organize in order to get results.
 According to Griffin,
“organizing involves determining how activities and resources are to be
grouped.”

 According to Allen,
“Organizing refers to the process of identifying and grouping the work to
be performed, defining and delegating authority and responsibility and
establishing a pattern of relationship for the purpose of enable people to
work efficiently together in accomplishing the objectives.”
 Organizing can be defined in two ways:
a. As a Structure
b. As a Process

 As a Structure- organizing is the narrow top to broad bottom concept.

 It is the traditional concept of the organization and is a structural framework of

duties and responsibilities given to the members of the organization.

 As a systematic combination of people, functions and facilities, organizational

structure provides the mechanism within which the people work together for the
accomplishment of the desired objectives.

 The organization is seen in two dimensions

 Horizontal dimensions- reflects the differentiation of jobs into department or
divisions.
 Vertical dimensions-vertical dimensions shows the hierarchy of authority
relationship with the number of levels from top to bottom.
 As a Process- organizing is a dynamic concept and also termed as a
modern concept of the organization.

 As a basic function of management, organizing is a continuous and

dynamic process of creating a harmonious authority responsibility
between specialized units.

 Organizing as a process is humanistic concept.

 Organization structure
 Organizational structure is a system used to define a hierarchy within an
organization. It identifies each job, its function and where it reports to
within the organization.

 This structure is developed to establish how an organization operates and

assists an organization in obtaining its goals to allow for future growth. The
structure is illustrated using an organizational chart.

 Organizational structure determines how

the roles, power and responsibilities are assigned, controlled, and
coordinated, and how information flows between the different levels of
management.
 Bureaucratic structure
 Max Weber, is considered the founding father of modern bureaucratic management theory. Weber
was a German sociologist and political economist.

 Bureaucratic structures are used in many organizations including the military, government agencies
and large corporations.

 A bureaucratic structure of an organization has two fundamental characteristics. First, the structure
is hierarchical, which means there are clearly ordered levels of management, where lower levels
are subordinate, or answerable, to higher levels.

 Second, the organization is governed by a set of objective laws, rules and procedures as the basis of
authority and direction. Max Weber called this element rational-legal authority.

 A bureaucratic organization is one with rigid and tight procedures, policies and constraints; and the
company reacts with strict controls as well as a unwillingness to adapt or change.

 Bureaucracies are very organized with a high degree of formality in the way it operates.
Organizational charts exist for every department, and everyone understands who is in charge and
what his responsibilities are for every situation. Decisions are made through an organized process,
and a strict command and control structure is present at all times.
 Bureaucratic organizational structures have numerous layers of management, flowing down from senior
executives to regional managers to departmental managers, all the way down to shift supervisors who
work alongside frontline employees.

 In a bureaucratic organizational structure, authority is generally centered at the top, and information
generally flows from the top down. This usually encourages a company culture focused on rules and
standards, where operational processes are rigidly controlled with best-practices methodologies and
close supervision.

 Employees of a bureaucracy give their obedience to the organization because managers exercise
authority through their office or formal position, and the orders or directions are based on the formal
rules or laws of the organization. The scope of the manager's authority is limited to his or her position.

 For example, the vice president of marketing has no legitimate authority to direct anyone outside of
that division, such as the employees in production. This is an example of rational-legal authority. Keep
in mind, the easiest way to think of rational-legal authority is that it is the set of the organization's
policies and procedures which everyone in the organization must follow.

 As previously mentioned, hierarchy is an important feature of bureaucratic structure as well. This

structure is meant to provide a clear chain of command so that one level of the structure is only
answerable to the level above it. This helps prevent conflicting orders from different lines of authority.
 Advantages
 Top-level managers in bureaucratic organizational structures exercise a great deal of control
over organizational strategy decisions, which is ideal for business owners with a command
and control style.
 Strategic decision-making time can be shorter in a tall organizational structure, since less
individuals are involved in the process.
 Standardization and best-practices are often highlights in companies with tall organizational
structures, ensuring that work is consistently completed efficiently and effectively.

 Disadvantages
 Bureaucratic structures can discourage creativity and innovation throughout the
organization.
 No matter how resourceful a business owner is, it is nearly impossible for a single individual
to generate the range of strategic ideas possible in a large, interdisciplinary group.
 Front-line employees may receive less satisfaction from their jobs in a rigidly bureaucratic
organization, increasing employee turnover rates.
 Organizations bound by rigid controls can also find themselves less able to adapt to
changing conditions in the marketplace, industry or legal environment.
 Matrix organizational structure
 A matrix organization structure is usually defined as one where
there are multiple reporting lines – that is, people have more than
one formal boss.

 Matrix structure sometime referred to as a multiple command

system is a hybrid that attempts to combine the benefits of both
types of design while avoiding their drawbacks.

 Unlike a traditional hierarchy in which each worker has one

supervisor, a matrix system requires employees to report to two or
more managers, each responsible for a different aspect of the
organization’s overall product or service.
 In matrix organization, the personnel working on the project having a responsibility to
their functional manager and project manager.

 In matrix structures, there are functional managers and product (or project or
business group) managers. Functional manager are in charge of specialized resources
such as production, quality control, inventories, scheduling and marketing.

 Product or business group managers are incharge of one or more products and are
authorized to prepare product strategies or business group strategies and call on the
various functional managers for the necessary resources.

 For example, a video producer working at an advertising firm might report to the
head of the media department (functional chain of command) as well as to the project
manager for a given client product (project chain of command).

 The project manager is accountable for the overall performance of the product team,
whereas the functional manager is responsible for the technical performance of the
particular employee task—in this case, video production.
 The benefits of a matrix organization approach can include
 improved communication flows, more efficient use of resources, increased
flexibility, authority and responsibility shared and better performance
resulting from complementary expertise among managers.

 The drawbacks of a matrix system might include confidence problems

and conflicting priorities arising from multiple lines of authority, as well as
higher overhead costs associated with increased system complexity and
idleness and power struggle between functional manager and project
manager.

 Because of these challenges, the move from a traditional hierarchy to a matrix

system typically requires the adoption of new information and
communication technologies, as well as a concentrated effort to reform the
organizational culture and expectations of members.
 Virtual organizational structure
 This new form of organisation, i.e., ‘virtual organisation’ emerged in 1990 and is also
known as digital organisation, network organisation or modular organisation.

 Simply speaking, a virtual organisation is a network of cooperation made possible by,

what is called ICT, i.e. Information and Communication Technology, which is flexible
and comes to meet the dynamics of the market.

 Alternatively speaking, the virtual organisation is a social network in which all the
horizontal and vertical boundaries are removed. In this sense, it is a boundary less
organisation.

 It consists of individual’s working out of physically dispersed work places, or even

individuals working from mobile devices and not tied to any particular workspace. The
ICT is the backbone of virtual organisation.

Managers in these organisations coordinate and control external relations with the help
of computer network links. The virtual form of organisation is increasing. Nike, Reebok,
Puma, Dell Computers, etc., are the prominent companies working virtually.
 Advantage:
 1. It saves time, travel expenses and eliminates lack of access to experts.
 2. Virtual teams can be organised whether or not members are in reasonable proximity to
each other.
 3. Dynamic team membership allows people to move from one project to another.
 5. Employee can be assigned to multiple, parallel teams.
 6. Teams’ communication and work reports are available online to facilitate swift responses
to the demands of the (global) market.
 7. Employees can accommodate both personal and professional lives.
 8. Virtual teams allow firms to expand their potential labour markets enabling them to hire
and retain the best people regardless of their physical locations.

 Disadvantages:
 1. The lack of physical interactions with its associated verbal and non-verbal cues and also
the synergies that often accompany face-to-face interaction
 2. Non-availability of non-verbal cues such as voice, eye movement, facial expression, and
body language which help in better communication.
 3. Ability to work even if the virtual teams are miles apart and the members have never or
rarely met each other face-to-face.
 Types of virtual organisations:
 1. Telecommuters
 2. Outsourcing employees/competencies
 3. Completely virtual

 Telecommuters:
 These companies have employees who work from their homes. They interact with the workplace via
personal computers connected with a modem to the phone lines.

 Outsourcing Employees/Competencies:
 These companies are characterized by the outsourcing of all/most core competencies. Areas for
outsourcing include marketing and sales, human resources, finance, research and development, engi-
neering, manufacturing, information system, etc.
 In such case, virtual organisation does its own on one or two core areas of competence but with
excellence.

 Completely Virtual:
 These companies symbolically described as companies without walls that are tightly linked to a large
network of suppliers, distributors, retailers and customers as well as to strategic and joint venture
partners.
 Atlanta Committee for the Olympic Games (ACOG) in 1996 and the development efforts of the PC
by the IBM are the examples of completely virtual organisations.
 A virtual organisation has the following characteristics:
 1. Flat organisation
 2. Dynamic
 3. Informal communication
 4. Power flexibility
 5. Multi-disciplinary (virtual) teams
 6. Vague organisational boundaries
 7. Goal orientation
 8. Customer orientation
 9. Home-work
 10. Absence of apparent structure
 11. Sharing of information
 12. Staffed by knowledge workers.