2015 pom chapter 4 organizing
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CHAPTER 4: ORGANIZING
DMG 1213 / DMG1113 / DPM1213 / DPM1113Principles of Management
Laura LawPerak College of Technology
OrganizingCHAPTER 4: ORGANIZING
DMG 1213 / DMG1113 / DPM1213 / DPM1113Principles of Management
Laura LawPerak College of Technology
OrganizingOrganizing is the process of
arranging and allocating work, authority, and resources among an organization’s members so that they can achieve organizational goal.
Stoner, Freeman and Gilbert3
Why organize? Extremely important to the management system
Manager who wants to organize department, they need to determine below;1. Determine what is to be done
2. Assigning tasks
3. Decide on a span of management
4. Decide how much authority you should designate
5. Draw an organization chart
Process of Organizing simplified
5
Why managers have to organize
Able to create and maintain relationship between all organizational resources Which resources are to be used for specified activities
and when, where and how they are used).
Minimize costly weakness
Divide the work according to the nature and similarity of tasks.
Pool resources and increase the efforts which lead to efficiency.
Build continuity and synergy.
Organizing process
Reflecting on plans and objectives
Establisihing major tasks
Dividing major tasks into subtasks
Allocating resources and directives for
subtasks
Evaluating the result of implemented
organizing strategy.
Organizational structure
Basic framework within which manager and his subordinates operate.
Explains the position and official relationship between various individuals in the organization
Basic activity performed;Who decides?Who report whom?Who responds?Who perform what work?
Division of Labor
CHAPTER 4: ORGANIZINGDMG 1213 / DMG1113 / DPM1213 / DPM1113
Principles of ManagementLaura Law
Perak College of Technology
Division of work/ laborDivision of work is main activities in
organization function because one individual can not do all the work but specialization results in efficiency and effectiveness
Within the formal structure of an organization whereby task/work has be divided among the members and different jobs related to each other
This is to maintain a balance between an emphasis on subject matter or function at higher levels of the organization and specialization and concern for staff at the operational level.
Importance of Division of work
Increases productivity of the
organizations
Fosters specialization because it
creates simplified tasks that easily
understood and completed very quickly
Easy to assign task to individual based
upon the talents, interests and position
Limitations of division of work
Sense of control felt by the managers will be different because of the specialization
It will create dissatisfaction among the subordinates that they might don’t like or have no interest to the tasks assigned
Feel boredom because of the routine and specified tasks to be done
Organization Chart
CHAPTER 4: ORGANIZINGDMG 1213 / DMG1113 / DPM1213 / DPM1113
Principles of ManagementLaura Law
Perak College of Technology
Organization chartA formal diagram that shows the lines of authority.
Each box represents a position within an organization and each line indicates reporting relationships and line of communication.
The purpose to performed organization chart; To indicate to each employees area of responsibility
and to whom each reports To coordinate the division of work and to make those
division clear. To show work to be done. To indicate line of promotion.
Span of Management
CHAPTER 4: ORGANIZINGDMG 1213 / DMG1113 / DPM1213 / DPM1113
Principles of ManagementLaura Law
Perak College of Technology
Span of managementRefers to the number of subordinates who report
directly to a given manager of supervision.
Major factors that influence
the span
Manageme
nt
Type of work
Ability of manager
Amount & type of
communication required
Location in organization
structure
Span of ManagementADVANTAGES DISADVANTAGESSuperior are forced to delegate
Decisions made by managers tend to be at a bottleneck because of the burden of managing subordinates
Clear policies must be made There is a danger superior’s loss of control
Subordinates must be carefully selected
Management requires exceptional quality managers to handle the situation
Span of Management Organization Structure
Flat structureHave a few organization levels
with flat wide span of authority.
Tall structureHave short span of authority
with many organization levels.
President
President
Tall Organization
Flat Organization
Establishing Reporting Relationships: Tall Versus Flat Organizations
Flat OrganizationsLead to higher levels of
employee morale and productivity.
Create more administrative responsibility for the relatively few managers.
Create more supervisory responsibility for managers due to wider spans of control.
Tall OrganizationsAre more expensive
because of the number of managers involved.
Foster more communication problems because of the number of people through whom information must pass.
Major aspects of organization structure
ASPECTS IN ORGANIZATION STUCTURE
EXPLAINATION
DIVISION OF WORK Represents individual or sub-unit responsible for a given part of the organization’s work load.
MANAGERS AND SUBORDINATES
To indicates who is whose boss and who reports to whom
NATURE OF WORK A descriptions of tasks. Area of responsibility
GROUPING OF WORK SEGMENTS
Indicates division of work / departments
LEVEL OF MANAGEMENT Provide the entire management hierarchy
Departmentalization
CHAPTER 4: ORGANIZINGDMG 1213 / DMG1113 / DPM1213 / DPM1113
Principles of ManagementLaura Law
Perak College of Technology
Departmentalization and formal structure
Process of grouping into separate units’ activities or tasks
5 types of departmentalization;By FunctionBy ProductBy Multi-divisionBy GeographyBy CustomerBy Matrix
1. Functional structure:
General Manager
Production Dept
Finance Dept
Marketing Dept
HR Deprtment
Structure is created based on the various functions of an organization.
DEPARTMENTALIZATION BY FUNCTION
2. Multi-Division structure
Multiple divisions are created in a related industry.
General Manager
Division I Division II Division III
DEPARTMENTALIZATION BY MULTI-DIVISION
DEPARTMENTALIZATION BY MULTI-DIVISION
Divisional or M-form (Multidivisional) DesignAn organizational arrangement based on
multiple businesses in related areas operating within a larger organizational framework; following a strategy of related diversification.
Activities are decentralized down to the divisional level; others are centralized at the corporate level.
The largest advantages of the M-form design are the opportunities for coordination and sharing of resources.
3. Geographic structure:
General Manager
Eastern Region
Central Region
Western
Region
Departments are created based on geographic regions.
All the activities in one geographic region is categorized into one unit.
DEPARTMENTALIZATION BY GEOGRAPHIC
4. Matrix Organization
Employees
CEO
Projectmanager B
Projectmanager C
Vice president,engineering
Vice president,production
Vice president,finance
Vice president,marketing
Projectmanager A
DEPARTMENTALIZATION BY MATRIX
Departmentalization by matrix
To increase the ability of managers and other employees to process information.
Combines the advantages of the functional and product structure to increase.
Matrix Structure:Advantages:Enhances organizational
flexibility.Team members have the
opportunity to learn new skills.
Provides an efficient way for the organization to use its human resources.
Team members serve as bridges to their departments for the team.
Disadvantages: Employees are uncertain
about reporting relationships.
The dynamics of group behavior may lead to slower decision making, one-person domination, compromise decisions, or a loss of focus.
More time may be required for coordinating task-related activities.
Involves grouping the activities and functions on product basis.
A sensible degree of specialization is encouraged.
Divides into self-contained units, capable of designing, producing, marketingPresident
GMPharmaceutical
product
GMPersonal care
product
5. PRODUCT structure:DEPARTMENTALIZATION BY PRODUCT
Grouping of activities to reflect the interests of different customers.
To ensure a focus on the customer’s need rather than organization’s skills or brand it produces.
President
Institutional banking
Real estate mortgage
Community banking
Corporate banking
6. Customer structure:DEPARTMENTALIZATION BY CUSTOMER
AuthorityCHAPTER 4: ORGANIZING
DMG 1213 / DMG1113 / DPM1213 / DPM1113Principles of Management
Laura LawPerak College of Technology
AuthorityRight to take decisions that arises due to
position in organizational structure.
Authority is the right to perform or command.
It allows its holder to act in certain designated ways and to directly influence the actions of others through orders.
Types of Authority:Line AuthorityStaff Authority
Line Authority • Belongs to managers who have the right to direct
and control (command) the activities of subordinates who perform task essential to achieving organizational goal.
• Each manager is responsible for the work of his unit and its direct contribution to the objectives of the organization.
The chain of command in the organizational structure that flows major decision making power.
The officially sanctioned ability to issue orders to subordinate employees within an organization.
1.Pertains to superior – subordinates relationships
2.Directly related to objectives of organization
3.Deals mainly with the exercise of authority to a channel of line authority
4.Identifies units that initiate and carry through to conclusion the basic activities
5.Manager is a doer6.Designates a line manager
Line Authority
Staff Authority• Right to advise, but not command, other who are not
subordinates in the chain of command.
• Each individual plays a supporting role and contributes indirectly to the objectives of the organization.
Staff authority consists of the right to advise or assist those who possess line authority as well as other staff personnel.
The Advisory or Counseling Role :
The Service Role
The Control Role
1. Characteristically, it is a manager-to-manager
relationship
2. Indirectly related to the objectives of
organization
3. Deals mainly with the exercise of authority to
a channel of line authority
4. Includes all units that are not line
5. Manager has a supporting and aids the doer
6. Designated a staff manager
Staff Authority
LINE FUNCTION STAFF FUNCTION
Activity that contributes directly to creating or selling the company’s product
Does not contribute directly to creating or selling the company product’s but instead supports line activities
Activities that take place within the manufacturing and marketing departments would be considered line function
Marketing managers might consult with the legal staff to make sure the wording of a articular advertisement is legalAccounting, human resource and legal service
Staff & Line Authority
PRESIDENT
MARKETING
FINANCE PRODUCTION
R & DLEGAL
---------------->
LINE AUTHORITY
STAFF AUTHORITY
DelegationCHAPTER 4: ORGANIZING
DMG 1213 / DMG1113 / DPM1213 / DPM1113Principles of Management
Laura LawPerak College of Technology
DelegationConcept describing the passing of formal authority to
another person.
Delegation may become necessary when managers are absent from their job
Step in delegation process;
Assigning Responsibili
ty
Granting Authority
Establishing Accountabil
ity
Factors Lead Manager to Delegate Authority
Culture of the organization
Specific situation involved
Relationship behavior personalities
The capabilities of the people in that situation
Guidelines lead to effective in delegating;
1. Responsibility, Authority and Accountability
2. The Scalar Principle; indicates there must be a clear line of authority from highest to lowest level.
3. Unity of command; suggest each person should report only one superior.
Factors Lead Manager to Delegate Authority
Guidelines lead to effective in delegating;
1. Responsibility, Authority and Accountability
2. The Scalar Principle; indicates there must be a clear line of authority from highest to lowest level. A clear line of authority will make it easier for organization members to understand:
To whom they can delegate Who can delegate them To who they are accountable
3. Unity of command; suggest each person should report only one superior. Advantage as below:-
The more task delegated, the more opportunity there is for managers to accept increased responsibilities
It leads to better decisions, since subordinates closet to the problem or task usually have the best view of facts
To accept responsibility and exercise judgment Speeds up decision
Barriers to effective delegation
Subordinates perspective1. fear of criticism for making a mistake
2. Discouraged because incentive for assuming extra responsibility are not sufficient.
Managers perspective; 1. Fear a loss of power if the subordinates does too good a job
2. Fear that the task won’t be done as well as if they did it themselves
How become a more Effective Delegator
3. Delegate to the right person
4. Be clear on direction and deadlines
5. Provide necessary resources
6. Focus on outcomes, not the process
7. Choose which tasks to delegate
8. Be generous in your praise ad acknowledgement
Centralization
CHAPTER 4: ORGANIZINGDMG 1213 / DMG1113 / DPM1213 / DPM1113
Principles of ManagementLaura Law
Perak College of Technology
CentralizationCENTRALIZATION (CONCERTRATION ON AUTHORITY)
Location of most authority at the upper levels of the organization
Manager make most decision, even the relatively small ones
Practice of having responsible and authority concentrated in one place made by central controlling body but only little initiative in hands of lower down management ladder.
Leads situation whereby all management decision have to be approved by chief executive before they can pun into operation.
Advantages and disadvantages
ADVANTAGES DISADVANTAGES
Provide absolute control over the organization and ensure adherence to laid down policies
Control can be autocratic and inflexible
Administratively convenient and gladly visible
Leads to frustration among staffs
Possible to have common standard throughout organization
Bureaucratic (Organization) control methods may be imported which will resulting in a proferation of forms and rigid (unbending) procedures
Possible to engage very highly qualified functional experts whose high salaries can be justified
Managers may see themselves not as independent decision makers but rather as order-taking
Decentralization
CHAPTER 4: ORGANIZINGDMG 1213 / DMG1113 / DPM1213 / DPM1113
Principles of ManagementLaura Law
Perak College of Technology
Decentralization
Location of a significant amount of authority in the lower levels of the organization
High degree of delegation at all levels
Delegating authority to subordinates for many decisions while maintaining control over certain essential matters.
Requires manager to decide what and when to delegate, to select and train personnel carefully and for mutate adequate control.
Guidelines for determining decentralization
i. Greater the number of decisions made by lower level management greater decentralization.
ii. Closer the level at which decision is made in relation to the point arose greater will be the decentralization.
iii. More important decision made at lower management greater decentralization it would be.
iv. The less subordinates check his/her work to superior the greater decentralization.
v. The narrow or the more selective the control by managers the greater decentralization.
Principles of decentralization
o Greater diversity of product, greater decentralization
o Larger the of firm the greater decentralization
o The more changing in the environment, the more decentralized is decision making.
o Managers should delegate decision that involved large amount of time but minimize erosion of their power and control.
CoordinationCHAPTER 4: ORGANIZING
DMG 1213 / DMG1113 / DPM1213 / DPM1113Principles of Management
Laura LawPerak College of Technology
Coordination • Process of integrating the activities of an
organization which involves controlling and coordinating the flow of information, resources and tasks among organizational members.
• Interdependence: refers degree to which work group are interrelated and the extent to which they depend on one another to complete their work.
Levels of Interdependence
POOLED INTERDEPENDENCE
Occurs when organizational units have common resources but no interrelationship with each other
SEQUENTIAL INTERDEPENDENCE
Occurs when organizational coordinate the flow of information resources and tasks from one unit to another
RECIPROCAL INTERDEPENDENCE
Occurs when information, resources and tasks must back and forth between work groups.
Integrating Mechanisms
CHAPTER 4: ORGANIZINGDMG 1213 / DMG1113 / DPM1213 / DPM1113
Principles of ManagementLaura Law
Perak College of Technology
Integrating mechanisms General management systems
- Some coordination of work units may achieved through development of general management systems.
- e.g.: basic rules and procedures, managerial hierarchy, plans and goals etc.
Increasing coordination potentials
- Information systems and lateral relationships are 2 most common mechanisms for increasing coordination potential in both horizontal and vertical management.
Integrating mechanisms Reducing need for coordination
- to reduce or eliminate need for coordination between work groups.
- organization creates slack resources that will reduce interdependence of work groups.
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