organizing 1

8/3/2019 Organizing 1

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Fundamentals of Organizing


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Organizing

The deployment of organizational resources to

achieve strategic goals

The deployment of resources is reflected in the

organizations division of labor into

Specific dept.s & jobs

Formal lines of authority and mechanisms


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Organization Structure

Defines how tasks are divided, resources are deployed,

and departments are coordinated

The set of formal tasks assigned to individuals & depts.

Formal reporting relationships

The design of systems to ensure effective coordination

of employees across departments

Organizing process leads to the creation of organization

structure


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Four Points About The Organization

Chart

Visual representation of

an org.s structure

Set of formal tasks to be

performed at each level

Formal

reporting relationships

Framework

for vertical control


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Organizing the Vertical Structure:Work

Specialization

Tasks are subdivided into individual jobs

Division of labor concept

Employees perform only the tasks relevant to their

specialized function

Jobs tend to be small, but they can be performed

efficiently


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Organizing the Vertical Structure: Chain

of Command

Unbroken line of authority that links all persons in an

organization

Shows who reports to whom

Associated with two underlying principles

Unity of Command: (each employee is held responsible to only onesupervisor)

Scalar Principle:(clearly defined line of authority)


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Organizing the Vertical Structure:

Authority

Formal and legitimate right of a manager to make

decisions and issue orders

Allocate resources to achieve organizationally desired

outcomes

Authority is distinguished by three characteristics

Authority is vested in organizational positions, not

peopleAuthority is accepted by subordinates

Authority flows down the vertical hierarchy


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Responsibility

The duty to perform the task or activity an

employee has been assigned

Managers are assigned authority commensuratewith responsibility


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Accountability

Mechanism through which authority and

responsibility are brought into alignment

People are subject to reporting and justifying task

outcomes to those above them in the chain of

command

Can be built into the organization structure


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Delegation

Process managers use to transfer authority and responsibility

Organization encourage managers to delegate authority to lowest possible level

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Techniques for Delegation

Give thoroughinstructions Maintain feedbackEvaluate and reward

performance

Delegate the whole task Select the right

person

Delegation

Ensure that authority

equals responsibility


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Centralization versus Decentralization

Greater change and uncertainty in the environment

are usually associated with decentralization

The amount of centralization or decentralization

should fit the firms strategy

In times of crisis or risk of company failure,

authority may be centralized at the top


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Organizing the Vertical Structure: Span of

Management/Span of Control

Number of employees who report to a supervisor

Traditional view, about seven subordinates per manager

Many lean organizations today have 30, 40, or evenhigher subordinates

When supervisors must be closely involved with

subordinates, the span should be small

Supervisors need little involvement with subordinates, it

can be large


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Factors Associated With Less

Supervisor Involvement

Work is stable and routine

Subordinates perform similar work tasks

Subordinates are concentrated in a single location

Subordinates are highly trained Rules and procedure defining task activities are

available

Support systems and personnel are available for the

manager

Little time is required in nonsupervisory activities

Managers preferences and styles favor a large span


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Tall versus Flat Structure

Span of Control used in an organization determines

whether the structure is tall or flat

Tall structure has a narrow span and more hierarchicallevels

Flat structure has a wide span, is horizontally dispersed

and fewer hierarchical levels

The trend has been toward wider spans of control


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Centralization and Decentralization

The hierarchical level at which decisions are made


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Centralization

All facilities at one location

Decision authority is located near the top of the

organization


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Decentralization

Facilities at different locations

Decision authority is pushed down the chain of

command to lower levels


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Decentralization Tends To---

Make greater use of human resources

Reduce burdens of top managers

Cause decisions to be made close to the action

Permit rapid response to changes


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Factors that Influence

Centralization/Decentralization

Amount of change and uncertainty

Corporate culture

Size of organization

Cost and risk of failure

Efficiency of communication and control systems


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Organizing the Vertical

Structure:Formalization

Written document used to direct & control

employees


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DepartmentalizationThe basis on which individuals are grouped into departments

Five structural alternatives

Vertical functional approach. People are grouped together in

departments by common skills.

Divisional approach. Grouped together based on a common

product, program, or geographical region.

Horizontal matrix approach. Functional and divisional chains

of command. Some employees report to two bosses

Team-based approach. Created to accomplish specific tasks

Network approach. Small, central hub electronically

connected to their other organizations that perform vital

functions. Departments are independent, and can be located

anywhere.


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Advantages of

Functional Approach

Efficient use of resources

In-depth skill specialization

Career progress within the department Top manager has direction and control

Excellent coordination

High-quality problem solving

Simplifies training


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Disadvantages of

Functional Approach

Poor communication among functional departments

Slow response to external changes

Centralized decision making

Responsibility for problems difficult to identify

Employees have limited view

Limited general management training


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Divisional Approach

Departments are grouped together based on

organizational outputs

Diverse departments are brought together to produce

a single organizational output

Encourages decentralization


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Advantages of

Geographic Divisions

Responsive in an unstable environment

Shows concern for customer

Coordinates across functional departments Identifies responsibility for product

Emphasizes overall product and division goals

Develops general management skills Minimizes travel costs


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Disadvantages of

Geographic Divisions

Duplication of resources across divisions

Less specialization in divisions

Poor coordination across divisions Less top management control

Competition for resources among divisions

More managers needed


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Matrix Approach

Functional and divisional chains of command

simultaneously Dual lines of authority

Functional hierarchy of authority runs vertically

Divisional hierarchy runs laterally Violates the unity of command concept


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Advantages of Matrix

More efficient use of resources than single hierarchy

Adaptable to changing environment

Development of both general and specialistsmanagement skills

Expertise available to all divisions

Enlarged tasks for employees


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Disadvantages of Matrix

Dual chain of command

High conflict between two sides of matrix

Many meetings to coordinate activities Need for human relations training

Power domination by one side of matrix


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Team Approach

Cross-functional teams consist of employees from

various functional departments

Interdisciplinary approach to management Permanent team solve ongoing problems

Reengineering radical redesign for improvements

in cost, quality, service and speed


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Advantages of Teams

Same advantages as functional structure

Reduced barriers among departments

Quicker response time Better morale

Reduced administrative overhead


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Disadvantages of Teams

Dual loyalties and conflict

Time and resources spent on meetings

Unplanned decentralization


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Network Approach

Organization divides major functions into separate

companies brokered by a small headquarters

organization "Where is the organization?"

Especially appropriate for international operations

Held together with phones, faxes, and other

electronic technology


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Advantages of Network Approach

Global competitiveness

Work force flexibility

Reduced administrative overhead


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Disadvantages of

Network Approach

No hands-on control

Loss of part of the organization severely impacts

remainder of organization Employee loyalty weakened

organizing 1

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