Organizing

Process a course of action, a route, a progression

Structure an arrangement, a configuration, a

construction

Organizing

The process of deploying resources to achieve strategic goals

The process of organizing takes place within a structure reflected by the way in which the organization

Divides its labor into departments and jobs Establishes formal lines of authority Establishes mechanisms for coordinating

diverse tasks

Organizing process leads to creation of an Organizational Structure Formal tasks assigned Formal reporting relationships Systems design for coordination across

departments

Features of Organizational Structure

Work Specialization

Also called division of Labor Specialists get good at a specific task Efficiency increases Employees are selected based on specific

skills Training is geared toward increased

efficiency. Based on a mechanistic organization

Chain of Command

An unbroken line of authority Unity of Command-Everyone has only one

supervisor Scalar Principle-Everyone has at least one

boss. Everyone is included

Authority

The formal rights of a manager to manage

Vested in the organizational position, not the person.

Provides the manager with positional power

Authority is accepted by the subordinates

Authority flow from the top, down.

Responsibility

The duty to perform the task the employee has been assigned.

Responsibility and Authority are delegated together and make the employee accountable to superiors

Span of Management (Control)

The number of employees reporting to a supervisor.

Size varies with the type of organization, skill of the subordinates, Geographic dispersion Managerial skill and preference

Factors Affecting Span of Control

Job Complexity More complex jobs = more manager

Job Similarity Similar jobs = more employees per manager

Geographic Proximity of Employees Dispersed locations = more supervision

Amount of Coordination to Complete Task High coordination = more supervision

Factors Affecting Span of Control

Employee Abilities Knowledgeable, trained staff = less supervision

Employee Empowerment Employees who are trusted and empowered to make decisions need

less supervision

Ability of Management Dispersed locations = more supervision

Hierarchy Tall hierarchy = low span of control

Centralization

Decision making is done high in the organization

Tendency toward decentralization Greater use of employee skills Less mechanistic Relieve burden on manager to do everything Decisions made closer to the action Decisions are make quicker

Factors influencing Decentralization

Amount of change and uncertainty in the environment Corporate strategy and culture Size and dispersion of the organization The risk of failure

The greater the risk, the higher up the decisions are made.

Advantages and disadvantages of centralization and decentralization Centralization Decentralization

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Adv.: •Tight control •Strong leadership •Improved communication

Disadv.:•Less participation•incomplete decisions

Adv.:•Better motivate•Reducin senior managers’ burden•Benefiting the middle managers

Disadv.:•Risk of losing control•Hard to make decisions as a whole

Matrix Organization

Two sets of bosses-functional and divisional. Violates the chain of command, e.g. two bosses, not clear line

of authority. Attempts to lower the risks of functional and divisional structures Requires employee to manage two sets of bosses.

Network or Value Chain Management

Do what you do well, sub-contract everything else to those who do better than you.

Look for the best industry practices Management the value chain rather than the organization Advantages

Increased competitiveness Flexibility Reduced costs

Disadvantages Requires a different kind of management Need to sell the concept Less control

Different forms of business structure The entrepreneurship structure: A

structure in which decisions are made centrally by one or two people

The bureaucratic or pyramid structure: A structure where decisions are shared throughout the organization and employees are each given a role.

The matrix structure: A structure combining people with different skills into project groups or task groups.

The independence structure:A structure emphasizing the individuals in decisions, also called ‘non-

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Departmentalization Departmentalization: process of

dividing work activities into units within the organization

Major forms of departmentalization subdivide work by: Product Geographic Area Customer Function Process

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Product departmentalization: Organizes work units based on the goods and services offered

ProductProduct

Departmentalization

Geographic departmentalization: units organized by geographic region within a country

For a multinational firm, units organized by regions throughout the world

Product

Departmentalization

GeographicGeographic

Customer departmentalization: organization that offers a variety of goods and services targeted to different types of customers might structure itself based on customers served

Product

Departmentalization

Geographic

CustomerCustomer

Functional departmentalization: work units organized according to business functions such as finance, marketing, human resources, and production

Product

Departmentalization

Geographic

Customer

FunctionalFunctional

Process departmentalization: units organized by work processes required to complete production of goods

Product

Departmentalization

Geographic

Customer

Functional

ProcessProcess

Delegating Work Assignments Delegation: act of assigning

activities to subordinates Span of management (span of

control): number of subordinates a manager can supervise effectively

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Delegating Work Assignments Centralization: retains decision-

making at the top of the management hierarchy

Decentralization: locates decision-making at lower levels

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Types of Organization Structures Line organization: establishes a

direct flow of authority from the chief executive to subordinates

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Line-and-staff organization: combines the direct flow of authority of a line organization with staff departments that serve, advise, and support the line departments

Types of Organization Structures

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Line manager: interacts directly with the functions of production, finance, or marketing – the functions needed to produce and market goods and services

Staff manager: provides information, advice, or technical assistance to aid line managers

Types of Organization Structures

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Types of Organization Structures Committee organization: structure

that places authority and responsibility jointly in the hands of a group of individuals rather than a single manager

Matrix, or project management, structure: links employees from different parts of the organization to work together on specific projects

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Figure 8.13 The Matrix Organization