Organizing

Organizing is
The identification and classification of required activities;

grouping of similar activities necessary to attain

objectives.
The assignment of each group to a manager with the
authority necessary to supervise it.
The process of structuring human and physical resources
in order to accomplish organizational objectives; involves
dividing tasks into jobs, specifying the appropriate
department for each job, determining the optimum
number of jobs in each department

Organizing : Managing the Four

Fundamental Issues
1) Ensuring that work activities are completed in the best way.
Break down the overall work into individual subtasks and identify
the optimal way to perform it.
2) Ensuring that each members subtasks contribute to the
whole. Each member should understand which of the subtasks he
or she is responsible for performing.
3) Ensuring that there is orderly deference among
organizational members. This helps members know from whom to
take cues in the everyday operation of the organization.
4) Ensuring that members work together harmoniously.
Coherence among tasks performed by immediate coworkers
determines what sources of mutual help and learning members
have easy access to.

The Logic of Organizing

1. Establishing enterprise objectives
2. Formulating supporting objectives, policies, and
3.
4.

5.
6.

plans
Identifying, analyzing, and classifying the activities
necessary to accomplish these objectives
Grouping these activities in light of the human and
material resources
Delegating to the head of each group the authority
necessary to perform the activities
Tying the groups together horizontally and
vertically, though authority relationships and
information flows.

The Organizing Process

Feasibility studies and feedback
1. Enterprise
Objectives

2. Supporting
objectives,
policies, and
plans

3. Identification and
classification of
required activities

4. Grouping of
activities in light of
resources and
situations

5. Delegation of
authority

6. Horizontal and
vertical coordination
of authority and
information
relationships

7. Staffing

8. Leading

9. Controlling

Part 2
(Planning)

Part 3
(Organizing)

Part 4,5,6
(Other Functions)

Organization
It is a formalized intentional structure of

roles or positions.
It includes all the behaviors of all
participants.
It is the total system of social and cultural
relationships.

Formal Organization
Formal Organization means the intentional

structure of roles in formally organized

enterprise.

A formal organization must be flexible.

Individual effort in group situation must be

channeled toward group and organizational

goals.

Informal Organization
It is a network of interpersonal relationships

that arise when people associate with each other.

It can also be described as any joint personal

activity without conscious joint purpose,

although contributing to joint results.

Thus, informal organizationsrelationships

that do not appear on the organization

chartmight include the machine shop group,
the sixth floor crowd, the Friday evening bowling
gang, and the morning coffee regulars.

Formal and Informal Organizations

President

Vice president
etc.
Division
managers
etc.
Department
managers

Informal organization:
Morning coffee
regulars

Informal organization:
Bowling team

Informal organization:
Chess group

Four Basic Elements of

Organizational Structure
Standardization developing uniform practices for

organizational members to follow in doing their jobs

Specialization grouping standardized organizational
tasks into separate jobs
Centralization decision-making authority rest with
managers at the top of an organizations hierarchy
Departmentalization grouping of members and
resources together to achieve the work of the larger
organization

Organizational Division: The Department

A department is a distinct area, division, or

branch of an organization over which a manager

has authority for the performance of the specified
activities.

Organizational Levels and the Span of

Management*
While the purpose of organizing is to make human

cooperation effective, the reason for levels of organization is

the limitation of the span of management.
In other words, organizational levels exist because there is a
limit to the number of persons a manager can supervise
effectively, even thought this limit varies depending on
situations.
* In much of the literature on management, this is referred to as the span of control.
Despite the widespread use of this term, in this lecture span of management will be
used, since the span is one of management and not merely of control, which is only
one function of managing.

Span of Management
Span of management or span of control refers to the number

of people who report to one manager or supervisor

A wide span results in a flat organization --- that is, a large
number of employees reporting to one supervisor and is
associated with a few organizational levels
A narrow span results in a tall organization, in which a
small number of employees report to a supervisor,
necessitating a larger number of supervisors
No formula exists for determining the ideal span of control.

Organization Structures with Narrow and Wide

Spans
Organization with narrow spans

Advantages:
Close supervision
Close control
Fast communication between subordinates and
superiors

Disadvantages:
Superiors tend to get too involved in
subordinates work
Many levels of management
High costs due to many levels
Excessive distance between lowest level and
top level

Organization with wide spans

Advantages:
Superiors are forced to delegate
Clear policies must be made
Subordinates must be carefully selected

Disadvantages:
Tendency of overloaded superiors to become
decision bottlenecks
Danger of superiors loss of control
Requires exceptional quality of managers

Factors Determining an Effective Span

The number of subordinates a manager can

effectively manage on the impact of underlying

factors.
Aside from such personal capacities as
comprehending quickly, getting along with
people, and commanding loyalty and respect, the
most important determinant is a managers
ability to reduce the time he or she spends with
subordinates.

Table 1

Factors influencing the span

of management

Factors Determining an Effective Span

Narrow spans (a great deal of
time spent with subordinates)

Little or no training of subordinates

Inadequate or unclear authority
delegation
Unclear plans for nonrepetitive
operations
Nonverifiable objectives and standards
Fast changes in external and internal
environments
Use of poor or inappropriate
communication techniques, including
vague instructions
Ineffective interaction of superior and
subordinate
Ineffective meetings
Greater number of specialties at lower
and middle levels
Incompetent and untrained manager
Complex task
Subordinates unwillingness to assume
responsibility and reasonable risks
Immature subordnates

Wide spans (very little time

spent with subordinates)

Thorough training of subordinates

Clear delegation and well-defined tasks
Well-defined plans for repetitive
operations
Verifiable objectives used as standards
Slow changes in external and internal
environments
Use of appropriate techniques, such as
proper organization structure and written
and oral communication
Effective interaction between superior
and subordinate
Effective meetings
Greater number of specialties at upper
levels (top managers concerned with
external environment)
Competent and trained manager
Simple task
Subordinates willingness to assume
responsibility and reasonable risks
Mature subordinates

Organization Structure
1.

Departmentation by Enterprise Function

It is the grouping of activities according to the functions
of the enterprise
key functions of a manufacturing company include
production, purchasing, marketing, accounting,
and personnel
functions of a hospital include surgery, psychiatry,
nursing, housekeeping, and billing
The most widely employed basis for organizing
activities and is present in almost every enterprise at
some level in the organization structure

Organization Structure
A functional organization grouping (in a manufacturing company)
President

Assistant to
president

Personnel

Marketing

Engineering

Production

Finance

Market
Research

Engineering
Administration

Production
planning

Financial
planning

Marketing
Planning

Preliminary
Design

Industrial
engineering

Budgets

Electrical
Engineering

Production
engineering

General
accounting

Sales
administration

Mechanical
Engineering

Purchasing

Cost
accounting

Sales

Hydraulic
Engineering

Tooling

Statistics and
data
processing

Packaging

General
production

Advertising
and Promotion

Quality
Control

Advantages:
Logical reflection of functions

Disadvantages:
De-emphasizes overall company objectives

production

Organization Structure
Quality
Control

Advantages:
Logical reflection of functions
Maintains power and prestige of major
functions
Follows principle of occupational
specialization
Simplifies training
Furnishes means of tight control at the top

Disadvantages:
De-emphasizes overall company objectives
Overspecializes and narrows viewpoints of
key personnel
Reduces coordination between functions
Responsibility for profits is at the top only
Slow adaptation to changes in the
environment
Limits development of general managers

Organization Structure

Organization Structure
2. Departmentation by Territory or Geography
It is the grouping of activities by area or
territory that is common in enterprises
operating over wide geographic areas.
Organizations that are spread over a wide
area may find advantages in organizing along
geographic lines so that all the activities
performed in a region are managed together.

Organization Structure
A territorial, or geographic, organization grouping (in a manufacturing company)
President

Marketing

Personnel

Western
region

Southwest
region

Central
region

Purchasing

Finance

Southeast
region

Eastern
region

Personnel

Engineering

Advantages:
Places responsibility at a lower level
Places emphasis on local markets and problems

Production

Accounting

Sales

Disadvantages:
Requires more persons with general manager
abilities

Engineering
Production
Accounting
Organization
Structure

Advantages:
Places responsibility at a lower level
Places emphasis on local markets and problems
Improves coordination in a region
Takes advantage of economies of local operation
Better face-to-face communication with local
interests
Furnishes measurable training ground for general
managers

Sales

Disadvantages:
Requires more persons with general manager
abilities
Tends to make maintenance of economical central
services dif icult and may require services such as
personnel or purchasing at the regional level
Makes control more dif icult for top management

Organization Structure

3.

Departmentation by Customer Group

It is the grouping of activities that reflects a
primary interest in customers.

Organization Structure
Customer departmentation (in a large bank)
President

Communitycity banking

Corporate
banking

Real estate and

mortgage loans

Institutional
banking

Agricultural
banking

Organization Structure
Advantages:
Encourages focus on customer needs
Gives customers the feeling that they have an
understanding supplier (banker)
Develops expertness in customer area

Disadvantages:
May be dif icult to coordinate operations
between competing customer demands
Requires managers and staf expert in
customers problems
Customer groups may not always be clearly
defined (e.g., large corporate firms vs. other
corporate business)

Organization Structure

Organization Structure
4.

Departmentation by Product
It is the grouping of activities according to
products or product line, especially in
multiline, large enterprises.
All the activities necessary to produce and
market a product or group of similar products
are grouped together.

Organization Structure
A product organization grouping (in a manufacturing company)
President

Marketing

Personnel

Purchasing

Finance

Instrument
division

Indicator
Lights
Division

Industrial
Tools
Division

Name
Title

Engineering

Accounting

Engineering

Accounting

Production

Sales

Production

Sales

Advantages:

Disadvantages:

Production

Sales

Production

Sales

Organization Structure
Advantages:
Places attention and effort on product line
Facilitates use of specialized capital, facilities, skil s,
and knowledge
Permits growth and diversity of products and services
Improves coordination of functional activities
Places responsibility for profits at the division level
Furnishes measurable training ground for general
managers

Disadvantages:
Requires more persons with general manager
abilities
Tends to make maintenance of economical central
services dif icult
Presents increased problem on top of management
control

Organization Structure

5.

Matrix Organization
It is the combination of functional and project
or product patterns of departmentation in the
same organization structure.

Organization Structure
Matrix Organization (in engineering)
Director
Of
Engineering

Chief of
Preliminary
Design

Chief
Mechanical
Engineering

Chief
Electrical
Engineer

Chief
Hydraulic
Engineer

Chief
Metallurgical
Engineer

Project A
manager

Project B
manager

Project C
manager

Project D
manager

Advantages:
Oriented toward end results
Professional identification is maintained

Disadvantages:
Conflict in organizational authority exists
Possibility of disunity of command

ject C
nager

Organization Structure

ject D
nager

Advantages:
Oriented toward end results
Professional identification is maintained
Pinpoints product-profit responsibility

Disadvantages:
Conflict in organizational authority exists
Possibility of disunity of command
Requires a manager effective in human
relations

Organization Structure

Choosing The Pattern Of

Departmentation
There is no one best way of departmentizing that is

applicable to all organizations and all situations

Managers must determine what is best by looking at
the situation they face
the jobs to be done and the way they should be done,
the people involved and their personalities,
the technology employed in the department,
the users being served, and
other internal and external environmental factors in the
situation

The Source and Nature of Authority

MaxWeber defined authority as a legitimate power,
which involves the willing and unconditional
compliance of subordinates; a belief that it is
legitimate for the manager to give commands and
illegitimate for subordinates to refuse to obey
Henri Fayol spoke of authority as the right to give
orders and the power to exact obedience

The Source and Nature of Authority

Power refers to the ability of individuals or
groups to induce or influence the beliefs or
actions of other persons or groups.

Bases of Power
Legitimate Power (Positional authority)
Normally arises from and derives from cultural
system of rights, obligations, and duties whereby a
position is accepted by people as being legitimate.
2. Expertness of a person or a group (Functional
authority)
The power of knowledge; people will accept, follow,
or be influenced by an expert. Physicians, lawyers,
and university professors may have considerable
influence on others because they are respected for
their specialized knowledge.
1.

Bases of Power
3.

Referent Power (Personal authority)

An influence that rests on an individual or groups
attributes; people believe in them and their ideas.

Reward Power
Refers to the power that arises from the
ability of some people to grant rewards.
5. Coercive Power
The power to punish, like by firing a
subordinate or by withholding a merit pay
increase.
4.

Line/Staff Concepts
A staff is someone who handle narrow specialized

aspects of the overall administrative task. In a staff

relationship, the nature is advisory.
He/she assists the manager (called line) in the

performance of the managerial work.

Line authority refers to the relationship in which a

superior exercises direct supervision over a subordinate.

Line/Staff Concepts
Scalar principle
The clearer the line of authority, the clearer
will be the responsibility for decision making
and the more effective will be organizational
communication.

Centralization of Authority
In centralization, authority is

delegated and the concentration of

management and decision-making is at
the top of an organizations hierarchy

Decentralization of Authority
Decentralization refers to the

tendency to disperse decision-making

authority in an organized structure.

Recentralization of Authority
Recentralization is centralization of

authority that was once decentralized;

normally not a complete reversal of
decentralization, as the authority delegated
is not wholly withdrawn.

Delegation of Authority
Authority is delegated when a superior

gives a subordinate the discretion to make

decisions.
Clearly, supervisors cannot delegate
authority they do not have, whether they are
members, presidents, vice presidents, or
supervisors.

Delegation of Authority
The process of delegation involves:
1. Determining the results expected from a
position
2. Assigning tasks to the position
3. Delegating authority for accomplishing
these tasks
4. Holding the person in that position
responsible for the accomplishment of the
tasks.

Three (3) Elements of Delegation

1. Responsibility means that a person is assigned

a task that he or she is supposed to carry out.

2. Authority means that the person has the power

and the right to give orders, draws upon resources,
and do whatever else is necessary to fulfill the
responsibility.
3. Accountability means that the subordinates
manager has the right to expect the subordinate to
perform the job and to take corrective action in the
event the subordinate fails to do so.

The Art of Delegation

Personal Attitudes toward Delegation
Receptiveness
An underlying attribute of managers who will
delegate authority is a willingness to give
other peoples ideas a chance.
Decision making always involves some
discretion, and a subordinates decision is not
exactly the one a superior would have made.

The Art of Delegation

Willingness to let go
A manager who will effectively delegate authority

must be willing to release them to make decisions

to subordinates.
A major fault of some managers who move up the
executive ladderor of the pioneer who has built
a large business from the small beginning of, say, a
garage machine shopis that they want to
continue making decisions for the positions they
have left.

The Art of Delegation

Willingness to allow mistakes by subordinates
Although no responsible manager would sit idly by and let

a subordinate make a mistake that would endanger the

company or the subordinates position in the company,
continual checking on the subordinate to ensure that no
mistakes are ever made will make true delegation
impossible.
Since everyone makes mistakes, a subordinate must be
allowed to make some, and their cost must considered an
investment in personal development.

The Art of Delegation

Willingness to trust subordinates
Superiors have no alternative to trusting their

subordinates, for delegation implies a trustful attitude

between them.

Willingness to establish and use broad controls

Since superiors cannot delegate responsibility for

performance, they should not delegate authority unless

they are willing to find means of getting feedback, that
is, of assuring themselves that authority is being used to
support enterprise or departmental goals and plans.

Staffing

It is defined as filling, and keeping filled, positions in

the organizational structure.

Work specialization degree to which the work
necessary to achieve organizational goals is broken
down into various jobs.
Job design specification of task activities
associated with a particular job (e.g. a job as an
administrative assistant may include typing, filing and
photocopying, or it could involve such activities as
coordinating travels and meetings, investigating
trouble spots, and making decisions about a certain
range of issues).

Staffing

Approaches to Job Design

Job simplification the process of designing jobs so that

jobholders have only a small number of narrow activities

to perform.
Job rotation practice of periodically shifting workers
through a set of jobs in a planned sequence.
Job enlargement the allocation of a wider variety of
similar tasks to a job in order to make it more challenging.
Job enrichment process of upgrading the job-task
mix in order to increase significantly the potential for
growth, achievement, responsibility, and recognition.

Job Simplification
Job Simplification

Worker 1

Worker 2

Worker 3

Task 1

Task 1

Task 1

Job Rotation
Job Rotation

Worker 1

Worker 2

Worker 3

Task 1

Task 2

Task 3

Job Enlargement
Job Enlargement

Worker 1

Worker 2

Worker 3

Task 1,2,3

Task 1,2,3

Task 1,2,3

Staffing Activities
Recruitment - the process of encouraging,

inducing, or influencing applicants to apply for a

certain vacant position
Selection - process of getting the most qualified
applicant from among different job seekers
Outplacement - process of helping people who
have been dismissed from the company to regain
employment elsewhere

Recruitment
1. Internal recruiting
2. External recruiting
Print advertisement
TV/radio advertisement
Internet job boards
Company Web site
Referral
Employment agencies
Career expo/job fairs

Selection
1. Applications and resumes
2. Interviews
3. Reference checks
4. Background checks
5. Series of Tests (personality, cognitive ability,

integrity, and drug testing)

Workforce Reductions
Lay-off - temporary and involuntary separation,

usually traceable to a negative business condition

Discharge/Termination - a permanent separation
if a person is not competent in his job, guilty of
breaking rules like delinquency and
insubordination, and other violations
Resignation - voluntary and permanent separation
due to low morale, low salary, etc.
Retirement - can either be voluntary (if an
employee retires upon reaching the number of
years of services in a company as provided for by
its policies) or involuntary (upon reaching the age
of 60)

Movement of Personnel
Transfer - refers to the shifting of an employee

from one position to another without increasing his

duties, responsibilities, or pay.

Promotion - refers to the shifting of an employee

to a new position to which his status,

responsibilities, and pay are increased.

Training Process
the systematic development of the attitude/

knowledge/behaviour patterns for the adequate

performance of a given job or task.
Training - teaching lower-level employees how to

perform their present jobs

Development teaching managers and professional
employees broader skills needed for their present and
future jobs

Types of Training
Orientation Training training designed to

introduce new employees to the company and

familiarize them with policies, procedures, culture,
and the like.
Team Training training that provides employees
with the skills and perspectives they need to
collaborate with others
Diversity Training programs that focus on
identifying and reducing hidden biases against people
with differences and developing skills needed to
manage a diversified workforce.

Stages of Training
Phase 1: Needs assessment
Phase 2: Design of Training Program
Phase 3: Identify Training Methods
Phase 4: Evaluation of Program Effectiveness

Performance Appraisal
The process of defining, measuring, evaluating, and

recording expectations from employee performance.

Self appraisal
Peer appraisal
Superior appraisal
Subordinate appraisal
Customer appraisal
360-degree appraisal