CHAPTER 4:

ORGANIZING

Learning Objectives
1. Explain why organizing is an important
managerial function, describe the process of
organizing, and outline the primary stages of
the process.
2. Discuss the concept of job design and identify
the core job dimensions that define a job.
3. Understand both the vertical and horizontal
associations that exist between individuals and
work groups within the organization.
4. Define delegation and discuss why it is
important for managers to delegate.
5. Explain why managers often fail to delegate and
suggest methods for improving delegation skills.

What is Organizing?
The process of determining the
tasks to be done,
who will do them, and
how those tasks will be
managed and coordinated
To structure or arrange the
relationship between people, the
work to be done, & the facilities
so that goals are achieved

What is Organizing?
Managers have to organize the
activities they want to perform for
the following reasons:
So that they can divide the work
according to the nature & similarity of
tasks.
So that they can pool resources &
increase the efforts which lead to
efficiency.
So that they can build continuity &
synergy.

What is Organizing?
A manager who wants to organize
his/her department must address
these issues:
Determine what is to be done
Assigning tasks
Decide how to achieve
coordination
Decide on a span of management
Decide how much authority you
should designate
Draw an organizational chart

The Process of Organization

Source: Management, Challenges for Tomorrows Leaders, International

Student Edition, 2007, pp. 159.

Organizational Structure
Definition:
The formal representation of working
relationship that defines tasks by
position and unit and indicates how they
will be coordinated

Organizational Chart
Definition:
Diagram that illustrates the relation of
reporting relationships, functions,
departments, divisions and even
individual position within organizations
skeleton representation of
organizational structure

Division of work/labor
(work specialization)
Definition:
Dividing duties into simpler, more
specialized task
Managers and employees are assigned
and perform duties based on
specialization and personal expertise

Advantages vs Disadvantages of
work specialization
Advantages
Increase productivity
Foster specialization
simplify task, easily
understood and
completed quickly
Assign task based on
individual talent,
interest and position

Disadvantages
Lower sense of control
by managers
Create dissatisfaction
and boredom esp.
routine and specialized
task

Organization Structure
(Departmentalization)
Departmentalization- Is a process of grouping
jobs into separate units activities or tasks that
are proposed.
There are six (6) types of
Departmentalization/Organizational Structure:

Functional structure

Product structure

Customer structure

Geographical structure

Matrix structure

Network structure

Functional Structure
Used mainly by smaller firms that offer a limited
line of products because it makes efficient use of
specialize resources
This method eliminate overlapping in the
execution of organizational activities
PLANT
MANAGER

Manager,
Engineering

Manager,
Finance & Planning

Manager,
Human Resources

Advantages and Disadvantages of

Functional Structure
Advantages:
Staffed by experts of each functions
Easier supervision
Easy to coordinate activities
Disadvantages:
Difficult to get quick decisions or actions on
a problem or situation
Difficult to monitor performance, especially
among individual

Product Structure
Grouping the activities and functions on a
basis of products manufactured by the
company
President,
North Atlantic

SALES

Manager,
Drug and
Pharmaceuticals

Manager,
Personal Care
Products

PRODUCTS

FINANCE

Manager,
Stationery
Products

Advantages and Disadvantages of

Product Structure
Advantages:
Activities can be easily focuses and
coordinated
Enhance speed and effectiveness of decision
making
Easy to assess performance and identify
accountability/liability
Disadvantages
Focus only on own products
Increase the administrative costs

Geographical Structure
A company or a part of it is organized around the
places where operations are located.
It is commonly found in sales or manufacturing
operations.
Vice President,
Sales

Sales Director,
Northern
Region

Sales Director,
Southern
Region

Sales Director,
Midwestern
Region

Sales Director,
Eastern
Region

Advantages and Disadvantages of

Geographical Structure
Advantages:
It offers better services at low cost
It place emphasis on local markets & problems
It offers better face to face communication with
local interests
Disadvantages:
It requires more staff with general manager
abilities
Top management has less control of the regional
managers since they are independent

Customer Structure
Is the grouping of activities to reflect the
interests of different customers
Director
Of
Sales
Manager,
Retail
Account

Manager,
Wholesale
Account

Manager,
Government
Account

Advantages and Disadvantages of

Customer Structure
Advantages:
Encourage concentration on customers
needs
It gives customers the feeling that they have
an understanding supplier
It develops expertise in the customer
handling
Disadvantages:
Difficult to coordinate operations between
competing customer demands
Requires managers & staff expert in

Matrix Structure
Also known as Multiple Command System
Focus on two or more dimensions at the same
time

Advantages and Disadvantages of

Matrix Structure
Advantages:
More efficient use of resources than single
hierarchy
Flexibility, adaptability, to changing
environment
Disadvantages:
Frustration & confusion from dual chain of
command
High conflict between 2 sided of matrix

Network Structure
Disaggregates major functions into separate
companies that are brokered by a small
headquarter organization
e.g. manufacturing, engineering, sales &
accounting is provided by separate
organization which specialized on that areas

Advantages and Disadvantages of

Network Structure
Advantages:
Global competitiveness
Workforce challenge
Reduce administrative cost
Disadvantages:
No hands-on control
Can lose organization part
Employee loyalty weakened

SPAN OF
MANAGEMENT
Definition: A number of subordinates who report
directly to a given manager of supervision
Also called span of control
In theory, when tasks are very complex, span of
control should be relatively narrow
In contrast, where jobs are highly standardized
and routine (low complexity), a manager will not
need to spend as much time supporting individual
subordinates, and the span of control may be
larger

Major Factors Influence the

Span of Management

The type of work

The strength of the organization structure
The ability of the manager
The amount & type of communication required
among the members

TYPES OF ORGANIZATION CHART

TALL & LEAN (FLAT) STRUCTURES

Tall Structure
Increase employee morale and productivity
More expensive
More communication problems

Lean/Flat Structure
Better

communication

More

administrative responsibility

More

supervisory responsibility
MGT162

CHAIN OF COMMAND
Definition: Separate lines of authority/power among all
position in an organization
It has 2 components:(i) UNITY OF COMMAND
- Suggests that each person within an organization must have a
clear reporting relationship to only one superior
(ii) SCALAR RELATIONSHIP
- Suggests that there must be a clear and unbroken line of
authority that extends from the lowest to the highest
position in the organization

AUTHORITY
Definition: The right to make decisions with
respect to work assignments & to require
subordinates to perform assigned tasks in
accordance with the decision made
Authority
The formal right inherent in an organizational
position to make decisions.
Formal authority
Authority inherent in an organizational position.
Informal authority
Ability to influence others that is based on
personal characteristics or skills.
Responsibility
The obligation to perform the duties assigned.

AUTHORITY
(Line and Staff Authority)
Line Authority
Those organizational members that are directly
involved in delivering the products and services of the
organization
Staff Authority
Those organizational members that are not directly
involved in delivering the products and services to the
organization, but provide support for line personnel

DELEGATION
Definition: The process of transferring the
authority for a specific activity or task to another
member of the organization and empowering that
individual to accomplish the task effectively
Transforming the responsibility for a specific
activity or task to another member of the
organization
Empowering that individual to accomplish the
task effectively

Steps in Delegation

Decide which goals/tasks to delegate.

Teach the department or organization mission.

Find a capable person.
Teach/train the person.

Make assignments.

Agree on mission, goals, tasks.

Establish limits (policy).
Agree on results.
Establish monitors and feedback.
Give information.

Grant authority to act.

Transfer right to decide.

Transfer right to commit resources.
Make it public.
Do not interfere.

Steps in Delegation

Hold responsible/accountable.
Check progress.
Treat problems and challenges as
teaching/learning opportunities.

Monitor.

Teach.
Reward.
Communicate.
Give information.
Give resources.
Remove roadblocks.

Benefits of Delegation
Leads to a more involved and empowered workforce.
Improved response time as a result of decisions and
information not needing to be passed up and down the
organization.
Leads to better decision making.
Provides opportunity for employee to develop
analytical and problem solving skills.
Provides managers the opportunity to accomplish
more complicated, difficult, or important tasks.

Barriers of Delegation
1. Manager may refrain to delegate
because they are insecure about their
value to the organization
2. Managers simply lack confidence in the
abilities of their subordinates
3. Manager experience dual accountability
4. Subordinate are reluctant to accept
delegation

Learning to Delegate
Effectively
1. Match the employee to the task.
2. Be organized and communicate clearly.
3. Transfer authority and accountability
with the task.
4. Choose the level of delegation carefully.

Overcoming Barrier to
Delegation
Allow subordinates to develop their own
solutions & to make mistake
More support & training
Improved communication

CENTRALIZATION &
DECENTRALIZATION
Centralization is the process of
systematically maintain the power
and authority in the hands of higherlevel managers

Decentralization is the process of

systematically hand over/assign
power and authority throughout to
middle and lower manager

COORDINATION
Keeping

organization units that

interact with or influence each
other in contact with each to share
information & other things in a way
that enhances accomplishment of
tasks