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Chapter 5

ORGANIZING

Nature and Purpose of Organizing

The word organizing stems from the word organism which means to create a
structure with fully integrated parts that are related to each other, and are governed by
their relationships to the whole. The results of combining are different parts and relationships.

The word organization refers to structure or a network of relationships among

individuals interacting with one another. Organizing as a tool is an end in itself but a means
of achieving the objectives of the organization. It is basically a grouping of activities and
defining the roles of the participants with appropriate authority and proper coordination in the
organizational structure. It also implies for a formalized structure of roles and positions and
responsibility and accountability.

For an organizational structure to exist, there are certain prerequisites to be met:

1. clearly defined and measurable objectives

2. a clear understanding of the important duties and activities involved
3. a definition of authority
4. adequate information and resources to carry out a given role

Organizing, in its essence, relates to:

1. the identification and classification of required activities;

2. the grouping of activities necessary to attain objectives;
3. the assignment of each grouping to a manager without the authority
necessary to direct and supervise it; and
4. the provision for coordination horizontally and vertically in the organization
structure.

Organization

- this implies a formalized structure of various roles of positions, relating to the

structuring and integrating activities with people working and cooperating with
one another to accomplish goals.

An organization has some characteristics such as:

1. goal-oriented
2. psychological orientation
3. structural systems
4. technological systems
5. management systems

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Formal Organization

- refers to the deliberate structure of roles in a formally organized

enterprise, having formal policies, structure and procedures, and the
existing social and cultural environment.

In a formal organization, prescribed positions with their corresponding authority and

responsibility are known to all. Systems, rules and procedures are specific and made
clear to all concerned about their roles, responsibilities and accountabilities within the
organization. Formal organization clearly reflects lines of authority and responsibility
and relationships. It must be flexible to provide room for discretion and to utilize creative
talents of individuals. The formal organization operates under the principle of unity of
objective and efficiency of operations.

Informal Organization

- this is a network of personal and social relations not established or

required by formal organization but arising spontaneously as people
associate with one another (Keith Davis, Arizona State University).

This includes the behavioral, informal, and undefined interrelationships and working
climate within the organization. The authority and power of executives and employees
are determined, not by their titles but by personal relationships, years of experience in
the organization, educational qualification, acceptable leadership, affinity through
kinship, regional or ethnic origins, religion and other human social relationships.
Grouping depends upon shared interests and desired goals.

Formal Organization Informal Organization

 have planned structure  not formally planned

 deliberate attempts to create
patterned analysis
 usually shown by a chart
 traditional theory advocates
formal organization
 arise spontaneously as a result of
interactions
 not depicted in a chart
 human relations theory stresses
informal organization

Centralized Organization Decentralized Organization

 control by few because men at  control by many because men at
the top believe they are the top believe that participation will
indispensable; don’t trust increase efficiency and effectiveness
subordinates, and like to build
empires within
 as a result of the above attitude,  as a result of the above attitude,
decisions are made by the top decisions are made throughout the
management organization
 the drawback is potential  the drawback may be controlled
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paralysis of decision-making and my many

poor morale

Theories of Organizing

Theories mean the coherent group of general propositions used as principles of

explanation of a class of phenomena belonging to a particular field of study. The
organization theories that are considered important are the following:

1. The Classical Theory. This theory puts emphasis on rationale, efficiency, work
accomplishment, and balance in the size of the department; the structure of the
organization is given importance.

2. The Neoclassical Theory. This theory considers the contributions of the behavioral
sciences by paying too much attention to human relations, individual and group
behavior, recognition of informal groups within the formal organization, and
improvement of relationships.

3. The Fusion Theory. This theory stresses the importance of the individual to improve
the organizational climate by way of the socializing process. This is illustrated by
formal and non-formal organizations, work assignments, job modification, and the
institutional practice of giving rewards for jobs well done and sanctions for utter
disregard of policies.

4. The Systems Theory. This theory views organizing as a system of variables

dependent upon one another. The basic components of the organizing system are the
individuals, the normal organization, the informal organization, the reciprocal patterns
of behavior of individuals arising from the organization, expectations of the organization
and the physical environment where the work is performed.

5. The Quantitative Theory. This theory covers only a portion of what aspects of
management should be considered that will directly affect organizing work.
Leadership, environment, informal relationships and communication are excluded in
the analysis because of difficulty in the accuracy of measurement.

Understanding the Structure and the Process of Organizing

Looking at organizing as a process requires some fundamental aspects that should be

considered:

1. The structure must reflect the objectives and plans, because activities are derived
from them;
2. It must reflect the authority available to the organization’s management;
3. An organizational structure must reflect its environment – political, economic, social
and cultural; and

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4. Since organizations are staffed with people, the groupings of activities and the
authority relationships of organizational structures must consider people’s abilities,
limitations and customs.

The organizing process consists of the following steps:

1. Establishing the objectives of the organization.

2. Formulating supporting objective, policies and plans.
3. Identifying and classifying the activities necessary to accomplish these.
4. Grouping these activities in the light of human and material resources available and
under the circumstances, the best way of using them.
5. Delegating to the head of each group the authority necessary to perform the
activities.
6. Tying the groups together horizontally and vertically, through authority relationships
and information flows.

Types of Organizational Structures

It has been stated that organization structures may differ in terms of the specific needs
of a given organization. There are, however, four principal organization types with different
degrees of complexity appropriate to the organization in terms of its size and types of product.
These types are:

1. Line Organization

This is the simplest form of structure and refers to a direct straight-line responsibility and
control from the top management to the middle management to the middle management and to
the lower level. It acquired its name because there are direct single lines of authority and
responsibility between the manager and his subordinates. It is the oldest form of organization
structure based on the classical principle of the scalar chain. In this form of structure, authority
passes responsibility directly to his immediate superior.

2. Line and Staff Organization

This utilizes the assistance of experts and specialists. Business leaders have
recognized that a small number of managers could not personally assume direct responsibility
for all functions. Therefore, one option toward reorganization as a company expands in size
and complexity is to appoint assistants to managers. Specific advisory responsibility is
delegated to these assistants. Managers and general foremen retain supervisory authority and
control over the activities of personnel of their respective departments.

3. Functional Organization

This utilizes the pure services of experts and specialists. The development of staff
departments and position led quite naturally to attempt complete reorganization on a functional
basis. This removed the staff specialist from his ‘assisting’ capacity and gave him the pure
authority and responsibility for supervision and administration of the function, replacing the
operating foreman.
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4. Committees

Committee is another common organizational form used in situations where group

participants and decision are required. Two types of thinking seem to be common when it
comes to the use of the committee form of organization:

1. the committee approach has been taken for granted and committees
are automatically set up without even considering the purpose and
the need for such committee
2. managers are totally reluctant to use committee because of a fear of
diverse opinions

Committees should be varied in terms of the needs of a given organization. However,

there are at least four basic principles to be considered:

1. The organization of a committee should grow out of a need that is recognized by the
representative of the departments and the personnel affected.
2. The members of a committee should be representatives of the function and the
personnel concerned who have variations in opinion among them.
3. Duties, authority, and responsibility must be clearly defined.
4. The organization and operation of a committee should be a cooperative development.

Organization Chart

An organization chart is a diagram or drawing showing the important aspects of an

organizational structure. It shows the relationship among positions as to authority, responsibility
and accountability, and the people who occupy them. It assists one to view the firm’s structure
as a whole. It shows the principal divisions and lines of formal authority and responsibility.

Types of Organization Chart

Some organization charts show positions and/or departments, others show only the
functions to be performed. Others would show either, both positions and functions, or
departments, individuals, and functions.

1. Master Chart or Chart of Authority. This shows the entire organizational structure.
It is master plan of the principal departments, with lines of authority and responsibility
and the mutual relationships of all departments or major components.

2. Functional Chart. This shows at a glance the functions and activities of the
positions and / or departments. It shows the major responsibilities of departments or
positions. Listed below each job title are brief statements of the responsibilities.

3. Personnel Chart. This shows the departments in the same relative manner as the
functional chart. But instead of listing the functions, the titles of the positions of the
names of persons are indicated. The chart also shows the class titles of all positions
in the department together with their locations in the organization.
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Implementation of Strategies

For a business enterprise, organizational strategies and policies that give overall
direction to operation should be emphasized on the aspects of growth, finance,
organizational pattern, personnel, public relations, products or services, and marketing.

Strategic planning must go beyond the determination and allocation of resources that
organizations purport to accomplish. There are certain strategic planning failures that managers
may guard against to improve their managerial capability, such as:

1. Some managers are inadequately prepared for strategic planning.

2. The information for preparing the plans is insufficient for planning and
for action.
3. The goals of the organization are too vague to be of value.
4. The business units are not clearly identified.
5. The link between strategic planning and control is insufficient.

Strategic planning needs to be integrated with the total managerial process, such as the
organization structure, the appraisal, the reward, the motivational system, and the control
mechanism to measure performance against objectives.

Effective Implementation Strategies

If strategic planning is to be successful, certain steps must be observed to implement it.

There are eight recommendations that managers should consider to put their strategies to work:

1. Communicate strategies to all key decision-making managers.

2. Develop and communicate planning premises.
3. Ensure that action plans reflect major objectives and strategies.
4. Review strategies regularly.
5. Develop contingency strategies and programs.
6. Make the organization fit planning needs.
7. Create a company climate that forces planning.

Classical Theories in Management

A number of theories in management are derived mostly from the French industrialist,
Henri Fayol, and these are as follows:

1. Objectives. The different objectives of the various departments should be consistent

with the vision, mission and philosophy and the overall goal of the organization.

2. Specialization. This is necessary to the advancement of human skills in the mastery of

the environment since related functions are grouped together under one supervisor.

3. Coordination. This is placing the various aspects of an enterprise in proper positions

relative to each other and to the program of which they are a part. This is the proper
synchronization of all efforts required for the achievement of common objectives.
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4. Authority. This is the power or right of a person on whom authority is vested. This is
the sources of power, instructions, delegation and direction to subordinates or peers.

5. Responsibility. This is the obligation owed by the subordinates to their superiors for
exercising authority delegated to them in a way to accomplish expected results. This
should commensurate responsibility, where one has the corresponding authority to take
the appropriate course of action to accomplish a given objective.

6. Efficiency. This refers to the achievement of the ends with the least amount of
resources and accomplishment of objectives at the least cost.

7. Delegation. This refers to the vesting of a decision-making discretion in a subordinate.

It is the determination of results expected from a subordinate, the assignment of task,
the delegation of authority for accomplishing these tasks, and the holding of people
responsible for the accomplishment of such tasks.

Coordinating Processes

Coordination relies on the authority that accompanies hierarchy and position and on the
individual competence, understanding and cooperation. The coordination process of an
organization is a complex undertaking which involves relationship among superiors, peers and
subordinates.

1. Unity of command. This refers to the arrangement of formal relationships in an

organization where there is a chain of authority in which every member of the
organization knows whom he should follow or to whom he should report and who reports
to whom.

2. Span of control. This refers to the number of people a manager can effectively
supervise, control and manage. The more units in an organization an administrator must
supervise, the harder it becomes to give adequate attention to all. The span of control
may vary depending on the organizational levels of the organization:

a. executive span - applied to upper and middle levels and have from 3 to 8
persons as subordinates
b. operative span - applied to the lowest level may have 20 to persons as
subordinates

3. Delegation of authority. This refers to the right to command and flows downward from
top management. On the other hand, accountability is the implicit contract that a
subordinate accepts to perform according to the institutional culture of the organization,
and flows upward to higher management.

4. Decentralization. This refers to the delegation of responsibility and authority at the

lowest level. It inclines toward competition and self-determination. It permits less
standardization; and allows more variation and experimentation, more freedom to
innovate and choose, encourages self-reliance and wider range of initiative which
stimulates leadership.
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5. Line and staff relationships. Generally speaking, line connotes action; while staff
means advice. Line is hierarchical; while staff is collateral. Line is authority while staff is
influence. Line units normally mean a command relationship while staff units refer to
advisory relationship.

Characteristics of an Effective Organization

According to Butchered (1979), an effective organization has the following

characteristics:

1. The entire organization, the important subparts, and individual manage their work
against the stated goals and objectives.
2. Communications laterally and vertically are very clear and definitive. They share the
relevant facts and the necessary information.
3. The reward system is such that managers and supervisors are rewarded for short-term
and production performance, growth and development of their subordinates; and for
creating harmonious and viable working groups.
4. The organization which is an open system relates itself with every members of the
system and with the larger environment.
5. There is shared value and a management strategy to support it and try to help each
member in the organization to maintain his integrity and develop his loyalty to the
enterprise.
6. The organization and its members operate in an action-research way. The general
practice is to build in feedback mechanisms so that individuals and groups can learn
from their own experience.

Tools and Techniques of Organization

A tool is anything used in doing a certain piece of work to produce certain results
requiring some degree of accuracy and precision; while technique is essentially a way of doing
things, methods of accomplishing a desired result. There are certain tools and techniques that
are necessary for the smooth operation of the organization.

1. Records. They furnish useful information and provide for the continuity of operation.
When maintained very well over a period of time, records reflect the organizational
philosophy, growth and development: forms, workflow processes, procedures for
records management and the use of computer is systematizing and organizing
company records.

2. Reports. They usually contain data and information about the operations of the
organizations. They contain a complete statement describing in detail an event or
situation about the organization’s progress. Reports as tools of management should
be relevant, clear and comprehensive so that they can be useful in solving problems.

3. Organization charts. These indicate how departments are tied together along
principal lines of authority. They indicate the main lines of communication, the
downward flow of authority and responsibility, and upward movement of
accountability. They reflect the formal organizational relationships among executives
and among departments and units.
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4. Manuals of operation. These are small pamphlets containing useful instruction and
information about the operation of the organization. Such manuals may cover more
detailed charts, specific job descriptions, qualifications of employees for specific jobs,
fringe benefits, salary ranges and even the names of the officials. This serves as a
guide especially for newly-hired personnel.

Organizational Development (OD)

- is a systematic, integrated, and planned approach to improve organizational

effectiveness. It is designed to solve problems that decrease operating efficiency
at all levels may include lack of cooperation, excessive decentralization, and poor
communication. The organizational development process is a situational
approach of improving the organizational effectiveness.

Development of
Change
Strategy
Feedback

Interventions
Organizational
diagnosis

Measurement
Problem and
recognition Evaluation

Figure 1
Model of the Organizational Development Process

Changes on Organizational Development

The forces of change may come from the environment. These may be external to the
organization, from within the organization, or from the individual themselves. There are several
trends which are already occurring and will have implications for developing human resources.

1. The increasing use of computers, especially microcomputers, requires that every

employee become computer-literate.

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2. Education extends to adult life.

3. The proportion of knowledge workers will increase and the need for skill workers will
decrease; hence, it will require more training in knowledge, conceptual, and design
skills.
4. The shirt from manufacturing to service industries requires retraining in preparation for
new positions.
5. The choice for educational opportunities increases.
6. Internationalization will continue necessitating the need to learn to communicate and to
adopt to one another. Companies need to train their personnel with a global
perspective.

How to Initiate Change

Organizations may be a state of balance, with forces pushing for change on one hand,
and forces resisting change to maintain the status quo on the other. The filed force theory of
Kurt Lewin expressed this phenomenon which suggests that an equilibrium is maintained by
driving forces and restraining forces.

Unknown
effects Unknown Loss of
reasons for benefits or Resisting
Fear Forces
change power

new state

present
equilibrium

New New Training Driving Forces

directive policy

Figure 2
Moving an Organizational Equilibrium

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In initiating change, the tendency is to increase the driving force. This, in effect, product
some movement but will also increase resistance by strengthening the restraining forces.
Another approach that is usually found to be more effective is to eliminate the restraining forces
and then move to a new level of equilibrium.

Normally, in organization, a change in policy is less resisted when those affected by the
change directly participate in the decision-making. The process involves three steps:

1. unfreezing
2. moving or changing
3. re-freezing

The unfreezing stage creates motivation for change. If employees feel uncomfortable
with existing conditions, they may see the need for change. The second stage is change itself.
This change may be through assimilation of new information, exposure to new concepts, or
development of a perspective. The third stage is re-freezing. This stabilizes the change.
Change, to be effective, must be congruent with the individual’s self-concept and values. If the
change is non-congruent with the attitudes and values of others in the organization, chances are
that the individual will go back to his old behavior.

There are many reasons why people resist change. Some of these are:

1. What is not known or clear to them causes fear and apprehension; and therefore,
induces resistance. An attempt of the enterprise to organizational restructuring might
leave an individual uncertain about its effect on his job.

2. People resist change because they are not informed about such change.

3. Change may also result in a reduction of benefits or loss of power.

Organizational Conflict

Conflict is a part of organizational life. It may occur within the individual, between
individuals, or between the individual and the group. While conflict is generally perceived as
counterproductive and dysfunctional; it can also be beneficial to the organization because it may
cause an issued to be presented for study.

The sources of conflict may stem from individuals who have different values and
perceptions of issues that directly affect them. Conflicts may arise between people in line and
staff positions.

While there are various potential sources of conflict, they can be managed in different
ways. One approach is to focus on interpersonal relationships and other structural changes.
Avoidance of the situation that causes conflict is an example of an interpersonal approach.
Smoothing is another way of coping with conflict. This approach is done by emphasizing the
areas of agreement and common goals and de-emphasizing disagreements. Forcing is the
third approach when one pushes his own view on others. This, certainly, will cause overt
resistance. A conventional way of coping with conflict is through compromise, agreeing in part

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with the other person’s view or demand. Another way of coping with conflict is to reassignment
in another organizational unit.

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