Fundamentals of Organizing

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
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
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

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
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
OUnity of Command: (each employee is held responsible to only one
supervisor)
OScalar Principle:(clearly defined line of authority)
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
CAuthority is vested in organizational positions, not
people
CAuthority is accepted by subordinates
CAuthority flows down the vertical hierarchy
Organizing the Vertical Structure:
Responsibility
The duty to perform the task or activity an
employee has been assigned
Managers are assigned authority commensurate
with responsibility
Organizing the Vertical Structure:
Accountability
EMechanism through which authority and
responsibility are brought into alignment
EPeople are subject to reporting and justifying task
outcomes to those above them in the chain of
command
ECan be built into the organization structure
Organizing the Vertical Structure:
Delegation
EProcess managers use to transfer authority and responsibility
EOrganization encourage managers to delegate authority to lowest possible level
1
2
Techniques for Delegation
Give thorough
instructions
Maintain feedback Evaluate and reward
performance
Delegate the whole task
Select the right
person
Delegation
Ensure that authority
equals responsibility
Organizing the Vertical Structure:
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
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 even
higher subordinates
When supervisors must be closely involved with
subordinates, the span should be small
Supervisors need little involvement with subordinates, it
can be large
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
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 hierarchical
levels
Flat structure has a wide span, is horizontally dispersed
and fewer hierarchical levels
The trend has been toward wider spans of control
Centralization and Decentralization
The hierarchical level at which decisions are made
Centralization
All facilities at one location
Decision authority is located near the top of the
organization
Decentralization
Facilities at different locations
Decision authority is pushed down the chain of
command to lower levels
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
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
Organizing the Vertical
Structure:Formalization

Written document used to direct & control
employees

Departmentalization
The basis on which individuals are grouped into departments
Five structural alternatives
OVertical functional approach. People are grouped together in
departments by common skills.
ODivisional approach. Grouped together based on a common
product, program, or geographical region.
OHorizontal matrix approach. Functional and divisional chains
of command. Some employees report to two bosses
OTeam-based approach. Created to accomplish specific tasks
ONetwork approach. Small, central hub electronically
connected to their other organizations that perform vital
functions. Departments are independent, and can be located
anywhere.
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
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
Divisional Approach
Departments are grouped together based on
organizational outputs
Diverse departments are brought together to produce
a single organizational output
Encourages decentralization
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
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
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
Advantages of Matrix
More efficient use of resources than single hierarchy
Adaptable to changing environment
Development of both general and specialists
management skills
Expertise available to all divisions
Enlarged tasks for employees
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
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
Advantages of Teams
Same advantages as functional structure
Reduced barriers among departments
Quicker response time
Better morale
Reduced administrative overhead
Disadvantages of Teams
Dual loyalties and conflict
Time and resources spent on meetings
Unplanned decentralization
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
Advantages of Network Approach
Global competitiveness
Work force flexibility
Reduced administrative overhead
Disadvantages of
Network Approach
No hands-on control
Loss of part of the organization severely impacts
remainder of organization
Employee loyalty weakened