Senior High School

Chapter 4

ORGANIZING
for Grade 11
Organization and Management

SELF-LEARNING KIT

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 First Semester
Module No. 7
LESSON 1: Nature of Organizations and Types of Organization Structures

OBJECTIVES
1. Discuss the nature of organizations; and
2. Distinguish the various types of organization structures
3. Design an appropriate organization structure for a specific business
4. Identify the different elements of delegation
5. Differentiate formal from informal organizations

LEARNING COMPETENCY
1. Analyze the nature of organizations and types of organization structures

I. TRY ME!
A. Think About Me!
Why is organizing important to a business?

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II. LESSON PROPER

Nature of Organizations
Organizing is the process of allocating and arranging the resources of the
company such as employee, facilities and equipment, finance, to achieve the goals of
the company.

Importance of Organizing
The organizing function is important because:
1. Specialization is achieved through division of work.
e.g. by separating the works among cooking, serving and janitorial etc.
2. It clarifies the authority of each manager.
e.g. The store manager reports to the operations manager of the company.
3. It clarifies the duties and responsibilities of every job position.
e.g. who takes the orders, who cleans the tables
4. It facilitates effective administration through a clear clarification of job positions and
specification.

Steps in Organizing
1. Determine the specific activities needed to implement.
2. Group these activities into a logical sequence.
3. Assign work to specific employees and provide resources required.
4. Coordinate the work of different groups and employees.
5. Evaluate the results or organizing process and make appropriate adjustment.

A. Self-check.
A food stall (carinderia) owner wants to improve the service for its customers. How
should he organize the staff to achieve this goal? Apply the steps in organizing.

Step 1 ______________________________________________________
______________________________________________________

Step 2 ______________________________________________________
______________________________________________________

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 Step 3 ______________________________________________________
______________________________________________________

Step 4 ______________________________________________________
______________________________________________________

Step 5 ______________________________________________________
______________________________________________________

Differentiation of the Organization’s Internal Environment

Differentiation in organizations involves division of labor and specialization
according to Bateman and Snell (2008). These necessarily result from the
organization’s composition -- many different work units with different kinds of task,
using different skills and work activities coordinating with one another for a common
end.
Division of labor involves assigning different tasks to different people in the
organization’s different work units. Related to it is specialization, the process in which
different individuals and units perform different tasks. An organization’s overall work is
complex and would be too much for any individual, therefore, the bigger the
organization, the more work units or work divisions and specializations are to be
expected.

Integration of Work Units

Integration is another process in the organization’s internal environment which
involves the collaboration and coordination of its different work units or work divisions.
Coordination refers to the procedures that connect the work activities of the different
work division or units of the firm in order to achieve its overall goal. Structural
mechanisms may be devised in order to increase collaboration and coordination. The
more highly differentiated one’s organization is, the greater the need for integration
among the different units.

B. Self-check.
Answer briefly and comprehensively.
1. What is the negative effect of not having division of labor in organizations?
Answer:

_________________________________________________________
_________________________________________________________

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2. Why should organizations be encouraged to have an organizational chart?
Answer:

_________________________________________________________
_________________________________________________________
_________________________________________________________

Types of Organization Structures

An organization structure is a system made up of tasks to be accomplished, work
movements from one work level to other work levels in the system, reporting
relationships, and communication passageways that unite the work of different
individual persons and groups. The types of organizational structures include:
a. Vertical structure
b. Horizontal structure
c. Network structure
According to Bateman and Snell (2008), a vertical structure clears out issues
related to authority rights, responsibilities, and reporting relationships. Authority rights
refer to the legitimate rights of individuals, appointed in positions like president, vice
president, manager, and the like, to give orders to their subordinates, who in turn,
report to them what they have done.

Figure 4.1
Example of an Organizational Chart with Vertical Structure

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 Owners of private business companies are said to have absolute authority, even
if other persons are appointed as managers in their companies. In corporations, the
owners are stockholders and they elect a board of directors to manager the
organization’s activities. The board has a chairman who acts as the leader, while the
members act as the corporation’s authority figures, responsible for making major
decisions affecting their organizations, subject to the corporation’s constitution and by-
law provisions. Besides the chairman of the board, a chief executive officer (CEO) is
appointed to occupy the top post in the organization pyramid and is personally
accountable to the members of the board and other owners for the organizational
performance.
Below the top-level managers are the middle-level managers in charge of
departments who, is earlier mentioned, report to them. Under the middle-level
managers are the lower-level managers which include office managers, sales
managers, and supervisors who directly report to the former. Employees under the
lower-level managers also have reporting relationships with their respective
department managers.

Figure 4.2
Example of an Organizational Chart with Functional Organization

A horizontal structure refers to the departmentalization of an organization into a

smaller work units as tasks become increasingly varied and numerous.

CEO

Line authority Legal

Counsel
Staff authority

CIO CFO COO

Figure 4.3
Example of an Organizational Chart with Horizontal Structure by Authority

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Types of Department:
Line departments - deal directly with the firm’s primary goods and services;
responsible for manufacturing, selling, and providing services to clients
Staff departments - support the activities of the line departments by doing research,
attending legal matters, performing public relations duties, etc. Meanwhile,
departmentalization may be done using three approaches:
Functional approach - where the subdivisions are formed based on specialized
activities such as marketing, production, financial management, and human
resources management
Divisional approach - where departments are formed based on management
of their products, customers, or geographic areas covered
Matrix approach - is a hybrid form of departmentalization where managers and
staff personnel report to the superiors, the functional manager, and the divisional
manager

Figure 4.4
Example of an Organizational Chart with Divisional Structure

Often, their communication is by electronic means where sharing of information is

speedy. This results to their ability to respond at once to their customers’ demands.

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Organization structure are needed to keep employees needed, to build a learning
organization and to manage global structural problems.

C. Self-check.
Answer briefly and comprehensively.

1. What are the types of organization structures? Briefly define each.

Answer:

_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________

2. In your opinion, who has greater responsibilities? The line department managers?
Or the staff department managers? Explain your choice.
Answer:

_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________

Delegation
Delegation refers to assigning a new or additional task to a subordinate; it may
also refer to getting work done through others by giving them the right to make
decisions and take action. Elements of delegation include: authority or the right to set
officially or legally, responsibility or the state of being answerable legally/morally for
the discharge of a duty, and accountability is to be liable to be called to explain. Steps
in delegation include:
1. Define the goal clearly. Managers must clearly explain the task objective and
the work or duties someone else is expected to do.
2. Selecting the person who will be given the task. The selected subordinate
must be competent and must share the manager’s task objectives.

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 3. Assigning of responsibility. Managers must explain that the responsibility
assigned to the selected subordinate is an expectation for him or her to perform the
assigned tasks well.
4. Asking the person assigned about his or her planned approaches to
accomplish the task objectives. It is expected that the person chosen to do the task
already has a tentative plan of action that may be presented to the manager, to assure
him or her that the person assigned could achieve the task objective.
5. Granting the assigned person the authority to act. If the manager is satisfied
with the tentative plan of action presented, granting of the authority to act immediately
follows. Authority is a right to act in ways needed to carry out the assigned task.

Figure 4.5
Kanban Board

This board is used to implement the Kanban method for a specific project. Kanban
is a Japanese word which means “signboard” or “billboard”. David J. Anderson later
on used this term to name his own method for delegating a team’s workload and
deliverables without overloading its members.

6. Giving the assigned person enough time and resources to do the task,
while at the same time emphasizing his or her accountability. Accountability is the
assigned person’s willingness to complete the job, as agreed upon.
7. Checking the task accomplishment progress. Following up and discussing
the task accomplishment progress at regular intervals is necessary.
8. Making sure that the task objective has been achieved. The above steps of
delegation were given by Weihrich and Krontz (2005).

Delegation has advantages and disadvantages as well. See Figure 4.6 below.

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D. Self-check.
Answer briefly and comprehensively.

1. What are the positive effects of delegating tasks?

Answer:

_________________________________________________________
_________________________________________________________
_________________________________________________________

2. What will be the possible result if managers frequently delegate their task to others?
Justify your answer.
Answer:

_________________________________________________________
_________________________________________________________
_________________________________________________________
Formal and Informal Organizations

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 Whether an organization is formal or informal is determined by the kind of
relationships that prevail in each organization type. Formal organizations are
characterized by hierarchical and reporting relationships among groups or members.
On the other hand, informal organization consist of informal groups born out of the
need for social affiliation. Both formal and informal organizations may exist in the same
organization structure.
Formal organizations and informal organizations both have functions and
advantages that benefit the organization and its members.
Formal organizations have the following functions:
1. Accomplish goals that require cooperation or collaboration among formal groups in
the organization;
2. Produce or bring about new and creative ideas and solutions to company problems;
3. Coordinate interdepartmental activities;
4. Implement company rules/regulations and policies; and
5. Orient/train new employees.
Meanwhile, informal organizations’ functions include the following:
1. Satisfy the members’ need for affiliation;
2. Give the individual members a chance to develop their self-esteem;
3. Give individual members an opportunity to share their ideas;
4. Lessen individual members’ insecurities; and
5. provide a mechanism to solve members’ personal and interpersonal problems.

Figure 4.7
Advantages and Disadvantages of Formal and Informal Organizations

E. Self-check.

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 Answer briefly and comprehensively.
1. Do informal organizations help in the achievement of the company’s set goals?
Explain your answer.
Answer:

_________________________________________________________
_________________________________________________________
_________________________________________________________
2. How could informal organizations lessen its members’ insecurities?
Answer:

_________________________________________________________
_________________________________________________________
_________________________________________________________

III. ASSESS WHAT YOU HAVE LEARNED

A. Multiple Choice.
Read each item carefully and encircle the letter of your answer. (10 points)
1. The process of allocating resources of the company to achieve the company
goals.
A. Planning B. Organizing C. Staffing D. Controlling
2. All, except one, are the significance of organizing in an organization.
A. It facilitates effective administration.
B. It clarifies the duties and responsibilities of every job position.
C. It clarifies the authority of every individual in the organization.
D. It allows the people in the higher position to manipulate those who are under them.
2. The following are organizational resources except
A. Capital C. Computers
B. Personnel D. Employee problems
4. This organizational structure is good for small businesses because it may rely on
the talent and intellect of its workers.
A. Functional structure C. Matrix structure
B. Divisional structure D. Horizontal structure

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5. It is a system made up of tasks to be accomplished, work movements from one
work level to other work levels in the system, reporting relationships, and
communication passageways that unite the work of different individual persons and
groups.
A. Flow chart C. Informal organization
B. Organization Chart D. Business concept
6. It is getting work done through others by giving them the right to make decisions
and take action.
A. Flow chart B. Organization C. Delegation D. Responsibility
7. It clears out issues related to authority rights, responsibilities, and reporting
relationships.
A. Vertical structure C. Network structure
B. Horizontal structure D. Matrix structure
8. Statement 1: Responsibility is the obligation of a subordinate to properly perform
the assigned duty.
Statement 2: It arises from subordinate-superior relationship because superior is
bound to perform the duty assigned by his subordinate.
A. Only statement 1 is correct. C. Both are correct.
B. Only statement 2 is correct. D. None is correct.
9. Statement 1: In formal organization, all the members follow a chain of command.
Statement 2: It is formed spontaneously by members.
A. Only statement 1 is correct. C. Both are correct.
B. Only statement 2 is correct. D. None is correct.
10. Statement 1: In informal organization, interpersonal communication is given
emphasis.
Statement 2: It is created to satisfy the members’ social and psychological
needs.
A. Only statement 1 is correct. C. Both are correct.
B. Only statement 2 is correct. D. None is correct.

B. Demonstration.
Suppose you want to set up a new business with your friends. Decide the product
you would like to sell as well as the target customers. Design the organization chart of
your business which you think is appropriate and explain why?

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Rubric Categories: Correctness (5 points) and Clarity of Ideas (5 points) = 10 points
GLOSSARY

Accountability - is to be liable to be called to explain

Authority - the right to act legally or officially

Delegation - refers to assigning in a new or additional task to a subordinate; or getting

the work done through others by giving them the right to make decisions or take action

Formal organizations - refer to organizations formed by the company owner or

manager to help the firm accomplish its goals; made up of formal groups (work groups/
project team/ committee) similarly formed by company authorities to support their
activities and achieve their objectives

Horizontal Organization Chart - refers to a selection of independent, usually single-

function organizations that work together to produce a product or service

Informal organizations - refer to organizations that exist because of friendship or

common interest; made up of informal groups which exist for the members’ need for
social affiliation

Responsibility - the state of being answerable legally and morally for the discharge
of duty

Vertical Organization Structure - clears out issues related to authority rights,

responsibilities, and reporting relationships

REFERENCES
Cabrera, H. M. F., Altarejos, A. DC. & Benjamin R. (2016). Organization and
Management Teacher’s Manual for Senior High School. Quezon City: Vibal
Group Inc.
Cabrera, H. M. F., Altarejos, A. DC. & Benjamin R. (2016). Organization and
Management Textbook for Senior High School. Quezon City: Vibal Group Inc.

Prepared by:
Charmine I. Sayawan
Teacher

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