BA FORMAL ORGANIZATION

After the business plan is adapted, management will

BSBA MM- 1ST QUARTER-
proceed to form an organization to carry out the activities
Wendell Sarmiento indicated in the plan.
The formal organization is the structure that details lines
of responsibility, authority, and position. What is
REASONS FOR ORGANIZING depicted in the organization chart is the formal
organization. It is the planned structure and it represents
Organizing is undertaken to facilitate the
the deliberate attempt to establish patterned
implementation of plans. In effective organizing, steps
relationships among components that will meet the
are undertaken to break up the total job into more
objectives effectively.
manageable man-size jobs. Doing these will make it
possible to assign particular tasks to particular persons. The formal structure is described by management
In turn, these will help facilitate the assignment of through:
authority, responsibility, and accountability for certain
functions and tasks. Efforts expended in organizing may 1. organizational chart;
also result to easier coordination among the various 2. organizational manual; and
activities.
3. policy manual. The organizational chart is a diagram of
ORGANIZING the organization's official positions and formal lines of
• Management function which relates to the authority.
structuring of resources and activities to The organizational manual provides written descriptions
accomplish objectives in an efficient and of authority relationships, details the functions of major
effective manner. organizational units, and describes job procedures.
• The result of organizing activities is the
organization which may be defined as a The policy manual describes personnel activities and
collection of people or activities formed for a company policies.
specific purpose.
INFORMAL ORGANIZATION
ORGANIZATIONAL STRUCTURE AND ITS Formal organizations require the formation of formal
DETERMINANTS groups which will be assigned to perform specific tasks
aimed at achieving organizational objectives. The formal
The structure is the means by which the organization will group is a part of the organization's structure.
attain its objectives and goals. The structure must be one
that considers, apart from the organization's goals and There are instances, however, when members of an
objectives, its resources, and its environment, both organization spontaneously form a group with friendship
internal and external. as a principal reason for belonging. This group is referred
to as an informal group. It is not a part of the formal
The determinants of organization structure are organization and it does not have a formal performance
1. strategy, or plans for achieving the company's purpose.
objectives; Informal groups are oftentimes very useful in the
2. the technology that will be used in carrying out the accomplishment of major tasks, especially if these tasks
strategy: conform with the expectations of the members of the
3. the people employed at all levels and their informal group.
functions; and
4. the size of the organization. The informal organization, useful as it is, is vulnerable to
ex-pendency, manipulation and opportunism. Its low
As the structure is the tool used in achieving the visibility makes it difficult for management to detect
organization's objectives, it must follow strategy which those perversions, and considerable harm can be done to
defines the specific means of realizing goals. Strategy the organization.
determines the lines of authority and channels of
communication that will have to be set up between the The manager is, therefore, warned that he must be on
managers and their respective units. the lookout for the possibilities that the informal groups
may do. It will be to his best interest if he can make the
The nature of technology that will be used will informal groups work for the organization.
determine to a certain extent the type of structure the
organization will have to adapt. The structure is also
determined by the people in the organization's internal
and external environment.
The structure must be designed to serve the needs of the
managers and their subordinates.
The size of the entire organization and its various units
will also determine the kind of structure that will have
to be adapted.
 LEVELS OF MANAGEMENT AND SUPERVISION BASIC ELEMENT OF ORGANIZATIONAL STRUCTURE
FLAT STRUCTURE WORK SPECIALIZATION
The flat organization has few levels of management. This The degree to which tasks are divided in the
characteristic provides it with the following advantages. organization is referred to as work specialization. A
decision must be made regarding this element and it
1. Communication is generally faster and less should be reflected in the organizational structure. The
distorted. decision-maker is confronted with choosing between a
2. Decisions can be made more quickly. structure with no specialized position and another with
3. Supervisor's salaries are eliminated. specialized positions. In the former structure, the sales,
Flat structures, however, have the following distinct the credit, and the collection tasks are assigned to a
disadvantages supervisor. Although another supervisor handles the
same group of tasks, none of them has the opportunity
1. They require managers with experience in the to specialize,
various tasks.
2. A manager may have little time for all In the alternate structure, a supervisor is assigned to
subordinates, handle sales while another is in charge of credit and
3. When the manager is out, the group is without a collection.
leader. Why Specialization? Specialization promotes efficiency.
4. Managers may have little time to anticipate This is so because it is presumed that people can
problems. perform more efficiently if they master just one task
TALL STRUCTURE rather than many tasks. When an organization is
efficient, it means it can perform its function with the
The tall structure has many levels of management. It has least number of resources.
the following advantages:
DEPARTMENTATION
1. Since the average span of control is narrower, the
supervisory load is less for each manager. Refers to the grouping of jobs based on criteria that
2. There are more opportunities for promotion managers believe help in the coordination and control
because there are more levels of positions. of activities. A decision must also be made on whether
3. Managers are provided with opportunities to the organization would be departmentalized or not
specialize. Criteria for Grouping of Jobs. If departmentation is the
4. There is less demand for managers with multiple choice, there are certain criteria used in the grouping of
skills. jobs. These are as follows:
5. Managers are afforded with more time to attend
to other important problems. 1. knowledge and skills
2. work process and function
Tall structures are also saddled with disadvantages such 3. time
as the 4. product
1. Communication tends to be slower and distorted 5. customers
because of the number of levels it has to pass 6. location
through.
2. The number of management levels also hinders
effective decision-making such activity slower
and lesser accurate
3. It is more expensive to maintain as there are
more manager to compensate

Advantages of Grouping Jobs. Departmentation offers

some advantages to the organization. These are the
following:
1. Supervision is made easier.
2. The sharing of resources, such as men, machines,
and materials results to maximum use of such
resources.
3. Common measures of performance is
established.
4. Communication is encouraged.
PATTERN OF AUTHORITY The Appropriate Span of Control. Neither the
narrow or the wide span of control is applicable
The pattern of authority as an element in designing to all types of situations.
organizational structure refers to the extent by which
organization members are allowed to make decisions COORDINATION
without getting the approval of another member Another basic element considered in designing
Authority patterns may either be (1) centralized, or (2) the organizational structure is coordination. This
decentralized. It is centralized when decision-making is term refers to the linking of activities in the
concentrated in the hands of higher-level managers. It is organization that serve to achieve a common
decentralized when decision-making authority is granted goal or objective.
to middle and lower management positions. As the total job is divided into several tasks and
each is assigned to a corresponding unit, there is
The Appropriate Pattern of Authority. The environments a risk that one task may be done too well or too
of organizations differ and so no single pattern of early to the detriment of the other tasks. For
authority is appropriate for all. Instead, the pattern of instance, a company's aggressive sales force may
authority must match the organization's environment. not be matched by the ability
Centralized authority is better suited for stable
environments, while decentralized authority is for com-
plex and changing environments.
Decentralized authority offers the following advantages:
1. Efficiency - red tapes and bottlenecks are
reduced.
2. Flexibility - managers can cope with situations as
they come.
3. Initiative - managers are highly motivated by the
challenge.
4. Motivation - managers are highly motivated by
the challenge,
5. 5. Development - managers are provided with
opportunity for training
Decentralized authority has also some disadvantages.
These are as follows:
1. Control - coordinating overall activities is more
difficult.
2. Duplication - there is a great chance of efforts
duplicated between departments.
3. Centralized expertise- home office experts may BASIC ORGANIZATIONAL DESIGN
be overlooked or disregarded.
4. Competency - the organization may not be able FUNCTIONAL DESIGN
to produce competent managers at all levels An organization may be designed basically
according to function. In organizations with
SPAN OF CONTROL functional design, employees are grouped
Is another consideration in designing the organization together in separate departments on the basis
structure. It refers to the number of subordinates of common tasks, skills, or activities.
reporting to a single supervisor.
Strengths of the Functional Design.
The span of control may either be narrow or wide. It is 1. efficient use of resources
narrow when there are few subordinates reporting to a 2. in-depth skill development
supervisor. The narrow span of control is characterized 3. clear career paths
by the following: 4. unity of direction
5. enhanced coordination within function
1. there is closer relationship between manager
Weaknesses of the Functional Design.
and subordinates;
1. slow decision-making
2. there is less delegation of authority;
2. less innovation
3. controlling activities are more tight
3. unclear performance responsibility
4. there is more time for rewarding behavior
4. limited management training
Span of control is wide when there are many 5. poor coordination across functions
subordinates reporting to a supervisor. The following
characteristics are inherent to an organization with wide
span of control:
1. employees work with little supervision;
2. there is a high level of delegation of authority;
3. controlling is lighter;
4. there is less time for rewarding behavior.
DIVISIONAL DESIGN MATRIX DESIGN
The organization with divisional design is that type where An organization with a matrix design is one that
all activities needed to produce a good or service are implements functional and divisional structures
grouped together into an independent unit. simultaneously in each department. The employee is
supervised by the functional manager in his work as a
specialist. The divisional manager integrates the
Strengths of the Divisional Design. activities of the specialists.
1. adaptation to unstable environment The following conditions favor the use of matrix design:
2. high customer satisfaction
3. high task coordination 1. Environmental pressures exist for a dual focus, such
4. clear performance responsibility as innovation and quality.
5. general management training 2. Large quantities of information must be processed.
3. Efficiency is needed in the use of resources.
Weaknesses of the Divisional Design.
Strengths of the Matrix Design.
1. inefficient use of resources
2. low in-depth training for personnel 1. It allows demands from the environment to be
3. focus is on division objectives met simultaneously.
4. loss of control 2. It provides flexibility.
3. It encourages resource efficiency.
4. It enhances skill development.
5. It increases motivation and commitment among
employees.
6. It aids top management in planning.
Weaknesses of the Matrix Design.
1. It creates dual-authority confusion.
2. It spawns power struggle.
3. It is time-consuming.
4. It requires interpersonal skills training.
5. It generates high implementation cost

HYBRID DESIGN
WHAT IS STAFFING?
a combination of divisional units and functional The manager must be concerned with putting the right
departments located at corporate headquarters. persons in various positions within his area of concern.
Strengths of the Hybrid Design. Although some of the important aspects of staffing may
be delegated to the human resource department, the
1. simultaneous coordination manager assumes a great responsibility in assuring that
2. integration of goals with objectives the right persons are assigned to positions that fit their
3. efficient and highly adaptable qualifications.
Weaknesses of the Hybrid Design in organization Staffing may be defined as the management function
that determines human resource needs, recruits,
1. slow response to exceptional situations
selects, trains, and develops human resource for jobs
2. conflict between headquarters and divisions
created by an organization.
3. administrative overhead
Staffing is undertaken to match people with jobs so that
the realization of the organization's objectives will be
facilitated.

The Staffing Procedure

1. human resource planning;
2. recruitment;
3. selection;
4. induction and orientation;
5. training and development;
6. performance appraisal;
7. employment decisions (monetary rewards,
transfers, promotions and demotions);
8. separation.
HUMAN RESOURCE PLANNING
The planned output of any organization will require a
systematic deployment of human resources at various
levels. To be able to do it, the manager will have to
involve himself with human resource planning. This will
be done in conjunction with the efforts of the human
resource officer, i.e., if the company has one.
1. FORECASTING. This is an assessment of future
human resource needs of the organization in
relation to its current capabilities.
2. PROGRAMMING. This means translating the
forecasted human resource needs to personnel
objectives and goals.
3. EVALUATION AND CONTROL. This refers to
monitoring human resource action plans and
evaluating their success.
Methods of Forecasting. The forecasting of manpower
may be undertaken using any of the following
quantitative method
1. TIME SERIES METHODS - use historical data to
develop forecasts of the future.
2. EXPLANATORY, OR CASUAL MODELS - attempts
to identify the major variables that are related to
or have caused particular past conditions and
then use current measures of these variables to
predict future conditions.
The three major types of explanatory models are
as follows:
a. REGRESSION MODELS (see Chapter 4)
b. ECONOMETRIC MODELS - this is a
system of regression equations
estimated from past time-series data
and used to show the effect of various
independent variables on various
dependent variables.
c. LEADING INDICATORS- this refers to
time series that anticipate business cycle
turns. 3.
3. MONITORING METHODS - are those that
provide early warning signals of significant
changes in established patterns and relationships
so that the manager can assess the likely impact
and plan responses if required.