Chapter FOUR
The Organizing Function
1
Organizing
In planning, managers set their objectives
and determine exactly what to do to attain
these objectives.
Of course, no one person can implement all
the plans of a modern organization or one
person can not do everything necessary to
meet the goals set forth in those plans.
Planning, consequently, requires organizing
the efforts of many people.
2
Organizing…Cont’d
Organizing, thus is, the process of
arranging people and other resources to
work together to accomplish a goal.
3
Organizing… Cont’d
As one of the basic functions of management,
organizing overall forces us to address several basic
questions such as the following:
What specific tasks are required to implement our
plans?
How many organizational positions are needed to
perform all the required tasks?
How should these positions be grouped?
How many layers of management (Organizational
levels) are needed to coordinate them?
How many people should a manager supervise 4
directly?
Reflection
Whatbenefits do you
expect from organizing?
5
Benefits of Organizing
Clarity of individual performance expectations
and specialized tasks.
Division of work that avoids duplication, conflict,
and misuse of resources, both material and
human.
A logical flow of work activities that can be
comfortably performed by individuals or groups.
Established channels of communication that
enhance decision making and control.
6
Benefits of Organizing
Coordinating mechanisms that ensure harmony
among organization members engaged in
diversified activities.
Focused efforts that relate to objectives
logically and efficiently.
Appropriate authority structures with
accountability to enhance planning and
controlling throughout the organization.
7
Steps in Organizing
The following points represents the multi-step process of
organizing.
1. Detailing all the work that must be done to attain the
goals of the organization
2. Dividing the total workload into activities that can logically
and comfortably be performed by one person or by a
group of individuals
3. Combining the work of the organization members in a
logical and efficient manner
4. Setting up a mechanism to co-ordinate the work of
organization members into a unified, harmonious whole
8
Basic Elements of
Organizing
1. Division of Work/labor
2. Grouping Jobs/Departmentalization
3. Establishing reporting relationships between jobs
4. Distributing authority among jobs
5. Coordinating activities among jobs
9
1. Division of Work/labor
Tasks are broken down and divided into
smaller parts
Itis the process by which tasks and
responsibilities are allocated
Itis essential for greater efficiency and
higher productivity
10
Division of … Cont’d
Benefits of Division of Labor:
Workers performing small, simple tasks will become
very proficient at each task.
Transfer time between tasks decreases
The more narrowly defined a job is, the easier it is
to develop specialized equipment to assist with that
job.
When an employee who performs a highly
specialized job is absent or resigns, the manager is
able to train someone new at relatively low cost.
11
Division of … Cont’d
Limitations of Division of Labor:
Workers who perform highly specialized jobs may become
bored and dissatisfied.
The job may be so specialized that it offers no challenge or
stimulation.
If boredom and monotony set in, absenteeism rises and the
quality of work may suffer.
The anticipated benefits of job specialization do not always
occur.
Although some degree of specialization is necessary, it
should not be carried to extremes because of the possible
negative consequences
12
2. Grouping Jobs:
Departmentalization
All organizations, regardless of their size or mission,
divide their overall operations into sub-activities and
then combine these sub-activities into working groups.
This process of grouping specialized activities in a
logical manner is called departmentalization .
In smaller organizations, the owner-manager/partner
may be able to personally oversee everyone who works
there.
As an organization grows, new managerial positions are
created to supervise work of others grouped according
to some plan which leads to the creation of
departments.
13
Basis of Departmentalization
Since organizations are different in their
activities, objectives and areas in which they
operate, there are different bases for
departmentalization.
The most common bases of departmentalization
are:
Functional
Product
Territory
Customer
Process
14
Functional
Departmentalization
It is the grouping together of activities in
accordance with the functions of an
organization- on the basis of similarity of
expertise, skills or work activities.
Jobs that call for certain skills or the use of
similar working methods will be put together.
Most common in smaller organizations.
15
• Each
and narrow
departme
viewpoints
16
of can be
ntkey
staffed by
personnel.
experts in
• Reduce
that
coordination
functional
and
s:
communicat
area. Disadvantage
• ion between
Supervisio
(among)
n is also
functions.
facilitated
• Decisions
because
are
an
concentrate
dindividual
at the top
manager
managemen
to
Advantages:
t,needs
creating
be
delay.
familiar
• Limits
with only
developmen
taof general
managers.
relatively
narrow set
Functional …Cont’d
of skills.
Product Departmentalization
It is the grouping and arrangement of activities around products
or product groups.
Departmentalization by product should be considered when
attention, energy and efforts need to be focused on an
organization’s particular products.
This approach works well for an enterprise which engaged in
very different types of products.
E.g. Textile products - Nylon products, woolen products, silk products,
cotton products
Petroleum refining - kerosene, diesel,
Electronics - Radios, TVs, Computers
17
organizatio
product or
n.
18 product group
• Administra
can be easily
tive costs
integrated
andmay rise
because
coordinated.
s:
• Theeach
speed and
departmen
effectiveness
Disadvantage
t must
of decision
have its
making are
own
enhanced.
functional
• The
specialists
performance
for areas
individual
of such as
products
market or
product
research
Advantages:
groups
and can be
assessed
financial
more easily
analysis.
and
• Requires
objectively,
more
thereby
persons
Product… Cont’d
improving the
with
accountability
general
Territory/Location
Departmentalization
Groups activities on the basis of geographic region or territory.
Is common in enterprises that operate over wide geographic
areas i.e. it is attractive to large-scale firms or other enterprises
whose activities are physically or geographically dispersed.
The logic is that all activities in a particular area or region should
be assigned to a manager. This individual would be in charge of
all operations in that geographic area.
Geographic departmentalization works best when different laws,
currencies, languages and traditions exist and have a direct
impact on the ways in which business activities must be
conducted.
19
• Duplicates
staffs,
20
• services, or
Places
effort.
emphasis
• Tends
on to
local
make
markets
maintenan
and
es
ce of
problems;
Disadvantag
economical
Encourages
central
local
services
participatio
ndifficult
in
and may
decision-
require
making
• services
Improves
such as
coordinatio
Advantages
npersonnel
of
or
activities in
apurchasing
region
• at the
Furnishes
regional
measurable
level.
Territory/Location… Cont’d
training
Customer Departmentalization
occurs when the organization structures its
activities to respond to and interact with specific
customers or customer groups.
Major advantage is that the organization is able to
use skilled specialists to deal with unique customers
or customer groups.
A disadvantage is that a fairly large administrative
staff is required to integrate various departments’
activities to make sure the organization does not
overcommit itself in any one area.
21
Process Departmentalization
Manufacturing firms often group activities around a
process or type of equipment.
This is when special skill is needed to operate
different machines.
Making plywood, for example, involves several
sequential processes: poling (removing bark from
logs); sawing logs in to 8’ lengths, heating; veneer
stripping and stamping veneer sheets in to 4'
segments; drying and grading according to quality;
gluing plies together; finishing and bundling.
22
is
difficult
23
• Respon
sibility
for es
• profit is
Achieve Disadvantag
sat the
top
economi
• cIs
unsuita
advanta
ble for
ge
• develop
Uses Advantages
ing
specializ
general
ed
manger
technolo
s
gy Process… Cont’d
• Simplifie
s
3. Establishing Reporting Relationships
Chain of Command is a clear and distinct line of authority
among the positions in an organization that has two
components:
Unity of Command: The unity of command principle suggests
that an employee should have one boss to whom he/she is directly
responsible. It refers to the reporting relationship in which an
employee should receive orders from and reports to only one boss.
The Scalar principle: The scalar principle establishes that
authority and responsibility flow from the top management to the
lowest level in an organization.
Here, there is no ambiguity about who should report to whom,
since an employee reports to his/her immediate boss who also in
turn reports to his/her immediate boss. 24
3. Establishing Reporting…
Cont’d
Span of Management: The term span of management is also
referred to as a span of control, span of supervision, span of
authority or span of responsibility.
Span of management refers to the number of subordinates
who report directly to a manger, or the number of subordinates
who will be directly supervised by a manager.
There is no magical number for the span of management.
There are various factors affecting the span of management.
Based on the number of subordinates who should report to a
manager or the number of subordinates that a superior should
supervise, we can have Wide span of management and Narrow
span of management.
25
Group Discussion
Discuss and Identify the
possible factors affecting the
span of management in an
organization.
26
Factors Determining an Effective Span of
Management
Type/nature of work
The availability of information and control
systems
Ability of the manger
Manager’s personality
The abilities of subordinates
Motivation and commitment
Need for autonomy
Geographic dispersion of subordinates
Levels of management
27
3. Establishing Reporting…
Cont’d
Narrow Span of Management
• This means superior controls few numbers of subordinates or
few subordinates report to a superior.
• When there is narrow span of management in an
organization, we get:
• Tall organization structure with many levels of supervision
between top management and the lowest organizational
level.
• More communication between superiors and subordinates.
• Managers may be underutilized and their subordinates may
be over controlled
• More trained managerial personnel and centralized
authority 28
Group Discussion
What advantages and
disadvantages may be there
with narrow span of
management?
29
3. Establishing Reporting…
Cont’d
Wide Span of Management
• This means many subordinates report to a superior or
a superior supervises many subordinates.
• If the span of management is wide, we get:
• A flat organization structure with fewer management
levels between top and lower level
• Many number of subordinates and decentralized
authority
• Managers may be overstrained and their
subordinates may receive too little guidance and
control 30
• Fewer hierarchal level
Group Discussion
What advantages and
disadvantages may be there
with wide span of
management?
31
Tall Versus Flat Organizations
32
4. Distributing Authority
Responsibility and authority mean that the responsibilities of
each individual in the organization are clearly defined.
Each individual is also given the authority needed to meet
these responsibilities and is held accountable for meeting
them.
Responsibility is the obligation to achieve objectives by
performing required activities.
Authority is the right to make decisions, issue orders, and
use resources.
Accountability is the evaluation of how well individuals meet
their responsibility.
All members of the organization should be evaluated
periodically and held accountable for achieving their
33
objectives.
Delegation of Authority
Delegation is an organizational process whereby as many
people as possible are directly and personally involved in
decision making, directing the work and doing the work.
Delegation is a process of sharing ones authority and
responsibility with others.
Delegation is an act of entrusting others with authority
and responsibility, and at the same time creating obligation
and accountability for results.
34
Steps in the Delegation
Process
Group Discussion
What are the possible
advantages of delegation of
authority?
36
Advantages in Delegation
It eases the burden on management and creates time for important
tasks.
It helps to exploit the specialized knowledge and experience of the
employees
It helps promote and develop the abilities, initiative, self - reliance
and competence of employees.
It has a positive effect on the motivation and job satisfaction of
employees.
Delegation contributes to subordinates growth and development.
Delegation ensures the maximum utilization of the skills and abilities
of subordinates.
Delegation increases motivation and job satisfaction.
Delegation creates a climate in which subordinates can become more
involved in decision-making and planning processes within an
organization.
37
Obstacles to Effective
Delegation
Superior-related Subordinate-related
Reasons of Inadequate Factors
Delegation
Belief that He can make Lack of self-confidence in
Better Decisions their Abilities
Fear of Losing Importance Fear of Making Mistakes
Fear of Loss of Control Dependent Personality
Fear of Being Exposed Unclear Delegation
Unwillingness to take Lack of Motivation
Calculated Risk
Tendency to be Authoritarian
Environment of Mutual
Distrust 38
Principles of Effective Delegation
Define authority and responsibility
Involve subordinates
Require completed work
Provide training
Interference should be minimum
Tolerance of mistakes
Adequate controls should be established
Goals should be predetermined
Policies, rules and procedures should be established to
guide decisions
Delegation should be rewarded
Unity of command
Principle of communications
Principle of management by exception
39
Centralization and decentralization of authority
Centralization and decentralization of authority are basic,
overall management philosophies of delegation, of where
decisions are to be made.
Centralization of authority is characterized by authority
concentrated at the top of an organization or department.
Decentralization of authority is characterized by a high
degree of delegated authority throughout an organization
or department.
Decentralization is an approach that requires managers to
decide what and when to delegate, to carefully select and
train personnel, and to formulate adequate controls.
40
Centralization and … Cont’d
Neither centralization nor decentralization is absolute.
No one manager makes all the decisions, even in a
centralized setting.
And total delegation would end the need for top level
managers.
Thus there are only degrees of centralization and
decentralization.
In most organizations some tasks are relatively
centralized (for example, payroll system, purchasing,
and personnel policies), and others are relatively
decentralized.
41
Factors Affecting Centralization and
Decentralization
Costliness of decisions
Uniformity of policy
Corporate culture
Availability of managers
Control mechanisms
Environmental influences
42
Factors Affecting… Cont’d
Time frame of decisions
Adequacy of communication system
Types of tasks
Existence of standing plans
Size and Complexity of the organization
Locations of target market
43
5. Coordinating Activities
Coordination is the process of linking
the activities of the various
departments of the organization.
Primary reason for coordination is that departments
and work groups are interdependent – they depend on
each other for information and resources to perform
their respective activities.
The greater the interdependence between
departments, the more coordination the organization
requires so departments are able to perform effectively.
5. Coordinating Activities
Pooled interdependence exists when units
operate with little interaction; their output is simply
pooled.
Each unit has its own budget, staff, etc., and their
profits/losses are added together at the
organizational level. They do not interact on a
day-to-day basis. [Debenham's, Marks &
Spenser, etc.]
5. Coordinating Activities
Sequential interdependence
occurs when the output of one unit
becomes the input for another in
sequential fashion.
Level of interdependence is generally
one way.
Nissan has one plant which assembles
engines and then ships them to another
plant where the cars are completed.
5. Coordinating Activities
Reciprocal interdependence occurs when
activities flow both ways between units.
This form of interdependence is the most
complex.
Within any hotel, the reservations department,
front-desk check-in and housekeeping are all
‘reciprocally interdependent’.
Reservations has to provide front-desk employees with information about how
many guests to expect each day, and housekeeping needs to know which rooms
need ‘priority cleaning’. If any of the three units does not do its job properly, all
will be affected.
5. Coordinating Activities
Structural Coordination Techniques
These techniques were designed to achieve and maintain
coordination among interdependent units. They include:
The managerial hierarchy
Rules and procedures
Liaison roles
Task forces
Integrating departments
5. Coordinating Activities
The Managerial Hierarchy
One manager is placed in charge of
interdependent departments or units.
Wal-Mart’s distribution center places one manager
in charge of both receiving and unloading
shipments from railroad cards and loading other
shipments onto trucks for distribution to retail
outlets.
Both departments are interdependent because they
share the same loading docks.
5. Coordinating Activities
Rules and Procedures
Routine coordination activities may be
handled by rules and standard procedures.
However, complex or unusual problems may
have to be handled independently.
Wal-Mart has a rule that an outgoing truck has
priority over an incoming rail shipment. So all
forklifts and related equipment are available to
loading outgoing trucks first.
5. Coordinating Activities
Liaison Roles
A manager acts as a common point of
contact but has no formal authority over the
interdependent groups.
He/she simply serves as a facilitator of
information flow between the units.
He/she maintains familiarity with each unit
and can answer questions and otherwise
serve to integrate the activities. [engineering groups
working on a large project may interact through a liaison]
5. Coordinating Activities
Task Forces
A task force may be needed when interdependence is complex and several
interdependent units are involved.
It is created by drawing one representative from each unit.
Coordination function is then spread across several individuals, each of whom
has special information about one of the units involved.
When coordination of project is completed, the task force is dissolved.
5. Coordinating Activities
Integrated Departments
Similar to a task force but is more permanent.
Usually has more authority than a task force and may even be given some
budgetary control.
Generally has some permanent members as well as members who are assigned
temporarily from units that are particularly in need of coordination.
Firms characterized by complex and dynamic environments tend to use
integrated departments to maintain internal integration and coordination.
5. Coordinating Activities
Electronic Coordination
E-mail makes it easier for people to communicate at all
levels.
Electronic scheduling is used and makes it easier for
individuals’ schedules to be coordinated to set
meetings and know when individuals are otherwise
available.
Some organizations require project contractors,
subcontractors and suppliers to use a common web-
based communication/reporting system to make
coordination easier among the units.
6. Differentiating Between
Positions
Line position is in the direct
chain of command that is
responsible for achieving an
organization’s goals.
Staff position is one intended to
provide expertise, advice and
support for line positions.
6. Differentiating Between
Positions
Differences between Line and Staff
Line managers work toward organizational goals; staff
managers advise and assist.
Line managers have formal and legitimate authority;
staff authority is less concrete and may take a variety of
forms:
Compulsory authority – line manager must listen to advice of
staff manager, but can choose to take it or ignore it. [Finance Manager
must listen to advice of auditor, but may take it or leave it]
Functional authority – formal or legitimate authority given to
staff managers over activities related to their specialties. [HR
specialist who is expert in discrimination or Labor Law]
6. Differentiating Between
Positions
Administrative Intensity
Administrative intensity is the degree to which managerial
positions are concentrated in staff positions.
An organization with ‘high’ administrative intensity is one with
many staff positions relative to the number of line positions.
Relative ‘low’ administrative intensity reflects more line
positions relative to staff positions.
Organizations would generally like to devote most of their HR
investment to line managers because they contribute directly
to the organization’s basic goals.
Practice today is leading toward reducing staff positions.