Chapter 4 organizing complete

PART ONE: INTRODUCTION

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 1.1 Meaning of organization

POM/Chapter 4 - Organizing
 1.2 Process of Organization

 1.3 Principles of Organization

2

DEFINITION OF ORGANIZING

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 Activities:  Resources:
 Identification of  Determining the

activities
 Grouping of Activities
specific need of
 Assignment of jobs to resources
formal groups  Allocation of
 Establishing a network resources into
of authority and
responsibility specific groups
 Providing framework for  Evaluation and
measurement, control of use of
evaluation and control
the resources 3

ORGANIZING

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Organizing is the process of
arranging and allocating work,

authority, and resources
among an organization’s
members so that they can
achieve organizational goal.
 Stoner, Freeman and Gilbert
4

PROCESS OF ORGANIZING

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 Division of Work
 Grouping of Work

 Delegation of Authority

 Coordination of Work

5

1/23/2012 POM/Chapter 4 - Organizing
6
PROCESS OF ORGANIZING SIMPLIFIED

PRINCIPLES OF ORGANIZING

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1. Unity of Objective 8.Exception
2. Specialization
9.Efficiency

3. Coordination
4. Authority and 10.Balance
Responsibility
11.Homogeneity
5. Unity of Command
6. Scalar Chain 12.Continuity
7. Span of Control
13.Simplicity 7

PART TWO: ORGANIZATIONAL ARCHITECTURE

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 2.1 Vertical differentiation
 Tall versus Flat Structure

 2.2 Horizontal differentiation
Functional Structure
Multidivisional Structure

Geographic Structure

Matrix Structure
8

TALL VERSUS FLAT ORGANIZATIONS
Tall Organization
President

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Copyright © by Houghton Mifflin Company.
Flat Organization
President

6–9

ORGANIZATIONAL ARCHITECTURE -
VERTICAL INTEGRATION

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 Tall Organization:  Flat organization:
 This type of This type of

organizational organizational
architecture has architecture
many layers and
has few layers
narrow span of
control. and wide span
of control.
10

ESTABLISHING REPORTING RELATIONSHIPS:
TALL VERSUS FLAT ORGANIZATIONS
 Tall Organizations  Flat Organizations
 Are more expensive  Lead to higher levels of
employee morale and

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Copyright © by Houghton Mifflin Company.
because of the number
of managers involved. productivity.
 Foster more  Create more administrative
communication responsibility for the
problems because of relatively few managers.
the number of people  Create more supervisory
through whom responsibility for managers
information must pass. due to wider spans of
control.
6–11

ORGANIZATIONAL ARCHITECTURE – HORIZONTAL
DIFFERENTIATION

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1. FUNCTIONAL STRUCTURE:
General Manager

Production Finance Marketing HR
Dept Dept Dept Deprtment

Structure is created based on the
various functions of an organization.
12

DIFFERENTIATION
2. MULTI-DIVISION STRUCTURE

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General Manager

Division I Division II Division III

 Multiple divisions are created in a
related industry.
13

DIFFERENTIATION

 Divisional or M-form (Multidivisional) Design
 An organizational arrangement based on multiple
businesses in related areas operating within a larger
organizational framework; following a strategy of
related diversification.
 Activities are decentralized down to the divisional
level; others are centralized at the corporate level.
 The largest advantages of the M-form design are the
opportunities for coordination and sharing of
resources.

DIFFERENTIATION
3. GEOGRAPHIC STRUCTURE:

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General

Manager  Departments are
created based on
geographic regions.
 All the activities in one

Eastern Central Western geographic region is
Region Region Region categorized into one
unit.

15

DIFFERENTIATION
4. MATRIX ORGANIZATION
CEO

Vice president, Vice president, Vice president, Vice president,
engineering production finance marketing

Employees
Project
manager A

Project
manager B

Project
manager C

6–16

MATRIX STRUCTURE:

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 Advantages:  Disadvantages:
 Enhances organizational  Employees are uncertain

flexibility. about reporting
 Team members have the relationships.
opportunity to learn new  The dynamics of group
skills. behavior may lead to
 Provides an efficient way for slower decision making,
the organization to use its one-person domination,
human resources. compromise decisions, or
 Team members serve as a loss of focus.
bridges to their departments  More time may be required
for the team. for coordinating task-
related activities. 17

PART THREE: RESPONSIBILITY

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3.1 Meaning of Responsibility

3.2Establishing Task and
Reporting Relationships

3.3 Creating Accountability

18

RESPONSIBILITY:

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Responsibility is the

obligation to perform
or
duty to carryout certain
activities

19

ESTABLISHING TASK AND REPORTING
RELATIONSHIP:

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 Task Relationship:
 How activities related to each other in an

organization.
 How the basic units of an organization are
formed.
 Establishment of job description and job
specification
 Job Specification: Prerequisites of job. Various skills and
experiences needed to perform certain job.
 Job Description: The activities that have to be carried
out at certain position in a job. It describes the job.
20

ESTABLISHING TASK AND REPORTING
RELATIONSHIP:

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 Establishing Reporting Relationship:
 It is finding out

 Chain of command
 Span of control or span of management

1. Who reports to whom?

2. How many subordinates will a supervisor have?

(Relate it to tall vs flat organizational architecture.)

21

ACCOUNTABILITY:

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Accountability:

 the state of being accountable, l
iable, or answerable
 Requirement to report

It creates a mechanism of control.

22

PART FOUR: AUTHORITY

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4.1 Line and Staff Authority

4.2 Delegation of Authority

23

AUTHORITY:

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 Right to take decisions that arises due to
position in organizational structure.

 Authority is the right to perform or
command. It allows its holder to act in
certain designated ways and to directly
influence the actions of others through
orders.

 Types of Authority:
 Line Authority
 Staff Authority 24

LINE AUTHORITY

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The chain of command in the
organizational structure that flows

major decision making power.
The officially
sanctioned ability to issue orders t
o subordinate employees within
an organization.
25

STAFF AUTHORITY

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 Staff authority consists of the right to
advise or assist those who possess

line authority as well as other staff
personnel.

 The Advisory or Counseling
Role :
 The Service Role
26
 The Control Role

DELEGATION OF AUTHORITY

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Assigning work to subordinates
and giving them necessary

authority to do the assigned work
effectively.

Simple terms,
GRANTING AUTHORITY TO SUBORDINATES
27

FEATURES OF DELEGATION OF
AUTHORITY:

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 No delegation of total authority
 Delegation of only that authority a

manager has
 Representation of the superior

 Delegation for organizational purpose

 Restoration of delegated authority

 Balance of authority and responsibility

 No delegation of responsibility
28

CONFLICT BETWEEN LINE – STAFF EMPLOYEES

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Assume Line Authority

Do not give Sound Advice
Steal Credit for Success
Fail to Keep line
personnel informed of their
activities
Do not see the whole picture. 29

PART FIVE:
CENTRALIZATION AND DECENTRALIZATION

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 Meaning : Centralization and Decentralization

 Reasons: In which case which is needed

 Advantages and Disadvantages: of both

30

CENTRALIZATION

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Systematically retaining power
and authority in the hands of

higher level managers.

Not dividing authority to lower
level employees.
31

ADVANTAGES V/S DISADVANTAGES:

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Advantages:

Facilitates unified decision.
Simplifies structure
Facilitates quicker decision
Economy in operation
Integrate operation
Suitable for small firms 32

ADVANTAGES V/S DISADVANTAGES:

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Disadvantages:

 Unsuitable for large organization
 Manager is overburdened
 Possibility of power misuse
 Low morale and motivation
 Lack of environmental adaptation
 In appropriate for routine decisions.
33

DECENTRALIZATION:

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 Delegation of authority to the lower
levels.

 Decentralization
is tendency to
disperse decision making authority in
an organized structure.
• Koontz and Weihrich

34

ADVANTAGES V/S DISADVANTAGES

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Advantages:
 Relief to top management

 Facilitates managers’ development
 Possibility if better decisions
 Effective control
 High morale and motivation
 Facilitates diversification
 Environment adaptation 35

ADVANTAGES V/S DISADVANTAGES

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Disadvantages:
 Increase in expenditure

 Conflict
 Unsuitable for emergency situations
 Maximizes risk
 Difficulty in communication
 Unsuitable for specialized services

36

EMERGING ISSUES IN ORGANIZATION DESIGN

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Re-engineering process

Team work
Network organization structure
Downsizing organization
Boundary-less organization

37

STAFFING:
CONCEPT AND IMPORTANCE

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 It is the process of obtaining and maintaining
competent employees to fill all positions.

 Recruitment: Encouraging people to apply
 Selection: Finding the right person for the job
 Training: Teaching the employees certain skill
 Development: Progress/advancement of career
 Motivation: Encouraging the employees to work
harder.

38

IMPORTANCE OF STAFFING:

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Managing effective staff
Utilization of physical resources

Increase in productivity
Focus on goal achievement
Helps to solve problems
Job satisfaction
Self-development of workers
39

1/23/2012 POM/Chapter 4 - Organizing
40
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Chapter 4 organizing complete

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