MGT 101 Module 8

• Organizing

  The process of identifying activities to be done to accomplish a goal; Grouping these activities into meaningful units; Assigning authority and responsibility to people for their accomplishments
• Importance of organizing

  • Divides work to be done into specific jobs and departments
  • Assigns tasks and responsibilities associated with individual jobs
  • Coordinates diverse organizational tasks
  • Clusters jobs into units
  • Establishes relationships among individuals, groups, and departments
  • Establishes formal lines of authority
  • Allocates and deploys organizational resources
• Organizational designing

  Determination of the most appropriate organizational structure is important in organizational designing
• Elements of Organizational designs

  • Work specialization
  • Departmentalization
  • Chain of Command
  • Span of control
  • Centralization and Decentralization
  • Formalization
• Organizational structure

  • Formal mechanism by which an organization is managed
  • Way in which an organization's activities are divided, organized and coordinated
  • Formal patterns of interaction, coordination, and linking of individuals and groups
• Advantages of organizational structure

  • Efficiency gains from specialization
  • Order arising from the clarity of job definitions
  • Reduction of unintended gaps or overlaps in the conduct of the activities of the institution
• Organizational chart

  • A line that depicts the broad outline of an organization structure
  • Shows positions and titles, level of reporting relationship and formal levels of communication
• Work specialization


  • Also known as division of labor
  • The degree to which the work necessary to achieve organizational goals is broken into various units
  • Increases efficiency but may lead to boredom, fatigue, stress, poor quality, increased absenteeism, reduced performance and increased turnover
• Job Designing


  Specification of task activities associated with a particular job
• Today's view: Most managers today continue to see work specialization as important because it helps employees be more efficient
• Departmentalization


  The clustering of individuals into units and units into larger units to facilitate achievement of organizational goals
• Today's view: Customer departmentalization has become a popular choice for better understanding of their needs and use of cross functional teams - composed of members from the various functional departments
• Simple structure


  • An organizational design with little departmentalization, wide spans of control, centralized authority, and little formalization
• Functional structure


  • The grouping of positions into departments based on similar skills, expertise, and resource use
• Divisional Structure


  • The grouping of positions into departments based on similar organizational outputs such as product, process and markets
• Functional departmentalization


  Pros: Efficiencies from putting together similar specialties and people with common skills, knowledge and orientations; Coordination with functional area; In-depth specialization

  Cons: Poor communication across functional areas; Limited view of organizational goals
• Product departmentalization


  Pros: Allows specialization in particular products and services; Managers can become experts in their industry; Closer to customers

  Cons: Duplication of functions; Limited view of organizational goals
• Geographical departmentalization


  Pros: More effective and efficient handling of specific regional issues that arise; Serve needs of unique geographic markets better

  Cons: Duplication of functions; Can feel isolated from other organizational areas
• Process departmentalization


  Pros: More efficient flow of work activities

  Cons: Can only be used with certain types of products
• Customer departmentalization

  Pros: Customers needs and problems can be met by specialists

  Cons: Duplication of functions; Limited view of organizational goals
• Chain of command


  • Unbroken line of authority that ultimately link each individual with top organizational position through a managerial position at each successive layer in between
  • Line of authority extending from the top management to the lowest management level
  • Defines who reports to whom
• Authority


  • Refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it
  • Parity of Authority and Responsibility: if a person is responsible for accomplishing a certain task in the organization, he should be given sufficient authority to accomplish that task
• Responsibility


  • An obligation to perform any assigned duties
  • Absoluteness of Responsibility: though a superior in an organization may delegate a portion of his authority to his subordinates, he does not reduce his responsibility or accountability for the performance of the tasks under his jurisdiction
• Unity of command


  A person should report to only one manager
• Today's view: Although early management theorists (Fayol, Weber, Taylor, Barnard, and others) believed that chain of command, authority (line and staff), responsibility, and unity of command were essential, times have changed as those elements are considered far less important today
• Span of control


  • The number of employees a manager can effectively and efficiently handle
  • Managers should have neither too many nor too few subordinates
  • Research indicates that there is no universally correct span of management
  • Span of management depends on the circumstances of each managerial job
• Narrow span


  • Close supervision and directed control
  • Many levels of management, high cost of management staff
  • Less independence and decision authority for subordinates
  • Large distance between top management and bottom staff
  • Poor executive communication and visibility
  • Overloaded supervisors, loss of control
• Broad span


  • Low management overhead, better operational cost and profit margins
  • Encourages empowerment through delegation of authority and decision-making
  • Employees have better communication with the top management
• Factors influencing span of control

  • Skills and abilities of managers and employees
  • Characteristics and nature of work being done
  • Similarity and complexity of employee tasks
  • Preferred style of manager
  • Experience level
  • Physical proximity of subordinates
  • Degree to which standardized procedures are in place
  • Sophistication of organization's information system
  • Strength of organization's culture
  • Budget constraints
  • Environmental Stability
• Downsizing


  Process of significantly reducing the layers of middle management, expanding spans of control and shrinking the size of the workforce
• Restructuring


  Process of making a major change in organization structure that often involves reducing management levels and possibly changing some major components of the organization through divestiture and acquisition
• Today's view: The trend in the recent years is larger spans of control. With wider span, the employees know their jobs well and when employees understand organizational processes
• Centralization


  Upper level makes decisions
• Decentralization


  Lower levels are also involved in decision-making
• Employee empowerment


  Giving employees more authority (power) to make decisions
• Factors favoring centralization

  • Environment is stable
  • Lower-level managers are not as capable or experienced at making decisions as upper-level managers
  • Lower-level managers do not want a say in decisions
  • Decisions are relatively minor
  • Organization is facing a crisis or the risk of company failure
  • Company is large
• Factors favoring decentralization

  • Environment is complex
  • Lower-level managers are capable and experienced at making decisions
  • Decisions are significant
  • Corporate culture is open to allowing managers a say in what happens
  • Company is geographically dispersed
  • Effective implementation of company strategies depend on managers retaining say over what happens
  • Effective implementation of strategies depends on managers having involvement and flexibility to make decisions
• Today's view: The trend is decentralization, wherein organizations have become more flexible and responsive to environmental trends (employee empowerment)
• Formalization


  • Standardization of organization's jobs
  • Job descriptions
  • Numerous organizational rules
  • Clearly defined procedures
• Highly standardized


  • Explicit job descriptions, numerous organizational rules, and clearly defined procedures covering work processes