Ch07

Fundamentals of Organizing

Organizing

• The deployment of organizational resources to achieve strategic goals.

• The deployment of resources is reflected in the division of labor.

• Formal lines of authority and mechanisms for coordinating diverse organization tasks.

Organization Structure

1. The set of formal tasks assigned to individuals and departments.

2. Formal reporting relationships.

3. The design of systems to ensure effective coordination of employees across departments.

Defined as:

Four Points Aboutthe Organization Chart

Visual representation

Set of formal tasks

Formal reporting relationships

Framework for vertical control

Work Specialization

• Tasks are subdivided into individual jobs.• Employees perform only the tasks relevant to their

specialized function.• Jobs tend to be small, but they can be performed

efficiently.• There is a concern that employees may become

isolated, and do only a single boring job.• Many organizations are moving away from this

principle.

Chain of Command

• Unbroken line of authority that links all persons in an organization.

• Associated with two underlying principles. Unity of Command. Scalar Principle.

Authority

• Formal and legitimate right of a manager to make decisions, issue orders, and to allocate resources to achieve organizationally desired outcomes.

Authority is distinguished by three characteristics: Authority is vested in organizational positions,

not people. Authority is accepted by subordinates. Authority flows down the vertical hierarchy.

Accountability

Mechanism through which authority and responsibility are brought into alignment.

People are subject to reporting and justifying task outcomes to those above them in the chain of command.

Can be built into the organization structure.

Delegation

Process managers use to transfer authority and responsibility.

Organization encourage managers to delegate authority to lowest possible level.

Effective Delegation Techniques

Give thorough instructions

Maintain feedback Evaluate and reward performance

Delegate the whole task Select the right person

Ensure that authority equals responsibility

Span of Management

• The number of employees reporting to a supervisor.

• Traditional view, seven or so per manager.• Many organizations today, 30 or more per

manager.• Generally if supervisors must be closely

involved with employees span should be small.

Large Spans of Control Factors

• Work is stable or routine.

• Similar task is performed by everyone.

• A single location.

• Employees are highly trained.

• Rules and procedures are available.

• Support systems and personnel are available for supervisor.

• Little time is required in nonsupervisory activities.

• Personal preferences and styles of management favor a large span.

Tall versus Flat Structure

• Span of control used in an organization determines whether the structure is tall or flat.

• Tall structure has a narrow span and more hierarchical levels.

• Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels.

• The trend has been toward wider spans of control.

Tall verses Flat Structure

Centralization versus Decentralization

• Greater change and uncertainty in the environment are usually associated with decentralization.

• The amount of centralization or decentralization should fit the firm’s strategy.

• In times of crisis or risk of company failure, authority may be centralized at the top.

DepartmentalizationThe basis on which individuals are

grouped into departments

• Five structural alternatives Vertical functional approach. People are grouped together in departments

by common skills. Divisional approach. Grouped together based on a common product,

program, or geographical region. Matrix approach. Functional and divisional chains of command are

implemented. Two chains of command exists. Team-based approach. Created to accomplish specific tasks. Network approach. Small, central hub electronically connected to their

other organizations that perform vital functions. Departments are independent, and can be located anywhere.

Approaches To Structural DesignSlide 2 of 2

Team Approach

• Cross-functional teams consist of employees from various functional departments.

• Permanent team solve ongoing problems. Employees come from all functional areas.

Network Approach

• May be viewed as a central hub surrounded by a network of outside specialist.

• "Where is the organization?” A difficult question to answer.

• Especially appropriate for international operations.• Connected electronically to the central office.

Virtual Organizations

• An organization that has few on-site employees and does most if its interactions online.

Evolution of Organization Structures

Structural Design

Teams

Project Management

Task Forces

• Task Force . . . A temporary team or committee formed to solve a specific short-term problem.

• Team . . . Participants from several departments who meet to solve ongoing problems.

• Project Manager . . . A person responsible for coordinating the activities of several departments.

Traditional vs. Learning Organizations

New Workplace Learning

Organization

Traditional Vertical

Organization

Contingency Factors that Influence Organization

Structure

Strategy

Environment

Technology

Interdependence

Traditional Vertical Structure

or

New Horizontal Structure

Company Performance

Uncertain Environment Creates

Increased differences occur among departments.

Organizations that need increased coordination.

Organizations must adapt to change.

Service Technology Defined

Intangible output

Direct Contactwith Customers