Report module 6

ORGANIZING Is the process of grouping together men and

establishing relationship among them, defining the authority and responsibility of personnel by using the company’s other basic sources to attain predetermined goals and objectives.

It aims to determine that tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom and where decisions are to be made.

It is also the process of dividing work into manageable sections and coordinating the results to serve a purpose. It follows planning as an essential management responsibility, and mobilizes organizational resources for action.

It ensures that there are the necessary human and physical resources to carry out plans to achieve organizational goals.

IMPORTANCE OF ORGANIZING

It provides a clarified work environment It creates a coordinated environment Everyone knows where to get orders formal decision – making structure is

established.

TYPES OF ORGANIZATION

A. Formal Organization is the “structure that details lines of

responsibility, authority and position” it is the planned structure and it

represents the deliberate attempt to establish patterned relationships among components that will meet the objectives effectively

B. Informal Organization is based on the needs, sentiments and

interests of the people composing it. It is vulnerable to expediency, manipulation and opportunism

its low visibility makes it difficult for management to detect perversions and considerable harm can be done to the company

ORGANIZING STRUCTURE

a way of subdividing work. a framework of task and authority

relationships among different units of the firm.

it is similar to the framework of a building or the skeleton of a body.

TYPES OF ORGANIZATIONAL STRUCTURE

1. Line Organizational StructureAdvantages:

1. Directness2. Fixed Responsibility3. Simplicity4. Flexibility5. Discipline6. Development of an all-round executive7. Expeditious decision- making

Disadvantages:1. It becomes too difficult for secure executives,

supervisors and workers who have an all- round knowledge and with the ability required.

2. Specialization is not taken advantage of.3. Executives are to be overload with duties and

responsibilities.4. Too much reliance is placed on the chief and

other executives5. Spirit of teamwork is lacking.6. Not suitable for big organizations.

2. Line and Staff Organizational StructureAdvantages:

1. Combination of line and staff2. Working relationships between the staff and the

line are well defined to avoid friction among various units

3. Ability of line officials when the staff officers constantly feed them with specialized assistance.

Disadvantages:1. Staff men are liable to overstep the bounds of

their authority and impose their advice or plan.2. Line officers will depend on the staff men to do

all the thinking about the problems in respective departments.

3. Functional Organizational StructureAdvantages:

1. The grouping of employees who perform a common task permit economies of scale and efficient resource use.

2. Since the chain of command converges at the top of the organization, decision-making is centralized, providing a unified direction from the top.

3. Communication and coordination among employees within each department are excellent.

4. The structure promotes high- quality technical problem- solving.

5. The organization is provided with in- depth skill specialization and development.

6. Employees are provided with career progress within functional departments.

4. Product or Market Organizational StructureAdvantages:1. The organization is flexible and responsive to change.2. The organization provides a high concern for

customers’ needs.3. The organization provides excellent coordination

across functional departments,4. There is easy pinpointing of responsibility for product

problems.5. There is emphasis on overall product and division

goals.6. The opportunity for the development of general

management skills is provided.

5. Committee Type of Organizational Structure Advantages:1. Fosters cooperation2. Provides balanced viewpointDisadvantages:1. Divided responsibility2. Time- consuming3. No clear-cut decision

6. Matrix Organizational Structure

BASIC ORGANIZATIONAL CONCEPTS

1. Division of Labor Division of labor happens when the entire job is

broken down into a number of steps, each step being completed by a separate individual. With this, it permits specialization thereby, successful performance of tasks increases.

In the present view, human diseconomies (brought by division of labor) exceed the economic advantages like boredom, fatigue, stress, low productivity, poor quality, increased absenteeism and high turnover.

2. Unity of Command- a concern of all managers in the application of both staff and functional authority is violation of the principle of unity of command: this principle means that each person within that organization should take orders from and report to only one person.

3. Chain of Command is an unbroken line authority that links all

persons in an organization and shows who reports to whom.

the organizing principle concerned with the number of management positions in and organization and their unbroken connection to its position.

It illustrates the following:

A.) Authority- is a tool of a manager.- it can be described as the right to commit resources (to make decisions that commit an organization’s resources), or the legal (legitimate) right to give orders ( to tell someone to do or not to do something).- it is a “glue” that holds the organization together. It provides the means of command.- it has been said that “ authority comes with the territory”, this means that authority is vested in a manager because of the position he or she occupies in the organization.

CHARACTERISTICS OF AUTHORITY:

1.) Authority is vested in organizational positions, not people.

2.) Authority is accepted by subordinates. 3.) Authority flows down the vertical

hierarchy.

TYPES OF AUTHORITY

a.) Line authority This is the authority to direct the work of a

subordinate. Every manager has line authority over his/ her subordinates.

b.) Staff authority - A staff specialist’s right to give advice to a

superior. Include positions that support, assist and advise line managers- whose organizational function contributes to the achievement of the organizational objectives. The head of a staff position has line authority over his/ her subordinates.

c.) Functional authority refers to a specialist’s right to oversee lower level personnel involved in that specialty, regardless of where the personnel are in the organization.

B.) Responsibility is the flip side of the authority coin. it refers to the duty to perform the task or

activity an employee has been assigned. Managers must consider the following to perform their job well:

Responsibility = Authority Responsibility > Authority Authority < Responsibility

C.) Accountability Is the mechanism through which authority and

responsibility are brought into alignment. It means people with authority and responsibility

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

For organizations to function well, everyone needs to know what they are accountable for and accept the responsibility and authority for performing it.

D.) Delegation is a concept describing the passing of formal

authority to another person. Superior delegate, or pass authority down, to subordinates in order to facilitate work being accomplished.

o The following approach can help each manager delegate more effectively: Delegate the whole task Select the right person Ensure the authority equals responsibility Give thorough instruction Maintain feedback Evaluate and reward performance

4. Span of Control also referred to as span of management. Refers to the number of reporting to a

supervisor.5. Centralization and Decentralization- Pertain to the hierarchical level at which decisions

are made. o Centralization- means that decision authority is

located near the top of the organization. o Decentralization- decision authority is pushed

down to lower organization levels.

6. Departmentalization Putting specialist’s together in one department

under the direction of a manager.o Departmentation : the process of setting up and

establishing departments within an organization.

DEPARTMENTATION BY TIME

One of the oldest form of departmentation, generally used at lower levels of the organization, is grouping activities on the basis of time. The use of shifts is common in many enterprises where for economic, technological, or other reasons the normal workday will not suffice.

ADVANTAGES:

Services can be rendered that go beyond the typical 8-hour day often extending to 24 hours a day

It is possible to use 4 processes that cannot be interrupted, those that require a continuing cycle

Expensive capital equipment can be used more the 8 hours a day when workers in several shifts use the same machine

DISADVANTAGES:

Supervision may be lacking during the night shift

There is the fatigue factor; it is difficult for most people to switch, for instance, from a day shift to a night shift and vice versa

Having several shifts may cause problems in coordination and communication.

The payment of overtime rates can increase cost of the product or service.

PROCESS OR EQUIPMENT DEPARTMENTATION

Manufacturing firms often group activities around a process or a type of equipment. In this kind of departmentation, people and materials are brought together in order to carry out a particular operation.

ADVANTAGES:

Achieves economic advantage Uses specialized technology Utilizes special skills

DISADVANTAGES:

Coordination of departments is difficult Responsibility for profit is at the top Is unsuitable for developing general

managers

DEPARTMENTATION BY PRODUCT

Grouping activities on the basis of product or product lines has long been growing in importance in multiline, large scale enterprises. Typically, companies and other enterprises adopting this form of departmentation were organized by enterprise functions.

president

finance

manufactur

ing

marketing

Vice- preside

nt home

products

Vice-preside

nt industri

al product

s

finance

Human

resources

Human

resources

marketing

manufacturi

ng

ADVANTAGES:

Places attention and effort on product line Facilities use of specialized capital, facilities,

skills and knowledge Permits growth and diversity of products and

services Improves coordination of functional activities Places responsibility for profit at the division

level Furnishes measurable training ground for

general managers.

DISADVANTAGES:

Requires more persons with general managerial abilities

Increased costs through duplication of central service and staff activities.

DEPARTMENTATION BY ENTERPRISE FUNCTION

Grouping activities in accordance with the functions of an enterprises functional departmentation- embodies what enterprises typically do. Since all enterprises undertake the creation of something useful and desired by others, the basic enterprise functions are production/marketing ( creating utility that will meet the expectations of customers), financing (raising and collecting, safeguarding, and expending the funds of the enterprises) and human resources (selecting, training and compensating workers.)

president

Vice- President manufacturing

Vice- President human

resources

Vice-President marketing

Vice- President Finance

ADVANTAGES: The grouping of employees who perform a

common task permit economies of scales and efficient resources use.

Since the chain of command converges, providing at the top of the organization, decision-making is centralized, providing a unified direction from the top.

Communication and coordination among employees within each department are excellent

The structure promotes high quality technical problem solving

The organization is provided with career progress within functional department.

Employees are provided with career progress within functional departments.

DISADVANTAGES: Communication and coordination between the

departments are often poor. Decisions involving more than one department

piles up at the top management level and are often delayed.

Work specialization and division of labor, which is stressed in a functional organization; produce routine, nonmotivating employee tasks.

It is difficult to identify which section or group is responsible for certain problems.

There is limited view organizational goals by employees

There is limited general management training for employees.

DEPARTMENTATION BY TERRITORY OR GEOGRAPHY

Department based on territory is rather common in enterprises that operate over wide geographic areas. In this case, it may be important that activities in a given are of territory be grouped ad assigned to a manager.

Chairman

Power system group

Industry and defense group

Electric company(Belgi

uo

Motor company (Argentina

Elevator company ( Belgium)

Constrction products

(Italy)

ADVANTAGES

Places responsibility at a lower level Places emphasis on local markets and

problems Improves coordination in a region Takes advantage of economies of local

operations Better face to face communication with local

interests Furnishes measurable training ground for

general managers

DISADVANTAGES

Requires more persons with general manager abilities

Leads to duplication of services Increase problem of top management control

CUSTOMER DEPARTMENTATION

Grouping activities so that they reflec5 a primary interest in customers is common in a variety of enterprise. Customers are the key to the way activities are grouped when each of the different things an enterprise does for them is managed by ne department.

Director of sales

Manager retail Manager wholesale

Manager government

ADVANTAGES

The organization is a flexible and responsive to change

The organization provides a high concern for customer’s needs

The organization provides excellent coordination across functional departments

There is easy pinponting of responsibility for product problems

There is emphasis on overall prodduc6t and division goals

The opportunity for the development of general management skills is provided

DISADVANTAGES

There is a high possibility of duplication of resources across divisions

There is less technical depth and specialization in division

There is less top management control There is competition for corporate resources

ORGANIZING PROCESS

THE ORGANIZING PROCESSES:

STEP 1:Consider plans and

goals.

STEP 2:Determine activities.

To manufacture and market new brands of clothes at a 10% return on investment.

Compensating, record keeping, cutting, printing, pricing, recruiting, advertising, selling, machining, inspecting, storing, training, hiring, shipping.

STEPS: Examples:

STEP 4:Assign the work and

delegate authority.

Marketing- Bob

Accounting- Loren

Personnel- Ian Production- Marie

Step 3:Classify and group

activities.

STEP 5:

DESIGN A HIERARCHY

IMPORTANCE OF THE ORGANIZING PROCESS

1. A CLARIFIED WORK ENVIRONMENT.

2. A COORDINATED ENVIRONMENT

3. A FORMAL DECISION-MAKING STRUCTURE

COMMON ELEMENTS IN ORGANIZATIONAccording to Henry Mintzberg, all organizations have five(5) common

elements:

1. Operating core

- this consists the employees who perform the basic work related to the production of goods and/or services.

2. Strategic Apex

- these are the top level managers, who are charged with the overall responsibility for the organization

3. The middle line

- compose the managers who connect the operating core to the strategic apex.

4. The technostructure

- they are the analysts who have the responsibility for effecting certain forms of standardization in the organization like time and motion engineers, job description designer, and systems and procedures analysts.

5. The support staff

- people who fill the staff units, who provide indirect support services for the organization

DESIGN CONFIGURATIONS

1. Professional bureaucracy—Control lies with the operating core.

Decisions are decentralized.

2. Simple structure—When the strategic apex is

dominant. Control is centralized and follows chain of command.

3. Divisional structure—Middle management is in control.

4. Machine bureaucracy—Technostructure are dominant. Control is

through standardization.

5. Adhocracy.—The support staff rules. This is a structure

characterized as low in complexity, formalization and centralization. Unwritten rules and regulations exist.

THE COMPANY’S STRUCTURE.

The result of organizing process is the structure. This is the manner in which an organization is constructed, including such aspects as hierarchy, lines of communication and span of control. 

PURPOSES OF THE STRUCTURE

It defines the relationship between tasks and authority of individuals and departments.

It defines formal reporting relationship, the number of levels in the hierarchy of the organization and the span of control.

It defines the grouping together of individual departments.

It defines the systems to affect coordination of effort in both vertical (authority) and horizontal (task directions)

Dimensions of an Organizational Chart

1.Vertical Dimensionestablishes the chain of

command or who reports to whom

2. Horizontal Dimensionestablishes the division of

labor

Vertical Dimension

Horizontal Dimension

ORGANIZATIONAL CHARTS=

STRUCTURE CHARTS

TYPES OF ORGANIZATIONAL CHARTS

Master chart or chart of authority.

A master plan of the principal departments with lines of authority and responsibility. It shows the entire organizational structure.

Functional chart.

It shows the functions and activities of the positions and/or departments. Listed below each job title are brief statements of the responsibilities.

Personnel chart.

Instead of listing functions, the titles of the positions and the names of the persons are indicated.

Organization Chart Defined the visual representation of an organization’s structure it shows the relationship among positions as to authority, responsibility and accountability and the people who occupy them (Inigo) a diagrammatical form that shows important aspects of an organization including the major functions and their respective relationships, the channels of supervision, and the relative authority of each employee who is in charge of each function

Types of an Organizational

Chart

shows the entire organizational structure. It is a master plan of the principal departments, with lines of authority and responsibility and the mutual relationships of all departments.

shows at a glance the functions and activities of each department/ positions.

shows the departments in the same relative manner as the functional chartinstead of listing the functions, the names of the persons are indicated.