Organizing Function of Management, Introduction to Management

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.
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ORGANIZING…CONT’D
• Organizing, thus is, the process of
arranging people and other resources
to work together to accomplish a goal.
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ORGANIZING…CONT’D
To organize is to align strategic interests with
operational priorities within given structural
prerequisites and means.
Organization and coordination aim to make the
functioning of an entire institution more predictable and
its output more effective
Define the daily and professional lives of everyone
everywhere
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ORGANIZING…
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?
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ORGANIZING…
How many layers of management
(Organizational levels) are needed to
coordinate them?
How many people should a manager
supervise directly?
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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. <#>

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.
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TYPES OF ORGANIZATIONS
 Based on how the member the group interacts and
formed, we have at least two types of
organization.
Formal organization
 Informal organization
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TYPES OF ORGANIZATIONS………
Formal organization
 It is the intentional, deliberate or rational structure
of roles in a formally organized enterprise.
 It is characterized by well-defined authority – reporting
relationships, job titles, policies, procedures, specific
job duties and a host of other factors necessary to
accomplish its respective goals
 Shown on the organizational chart or organogram
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TYPES OF ORGANIZATIONS
Informal organization
 It is a network of personal and social relationships that arises
spontaneously as people associate with one another in a work
environment.
 It is an unofficial network of personal and social relations developed as
a result of association or working together
 E.g. the Chess group, the Morning Coffee group, the Bowling team, etc.
It operates outside formal authority relationships.
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INFORMAL ORGANIZATION
 Informal organization has a structure which is loosely
designed, highly flexible and spontaneous.
 It operates outside formal authority relationships. It doesn’t
have legal personality.
 Informal organization develops within the formal
organization
 Informal groups may be described as horizontal, vertical, or mixed.
These titles indicate whether the group members come from the same
or different levels of formal organization.
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INFORMAL ORGANIZATION
 A Sociogram is a diagram of group attraction. The Sociogram is
developed through a process asking members whom they like or dislike
and with whom they wish to work or not to work
 An Interaction Chart is a diagram that shows the informal interactions
people have with one another.
• For any specific person, the chart can show with whom the person spends
the most time and with whom the person communicates informally.
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WHY PEOPLE FORM INFORMAL
GROUPS?
Need for satisfaction
Proximity and interaction
Similarity
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STEPS IN ORGANIZING
The following points represents the multi-step process of
organizing.
I. Detailing all the work that must be done to attain the
goals of the organization
II. Dividing the total workload into activities that can
logically and comfortably be performed by one person or
by a group of individuals
III. Combining the work of the organization members in a
logical and efficient manner <#>

BASIC ELEMENTS OF
ORGANIZING
 Division of Work/labor
 Grouping Jobs/Departmentalization
 Establishing reporting relationships between
jobs
 Distributing authority among jobs
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DIVISION OF WORK/LABOR
 Tasks are broken down and divided into smaller parts
 Is a concept which states that dividing the production
process into different stages enables workers to focus
on specific tasks.
 It is essential for greater efficiency and higher
productivity
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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
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 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.
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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
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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 .

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.
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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
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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.
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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.
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PRODUCT DEPARTMENTALIZATION……….
• 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
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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.
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LOCATION DEPARTMENTALIZATION…..
 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.
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TERRITORY/LOCATION… CONT’D
• Places emphasis on local markets and
problems; Encourages local participation
in decision-making
• Improves coordination of activities in a
region
• Furnishes measurable training ground for
general managers.
• Encourages decentralized decision-
making.
Advantage
s
• Requires more persons with general
manager abilities
• Duplicates staffs, services, or effort.
• Tends to make maintenance of economical
central services difficult and may require
services such as personnel or purchasing
at the regional level.
Disadvanta
ges
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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.
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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.
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ESTABLISHING REPORTING RELATIONSHIPS……
 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.
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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.
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 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.
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GROUP DISCUSSION
Discuss and Identify the
possible factors affecting the
span of management in an
organization.
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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
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Narrow Span of Management
o This means superior controls few numbers of
subordinates or few subordinates report to a superior.
o 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 <#>

3. ESTABLISHING REPORTING… CONT’D
Wide Span of Management
o This means many subordinates report to a superior
or a superior supervises many subordinates.
o 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
 Fewer hierarchal level <#>

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 respon
sibility.
 All members of the organization should be evaluated periodically and <#>

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.
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STEPS IN THE DELEGATION
PROCESS
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GROUP DISCUSSION
• What are the possible
advantages of delegation of
authority?
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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.
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OBSTACLES TO EFFECTIVE DELEGATION
SUPERIOR-RELATED REASONS OF
INADEQUATE DELEGATION
 Belief that He can make
Better Decisions
 Fear of Losing Importance
 Fear of Loss of Control
 Fear of Being Exposed
 Unwillingness to take
Calculated Risk
 Tendency to be
Authoritarian
 Environment of Mutual
SUBORDINATE-RELATED FACTORS
 Lack of self-confidence in their
Abilities
 Fear of Making Mistakes
 Dependent Personality
 Unclear Delegation
 Lack of Motivation
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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.
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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
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FACTORS AFFECTING CENTRALIZATION AND DECENTRALIZATION
• Costliness of decisions
• Uniformity of policy
• Corporate culture
• Availability of managers
• Control mechanisms
• Environmental influences
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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
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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.
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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.]
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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.
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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.
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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
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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.
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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.
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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]
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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.
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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.
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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.
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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.
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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]
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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.
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