Organizing is a subset of larger activity of managing. It is the process by which the structure of an organization is created and maintained.

The process includes The determination of the specific activities to accomplish the objectives The grouping of activities and assigning these to specified positions/ persons The creation of network of positions/ persons for the purpose of planning, motivation, communication, coordination & control

Org Theory and Design

Classical Viewpoints developed in late 18th Century Scientific Management FW Taylor Administrative Principles Henry Fayol Bureaucracy - Max Weber Human Relations Hawthorne studies Systems View Contingency Theory

Bureaucracy - Max Weber Rules and regulation Hierarchy Paper work Professional qualifications and Expert Training

Functional Aspects Specialization Structure set the pace for processes Predictability and Stability Rationality in Dec Making Democracy

Dysfunctional Aspects Rigidity Impersonal rule is important Displacement of Objectives Compartmentalization Empire Building Red Tape

Administrative Theory - Henri Fayol 1916 French Industrialist 1. Division of Work 2. Authority & Responsibility 3. Discipline 4. Unity of Command 5. Unity of Direction 6. Subordination of Individual Interest to General Interest 7. Remuneration of Personnel 8. Centralization 9. Scalar Chain 10. Order 11. Equity 12. Stability of tenure of personnel 13. Initiative 14. Espirit de corps Union is strength

Scientific Management F W Taylor 1900 Micro Four Principles of Scientific Management 1. Develop science for each element of mans work which replaces the old rule-of-thumb approach 2. Scientifically select and then train, teach and develop the workman (where as earlier he decided) 3. Management should heartily cooperate with the workers so as to ensure all the work being done in accordance with the principles of scientific management 4. There is almost equal division of work between management and workmen. Management should take over the work for which they are better suited.

Neo Classical Viewpoint Human Relations Theory Hawthorne experiments at Western Electric Company by Elton Mayo 1924 to 1932 1924 to 27 variation in illumination productivity raised 1927 to30 Telephone operator work conditions Social interaction amongst employee supervisor influenced productivity 1931 study How group norms affect group efforts and output IMPORTANT: Neo classical theory does not replace classical view

Organization as Systems

Environment

Transformation Resources INPUT process OUTPUT

Goods/ Services

Boundary Spanning
SUB SYSTEMS

Production Maintenance Adaptation Management

Boundary Spanning

What is an Organization? Definition Importance of Organization Organization as Systems Organizational Configuration Dimensions of Org Design Org Theory and Design Changing Paradigm of Org Design

What is an Organization? Definition

A social Entity Goal Directed Designed as deliberately structured and activity system linked to external environment coordinating

Organizational Configuration

Top Management

Technical Support Staff

Middle Management

Admin Support Staff

Technical Core

Environment

Goals Strategy

Size

Culture

Technology

Structure
1. Formalization 2. Specialization 3. Hierarchy of authority 4. Centralization 5. Professionalism 6. Personnel ratios

ORGANIZATION STRUCTURE & DESIGN need an effective structure to achieve org. goals/plans/strategies org. structure formal framework for jobs, tasks to be divided, grouped and coordinated org. design process that involves decisions about - work specialization - departmentalization - chain of command - span of control - centralization and decentralization - formalization

PURPOSES OF ORGANIZING Divides work to be done into specific jobs and departments Assigns task & responsibilities associated with indv. jobs Coordinates diverse organizational tasks Clusters job into units Establishes relationships among individuals, groups & departments Establishes formal lines of authority Allocates and deploys org. resources

WORK SPECIALIZATION Early in 2oth century, Henry Ford division of labor concept in his assembly line, workers assigned specific, repetitive task-helped increase productivity Today Work specialization means degree to which tasks in an organization are divided into separate jobs By 1960s human diseconomies form being too specialized offset the advantages boredom, fatigue, stress, poor quality Managers see it as important organizing mechanism but not source of ever-increasing productivity Broaden job scope, teamwork and reduced work specialization

DEPARTMENTALIZATION process of grouping together jobs and people into separate units to accomplish org. goals. 5 common forms functional departmentalization (group by functions performed) geographic departmentalization (basis of territorial area) departmentalization (groups jobs by product line) customer departmentalization (on the basis of common customers) process departmentalization (group on basis of product process or customer flow) customer departmentalization used to better monitor customer needs cross functional teams flexible interdisciplinary teams replaced traditional functional groupings

CHAIN OF COMMAND Continuous line of authority that extends from upper organizational levels to lowest Who reports to whom. Who do I go to if I have a problem? To whom am I responsible? Elements involved authority, responsibility, unity of command 1. Authority - Rights inherent in a managerial position to tell people what to do and to expect them to do it 2. Responsibility - The obligation or expectation to perform any assigned duties 3. Unity of Command - The principle that a person report only to one superior

NEW DEVELOPMENTS Authority, responsibility, chain of command less relevant because of IT and employee empowerment Employees can access info that used to be available to managers Also using computers employees can communicate directly without going through chain of command Employees empowered to make decisions management use self-managed teams New organization designs with multiple bosses continue to be implemented, therefore traditional concepts of authority, responsibility and chain of command becoming irrelevant

SPAN OF CONTROL no. of employees a manager can supervise effectively and efficiently. Classical view not more than 6 (small span) Helps determine no. of levels and managers 1 2 3 4 5

1 8 64 512 4096

new (contemporary) viewpoint span of control increasing flatter organization less direct supervision, well trained and experienced staff new (contemporary) viewpoint span of control increasing flatter organization less direct supervision, well trained and experienced staff

CENTRALIZATION AND DECENTRALIZATION how much decision making authority has been delegated lower levels classical centralized decision-making as org. become more complex and dynamic decentralize decision making decisions should be made by those who have best information to make those decisions empowerment is a managerial approach in which employees are given substantial authority and say to make decisions on their own - involve business decisions - design & prod. Of products - front line/desk service counters

FORMALIZATION

Degree to which jobs within org. are standardized Extent to which employed behavior guided by rules and procedures Explicit job descriptions, clearly defined procedures covering work processes

ORGANIZATIONAL DESIGN DECISIONS mechanistic org.- rigid, tightly controlled organic highly adaptive and flexible Mechanistic High specialization Rigid Departmentalization Clear Chain of Command Narrow Spans of Control Centralization High Formalization Organic Cross-functional Teams Cross-Hierarchical Teams Free Flow of Info. Wide Spans of Control Decentralization Low Formalization

Contingency Factors Deciding Org. Design Strategy and Structure innovators need flexibility, cost minimizes seek efficiency, tight controls of mechanistic structure Size and Structure large (2000 employees) more specialize, departments > mechanistic whereas Small co. organic, loose, flexible Technology and Structure Batch (or unit) production organic, Mass production mechanistic, and Continuous process production organic Environmental Uncertainty and Structure mechanistic structure suitable for stable simple environment. Global competition, accelerated product innovation by competitors, increased demands for high quality and fast delivery are dynamic environmental forces. Need lean, fast flexible