Organizing

Deployment of organizational
resources to achieve strategic goals.
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.
Four Points About
the 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.

Authority
Formal and legitimate right of a manager
to make decisions, issue orders, and to
allocate resources to achieve
organizationally desired outcomes.
EAuthority is distinguished by three
characteristics:
C Authority is vested in organizational
positions, not people.
C Authority is accepted by subordinates.
C Authority flows down the vertical hierarchy.

Responsibility

The duty to perform the task or activity
an employee has been assigned
Managers are assigned authority
commensurate with responsibility

Accountability
EMechanism through which authority and
responsibility are brought into
alignment.
EPeople are subject to reporting and
justifying task outcomes to those above
them in the chain of command.
ECan 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
Give
thorough
instructions
Maintain
feedback
Evaluate and reward
performance
Delegate the whole
task
Select the right
person
Ensure that
authority equals
responsibility
Techniques for Delegation
Delegation
Line Authority:
Individuals have the formal power to
direct and control immediate
subordinates.

Staff Authority:
Granted to staff specialists in their areas
of expertise
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 and Decentralization:

The hierarchical level at which decisions
are made


Centralization:
1. All facilities at one location


2. Decision authority is located near the top of the organization
Decentralization:
1. Facilities at different locations


2. Decision authority is pushed down the chain of command to lower levels
Decentralization Tends
Make greater use of human resources
Reduce burdens of top managers
Cause decisions to be made close to the
action
Permit rapid response to changes
Factors that Influence
Centralization/Decentralization

Amount of change and uncertainty
Corporate culture
Size of organization
Cost and risk of failure
Efficiency of communication and control
systems

Formalization:

The written documentation used to
direct and control employees.
Departmentalization
The basis on which individuals are
grouped into departments
Five structural alternatives
O Vertical functional approach. People are grouped
together in departments by common skills.
O Divisional approach. Grouped together based on a
common product, program, or geographical region.
O Matrix approach. Functional and divisional chains of
command are implemented. Two chains of
command exists.
O Team-based approach. Created to accomplish
specific tasks.
O 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
Design
Vertical Approach Divisional Approach

Approaches To Structural
Design

Advantages of
Functional Approach
Efficient use of resources
In-depth skill specialization
Career progress within the department
Top manager has direction and control
Excellent coordination
High-quality problem solving
Simplifies training

Disadvantages of
Functional Approach
Poor communication among functional
departments
Slow response to external changes
Centralized decision making
Responsibility for problems difficult to
identify
Employees have limited view
Limited general management training

Divisional Approach
Departments are grouped together
based on organizational outputs
Diverse departments are brought
together to produce a single
organizational output
Encourages decentralization

Advantages of
Geographic Divisions
Responsive in an unstable environment
Shows concern for customer
Coordinates across functional
departments
Identifies responsibility for product
Emphasizes overall product and division
goals
Develops general management skills
Minimizes travel costs

Disadvantages of
Geographic Divisions
Duplication of resources across
divisions
Less specialization in divisions
Poor coordination across divisions
Less top management control
Competition for resources among
divisions
More managers needed

Matrix Approach
Functional and divisional chains of
command simultaneously
Dual lines of authority
Functional hierarchy of authority runs
vertically
Divisional hierarchy runs laterally
Violates the unity of command concept
Advantages of Matrix
More efficient use of resources than
single hierarchy
Adaptable to changing environment
Development of both general and
specialists management skills
Expertise available to all divisions
Enlarged tasks for employees

Disadvantages of Matrix
Dual chain of command
High conflict between two sides of
matrix
Many meetings to coordinate activities
Need for human relations training
Power domination by one side of matrix

Team Approach
Cross-functional teams consist of
employees from various functional
departments.
Permanent team solve ongoing
problems. Employees come from all
functional areas.

Advantages of Teams
Same advantages as functional
structure
Reduced barriers among departments
Quicker response time
Better morale
Reduced administrative overhead

Disadvantages of Teams
Dual loyalties and conflict
Time and resources spent on meetings
Unplanned decentralization

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.

Advantages of Network
Approach
Global competitiveness
Work force flexibility
Reduced administrative overhead

Disadvantages of
Network Approach

No hands-on control
Loss of part of the organization severely
impacts remainder of organization
Employee loyalty weakened

Structural Design
Project Management

Teams
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.