Module 3

ORGANISING
 Planning Ahead
 What is organizing as a management function?
 What are the major types of organization
structures?
 What are the new developments in
organization structures?
 What organizing trends are changing the
workplace?

Management 8/e - Chapter 10 2

 Organizing
The term ‘Organization is used in many ways. It
means different things to different people. Currently,
the following uses of the term are popular:
 A Group of people united by a common purpose

 An entity, an ongoing business unit engaged in utilising

resources to create a result.

 A structure of relationship between various positions in an

enterprise.
 A process by which employees, facilities and task are

related to each other, with a view to achieve soecific goals

 What is organizing as a management
function?
 Organizing is a very important managerial function.
 If planning focus on what to do, Organizing focus on
hos to do it. Hence ahter planning manager will start
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.
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 Organizing and organization structure
 Organizing
 The process of arranging people and other resources to
work together to accomplish a goal.
 Organization structure
 The system of tasks, workflows, reporting relationships,
and communication channels that link together diverse
individuals and groups.
 Figure :Organizing viewed in
relationship with the other management
functions.

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 Organizing Process

 Organizing Process: consists of

a. Identifying the work
b. Grouping of work/activities or tasks, e
c. Establishing authority relationships among people
and assigning tasks to people.
d. Delegating authority
e. Providing for coordination and control

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 Organisation Structure: Formal And
Informal
 Formal structures 
Is a group of people working together cooperatively,
under authority, towards goals that mutually
benefit the partcipants and the Organization. It is
system of well-defined jobs, each bearing a
definite measure of authorty, responsibility and
accountibility.
 The structure of the organization in its official state.
 The intentional structure of roles in a formally
organized enterprise.
 An organization chart is a diagram describing reporting
relationships and the formal arrangement of work
positions within an organization.
Management 8/e - Chapter 10 8
 An organization chart identifies the following
aspects of formal structure:
 The division of work.
 Supervisory relationships.
 Communication channels.
 Major subunits.
 Levels of management.
 Informal structures 
 A “shadow” organization made up of the unofficial, but
often critical, working relationships between
organization members.
 A network of interpersonal relationships that arise when
people associate with one another.
 Potential advantages of informal structures:
 Helping people accomplish their work.
 Overcoming limits of formal structure.
 Gaining access to interpersonal networks.
 Informal learning.

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 Informal structures (cont.) 
 Potential disadvantages of informal structures:
 May work against best interests of entire organization.
 Susceptibility to rumor.
 May carry inaccurate information.
 May breed resistance to change.
 Diversion of work efforts from important objectives.

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 Four Points About
the Organization Chart

Visual representation

Set of formal tasks

Formal
reporting relationships

Framework
for vertical control

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Organizational Structure and Span of
Control
Relatively narrow
span of control

Relatively wide span

of control

Management 8/e - Chapter 10 13

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.

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 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.
Management 8/e - Chapter 10 15
 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.
Management 8/e - Chapter 10 16
Tall verses Flat Structure

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 Basic Forms of
Organizational Structure

Functional
Organization
Divisional
Organization

Matrix
Organization International
Organization
Management 8/e - Chapter 10 18
 What are the major types of organization
structures?
 Functional structures
 People with similar skills and performing similar
tasks are grouped together into formal work units.
 Members work in their functional areas of
expertise.
 Are not limited to businesses.
 Work well for small organizations producing few
products or services.

Management 8/e - Chapter 10 19

Figure 2 Functional structures in a
business, branch bank, and community
hospital.

Management 8/e - Chapter 10 20

 Potential advantages of functional structures:
 Task assignments consistent with expertise and training.
 High-quality technical problem solving,
 In-depth training and skill development.
 Clear career paths within functions.
 Economies of scale within fuction
 Specialization
 Coordination
 In-depth skill development
 Power & prestige
Management 8/e - Chapter 10 21
 Potential disadvantages of functional structures:
 Difficulties in pinpointing responsibilities.
 Functional chimneys problem.
 Sense of cooperation and common purpose break down.
 Narrow view of performance objectives.
 Excessive upward referral of decisions.
 Boredom & monotony
 Sub-unit conflicts
 Not suitable for large organizations

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 Divisional structures
It is a type of departmentalization in which positions are
grouped according to somilarity of products, services
or markets.
It is the process of dividing large functional pyramids
into smaller, more flexible, administrative units is
called divisionalization.
It creates a set of small companies in terms of products,
services or markets.
Common in complex organizations.
Avoid problems associated with functional structures.

Management 8/e - Chapter 10 23

Figure 3 Divisional structures based on
product, geography, customer, and process.

Management 8/e - Chapter 10 24

 Potential advantages of divisional structures:
 More flexibility in responding to environmental
changes.
 Improved coordination.
 Clear points of responsibility.
 Expertise focused on specific customers, products,
and regions.
 Greater ease in restructuring.

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 Potential disadvantages of divisional
structures:
 Duplication of resources and efforts across
divisions.
 Competition and poor coordination across
divisions.
 Emphasis on divisional goals at expense of
organizational goals.

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 Types of divisional structures and how they group job
and activities:
 Product structures focus on a single product or service.
 Geographical structures focus on the same location or
geographical region.
 Customer structures focus on the same customers or
clients.
 Process structures focus on the same processes.

Management 8/e - Chapter 10 27

 Matrix structure
It is a type of departmentalization that superimposes a horizontal set of
divisional reporting relationship onto a hierarchical functional structure. It is
also called as a grid organization or project orgns.
Thus it is considered as both functional and divisional at the same time to gain
advantages and minimize disadvantages of each.
It will have two chains of command-vertical and horizontal.
Used in:
 Manufacturing
 Service industries
 Professional fields
 Non-profit sector
 Multi-national corporations

Management 8/e - Chapter 10 28

Fig 4 Matrix structure in a small
multi-project business firm.

Management 8/e - Chapter 10 29

 Potential advantages of matrix structures:
 Better cooperation across functions.
 Improved decision making.
 Increased flexibility in restructuring.
 Better customer service.
 Better performance accountability.
 Improved strategic management.

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 Potential disadvantages of matrix structures:
 Two-boss system is susceptible to power struggles.
 Two-boss system can create task confusion and
conflict in work priorities.
 Team meetings are time consuming.

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 What are the new developments in
organization structures?

 Team structures
 Extensively use permanent and temporary

teams to solve problems, complete special

projects, and accomplish day-to-day tasks.

 Often use cross-functional teams.

Management 8/e - Chapter 10 32

Fig 5 How a team structure uses cross-
functional teams for improved lateral
relations.

Management 8/e - Chapter 10 33

 Potential advantages of team structures:
 Eliminates difficulties with communication and
decision making.
 Eliminates barriers between operating
departments.
 Improved morale.
 Greater sense of involvement and identification.
 Increased enthusiasm for work.
 Improved quality and speed of decision making.

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 Potential disadvantages of team structures:
 Excessive time spent in meetings.
 Effective use of time depends on quality of
interpersonal relations, group dynamics, and team
management.

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 Network structures
 A central core that is linked through networks of
relationships with outside contractors and
suppliers of essential services.
 Own only core components and use strategic
alliances or outsourcing to provide other
components.

Management 8/e - Chapter 10 36

Figure 10.6 A network structure for a
Web-based retail business.

Management 8/e - Chapter 10 37

 Potential advantages of network structures:
 Firms can operate with fewer full-time employees
and less complex internal systems.
 Reduced overhead costs and increased operating
efficiency.
 Permits operations across great distances.

Management 8/e - Chapter 10 38

 Potential disadvantages of network structures:
 Control and coordination problems may arise from
network complexity.
 Potential loss of control over outsourced activities.
 Potential lack of loyalty among infrequently used
contractors.
 Excessively aggressive outsourcing can be
dangerous.

Management 8/e - Chapter 10 39

An International Organization

CEO

Retail Retail International

Division A Division B Division

Latin
Europe Asia
America
Management 8/e - Chapter 10 40
 The Future of
Organizational Structure

 Boundary-less Organizations

 Team Organizations

 Virtual Organizations

 Learning Organizations
Management 8/e - Chapter 10 41
 Boundaryless organizations
 Eliminate internal boundaries among subsystems and
external boundaries with the external environment.
 A combination of team and network structures, with the
addition of “temporariness.”
 Key requirements:
 Absence of hierarchy.
 Empowerment of team members.
 Technology utilization.

 Boundaryless organizations
 Encourage creativity, quality, timeliness, flexibility, and
efficiency.
 Knowledge sharing is both a goal and essential component
Management 8/e - Chapter 10 42
Figure 10.7 The boundary less
organization eliminates internal and
external barriers.

Management 8/e - Chapter 10 43

 Virtual organization.

 A special form of boundaryless organization.

 Operates in a shifting network of external alliances that
are engaged as needed, using IT and the Internet.

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 The learning organization
 An organisation that has developed the capacity to continuously learn,
adapt, and change through the practice of knowledge management by
employees.
Characteristics of a learning organisation:
 An open team-based organisation design that empowers
employees
 Extensive and open information sharing
 Leadership that provides a shared vision of the organisation’s future,
support and encouragement
 A strong culture of shared values, trust, openness, and a sense of
community.

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The Informal Organization
A Powerful Dynamic orgn

 Informal Groups
 The Grapevine
 Intrapreneuring

Management 8/e - Chapter 10 46

 What organizing trends are changing the
workplace?
 Contemporary organizing trends include:
 Shorter chains of command.
 Less unity of command.
 Wider spans of control.
 More delegation and empowerment.
 Decentralization with centralization.
 Reduced use of staff.
Management 8/e - Chapter 10 47
 Shorter chains of command
 The line of authority that vertically links all

persons with successively higher levels of

management.
 Organizing trend:

 Organizations are being “streamlined” by cutting

unnecessary levels of management.
 Flatter structures are viewed as a competitive
advantage.

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 Less unity of command
 Each person in an organization should report to

one and only one supervisor.

 Organizing trend:
 Organizations are using more cross-functional teams,
task forces, and horizontal structures.
 Organizations are becoming more customer conscious.
 Employees often find themselves working for more than
one boss.

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 Wider spans of control
 The number of persons directly reporting to a

manager.
 Organizing trend:

 Many organizations are shifting to wider spans of

control as levels of management are eliminated.
 Managers have responsibility for a larger number of
subordinates who operate with less direct supervision.

Management 8/e - Chapter 10 50

Fig-8 Spans of control in “flat” versus “tall”
structures.

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 More delegation and empowerment
 Delegation is the process of entrusting work to

others by giving them the right to make decisions

and take action.
 The manager assigns responsibility, grants

authority to act, and creates accountability.

 Authority should be commensurate with

responsibility.

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 Guidelines for effective delegation:
 Carefully choose the person to whom you delegate.
 Define the responsibility; make the assignment clear.
 Agree on performance objectives and standards.
 Agree on a performance timetable.
 Give authority; allow the other person to act independently.
 Show trust in the other person.
 Provide performance support.
 Give performance feedback
 Recognize and reinforce progress.
 Help when things go wrong.
 Don’t forget your accountability for performance results.
Management 8/e - Chapter 10 53
 More delegation and empowerment (cont.)
 A common management failure is unwillingness to
delegate.
 Delegation leads to empowerment.
 Organizing trend:
 Managers are delegating more and finding more ways to
empower people at all levels.

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 Decentralization with centralization
 Centralization is the concentration of authority for
making most decisions at the top levels of the
organization.
 Decentralization is the dispersion of authority to
make decisions throughout all levels of the
organization.

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 Decentralization with centralization (cont.)
 Centralization and decentralization not an

“either/or” choice.
 Organizing trend:

 Delegation, empowerment, and horizontal

structures contribute to more decentralization in

organizations.
 Advances in information technology allow for

the retention of centralized control.

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 Reduced use of staff
 Specialized staff
 People who perform a technical service or provide
special problem-solving expertise to other parts of the
organization.
 Personal staff
 People working in “assistant-to” positions that provide
special support to higher-level managers.

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 Reduced use of staff (cont.)
 Line and staff managers may disagree over staff authority.

 Advisory Authority.
 Functional authority.
 No one best solution for dividing line-staff responsibilities.
 Organizing trend:
 Organizations are reducing staff size.
 Organizations are seeking increased operating efficiency by
employing fewer staff personnel and smaller staff units.

Management 8/e - Chapter 10 58

 Organization design and
organizational configuration