ORGANIZING PROCESS

◆ Organizations are groups of people,

with ideas and resources, working
toward common goals.
◆ The purpose of the organizing function
is to make the best use of the
organization's resources to achieve
organizational goals.
ORGANIZING PROCESS

◆ Organizational Structure is the formal

decision-making framework by which
job tasks are divided, grouped, and
coordinated
ORGANIZING PROCESS

◆ An organization chart displays the

organizational structure and shows job
titles, lines of authority, and
relationships between departments.
ORGANIZING PROCESS
Organizational Structure

◆ mechanistic structure
◆ organic structure
Organizational Structure

◆ The mechanistic structure is the traditional

or classical design, common in many
medium- and large-size organizations.
Mechanistic organizations are somewhat rigid
in that they consist of very clearly delineated
jobs, have a well-defined hierarchical
structure, and rely heavily on the formal chain
of command for control.
Organizational Structure

◆ Bureaucratic organizations, with their

emphasis on formalization, are the
primary form of mechanistic structures.
Organizational Structure

◆ Bureaucracy is a form of organization

characterized by a rational, goal-
directed hierarchy, impersonal decision
making, formal controls, and subdivision
into managerial positions and
specialization of labor.
Organizational Structure

◆ Bureaucratic organizations are tall

consisting of hierarchies with many
levels of management.
Organizational Structure

◆ In a tall structure, people become relatively

confined to their own area of specialization.
Bureaucracies are driven by a top-down or
command and control approach in which
managers provide considerable direction and
have considerable control over others. Other
features of the bureaucratic organization
include functional division of labor and work
specialization.
Tall Organizational Structure
Organizational Structure

◆ The organic structure is more flexible,

more adaptable to a participative form
of management, and less concerned
with a clearly defined structure. The
organic organization is open to the
environment in order to capitalize upon
new opportunities
Organizational Structure

◆ Organic organizations have a flat

structure with only one or two levels of
management.
◆ Flat organizations emphasize a
decentralized approach to management
that encourage high employee
involvement in decisions.
Organic Structure
Organizational Structure

◆ The purpose of the flat structure is to

create independent small businesses or
enterprises that can rapidly respond to
customers' needs or changes in the
business environment.
◆ The supervisor tends to have a more
personal relationship with his or her
employees.
Organizational Structure
Organizational Structure

◆ Contingency organization means that the

most appropriate organization structure for
each situation depends upon technology,
organizational size, goals and strategy,
environmental stability, and characteristics of
the employees.
◆ Mechanistic organizations are best suited to
repetitive operations and stable
environments, while organic organizations are
best suited to an uncertain task and a
changing environment.
Organizational Design

Designing an organization involves

choosing an organizational structure
that will enable the company to most
effectively achieve its goals.
Organization design is the creation of an
organization's structure, traditionally
functional, divisional, and/or matrix.
Organizational Design
Functional Organization

◆ In a functional organization, authority is

determined by the relationships between
group functions and activities.
◆ Functional structures group similar or related
occupational specialties or processes
together under the familiar headings of
finance, manufacturing, marketing, accounts
receivable, research, surgery, and photo
finishing.
Organizational Design
Functional Organization

◆ Economy is achieved through

specialization.
◆ However, the organization risks losing
sight of its overall interests as different
departments pursue their own goals
Organizational Design
Divisional Organization

◆ In a divisional organization, corporate

divisions operate as relatively autonomous
businesses under the larger corporate
umbrella.
◆ In a conglomerate organization, divisions may
be unrelated.
◆ Divisional structures are made up of self-
contained strategic business units that each
produces a single product.
Organizational Design
Divisional Organization

◆ For example, General Motors' divisions

include Chevrolet, Oldsmobile, Pontiac, and
Cadillac.
◆ A central headquarters, focusing or results,
coordinates and controls the activities, and
provides support services between divisions.
◆ Functional departments accomplish division
goals.
◆ A weakness however, is the tendency to
duplicate activities among divisions.
Organizational Design
Matrix Organization

◆ In a matrix organization, teams are formed

and team members report to two or more
managers.
◆ Matrix structures utilize functional and
divisional chains of command simultaneously
in the same part of the organization,
commonly for one-of-a-kind projects.
◆ It is used to develop a new product, to
ensure the continuing success of a product to
which several departments directly contribute,
and to solve a difficult problem.
Organizational Design
Matrix Organization

◆ By superimposing a project structure upon the

functional structure, a matrix organization is
formed that allows the organization to take
advantage of new opportunities.
◆ This structure assigns specialists from
different functional departments to work on
one or more projects being led by project
managers.
Organizational Design
Matrix Organization

◆ The matrix concept facilitates working on

concurrent projects by creating a dual chain
of command, the project (program, systems,
or product) manager and the functional
manager.
◆ Project managers have authority over
activities geared toward achieving
organizational goals while functional
managers have authority over promotion
decisions and performance reviews.
Organizational Design
Matrix Organization

◆ Matrix organizations are particularly appealing to

firms that want to speed up the decision-making
process.
◆ However, the matrix organization may not allow
long-term working relationships to develop.
◆ Furthermore, using multiple managers for one
employee may result in confusion as to manager
evaluation and accountability.
◆ The matrix system may elevate the conflict between
product and functional interests
Boundaryless Organization

◆ Boundaryless organizations are not

defined or limited by horizontal, vertical, or
external boundaries imposed by a
predetermined structure.
◆ They share many of the characteristics of
flat organizations, with a strong emphasis
on teams.
Boundaryless Organization

◆ Cross-functional teams dissolve horizontal

barriers and enable the organization to
respond quickly to environmental changes
and to spearhead innovation.
◆ Boundaryless organizations can form
relationships (joint ventures, intellectual
property, distribution channels, or financial
resources) with customers, suppliers, and/or
competitors.
Boundaryless Organization

◆ Telecommuting, strategic alliances and

customer-organization linkages break
down external barriers, streamlining
work activities.
◆ Jack Welch, former CEO of General
Electric, to facilitate interactions with
customers and suppliers, first used this
un-structure.
Boundaryless Organization

◆ A boundaryless environment is required by

learning organizations to facilitate team
collaboration and the sharing of information.
◆ When an organization develops the
continuous capacity to adapt and survive in
an increasingly competitive environment
because all members take an active role in
identifying and resolving work-related issues,
it has developed a learning culture.
Learning Organization

◆ A learning organization is one that is able to

adapt and respond to change.
◆ This design empowers employees because they
acquire and share knowledge and apply this
learning to decision-making.
◆ They are pooling collective intelligence and
stimulating creative thought to improve
performance.
◆ Supervisors facilitate learning by sharing and
aligning the organization's vision for the future
and sustaining a sense of community and strong
culture.
Learning Organization
Organizing Function

◆ The organizing function deals with all

those activities that result in the formal
assignment of tasks and authority and a
coordination of effort.
◆ The supervisor staffs the work unit,
trains employees, secures resources,
and empowers the work group into a
productive team.
Organizing Function

The steps in the organizing process include

1. review plans
2. list all tasks to be accomplished
3. divide tasks into groups one person can accomplish -
a job,
4. group related jobs together in a logical and efficient
manner
5. assign work to individuals
6. delegate authority to establish relationships between
jobs and groups of jobs.
Organizing Function- Division of Labor

◆ The nature and scope of the work

needed to accomplish the organization's
objectives is needed to determine work
classification and work unit design.
◆ Division of labor, or work
specialization, is the degree to which
tasks in an organization are divided into
separate jobs.
Organizing Function- Division of Labor

◆ Work process requirements and employee

skill level determine the degree of
specialization.
◆ Placing capable people in each job ties
directly with productivity improvement. In
order to maximize productivity, supervisors
match employee skill level with task
requirements.
Organizing Function-Workflow analysis

◆ Supervisors should perform workflow analysis

to examine how work creates or adds value to
the ongoing processes in an organization.
◆ Workflow analysis looks at how work moves
from the customer or the demand source
through the organization to the point at which
the work leaves the organization as a product
or service to meet customer demand.
Organizing Function

◆ Workflow analysis can be used to tighten the

connection between employees' work and customers'
needs.
◆ It can help to make major performance
breakthroughs throughout business process
reengineering (BPR), a fundamental rethinking and
radical redesign of business processes to achieve
dramatic improvements in costs, quality, service, and
speed.
◆ BPR uses workflow analysis to identify jobs that can
be eliminated or recombined to improve company
performance.
Departmentalization

◆ Departmentalization – the basic

organizational format or departmental
structure for the company.
◆ Functional departmentalization – Creating
departments on the basis of the specialized
activities of the business – finance,
production, marketing, human resources.
◆ Geographical Departmentalization – grouping
activities on the basis of location.
Departmentalization

◆ Product departmentalization –
assembling the activities of crating,
producing, and marketing each product
into a separate department.
◆ Customer departmentalization –
grouping activities and responsibilities
in departments based on the needs of
specific customer groups.
Departmentalization

◆ Span of Control – the number of

subordinates under the direction of a
manager
◆ Organizational Chart is the complete
organizational structure shown visually.
Organizational Chart

The organizational chart shows the following

◆ Who reports to whom – that is, the chain of
command
◆ How many subordinates work for each
manager – that is, the span of control
◆ The channels of official communication – as
shown by solid lines that connect each job.
Organizational Chart

The organizational chart shows the following

◆ How the company is departmentalized – by
function, by product, or by customer for
example
◆ The work being done in each position – the
labels in boxes describe each person’s
activity
Organizational Chart

The organizational chart shows the following

◆ The hierarchy of decision making – where the
ultimate decision maker for a request,
problem, appeal, or grievance is located.

◆ The types of authority relationships – solid

connections between boxes illustrate line
authority, dotted lines show staff authority,
and broken lines trace the functional
authority.
Authority

◆ Authority is a formal and legitimate right

of manager to make decisions, give
orders and allocate resources.
◆ Line authority is the relationship
between superior and subordinate. Any
manager who supervises operating
employees – or other managers – has
line authority.
Authority
Authority
Authority
Authority

◆ Staffauthority – the authority to serve in

an advisory capacity, it flows up word to
the decision maker.
◆ Functional authority – the authority that
permits staff managers to make
decisions about specific activities
performed by employees within other
departments.
Authority
Authority

◆ Line departments - the departments

established to meet the major objectives of
the business and directly influence the
success (profitability) of a business.
◆ Staff departments – the departments,
including legal, human resources, computer
services, and public relations, that provide
assistance to the line departments and to
each other, making money indirectly for the
company through advice, service, and
assistance.
Authority

◆ Unity of command – the organizing principle

that states that each person within the
organization should take orders from and
report to only one person.
◆ Power is the ability to exert influence in the
organization. Power is personal.
◆ Legitimate power – the power possessed by
managers and derived from the positions they
occupy in the formal organization
Authority

◆ Reward power – the power that comes

from the ability to promise or grant
rewards.
◆ Coercive power – the power dependent
on fear of the negative results that may
happen if one fails to comply.
Authority

◆ Expert power – influence due to

abilities, skills, knowledge, or
experience.
◆ Delegation – the downward transfer of
formal authority from one person to
another.
Departmentalization

◆ Departmentalization is the basis on

which work or individuals are grouped
into manageable units.
◆ There are five traditional methods for
grouping work activities.

·
Departmentalization

◆ Departmentalization by product
assembles all functions needed to make and
market a particular product are placed under
one executive.
◆ For instance, major department stores are
structured around product groups such as
home accessories, appliances, women's
clothing, men's clothing, and children's
clothing.
Departmentalization

◆
· Departmentalization by product assembles all
functions needed to make and market a particular
product are placed under one executive. For
instance, major department stores are structured
around product groups such as home accessories,
appliances, women's clothing, men's clothing, and
children's clothing.
◆
Departmentalization

· Departmentalization by geographical regions

groups jobs on the basis of territory or geography.
For example, Merck, a major pharmaceutical
company, has its domestic sales departmentalized by
regions such as Northeast, Southeast, Midwest,
Southwest, and Northwest.
◆
Departmentalization

◆ Departmentalization by process groups jobs on the

basis of product or customer flow. Each process
requires particular skills and offers a basis for
homogeneous categorizing of work activities. A
patient preparing for an operation would first engage
in preliminary diagnostic tests, then go through the
admitting process, undergo a procedure in surgery,
receive post operative care, be discharged and
perhaps receive out-patient attention. These services
are each administered by different departments.
Departmentalization

◆ Departmentalization by customer groups jobs on the basis of

a common set of needs or problems of specific customers. For
instance, a plumbing firm may group its work according to
whether it is serving private sector, public sector, government, or
not-for-profit organizations. A current departmentalization trend
is to structure work according to customer, using cross-
functional teams. This group is chosen from different functions
to work together across various departments to interdependently
create new products or services. For example, a cross-
functional team consisting of managers from accounting,
finance, and marketing is created to prepare a technology plan.