Fundamentals of Management Fundamentals of Organizing

Chapter 11
Fundamentals of Organizing
By
Dr. Doaa Saleh
Fundamentals of Management Making Decisions

Overview

Introduction Theories of Business

Management Ethics
(Ch. 1)
(Ch. 2) (Ch. 3)
 Fundamentals of Management Fundamentals of Organizing

What is Organizing?
Lower Level
Employees Management

Raw Materials
High Level
Management

Middle Level
Management

Assets
 Fundamentals of Management Fundamentals of Organizing

What is Organizing?
High Level
Management

Middle Level
Management

Lower Level
Management

Employees

Raw Materials
& Assets
Fundamentals of Management Fundamentals of Organizing

Definitions
• Organizing:
Is the process of establishing orderly uses for resources within the
management system.

• Organizing Skills:
Is the ability to establish orderly uses for resources within the
management system.
Fundamentals of Management Fundamentals of Organizing

Importance of Organizing
1. It is the primary mechanism managers use to activate plans.
2. It creates and maintains relationships between all organizational
resources.
3. It helps managers in minimizing costly weaknesses.
Fundamentals of Management Fundamentals of Organizing

Organizing Process
Fundamentals of Management Fundamentals of Organizing

Classical Organizing Theory

• Weber’s Bureaucratic Model.
• Division Of Labor.
• Structure.
Fundamentals of Management Fundamentals of Organizing

Weber’s bureaucratic model

• Concept of bureaucracy:
• Detailed Procedures And Rules.
• Clearly Outlined Organizational Hierarchy.
• Impersonal Relationships Among Organization Members.
• He was concerned that managers were inclined to overemphasize the
merits of a bureaucracy.
• He cautioned that a bureaucracy is not an end in itself, but rather a
means to the end of management system goal attainment.
Fundamentals of Management Fundamentals of Organizing

Weber’s bureaucratic model

Disadvantages
• It gives short shrift to the human variable within organizations.
• It is recognized today that the bureaucratic approach without an
appropriate emphasis on the human variable is almost certainly a
formula for organizational failure.
Fundamentals of Management Fundamentals of Organizing

Division of Labor
• Is the assignment of various portions of a particular task among a
number of organization members.
Fundamentals of Management Fundamentals of Organizing

Division of Labor
Advantages:
• When workers specialize in a particular task, their skill at performing
that task tends to increase.
• Workers who have one job and one place in which to do it do not lose
valuable time changing tools or locations.
• When workers concentrate on performing only one job, they naturally
try to make the job easier and more efficient.
• It creates a situation in which workers need only to know how to
perform their part of the work task rather than the entire process for
producing the end product.
Fundamentals of Management Fundamentals of Organizing

Division of Labor
Disadvantages:
• It focuses solely on efficiency and economic benefit and overlooks the
human variable in organizations.
• Work that is extremely specialized tends to be boring and therefore
will eventually cause production rates to go down as workers become
resentful of being treated like machines.
 Fundamentals of Management Fundamentals of Organizing

Division of Labor - Coordination

High Level
Management

Division

Division
Middle Level
Management

Lower Level
Management

Employees

Raw Materials
& Assets
Fundamentals of Management Fundamentals of Organizing

Division of Labor - Coordination

• Coordination: is the orderly arrangement of group effort to provide
unity of action in the pursuit of a common purpose.
Fundamentals of Management Fundamentals of Organizing

Structure
• Definition:
Is the designated relationships among resources of the management system
• Purpose:
is to facilitate the use of each resource, individually and collectively, as the
management system attempts to attain its objectives.
• Types:
Formal: the relationships among organizational resources as outlined by
management
Informal: the patterns of relationships that develop because of the informal
activities of organization members
Fundamentals of Management Fundamentals of Organizing

Organization Chart
Vertical Dimensioning

General
Manager

Production Marketing Finance

Manager Manager Manager

Manufacturing Inventory Advertising Sales Expenditure Accountants

Manager Manager Manager Manager Manager Manager

Horizontal Dimensioning
Scalar Relationship (chain of command)

Fundamentals of Management Fundamentals of Organizing

Vertical Dimensioning
Scalar Relationship General
Unity of Command Span of Management
(chain of command) Manager

Production Marketing Finance

Manager Manager Manager

Manufacturing Inventory Advertising Sales Expenditure Accountants

Manager Manager Manager Manager Manager Manager
Fundamentals of Management Fundamentals of Organizing

Vertical Dimensioning
• Definition:
The extent to which an organization uses vertical levels to separate job
responsibilities
• Scalar Relationship (chain of command):
Individual at the top possesses the most authority
Individual at the bottom possesses the less authority
Other individuals’ authority is scaled downward according to their relative
position on the organization chart
• Unity of Command:
Is the management principle that recommends that an individual have only
one boss
Fundamentals of Management Fundamentals of Organizing

Vertical Dimensioning
• Span Of Management:
The span of management has a significant effect on how well managers
carry out their responsibilities.

Span of management is also called span of control, span of authority, span

of supervision, and span of responsibility.

To use the organization’s human resources effectively, managers should

supervise as many individuals as they can best guide toward production
quotas.
Fundamentals of Management Fundamentals of Organizing
Span Management Designing
A Contingency Viewpoint
• Similarity of functions.
• Geographic continuity.
• Complexity of functions.
• Coordination.
• Planning.
Fundamentals of Management Fundamentals of Organizing

Height of Organization Chart

Fundamentals of Management Fundamentals of Organizing

Height of Organization Chart

• Span of management directly influences the height of an organization
chart.
• The greater the height of the organization chart, the smaller the span of
management.
• Organization charts with little height are usually referred to as flat.
• Organization charts with much height are usually referred to as tall.
• Increasing spans of management to eliminate certain management
positions and thereby reduce salary expenses.
• Increasing spans of management to achieve such objectives as speeding up
organizational decision making and building a more flexible organization.
Fundamentals of Management Fundamentals of Organizing

Horizontal Dimensioning
• Definition:
The extent to which firms use lateral subdivisions or specialties within
an organization
• Department:
Is a unique group of resources established by management to perform
some organizational task
• Departmentalizing:
Is the process of establishing departments within the management
system
Fundamentals of Management Fundamentals of Organizing
Departmentalization Types
Departments Based on Function
Fundamentals of Management Fundamentals of Organizing
Departmentalization Types
Departments Based on Function
• Advantages:
Power of functional heads promotes consistency
Relatively easy to assign blame or credit for the performance of a
function
• Disadvantages:
May prove difficult to coordinate between various functions
Difficult to assign credit or blame when a product performs well or
poorly
Fundamentals of Management Fundamentals of Organizing
Departmentalization Types
Departments Based on Product
Fundamentals of Management Fundamentals of Organizing
Departmentalization Types
Departments Based on Product
• Advantages:
Allows managers to focus on the products sold by the company
Relatively easy to assign credit or blame on the performance of a
product
• Disadvantages:
Focus on product may force managers to miss differences in customers
or geographic regions
May be difficult to coordinate across products
Fundamentals of Management Fundamentals of Organizing
Departmentalization Types
Departments Based on Geographic
Fundamentals of Management Fundamentals of Organizing
Departmentalization Types
Departments Based on Geographic
• Advantages:
Managers can focus on the various regions served by the company
Allows firms to develop human resources by rotating managers across
different regions
• Disadvantages:
May prove difficult to coordinate between various regions
May prove difficult to assign credit or blame based on the performance
of a particular product
Fundamentals of Management Fundamentals of Organizing
Departmentalization Types
Departments Based on Customer
Fundamentals of Management Fundamentals of Organizing
Departmentalization Types
Departments Based on Customer
• Advantages:
Allows managers to focus on and cater to the most important
customers
Relatively easy to assign blame or credit regarding customer
relationships
• Disadvantages:
May prove difficult to coordinate across various customers
May introduce complexities as customers span different products and
geographic areas
Fundamentals of Management Fundamentals of Organizing
Departmentalization Types
Departments Based on Matrix
Fundamentals of Management Fundamentals of Organizing
Departmentalization Types
Departments Based on Matrix
• Advantages:
Allows firm to pool human resources for both short-term and long-
term projects
Allows firm to maintain flexibility over time
• Disadvantages:
Difficult for employees to understand power structure within the firm
Difficult for employees to prioritize responsibilities based on multiple
authority figures
Fundamentals of Management Fundamentals of Organizing

Horizontal Dimensioning
• Forces Influencing Formal Structure
• Forces in the manager.
• Forces in the task.
• Forces in the environment.
• Forces in the subordinates.
• Fayol’s Advice on Using Formal Structure
Fayol has indicated that strict adherence
to a particular chain of command is not
always advisable.
Fundamentals of Management Making Decisions

Roll Up Concepts

Weber’s
Definitions
Bureaucratic
Organizing Model
Process Cautions

Organizing Disadvantages
Division of Labor

Coordination
Importance

Guidelines
Advantages Disadvantages
Fundamentals of Management Making Decisions

Roll Up Organization Vertical

Scalar
Relationship
Chart Dimension

Definition Unity of
Command
Height of
Horizontal
Organization
Dimension
Span of
Structure Management

Departments
Forces  Fayol’s
Structure Advice
Purpose Types Departmentalizing

Function Product Geographic Customer Matrix

Fundamentals of Management Making Decisions

Overview

Introduction Theories of Business

Management Ethics
(Ch. 1)
(Ch. 2) (Ch. 3)