ORGANIZING

-is the process of arranging

an organization’s structure
and coordinating its
managerial practices, and the
use of resources to achieve
its goals. (Professor James
Stoner)
-A management function that
establishes relationships
Organizing has four distinct
activities:
1.Determines the activities to be
performed to achieve
organizational objectives.
2.Clarifies the types of work and
groups these into manageable
work units.
3.Assigns the work to individuals and
delegates appropriate authority
4.Constructs a hierarchy of decision-
making relationships.
ORGANIZING
-isthe process of combining and
coordinating productive
resources in order to
accomplish efficiently and
effectively the established
objectives of the organization.
Human factor- is the key to the
success of the organizing
process. Prof. Schumpter calls
the human factor the
entrepreneur.
IMPORTANCE OF ORGANIZING
1. Clearand specific job
description. Every
employee knows what to do.
The tasks and duties of all
employees, sections,
departments, and divisions
are clearly and specifically
stated. It is easy to
determine the scope and
limits of authority.
2. Existence of coordination.
This reduces or eliminates
confusions and conflicts.
Policies on interrelationships
among the various work
units are defined. For every
designated task of the
organization, there is a
person who has the authority
to coordinate all plans for
the said task.
3. Presence of formal structure.
By means of the organizational
chart which diagrams the various
departments, functions, and
positions, and which shows their
relationships, the formal superior-
subordinate relationships are
indicated. Such a chart is helpful
in defining managerial authority,
responsibility and accountability.
It also shows the whole
management hierarchy.
STEPS IN ORGANIZING
1. Evaluate plans and
objectives.
Organizational objectives,
together with the activities,
are indicated in the plans.
Objectives and plans
change if there is a change
in the environment of the
organization, or if there is
a change in its mission.
2.Identify the various
activities. These are
the activities to be
performed to accomplish
organizational
objectives. Examples of
these activities are
financing, production,
and advertising.
3. Group similar or related
activities. For efficiency, similar
or related activities should be
grouped under one department
or division. This is based on the
concept of division of labor or
specialization. For instance,
hiring, training, promoting,
retiring, and compensating are
personnel activities. Packaging,
advertising, warehousing,
transporting, and selling are
under marketing activities.
4. Assign activities with
appropriate authority. The
various activities will be
assigned to competent
individuals. However, it is very
necessary to give them
adequate authority to be able
to do their jobs efficiently and
effectively. They should be
given the right to make
decisions and the right to order
subordinates to perform the
job.
5. Design a hierarchy of
relationships. These are the
working relationships of the
various components of the
entire organization. This is
called the organizational
structure. It indicates the
vertical and horizontal
relationships of the
organization. Levels of
management from the top to
bottom are established.
APPROACHES TO
ORGANIZING
1. Functional Approach.
This is the most common
and basic approach to
organizing. Similar or
related activities are
grouped under one
department. The common
departments are finance,
production, marketing, and
personnel.
Advantages:
It makes supervision
easier.
It is easier to mobilize
specialized skills.
It is helpful in the
efficient use of
specialized resources.
Disadvantages:
Quick decisions become
more difficult to get.
It is harder to pinpoint
accountability and judge
performance.
Top managers encounter
difficulties in coordinating the
functions of the members of
the entire organization.
 Functional Organizational Structure
PRESIDENT

VP-Finance VP- Production VP-Personnel VP - PR

VP- Marketing
2.Geographic Approach. This is
applicable to big organizations and
giant business enterprises like the
multinational corporations.
Advantages:
 Vice presidents or regional
directors are assigned to the
different regions of the country of
the world.
 The geographic structure is most
suitable when different laws,
policies, currencies, and cultures
exist among the various regions.
In terms of marketing, it is more
efficient. A business enterprise with
a geographic structure can
immediately respond to the needs of
consumers. In the case of nonprofit
organizations, delivery of services is
faster.
Disadvantages:
It is expensive because it requires
more facilities and personnel. If
there are 15 regions, there are also
15 regional directors, or 15 vice-
presidents.
Geographic Organizational Structure
PRESIDENT

VP- Luzon VP- Mindanao VP - Visayas

3. Product Approach. Most
large multiproduct
corporations are structured
on product organization,
particularly for products
which requires unique
strategy, production process,
or distribution system.
Ex: manager for books,
manager for school supplies,
manager for toys, etc.
Advantages:
Faster decisions
Better coordination
Higher product visibility
Disadvantage:
Higher cost of operations.
Each product division needs
finance, production,
marketing, and personnel
operations.
 Product Organizational Structure
PRESIDENT

Vice President - Marketing

Manager - Books Manager - Toys

Manager – School Supplies

4. Customer Approach.
There are groups of
customers which are different
in their demands,
preferences, or needs. In the
case of government
agencies, their big purchases
require competitive biddings,
specifications, regulations on
employment, and supervision
of production.
Advantage:
In the case of agricultural product
and industrial product buyers, their
tastes and preferences are
different. Such differences among
customers require different suitable
strategies in order to maximize
customer satisfaction.
Disadvantage:
Itmay result in overspecialization
which limits the areas of
competence of individual
managers.
 Customer Organizational Structure
PRESIDENT

VP-Industrial Products VP – Military Products

VP- Consumer Products

5. Matrix Approach. This
combines the functional
organizational structure with a
project team structure in which
an employee has two bosses. He
reports to the department and to
the project manager. This type
of organizational structure is
found in high-technology,
project-based enterprises. Matrix
organizations are also used in
management consulting firms
and advertising agencies.
Advantages:
It allows experts to be assigned in crucial
areas.
It stimulates interdisciplinary cooperation
among the members of the team.
It challenges employees.
Disadvantage:
It requires high interpersonal skills due to
constant interaction among team
members.
It may also encourage power struggle
between the functional manager and the
project manager. (Such a situation may also create
conflicts in terms of loyalty among the employees, since they are serving
two bosses).
 Product Organizational Structure
PRESIDENT
--------- Consultant

VP – R & D VP - Engineering VP - Production VP - Administration

Project
Manager, R&D Engineering Production Administrative
Guam staff staff staff staff
Project Engineering
Manager,
R&D Production Administrative
staff staff staff staff
Saipan

Production Administrative
Project Engineering
Manager, R&D staff staff
staff
Subic staff
PRINCIPAL ORGANIZATIONAL
CONCEPT
1. Authority. It is the right to
give orders and make decisions.
These rights are vested in
individuals by virtue of their
positions. Authority provides
power. This is the ability to
exert influence in the
organization. Influence is an
action, or example that causes
a change in attitude or behavior
of another person or group.
Types of Authority:
a. Line Authority. It is a direct
supervisory relationship between
superior and subordinate. Line
authority moves from the top to the
bottom of the organization.
b. Staff Authority. It provides advice or
technical assistance to top
management or line managers. Such
advisory authority has no direct control
over subordinates, or activities of other
departments, except within the staff
manager’s own department.
c. Functional Authority. It is
the authority delegated to the
members of the staff
department that are related to
specific staff responsibilities.
Ex: The Civil Service Commission
controls the compliance of hiring,
promotion, or removal of government
employees.
In private organizations, the personnel
department monitors the compliance
of the performance evaluation system
by the other departments.
2.Delegation. It is the assignment of
formal authority from a superior to a
subordinate. The idea is to facilitate
work or to develop subordinates.
Responsibility – is the obligation to
perform one’s assigned duties.
When a subordinate accepts the
authority and responsibility,
accountability is created.
Accountability – means the subordinate
is answerable to his superior for his
actions.
Ex: A supervisor is accountable to his boss in using his authority.
In addition, a supervisor is also accountable for the actions of
his subordinates.
Two Principles of Effective
Delegation:
a. Scalar principle. It is a clear
line of authority from the top
level to the bottom level of the
organization. This principle
makes delegation more
effective and easier. Members
of the organization understand
who can delegate to them, to
whom they can delegate, and
to whom they are accountable.
b. Unity of Command. Each
employee in the organization
should report to only one
supervisor. Reporting to two
or more supervisors may
likely result in confusions and
frustrations on the part of the
subordinate. It is difficult for
the subordinate to determine
his accountability and whose
instructions he should follow.
3. Span of Control. It refers to the
number of subordinates a
manager should direct. There is
no prescribed number for the
span of control. The appropriate
number under a supervisor
depends on the qualifications of
the manager and his
subordinates.
For instance, the type of work, ability, and training of both
manager and his subordinates can determine the span
of control. As a rule, if the nature of the job is
complex, fewer subordinates are required. If it is a
repetitive or routine job, more subordinates can be
effectively directed and controlled.
4. Centralization. This is the extent
of authority in an organization. If
the authority for making decisions
is in the hands of one or a few
individuals at the top of the
organization, it is a centralized
organization. On the other hand, if
such authority is in the hands of
many in the lower levels of the
organization, it is a decentralize
one.
Ex: Top management may decide to centralize all
decisions regarding operations, purchasing and hiring.
Or it may allow levels of management to make
purchases with limitations, hire clerks and workers, and
make appropriate and reasonable operational
decisions.
Some factors which influence
the degree of decentralization:
a. External environment, such as market
characteristics, presence of
competitors, and availability of
materials.
b. Size and growth rate of the
organization
c. Profile of the organization, like
competence of the lower-level
managers, culture of the organization,
attitudes of top management, and the
cost of decisions.
INFORMAL ORGANIZATION
It is a group of individuals
which has emerged out of
personal and group needs of
the members. It is an
interpersonal kind of
relationship in the
organization. Such
relationships develop
camaraderie, friendship, unity,
and cooperation among
members.
Classification of Informal
groups:
1. Horizontal groups – are
composed of employees in the
same department, or across
departmental lines which operate
at the same organizational level.
Ex: clerks in the marketing
department or clerks in the
marketing, production, and
personnel department.
managers or supervisors with the
same levels.
2. Vertical groups – are
composed of employees from
the different levels of the
organization.
Ex: A manager and some of his
subordinates.
Supervisors with their boss.
Some workers with the
president
of the corporation.
3. Mixed groups – these are
the combinations of
employees from the different
levels of the organization and
from the different work
areas.
Ex: A marketing manager may make
friends with the motor pool manager
A vice president may cultivate a
personal and social relationship with
the chief security officer.
Functions of the Informal
Organization
1. Reinforce and sustain the cultural
and social values of the members.
Through private parties, programs,
and other group activities, they
demonstrate and enhance their
values.
2. Provide members the opportunities to
satisfy their psychological needs.
Ex: Pedro is a janitor. He is also a good
chess player in the company. As a janitor,
he is nobody. But as a champion in chess,
he feels important and he gets
appreciation from his superiors.
3. Generate a faster system of
communication for the members.
The formal organization conducts its
communication through channels.
This is slow. In some cases,
information is not given to the rank-
and-file employees. However, there
are employees who are close to top
management, particularly executive
secretaries, executive assistants, or
senior accountants. They have the
current news in the organization, and
they supply such information to the
other members of their informal
organizations.
4. Influence operation of the formal
organization. Members of informal
organizations can control the work
performance of their groups by means
of their collective support, or
cooperation with management
policies. But they can also ignore or
oppose rules, systems, or procedures
imposed by top management. The
available options for management are
to terminate all employees, or change
the rules, and so forth. It is not that
easy to fire employees. There are
labor laws to protect them. In the case
of government employees, they are
protected by Civil Service laws.