CHAPTER 4

THE ORGANIZING FUNCTION

Thursday, November 28, 2024

Planning, consequently, requires organizing the efforts of
many people. It forces us to address several basic questions:

What specific tasks are required to implement our plans?

How many organizational positions are needed to perform all

the required tasks?

How should these positions be grouped?

How many layers of management (Organizational levels) are

needed to coordinate them?
Thursday, November 28, 2024
2
 Organizing - is a management function that involves arranging
human and non-human (physical) resources to help attain
organizational objectives.

 It is the management function that establishes relationship

between activity and authority.

 The end result of an organizing process is an organization.

 Organization - is the total system of social and cultural

relationship among peoples who are joined together to
achieve some specific common objectives.
Thursday, November 28, 2024 3
 The Organizing Process
1. Identification of objectives
 This is to understand clearly the
objectives of the organization.
2. Identification of the specific activities
needed to accomplish objectives.
 Creating a list of tasks to be accomplished.
Thursday, November 28, 2024 4
Cont
 This involves grouping together of activities in accordance

…interdependence, job characteristics.

with similarities (homogeneity) of the activities,

4. Assigning group of activities (work) and

delegate the appropriate authority.

 The activities now must be assigned to individuals who are

simultaneously given the appropriate authority to accomplish
task.

Thursday, November 28, 2024 5

5. Provision for coordination/Design a
hierarchy of relationships.

Determination of both vertical and

horizontal operating relationships of the
organization as a whole.

Levels of management are established from

bottom to top in the organization.
Thursday, November 28, 2024 6
 Importance of Organizing
1. Organizing promotes collaboration and
negotiation among individuals in a group.
2. Organizing sets clear-cut lines of authority and
responsibility for each individuals or department’s.
3.It enables management to effectively control the
work and workers.

Thursday, November 28, 2024 7

4. Organizing develops maximum use of
time, human, and material resources.

5. Maintain its activities coordinated so that

the efforts of managers and employees can
be well integrated and directed towards an
end; i.e. to accomplish organizational
goal.

Thursday, November 28, 2024 8

 Types of Organizations
These are two types of organizations:
1. Formal , 2. Informal.

Thursday, November 28, 2024 9

Formal organization- is the intentional, deliberate or
rational structures of roles in a formally organized
enterprise. It is characterized by well-defined authority
- reporting relationships, job titles, policies,
procedures, specific job duties and a host of other
factors necessary to accomplish its respective goals.
It is represented by a printed chart.
Formal organization has consciously designed
durable and inflexible structure. Formal organization
Thursday, November 28, 2024 10
Informal organization
 is a network of personal and social relationships
that arises spontaneously as people associate with
one another in a work environment.

It is an unofficial network of personal and

social relations developed as a result of
association or working together.
It operates outside formal authority
relationships.
Thursday, November 28, 2024It doesn’t have legal personality.
11
However, to identify the existence of informal
organizations and their composition we can use two tools:
a Sociogram and an Interaction Chart.
The Sociogram is developed through a process
asking members whom they like or dislike and with
whom they wish to work or not to work.
Interaction Chart is a diagram that shows the
informal interactions people have with one another.
For any specific person, the chart can show with
Thursday, November 28, 2024 12
 Types of Groups in the Informal Organization
Informal groups may be described as horizontal, vertical, or
mixed.
Horizontal Groups:
Persons whose positions are on the same level of the
organization,

Can consist of all the members in the same work

areas,
Members may be all management or non-
management personnel,
Thursday, November 28, 2024 13
Vertical Groups:

Include people on different levels of the formal

organization’s hierarchy.

These people always come together within the

same department (work areas).

A vertical group can consist of a supervisor and one

or more of his/her employees.
Thursday, November 28, 2024 14
Mixed Group:
It is a combination of two or more persons whose
positions are on different levels of the formal
organization and in different work areas.

E.g. A Vice-President may develop a close

relationship with the director of computer services in
order to get preferential treatment.

Thursday, November 28, 2024 15

Why people form informal groups?
Informal groups are formed for different
reasons.
1. Need for satisfaction
The opportunity to fulfill security, affiliation,
esteem, and sometimes self-actualization
needs.
2.Proximity and interaction
Thursday, November 28, 2024 16
Cont
3. Similarity
…
Several persons with the same attitudes or
beliefs may join one group.

Other factors or similarity can be personality,

race, sex, economic position, age,
educational background etc.
Thursday, November 28, 2024 17
The Impact of Informal Organization on the
Formal Organization
The Negative Impacts:
1.Resistance to change: In an effort to protect its values and beliefs.
2.Conflict: E.g. The Company may allow 10 minutes for coffee break; however,
the informal group may extend it to 30 minutes for the employee’s social
satisfaction. There, the employee’s social satisfaction is in conflict with the
employer’s need for productivity.
3.Rumor: The informal communication system - the grapevine.
4.Pressure to conform: The more cohesive the group, the more accepted are the
behavioral standards.
Thursday, November 28, 2024 18
Cont
The Positive Impacts:
…
1.Makes the total system effective:

Provide flexibility and instantaneous reactions will

polish the plans and procedures developed through
the formal organization.
2. Provides support to management:
For example, budgeting and scheduling. By performing
effectively and positively, it can build a cooperative
Thursday, November 28, 2024 19
Cont
4. Encourages better management,
…5. Provides stability in the environment

Thursday, November 28, 2024 20

Major Elements of the Organizing Function
1. Division of Labor:
The degree to which the grand task of the
organization is broken down and divided into
smaller component parts is referred to as division
of labor.
Division of labor is performed in light of
organizational objectives.

Thursday, November 28, 2024 21

Cont
After determining the sub-tasks, sub-tasks will be
…
defined by enumerating the activities that each
individual sub-tasks would entail in terms of what
the incipient sub task performer is expected to do.
This is called job description.

Job description is an account of activities what the

sub-task performer is expected to perform and the
associated authority
Thursday, November 28, 2024 and responsibility relationships
22
In short, division of labor involves:

Breaking down a task into its most basic elements

Training workers in performing specific duties
Sequencing activities so that one person's efforts build on


another's
Advantages of Division of Labor
1.Proficiency, result efficiency & productivity increases.
2. Decreased transfer time. It saves the time that is always
Thursday, November 28, 2024 23
Cont
3. Less wastage of materials in the learning process
…including time.
4. Ease of supervision. When employees are performing
similar simplified tasks it will require the superior to
have a narrow range of skills to effectively oversee
subordinates.
5. Training is easier with specialization and takes shorter
period.
Thursday, Plus,28,it2024
November decreases training cost. 24
Disadvantages
1. Boredom and fatigue caused by monotonous,
repetitive tasks because the work becomes less
challenging.
2. Specialization would result in workers' having limited
knowledge.
3. Creates communication barriers. Specialists develop
their own language and customs, which can hamper
communication across departments.
Thursday, November 28, 2024 25
 5.Specialization leads to time-oriented confusion.
Production department, for instance, are commonly
short-run oriented; research and development
departments are concerned with the long term.
Consequently, production departments typically
evaluate their performance in the short run, where as
R&D efforts may go unrecognized for several
years.
6.Different specialties often formulate rules, policies,
Thursday, November 28 26
Departmentalization: Meaning and Bases
Departmentalization –
All organizations, regardless of their size or mission,
divide their overall operations into sub-activities and then
combine these sub-activities into working groups. This
process of grouping specialized activities in a logical
manner is called Departmentalization.
Department - is a distinct area, division, or branch of an
Thursday, November 28, 2024 27
 Bases for Departmentalization
The most common bases are function, territory,
product, customer, and process .
I. Departmentalization by Function
Jobs that call for certain skills or the use of similar working methods will
be put together.
E.g. Human resources, production, marketing, finance, etc.
Advantages:
 It is a logical reflection of functions.
 It maintains power and prestige of major functions of the
organizations.
Thursday, November 28, 2024 28
Departmentalization …….
 It follows principle of occupational specialization,
thereby promoting efficiency in the utilization of
people. Simplifies to fill vacant positions.
 It simplifies training. Train functional specialists by
indicating special abilities required.
 Provides unity of command for closely related activities.
 Managers have an easier time coordinating and planning
because all the jobs that report to them are similar 29in
Thursday, November 28, 2024
 Disadvantages
 De-emphasis of overall company objectives -
narrow view may develop.
 Over specializes and narrow viewpoints of key
personnel.
 Reduce coordination and communication
between (among) functions.
 Decisions are concentrated at the top
management, creating delay.
 Thursday,
Limits development
November 28, 2024 of general managers. 30
II. Departmentalization by Territory/ Geography

Groups activities on the basis of geographic region or territory.
 Is common in enterprises that operate over wide geographic areas.

 Can be used by business, government, NGOs, or other enterprises.

Advantages
1. Places emphasis on local markets and problems.
2. Encourages local participation in decision-making
3. Improves coordination of activities in a region
4. Takes advantage of economies of local operations
Thursday, November 28, 2024 31
Disadvantages
A.Requires more persons with general
manager abilities
B.Duplicates staffs, services, or effort.
C.Tends to make maintenance of economical
central services difficult and may require
services such as personnel or purchasing at
the regional level
Thursday, November 28, 2024 32
 III. Departmentalization by Product (Line)
It is the grouping and arrangement of
activities around products or product groups.
E.g. Textile products - Nylon products,
woolen products, silk products, cotton
products
Petroleum refining - kerosene, diesel,
Thursday, November 28, 2024 33
Advantages
Places attention and effort on product line.
Facilitates use of specialized skill, capital facilities and
knowledge
Permits growth and diversity of products and services
Places responsibility for profits at the division level
Furnishes measurable training ground for general
Thursday, November 28, 2024 34
Disadvantages
1.Requires more persons with general
manager abilities.
2.Tends to make maintenance of economical
central services difficult - duplication of
business functions within each product line.
3.Presents increased problem of top
Thursday, November 28, 2024 35
 IV. Departmentalization by Customer
It can be used in medical institutions such as
hospitals and clinics - emergency services, out
patient services, inpatient services, x-rays; retail
stores- men's clothing, women's clothing, children's
clothing.

Thursday, November 28, 2024 36

Advantages
Encourages concentration on customer needs
Gives customers the feeling that they have an understanding supplier
Develops expertness in customer area

Disadvantages
•May be difficult to coordinate operation between competing
customer demands
•Requires managers and experts in customers’ problems
Thursday, November 28, 2024 37
 V. Departmentalization by Process
Manufacturing firms often group activities around a
process or type of equipment. This is when special
skill is needed to operate different machines.
Advantages
1.Achieves economic advantage
2.Uses specialized technology
3.Simplifies training
Disadvantages
1. Coordination of departments is difficult
2. Responsibility for profit is at the top
3. Is unsuitable for developing general mangers

Thursday, November 28, 2024 38

VI. Departmentalization on Combined Base
It is a base in which multiple bases are used at
different organizational levels of a particular
organization.

Thursday, November 28, 2024 39

 Delegation of Authority
Authority - is the right to commit
resources (that is, to make decisions that
commit an organization’s resources), or
the legal (legitimate) right to give orders
(to tell someone to do or not to do
something)
Thursday, November 28, 2024 40
Cont
Authority is vested in a manager because of the position he/she
occupies in the organization, that is why we say, “authority comes
…
with the territory.”
Even though a manager has formal or legitimate authority, it is
wise to remember that the willingness of employees to accept the
legitimate authority is a key to effective management. Chester
Bernard called this Acceptance Theory of Authority.

Thursday, November 28, 2024 41

Cont
…
Delegation of Authority - is the downward pushing of authority from
superiors to subordinates to make decision within their area of
responsibilities.
In delegating authority a manager doesn’t surrender his power because
he does not permanently dispose of it; delegated authority can always be
regained. This is called recovery of delegated authority.

Thursday, November 28, 2024 42

 The Process of Delegation
Delegation of authority has the following steps:
1.Assignment of tasks
2.Delegation of authority
3.Acceptance of responsibility
4.Creation of accountability

Thursday, November 28, 2024 43

 Importance of Delegation
1. It relieves the manager from his/her heavy workload.

2. It leads to better decisions: Since subordinates are closer to

real “firing line” activities and problems than superiors, they
have more realistic information and better understanding.
3. It speedup decision-making.
4. It helps subordinates to train and builds moral
5. It encourages the development of professional managers.
6. It helps to create the organization structure

Thursday, November 28, 2024 44

 Factors Determining Delegation
1. The history and culture of the organization.

2. The nature of the decision: The costlier and the riskier the decision is, the
more centralized the authority will be.

3. Availability and ability of managers (Lower level managers)

4. Management philosophy

5. Size and character of the organization

6. Geographic dispersion of operations

7. 6.Environmental uncertainty: Environmental uncertainty tends to produce a

need for more decentralization.
Thursday, November 28, 2024 45
1.Reluctance to delegate/Problems from Managers
Problems
There are a number in Effective
of reasons that managersDelegation
commonly offer to explain why

they do not delegate. Some are:

I. Fear of loss of power
II.“I can do it better myself” fallacy
III.Lack of confidence in subordinates
IV.Fear of being exposed
V.Difficulty in briefing- believe they lack the time to train subordinates. “It
takes too much time to explain what I want done”.

Thursday, November 28, 2024 46

 2. Reluctance to Accept Delegation/problems from subordinates
A. Fear of failure and criticism

B. Subordinate may believe that the delegation increases the risk of

making mistakes but doesn’t provide adequate rewards for assuming
greater responsibility

C. Lack of adequate information and resources

D. If subordinates are already overworked

E. Lack of self-confidence

F. Believing / Thinking that decision-making is the boss’s job.

Thursday, November 28, 2024 47

 Overcoming the barriers in effective delegation
Centralization and Decentralization
Centralization and decentralization are not opposites rather they are
Centralization - is the
tendencies/proportions extent to
in delegation which power and authority are
of authority.
systematically retained by top managers.
If an organization is centralized:
- Decision-making power remains at the top
-The participation of lower-level managers in decision-making is
very low

Thursday, November 28, 2024 48

Cont
Decentralization- is the extent to which power and authority
Whensystematically
decentralizationdispersed
is greater: / delegated throughout the
…
are
organization
The greatertois middle and of
the number lower level managers.
decisions made at lower level of the

organization
The more functions are affected by decisions made at lower
levels
The less a subordinate has to refer to his/her manager prior to a
decision and the less checking required as decisions are made at
the lower level.

Thursday, November 28, 2024 49

 Authority Relations in Organization (Line, Staff,
i. Line Authority Functional)
Line authority defines the relationship between superior and
subordinate. It is a direct supervisory relationship. It exists in all
organizations as an uninterrupted score or series of steps.
In line authority a superior exercises direct command over
a subordinate. Line authority is represented by the standard
chain of command that starts with the most superiors and
extends down through the various levels in the hierarchy to
the point where basic activities of the organization are
carried out.

Thursday, November 28, 2024 50

ii. Staff Authority - is advisory in nature.

The function of people in a pure staff capacity is to give

advice, expertise, technical assistance, and support to help
line managers to work more effectively in accomplishing
objectives.
E.g. Personnel, research and development, legal, plant maintenance,
compost quality control, etc.
•Staff authority is advisory and normally flows upward.

Thursday, November 28, 2024 51

iii. Functional Authority
It is the right which is delegated to an individual or a department to
control specified process, practices, or provinces or other matters
relating to activities undertaken by persons in other departments.
Example:
The Finance Manager can give direct command to the marketing
manager of the same level about financial affairs.
The Legal Advisor can give direct command to others concerning
the legal affairs of the organization.
The Personnel Manager can give direct command to others
regarding recruitment, selection, performance appraisal systems

Thursday, November 28, 2024 52

 Span of Management
Meaning: The term span of management is also referred to
as a span of control, span of supervision, span of authority
or spanof
Span of responsibility.
management - refers to the number of
subordinates who report directly to a manger, or the
number of subordinates who will be directly supervised
by a manager.

Thursday, November 28, 2024 53

 Based on the number of subordinates who should
Cont…
report to a manager or the number of
subordinates that a superior should supervise, we
can have Wide span of management and Narrow
span of management.

Thursday, November 28, 2024 54

i. Narrow Span of Management
Cont…
This means superior controls few numbers of subordinates or few
subordinates report to a superior.
When there is narrow span of management in an organization, we
get:
•Tall organization structure with many levels of supervision
between top management and the lowest organizational level.
•More communication between superiors and subordinates.
•Managers are underutilized and their subordinates are over
controlled.
•More trained managerial personnel and centralized authority.

Thursday, November 28, 2024 55

Advantages
Cont
•Close supervision and control
•Fast communication between subordinates and superiors.
…
•Easy to coordinate and control activities.
Disadvantages
•Superiors tend to get too involved in the subordinates work
•The problem of setting more trained managerial personnel
•Excessive distance between lowest level and top level
management. This kills intuitive for top-level positions.
•High costs due to many levels

Thursday, November 28, 2024 56

Wide Span of Management
This means many subordinates report to a superior or a superior supervises
many subordinates.
If the span of management is wide, we get:
•A flat organization structure with fewer management levels between top and
lower level
•Many number of subordinates and decentralized authority
•Managers are overstrained and their subordinates receive too little guidance
and control
•Fewer hierarchal level
Advantages
•Superiors are forced to delegate
•It initiates the development of clear polices
Disadvantages
•Tendency of overloaded superiors to become decision bottle necks
•Danger of superior’s loss of control
Thursday, November 28, 2024 57
Factors Determining an Effective Span of Management
1. Ability of the manger
2. Manager’s personality
3. The abilities of subordinates
4. Motivation & commitment: motivated employees take initiative &
responsibility
5. Need for autonomy: subordinates with high need for autonomy prefer to make
decisions by themselves
6. Type of work: Routines and simplicity of work
7. Geographic dispersion of subordinates
8. The availability of information and control systems
9. Levels of management: The size of the most effective span differs by
organizational level.

Thursday, November 28, 2024 58

 Organizational Structure
Meaning
•Organization structure is the structural framework for carrying out the functions of
planning, decision-making, controlling, communication, motivation, etc.
•Organization structure is the formal pattern of interactions and coordination designed
by a manager to link the tasks of individuals and groups in achieving organizational
goals.
•The word “formal” in this content refers to the fact that organization structures
typically are created by management for specific purposes related to achieving
organizational goals, and, hence, are official, or formal outcomes of the organizing
function.
•Organization structure is the arrangement and interrelationship of the component
parts, and positions of an organization.

Thursday, November 28, 2024 59

 The formal
Cont… structure of an organization is of two-
dimensional: The horizontal dimension and vertical
dimension.
The horizontal dimension identifies departments,
units, and divisions on the same level of a management.

 Whereas the vertical dimension refers to the authority

relationships between superiors and subordinates and it
also identifies who is responsible and accountable for
whom.
Thursday, November 28, 2024 60
The organization
Cont… chart can tell us:
•Who reports to whom (chain of command)
•The number of managerial levels
•How many subordinates work for each manager (the span of control)
•Channel of official communication through the solid lines that connect each job
(box)
•How the organization is structured-by function, territory, customer, etc.
•The work being done in each job- the labels on the boxes
•The hierarchy of decision making- where a decision maker for a problem is
located
•How current the present organization is (if a date is on the chart)
•Type of authority relationships- line authority, staff authority, and functional
authority

Thursday, November 28, 2024 61

Cont…

AMBO
campus
Health Vice President for

CDE Faculty of Business Sciences Research,

Publication, and
and Technology Faculty PG Studies

BUSINESS
DEPARTMENT OF BUSINESS ADMINSTRATI
MANAGEMENT ON

TVET Program Undergraduate

degree Programs

HUMAN
BUSINESS
RESOURCE
MANAGEMEN
MANAGEMEN
T
T

Thursday, November 28, 2024 62