Management Functions: Organizing

Organizing Function

• Organizing is a management function. It involves arranging human and non-human (physical) resources to achieve organizational goals.
• The organizing function develops a framework where the total work is divided into manageable components. This facilitates the accomplishment of objectives.
• Organizing requires addressing basic questions: What specific tasks are needed to implement plans? How many positions are needed to perform those tasks? How should those positions be grouped? How many managerial levels are needed for coordination? How many people should a manager supervise directly/how should the span of control be structured?

Basic Concepts

• Division of Labor: Dividing tasks into narrow specialties enhances skill and dexterity. It improves efficiency, saves time on movements required to complete a task, and encourages the invention of tools and machines needed to complete specialized work.

Departmentation

• Departmentation: A formal structure in an organisation, it groups people and specialized activities into departments in a logical manner. Departmentation facilitates communication, coordination, and control/supervision.

Bases for Departmentation

• Common bases of departmentation include grouping by product, function, territory/geography, customer, process, time, or matrix (a combination of different bases).

Examples of Departmentalization

• By Product: Separating departments by the products they work on: Noodles Department, Beverage Department, Electronic Department, and Furniture Department.
• By Function: Grouping jobs with shared skills into departments. Like, Marketing, Finance, Production, HR.
• By Geography/Territory: Separating departments based on location, with a department for each relevant region or territory.
• By Customer: Grouping teams around specific types of customers (e.g., loan department, cash department, remittance department, CSD department).
• By Process: Arranging departments around distinct stages in the production or service process (e.g., crushing department, refining department, finishing department, packaging department).
• By Time: Organizing departments around specific work shifts (e.g., morning shift, day shift, night shift).

Matrix Structure

• A matrix structure combines different bases of departmentation. An example illustrates products, engineering, design, data science, and operations as different categories within an organization. Further product managers are assigned to specific engineers, designers, data scientists, and operations analysts.

Centralization and Decentralization

• Centralization: The top managers retain power and authority.
• Decentralization: Power and authority are dispersed throughout the organization to middle and lower-level managers.

Span of Management/Control

• Span of management: The number of subordinates who report directly to a manager. A wider span suggests a flatter structure, while a narrower span indicates a taller structure.

Delegation of Authority

• Delegation of authority is the process of transferring responsibility to an employee/direct team member.

Types of Authority

• Legal authority: Based on rank and position.
• Traditional authority: Linked to social order.
• Charismatic authority: Based on the leader's personality and personal traits.
• Acceptance theory: Acceptance of the command is based on the subordinate’s belief in the command.
• Competency theory: Acceptance is based on skill and expertise.

Source of Power

• Legitimate power: Derived from a position of authority.
• Coercive power: Ability to create fear.
• Reward power: Ability to grant rewards.
• Expert power: Knowledge and skill.
• Referent power: Respect and admiration from others.

Barriers to Delegation

• Executive reluctance: Managers may think they do better work themselves, lack confidence/trust in subordinates, do not have the ability to direct effectively/or may fear losing power.
• Subordinate reluctance: Subordinates may fear making mistakes, be unmotivated/lack self-confidence, or lack necessary resources.

Types of Organizational Structure

• Line Organization: A simple structure with a direct flow of authority from top to lower levels (e.g. CEO, BOD).
• Line and Staff Organization: Includes support staff or specialists (e.g. Finance, legal advisor).
• Functional Organization: Tasks and/or responsibilities are grouped by function (e.g. sales, production).

Types of Organizations

• Formal Organization: Deliberate structures with defined roles, authorities, and relationships. The structure is formally documented.
• Informal Organization: Unplanned social networks among employees.

PESTEC Analysis

• A method to evaluate external factors affecting an organization.

This quiz covers the organizing function of management, focusing on how resources are arranged to achieve organizational goals. It explores basic concepts like division of labor and departmentation, and addresses essential questions related to task management and organizational structure.