Organizational Management Quiz

Organizing Function

• Organizing is the process of establishing orderly uses for all resources within an organization to achieve its objectives.
• It establishes relationships between activities and authority.
• It involves identifying, classifying, and grouping tasks needed to achieve objectives. This includes assigning work to individuals and designing the hierarchy of decision-making relationships.

Organizing Process

• Identifying organizational objectives
• Identifying activities needed to accomplish objectives
• Grouping activities to achieve goals (departmentalization)
• Assigning activities (work) and delegating appropriate authority
• Providing coordination and designing relationships between individual activities and departments

Importance of Organizing

• Promotes collaboration and negotiation among individuals
• Establishes clear authority and responsibility for each individual
• Improves directing and controlling functions
• Maximizes the use of time, human, and material resources
• Maintains coordinated activities to integrate the efforts of managers and employees

Formal and Informal Organization

• Formal Organization: A deliberately and rationally designed organization to achieve established goals and objectives, that is consciously designed, based on delegated authority, with a structured organizational chart and is deliberately impersonal.

• Informal Organization: People-in-group associations that operate within a formal organization but are not specified in the formal organization structure. Characteristics of informal organizations include group norms, cohesiveness, leadership, and communication networks (grapevine).

• Informal organizations can develop within a formal structure.

• Reasons for informal organizational formation include mutual benefit, friendship, social need fulfillment, work-related conditions, and administrative practices.

• Advantages of informal organizations include providing additional assets for a formal organization, offering useful communication channels, providing satisfaction and stability within the organization, and informing managers of sensitive issues.

• Disadvantages of informal groups include resistance to change, role conflict, rumors, and hidden agendas/conformity.

Organizational Structure

• The structural framework for carrying out organizational functions like planning, decision-making, controlling, communication, and motivation.
• The formal pattern of interactions and coordination, designed to link individual and group tasks towards achieving organizational goals.
• Structure is both horizontal (linking tasks) and vertical (establishing managerial levels).
• Organizational structure can explain who reports to whom (chain of command), the number of managerial levels, the span of control, channels of official communication, and the structure of work (by function, territory, customer, etc.).

Major Elements of the Organizing Function

• Division of Labor: Breaking down complex tasks into smaller, more manageable parts, training workers in specific duties, and sequencing activities for efficient workflow.
• Advantages of division of labor: High proficiency by workers, reduced transfer time, less material waste in training, easier supervision, and shorter training periods.
• Disadvantages of division of labor: Boredom and fatigue from monotonous tasks, limited knowledge, communication barriers, department-centric thinking, and potential conflict between specialized areas.

Departmentalization

• Dividing organizational operations into sub-activities and grouping them into working groups based on a logical arrangement.
• Essential for overseeing and coordinating activities beyond a limited capacity.
• The most common bases for departmentalization include function, territory, product, customer, and process.
• Function: Grouping based on similar expertise, skills, or activities. This is the most common form of organizational structure.
• Advantages: Maintains power and prestige of major functions, follows the principle of occupational specialization, simplifies training, provides unity of command, makes coordination and planning easier, and promotes specialization and efficiency.
• Disadvantages: De-emphasizes overall company objectives, personnel overspecialization, narrows viewpoints, reduces coordination and communication across functional areas, concentrates decisions at the top (which can lead to delays), and restricts general manager development.
• Territory: Grouping according to geographic area.
• Advantages: Places emphasis on local markets and local participation in decision-making. Improves coordination within a region, takes advantage of economies of local operations, and encourages decentralized decision-making.
• Disadvantages: Requires more managers with general abilities, may duplicate staff, services, or efforts, and increases top management control problems.
• Product: Grouping according to product lines.
• Advantages: Focuses effort on particular products, enables diverse product and service growth, places profit responsibility at the division level, and facilitates general manager training.
• Disadvantages: Requires more managers with general abilities, creates duplication of business functions, and creates more management control issues.
• Customer: Grouping based on customer type (e.g., consumer, industrial).
• Advantages: Concentrates on customer needs, makes customers feel understood, and develop customer expertise.
• Disadvantages: Coordination issues between customer demands, requires specialized managers, and requires expert understanding of customer issues.
• Process: Grouping based on the workflow or production process in a company (e.g., manufacturing, assembly line).
• Advantages: Achieves economies of scale, uses specialized technology, and simplifies training.
• Disadvantages: Coordination between departments can be challenging and responsibility for profit is at the top.

Span of Management Levels

• Narrow Span: Few reporting to a superior, often a tall organizational structure, excellent communication between supervisors

• Advantages: Close supervision; fast communication; easy coordination.

• Disadvantages: Managers may be underutilized; subordinates may be overly controlled; costly to maintain a large hierarchy.

• Wide Span: Many reporting to a superior, creating a flat organizational structure, decentralized authority, fewer hierarchical levels.

• Advantages: Managers are more flexible and responsive; fewer levels lead to quicker decisions.

• Disadvantages: Managers may be overstrained; subordinates may not receive enough guidance; potential for communication and supervision problems if the span is too large.

• Factors determining an effective span of management include manager's ability to delegate, manager's personality, subordinate skills, motivation, need for autonomy, work type, geographic dispersion, availability of information systems, and organizational levels.

Authority Relations

• Line Authority: A hierarchical relationship between superior and subordinate. Production, marketing, and finance are examples.

• Staff Authority: Advisory in nature (e.g., personnel, research, legal, plant maintenance). Staff provides support and services to line managers but do not have authority over them.

• Functional Authority: Delegated control to individuals or departments over specific processes or activities that other departments perform. This can include allocating resources within a department.

• Benefits of staff authority include providing advice to line managers during complex issues, allowing time for specialized tasks when line managers are too preoccupied.

Delegation, Centralization, and Decentralization

• Authority: The right to commit resources or give orders; the formal right to make decisions and direct others in matters related to a position's duties and goals.
• Delegation of Authority: The downward transfer of authority from superiors to subordinates to make decisions within their assigned responsibilities.
• Centralization: The extent to which power and authority are retained by top managers, resulting in centralized decision-making.
• Decentralization: The systematic dispersal/delegation of power and authority throughout the organization to middle and lower-level managers, leading to decentralized decision-making.
• Factors affecting delegation decisions include organization culture, nature of decisions, availability of lower-level managers, management philosophy, organizational size, geographic operations, and environmental uncertainties.
• Problems in effective delegation may come from managers (fear of loss of power) or from subordinates (fear of failure, lack of resources or information).

Conflict Between Staff and Line Managers

• Possible conflicts arise due to demographic factors (e.g., age, education, motivations, power disparity), threats to authority, dependence on specialized knowledge, or exceeding authority.
• Ways to resolve conflicts include understanding authority relationships, encouraging staff input, keeping staff informed, demanding completed staff work, defining clear roles and responsibilities, prioritizing results.