Organizing in Management Concepts

Organizing in Management

• Organizing is a key management function establishing working relationships among employees to achieve goals.
• Organizational structure is a formal system outlining task and reporting relationships, showing how resources are used.
• Organizational design involves managers making specific choices leading to a specific organizational structure.
• Successful design depends on the organization's unique situation.

Factors Affecting Design

• Environment: Quicker environmental change necessitates more flexible structures.
• Strategy: Different strategies require different structures. Differentiation needs a flexible structure, while a low-cost strategy may need a more formal structure.
• Technology: The combination of skills, knowledge, tools, equipment, and machines. Complex technology makes regulation harder. Technology is measured by task variety (new problems a manager encounters) and task analyzability (programmed solutions available to solve problems).
• Human Resources: Higher skilled workers typically need more flexible structures.

Importance of Organizing

• Establishes a clear structure and hierarchy.
• Assigns tasks and responsibilities to individuals and teams.
• Creates efficient communication channels.
• Reduces duplication of work and resource wastage.
• Aligns individual efforts with organizational goals.

Organizational Structure Types

• Functional: Groups based on functions (e.g., Marketing, HR, Finance).
• Divisional: Organizes by product lines, geographic regions, or markets.
• Matrix: Combines functional and divisional structures with dual reporting lines.
• Network: Focuses on core functions and outsources non-core activities.

Determinants of Structure

• A division is a collection of functions working together to produce a product.
• Divisions create smaller, manageable parts of a firm.
• Product Structure: Divisions based on product or service types.
• Geographic Structure: Divisions based on geographic regions.
• Market Structure: Divisions based on customer types.
• Global Structures: Used when problems or demands vary across the globe.
  • Global Geographic Structure: Different divisions serve each world region, tailoring to regional customer needs.
  • Global Product Structure: Firms focus on core functional work at home and establish divisions to market similar products globally.

Job Design

• Job Design: Grouping tasks into specific jobs, creating a division of labor.
• A division of labor is effective and efficient.
• Job Simplification: Reduction of tasks for each worker can lead to boredom.
• Job Enlargement: Increasing tasks for a given job reduces boredom.
• Job Enrichment: Increases worker responsibility over a job, potentially leading to increased worker involvement.

Job Characteristics Model

• Jobs have five key characteristics:
  • Skill variety (range of skills used)
  • Task identity (worker involvement in all job tasks)
  • Task significance (meaningfulness of task to organization)
  • Autonomy (employee's freedom to schedule tasks)
  • Feedback (worker's direct information about job performance).
• These affect motivation, satisfaction and employee performance.

Grouping Jobs into Functions

• Function: people with similar skills performing similar jobs together.
• Functional structure consists of departments like marketing, production, and finance.
• Pros: Easy for managers to monitor and evaluate workers, and workers can learn from others.
• Cons: Hard for departments to communicate effectively & managers may become too focused on their department.

Coordinating Functions

• Authority: The power vested in the manager to make decisions and use resources.
• Hierarchy of authority: Describes the relative authority of different managers.
• Span of control: The number of workers a manager manages.
• Line authority: Managers directly commanding for the production of goods or services.
• Staff authority: Managers advising line managers (e.g., legal).

Tall & Flat Organizations

• Tall structures: Many levels, making communication difficult and decisions slow.
• Flat structures: Few levels, resulting in quick communication but potential for overworked managers.

Minimum Chain of Command

• Managers must evaluate whether they have the right number of middle managers.
• Decentralization puts more authority at lower levels, creating flatter organizations.
• Decentralization can lead to divisions losing sight of broader organization goals.

Integrating Mechanisms

• Direct contact: Managers from different departments meet to solve problems.
• Liaison roles: One manager responsible for communication between different areas.
• Task forces: Temporary teams for specific problems across different departments.
• Cross-functional teams: Permanent teams for recurring problems across departments.
• Matrix structures: Already incorporate many integrating mechanisms.

Strategic Alliances

• Strategic alliance: Firms formally agree to exchange resources to produce a good.
• Network structures result from multiple strategic alliances, allowing firms to bring resources together in a boundary-less organization.

Organizational Control and Culture

• Managers must monitor and evaluate:
  • Efficiency in converting inputs to outputs
  • Product quality improvements
  • Competitive performance among firms
  • Employee responsiveness to customers
  • Manager innovation
  • Risk-taking encouragement by control systems
• Control systems: Formal systems for target-setting, monitoring, evaluation, and feedback to improve effectiveness and efficiency.
• Control systems should offer flexibility and provide information in a timely manner.
• Types of control:
  • Feedforward: Anticipating problems in input stage.
  • Concurrent: Managing problems as they occur.
  • Feedback: Managing problems after they occur.

Control Process Steps

• Establish standards of performance (goals or targets).
• Measure actual performance.
• Compare actual performance against standards.
• Evaluate results and take corrective actions.

The Goal-Setting Process

• Corporate managers set goals for the organization.
• Divisional managers set goals for departments.
• Functional managers set goals for individual workers.

Output Control Systems

• Output controls involve financial measures.
• Profit ratios measure efficiency of converting resources to profits.
• Return on investment (ROI), liquidity ratios, and leverage ratios show firm performance.
• Operating budgets outline how to use resources to meet goals.

Behavior Control Systems

• Direct supervision: Managers directly control workers.
• Management by objectives (MBO): Specific objectives for improving performance. Goal setting is participatory, and reviews are held on progress toward goals.
• Bureaucratic control: Established rules and standard operating procedures dictate worker behavior.

Organizational Culture & Clan Control

• Organizational culture: Shared values and norms that influence worker behaviour and interactions.
• Clan control: Control achieved through internal systems of values & norms, ensuring shared understanding.

Culture & Managerial Action

• Culture influences planning, organizing, leading, and controlling.
• Innovative firms encourage participation in planning.
• Creative firms may have organic, flexible structures and top managers who lead by example, taking risks and trusting in lower-level managers.