FAG1007 Fundamental of Management PDF

FAG1007 FUNDAMENTAL OF MANAGEMENT Attendance  Topic 8 ORGANIZING Learning Outcomes After studying this chapter, you should be able to: ❑ Define the concept of organizing and explain the importance of the organizing function. ❑ Describe the process of organizing. ❑ Describe...

FAG1007 FUNDAMENTAL OF MANAGEMENT Attendance  Topic 8 ORGANIZING Learning Outcomes After studying this chapter, you should be able to: ❑ Define the concept of organizing and explain the importance of the organizing function. ❑ Describe the process of organizing. ❑ Describe the types of organizing structures and organizational relationships. ❑ Explain the types of organizational structures or design.  Organizing and Its Importance “Organizing is a function by which the concern is [being] able to define the role positions, the jobs related and the coordination between authority and responsibility” ❖ It is also defined as the process of determining what needs to be done, how it will be done and who is to do it. ❖ Organizing synchronizes and combines organizational resource (human, physical and financial) which are important in obtaining results. Identification of organizational activities ❖ The organizing function helps an organization to identify important and relevant activities which have to be performed in meeting organizational goals. ❖ This activities are identified during the planning process. ❖ Organizing helps to group and classify these activities into work department and units. ❖ E.g.: preparation of accounts, achievement of sales targets, record keeping, quality control and inventory control. Departmentalization of organizational activities ❖ In this steps, a manager attempts to combine and group similar and related activities into departments and units. ❖ E.g.: marketing department, production department, and finance department – how activities are grouped. ❖ Allows for specialization of jobs, thus making people more effective at their jobs. Classifying authority ❖ Once departments are set up, a manager tries to classify powers and their extent to managers. ❖ The top level of management is into formulation of policies, whereas the middle level management is into departmental supervision. The lower level of management is into supervision of non-managerial employees. Coordination between authority and responsibility ❖ Relationships are established among various groups to enable and ensure smooth interaction towards the achievement organizational goals. ❖ Each individual is made aware of his or her authority, and whom they are to receive orders from, account for and report to. Organizing Process 1. Identifying organizational structure in relation to the company’s mission and determining organizational relationships and organizational members' activities. ❖ Goals for an organization, strategic plans for pursuing these goals and the capabilities available at the organization for executing those strategic plans must be outlined. ❖ This is achieved through planning process. 2. Delegating or empowering authority to these positions and people and determining the locus of decision making. ❖ Managers need to make decisions effectively through the art o delegation of authority or empowerment, and to determine the locus of decision-making (centralization versus decentralization) to encourage sense of belongingness among organizational members. 3. Departmentalization, i.e., grouping, the activities into logical and suitable units. ❖ Managers need to focus on processes, such as grouping of organizational members according to their expertise or specialization as well as according to regional divisions of products produced or services catered. ❖ This refers to the most suitable organizational structure, often known as departmentalization. 4. Coordinating resources. ❖ Managers need to be able to coordinate organizational resources and ensure that resources are effectively utilized. 5. Monitoring and feedback. ❖ Managers need to monitor the process to ensure that the organization is adapted to environmental and technological changes that are occurring and is heading towards its goals. Formal and Informal Organizations There are two types of organization structures formal organization and informal organization-which are formed on the basis of relationships. Formal Organization ❖ Has a structure comprising well-defined jobs; each of which bears a measure of authority and responsibility. ❖ Employees achieve organizational goals of a formal organization by adhering to norms laid down by the structure. ❖ This type of organization is a logical set up because everyone is responsible for their own performance. ❖ It also sets out to achieve predetermined goals. ❖ A formal organization is often represented in the form of an organization chart. Informal Organization ❖ Has a network of both personal and social relationships that spontaneously originate within the formal set up. ❖ It is not, however, based on any rules or regulations, as is the case with a formal organization. ❖ Informal organizations develop through relationships built on likes, dislikes and emotions. In sum, a formal organization originates from a set organizational structure, whereas an informal organization originates from the formal organization.  Types Of Organizational Relationship 1. Chart and Chain of Command ❖ An organization chart is a graphic representation or a form of line diagram of a formal organization structure. ❖ It is an extremely important tool for analysing problems in an organization, specifically the analysing of day-to-day problems or issues of management. An Organization Chart President Vice President Vice President (Marketing) (Human Resource) Sales Advertising Staffing Manager Manager Manager  Types Of Organizational Relationship ❖ This organization chart aids managers to verify the following factors: Levels of management ❖ An organization chart is always shown in a hierarchical formation, as shown in Figure 7.1, depicting the different levels of management in an organization. Chains of command ❖ denotes the delegation of authority, which specifies who reports to whom. Positions and types of work performed ❖ As can be seen in Figure 7.1, the titles of positions are clearly shown (Sales Manager, Advertising Manager and Staffing Manager). These titles of positions indicate the type of work that these managers perform. Departmentalization or division of work ❖ The grouping or clustering of similar tasks under one common task indicates departmentalization (specialization of work). 2. Span of Control ❖ Span of control can be defined as the number of subordinates or employees that is managed by a manager. ❖ There are two types of span of control-a narrow span of control and a wide span of control.  Narrow Span of Control Wide Span of Control Requires a manager to supervise a Requires a manager to supervise a small group of employees, resulting in a larger group of employees compared to tall organization structure as shown in a narrow span of control (see Figure Figure 7.2. 7.2). A wide span of control will result in a flat organization structure. Too narrow a span, however, will prove Multiple layers of management. Too wide a span, however, will prove Slower communication. Fewer layers of management. Higher number of communication Rapid communication. issues among different management Wide spans of control levels. Common in decentralized Narrower spans of control. organizations  FIGURE SPAN OF CONTROL Wide Span of Control Narrow Span of Control 3. Delegation ❖ The delegation or assignment of authority to another person and and the accountability of carrying out specific activities. ❖ The delegation of authority by managers to employees is necessary for the efficient functioning of any organization as no manager can personally accomplish or completely supervise everything that happens in an organization. ❖ Delegation Entails: Assignment of responsibility—the duty to perform an assigned task. Granting of authority—the power to make decisions necessary to complete the task. Creation of accountability—the obligation of employees to successfully complete the task. ❖ The delegation of authority by managers to employees is necessary as no manager can personally accomplish or completely supervise everything that happens in an organization. Line, Staff and Functional Authorities ❖ Line Authority The type of operational authority that flows up and down the chain of command. ❖ Staff Authority Authority based on special expertise and usually involves counseling and advising line managers. ❖ Functional Authority The right to control the activities of other departments which are related to specific staff responsibilities is termed as functional authority. 4. Centralization and Decentralization ❖ Most businesses must make decisions about general patterns of authority in an organization. This pattern of authority may be largely centralized or decentralized. ❖ The extent to which authority is retained by upper level management in an organization is termed a centralized organization, and the decisions made are centralized. ❖ But when the authority in making decisions is delegated from one unit of an organization to another (usually lower level managers), a decentralized organization appears. Thus, all decisions made are decentralized. Types Of Organizational Structure Functional Structure Form of business organization in which authority is determined by the relationships between group functions and activities. Used by most small to medium-sized firms structured around basic business functions (marketing, operations, finance) Advantages: Specialization and smoother internal coordination Disadvantages: Centralization, poor cross-functional coordination, and lack of accountability TYPES OF ORGANIZATIONAL STRUCTURE (cont.) Divisional Structure Based on departmentalization by product with each division managed as a separate enterprise Organizations using this approach are typically structured around several divisions—departments that resemble separate businesses in that they produce and market their own products Advantages: Increased product-focus and internal coordination Disadvantages: Duplication of efforts and competition between divisions TYPES OF ORGANIZATIONAL STRUCTURE (cont.) Geographical Structure Geographical departmentalization groups related work activities according to areas that are served by a business. Advantages: Better customer service, improve customer communication Disadvantages: Higher cost, chance of miscommunication Geographical Organization Matrix Structure Organized along two dimensions, instead of just one, by combining, for example, functional and divisional structures Advantages: Highly flexible, focused on single problem, access to resources and expertise Disadvantages: Loss of command and control, lack of accountability, impermanent existence  TYPES OF ORGANIZATIONAL STRUCTURE (cont.) Virtual Organization Has little or no formal structure, few permanent employees, a very small staff, and a modest administrative facility. Advantages: Highly flexible Disadvantages: The issue on the use of information outside the company’s legal rights. To prevent this from happening, companies normally will ensure that copyrights and confidentially agreements are in place. The Virtual Organization  Mid Sem Test (UPS) Subject: FAG1007 (Fundamental of Management) Date & Time: Tuesday (9.30 -10.30) Topic: 1 – 6 Questions: 30 multiple choice questions THANK YOU