Chapter 4 Organizing & Organizational Structure PDF

CHAPTER 4 ORGANIZING & ORGANIZATIONAL STRUCTURE DEFINITION - Organizational Structure THE FORMAL ARRANGEMENT OF JOBS WITHIN AN ORGANIZATION.  DEFINITION make arrangements or preparations for (an event or activity). Organising can be defined as a process that initiates implementatio...

CHAPTER 4 ORGANIZING & ORGANIZATIONAL STRUCTURE DEFINITION - Organizational Structure THE FORMAL ARRANGEMENT OF JOBS WITHIN AN ORGANIZATION.  DEFINITION make arrangements or preparations for (an event or activity). Organising can be defined as a process that initiates implementation of plans by clarifying jobs, working relationships and effectively deploying resources for attainment of identified and desired results (goals). Therefore, it is a process which coordinates human efforts, assembles resources and integrates both into a unified whole to be utilized for achieving specified objectives. Organizing is the managerial function, and this function of organizing is known as process of organization.  PURPOSES OF ORGANIZING Divides work to be done into specific jobs and departments. Assigns tasks and responsibilities associated with individual jobs. Coordinates diverse organizational tasks. Clusters jobs into units. Establishes relationships among individuals, groups, and departments. Establishes formal lines of authority. Allocates and deploys organizational resources.  ORGANIZATIONAL DESIGN A process involving decisions about six key elements: 1. Work specialization 2. Departmentalization 3. Chain of command 4. Span of control 5. Centralization and decentralization 6. Formalization. 1. Work Specialization The degree to which tasks in the organization are divided into separate jobs with each step completed by a different person. However, overspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover. 2. Types of Departmentalization a) Functional d) Process ◦ Grouping jobs by functions ◦ Grouping jobs on the basis of performed product or customer flow b) Product e) Customer ◦ Grouping jobs by product line ◦ Grouping jobs by type of customer and needs c) Geographic f) Matrix Departmentalization ◦ Grouping jobs on the basis of territory or geography a) FUNCTIONAL DEPARTMENTALIZATION Advantages Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations Coordination within functional area In-depth specialization Disadvantages. Poor communication across functional areas Limited view of organizational goals  b) GEOGRAPHICAL DEPARTMENTALIZATION Advantages More effective and efficient handling of specific regional issues that arise Serve needs of unique geographic markets better Disadvantages Duplication of functions Can feel isolated from other organizational areas c) PRODUCT DEPARTMENTALIZATION + Allows specialization in particular products and services + Managers can become experts in their industry + Closer to customers – Duplication of functions – Limited view of organizational goals d) PROCESS DEPARTMENTALIZATION + More efficient flow of work activities – Can only be used with certain types of products e) CUSTOMER DEPARTMENTALIZATION + Customers’ needs and problems can be met by specialists – Duplication of functions – Limited view of organizational goals  f) MATRIX DEPARTMENTALIZATION teams are formed in which individuals report to two or more managers, usually the functional manager and project manager brings together personnel from several specialties to complete limited-life tasks Advantages of Matrix departmentalization oriented toward end results professional identification is maintained pinpoints product-profit responsibility Disadvantages of Matrix departmentalization conflict in organization authority exists, causing uncertainty in reporting relationships the possibility of disunity of command exists requires the manager to be the most effective and efficient 3. Chain of Command The continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to who. Authority, responsibility, unity of command  Chain of Command Authority rights inherent in a managerial position to tell people what to do and to expect them to do it Responsibility obligation to perform any assigned duties Unity of command management principle that each person should report only one manager  4. Number Span ofof Control employees a manager can efficiently and effectively manage This is a crucial information for managers since they need to understand which are the resources available from a human resources standpoint. A hierarchical organizational structure normally has well defined boundaries that allow the manager to fully understand who are part of his team.  Span of Control Tall structure characterised by an overall narrow span of control and a relatively large number of hierarchical levels. Flat structure characterised by an overall broad span of control and a relatively few number of hierarchical levels. Organizational Hierarchies Width (degree) of span is affected by: Skills and abilities of the manager Employee characteristics Characteristics of the work being done Similarity of tasks Complexity of tasks Physical proximity of subordinates Standardization of tasks.  CENTRALIZATION The degree to which decision-making is concentrated at a single point in the organizations. Organizations in which top managers make all the decisions and lower-level employees simply carry out those orders. 5. Centralization and Decentralization  DECENTRALIZATION Organizations in which decision-making is pushed down to the managers who are closest to the action. The degree to which lower-level employees provide input or make decisions.  EMPLOYEE EMPOWERMENT Increasing the decision-making discretion of employees (increasing decentralization) Employee empowerment is a management philosophy that emphasizes the importance of giving employees the autonomy, resources and support they need to act independently and be held accountable for the decisions they make. Factors that Influence the Amount of Centralization Environment is stable. Lower-level managers are not as capable or experienced at making decisions as upper-level managers. Lower-level managers do not want to have a say in decisions. Decisions are significant. Organization is facing a crisis or the risk of company failure. Company is large. Effective implementation of company strategies depends on managers retaining say over what happens. Factors that Influence the Amount of Decentralization Environment is complex, uncertain. Lower-level managers are capable and experienced at making decisions. Lower-level managers want a voice in decisions. Decisions are relatively minor. Corporate culture is open to allowing managers to have a say in what happens. Company is geographically dispersed. 6. Formalization The degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures. Formalization is the extent to which an organization's policies, procedures, job descriptions, and rules are written and explicitly articulated. Formalized structures are those in which there are many written rules and regulations. ORGANISATIONAL DESIGN DECISIONS An organization’s structure is an important factor in how effectively it will operate. Mechanistic Organization Organic Organization - Rigid and tightly controlled - Highly adaptive and flexible structure structure High specialization Cross-functional teams Rigid departmentalization Cross-hierarchical teams Clear chain of command Free flow of information Narrow spans of control Wide spans of control Centralization Decentralization High formalization Low formalization Thank you