Topic 6-Organizing PDF

Topic 6-ORGANIZING ▪“ an organization is a process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationship for the purpose of enabling people to work most effectively together in accomplishing objectives.” - Allen “or...

Topic 6-ORGANIZING ▪“ an organization is a process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationship for the purpose of enabling people to work most effectively together in accomplishing objectives.” - Allen “organization involves the grouping of activities necessary to accomplish goals and plans, the assignment of these activities to appropriate departments and the provision for authority delegation and coordination.”- Koontz and O’Donnell ▪“Organization is a process of defining and grouping the activities of the enterprise and establishing the authority relationship among them.”-T. Haimann “Organization is a form of every human association for the attainment of a common purpose.”-Mooney and Reily “Organization is a system of cooperative activities of two or more persons.”-Chester Barnard ▪ It facilitates administration and management ▪ It helps in the growth and development of a firm ▪ It ensures optimum use of human resources ▪ It stimulates creativity and innovation ▪ It allows use of modern technology ▪ It facilitates coordination in the firm ▪ It promotes executive development ▪ It ensures cooperation among personnel 1. Principle of objective – objectives must be clearly defined 2. Principle of coordination-people working towards a common objective must coordinate with each other 3. Principle of efficiency-ensure lowest possible cost of production 4. Principle of unity of direction-there must be one superior and one plan of action in gearing towards a direction 5. Principle of unity of command-every person should received a command from one supervisor and must be accountable to him 6. Principle of specialization-job of the person must be confined in one function 7. Scalar principle-line of authority shall be clear 8. Short chain of command-short chain of command enable better communication 9. Authority and responsibility-people with authority shall be willing to accept corresponding responsibility 10. Principle of Delegation-decision making shall be made at the lowest competent level of mngt 11. Principle of balance-proper reporting and evaluations shall be done 12. Principle of change-organizations shall be flexible and capable of coping with the changes ▪The term organization architecture refers to the totality of a firm’s organization, including formal organization structure, control systems, incentive systems, organizational culture, and people. ▪The location of decision-making responsibilities in the firm, the formal division of the organization into subunits, and the establishment of integrating mechanisms to coordinate the activities of subunits. ▪the location of decision-making responsibilities in the firm (centralized or decentralized); ▪the formal division of the organization into subunits such as functions, product divisions, and national operations ▪the establishment of integrating mechanisms to coordinate the activities of subunits (such as cross- functional teams). ▪Metrics used to measure the performance of subunits and to judge how well managers are running those subunits. ▪Devices used to encourage desired employee behavior. ▪Values and assumptions that are shared among the employees of an organization. ▪People in the organizations have their own distinctive patterns of culture and subculture. ▪The employees of an organization, the strategy used to recruit, compensate, motivate, and retain those individuals, and the type of people they are in terms of their skills, values, and orientation. ▪They are the human capital 1.Vertical differentiation, which refers to the location of decision-making responsibilities within a structure (that is, centralization or decentralization) and also to the number of layers in a hierarchy (that is, whether the organizational structure is tall or flat). 2. Horizontal differentiation, which refers to the formal division of the organizationinto subunits. 3. The establishment of integrating mechanisms, which are mechanisms for coordinatingsubunits. A. Centralizations vs. Decentralization A firm’s vertical differentiation determines where in its hierarchy the decision-making power is concentrated. ▪Centralization is the concentration of decision- making authority at a high level in a management hierarchy. ▪Decentralization vests decision-making authority in lower-level managers or other employees. ▪ Centralization can facilitate coordination ▪ centralization can help ensure that decisions are consistent with organizational objectives. ▪ centralization can avoid duplication of activities by various subunits within the organization. ▪ by concentrating power and authority in one individual or a management team, centralization can give top-level managers the means to bring about needed major organizational changes ▪ top management can become overburdened when decision- making authority is centralized. ▪ motivational research favors decentralization. Behavioral scientists have long argued that people are willing to give more to their jobs when they have a greater degree of individual freedom and control over their work ▪ decentralization permits greater flexibility—more rapid response to environmental changes. ▪ decentralization can result in better decision. ▪ decentralization can increase control. ▪Tall Hierarchies – have many layers of management ▪Flat Hierarchies – have few layers ▪ The number of direct reports a manager has. ▪ The number of direct reports a manager can handle depends on the nature of the work being supervised, how visible the performance of subordinates is, and the extent of decentralization within the organization. ▪ Generally if the work being performed by subordinates is routine, if the performance of subordinates is visible and easy to measure, and if the subordinates are empowered to make many decisions by themselves, managers can operate with a wide span of control. 1. there is a tendency for information to get accidentally distorted as it passes through layers in a hierarchy 2. There is also the problem of deliberate distortion by midlevel managers who are trying to curry favor with their superiors or pursue some agenda of their own. ▪ example, the manager of a division might suppress bad information and exaggerate good information in an attempt to window-dress the performance of his or her unit to higher- level managers and win their approval. 3. they are expensive. The salaries and benefits of multiple layers of midlevel managers can add up to significant overhead, which can increase the cost structure of the firm; 1. There is a tendency for information to get accidentally distorted as it passes through layers in a hierarchy 2. There is also the problem of deliberate distortion by midlevel managers who are trying to curry favor with their superiors or pursue some agenda of their own. ▪ example, the manager of a division might suppress bad information and exaggerate good information in an attempt to window-dress the performance of his or her unit to higher- level managers and win their approval. 3. They are expensive. The salaries and benefits of multiple layers of midlevel managers can add up to significant overhead, which can increase the cost structure of the firm; A. Functional Structure B. Multidivisional Structure C. Geographic Structure D. Matrix Structure ▪A structure that follows the obvious division of labor within the firm, with different functions focusing on different tasks. ▪Functions themselves can be and often are subdivided into subunits ▪Horizontal differentiation within functions is typically on the basis of similar tasks and processes ▪ A structure in which a firm is divided into different divisions, each of which is responsible for a distinct business area. ▪ Each division is set up as a self-contained, largely autonomous entity with its own functions. ▪ Responsibility for operating decisions and business-level strategy is typically decentralized to the divisions, which are then held accountable for their performance. ▪ A structure in which a firm is divided into different units on the basis of geography. ▪ An area may be a country (if the market is large enough) or a group of countries. Each area division tends to be a self-contained, largely autonomous entity ▪ Each may have its own set of functions (such as its own production, marketing, R&D, and human resource functions) ▪An organization with two overlapping hierarchies. ▪A structure when a firm thinks that no single structural design seems to solve all of a firm’s problems