Module 3

ORGANIZING

• Organizing – Merit of vagueness? – Team work and co-operation

• Essentials of a meaningful organizational role: Verifiable objectives,

Clarity of major duties and activities and Boundaries of one’s authorities.

ORGANIZING

• Organizing? Identification and classification of activitiesGrouping of activities to achieve goalsAssigning of each group to manager with authorityProvision of co-ordination horizontally and

verticallyWho has to what? And Who is responsible for what

results?

DEFINITION: Organization is the process of identifying and

grouping work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives. - Louis Allen

• It is the establishment of authority relationships with provision for co-ordination between them, both vertically and horizontally in the enterprise structure. - Koontz and O’Donnell

ORGANIZING

Formal Organization: Intentional structure of roles in a structured organization -- Flexibility/Inflexibility, -- Conduciveness for performance, --Meeting group and organizational goals,…….

ORGANIZING Informal Organization:

Any joint personal activity without conscious joint purpose, even though contributing to joint results. (Network of personal and social relations)

Morning joggers Evening club mates Tennis players Good neighbors Temple devotees, all these groups formulated

informally out of the same organization’s employee larger group

ORGANIZING

Organizational Division –The DepartmentA distinct area or a division or a branch

within the organization where a manager has the authority and responsibility for the performance of specified activities. Production, Design, Finance, Sales, Advertisement, HR, R&D, Admin, Public Relations, Security, …..

Application of terminology of designations vary from co. to co. / Ind. to Ind.

ORGANIZING

Organization Levels and the Span of Management.

Levels speak of the depth of the structure

Span speak of the width of the structure

Merits and Demerits of both? Regarding supervision , control, involvement, cost, distance, rapport, ……

The span of management /Span of control

• The span of management /Span of control/refers to the number of subordinates who report directly to the superior. It is also known as the number of subordinates who report to a superior manager. If the subordinates who report to a superior are more in number, it is called the ‘wide span’ and the vice versa is called the ‘narrow span.’

ORGANIZING What factors influence the span of

management?Degree of trainingDegree of clarity of objective.Verifiability of objectives Degree of change in environmentType of communication Complexity of tasks Competency levels of employees Maturity levels Delegation levels, ……

ENTREPRENEURING Entrepreneuring skills: Generally applied

to managing small businesses. Further applicable to large organizations

and managers in terms of initiating changes to take advantages of opportunities.

Peter Drucker: The essence of entrepreneurship is innovation, i.e., goal oriented change to utilize the enterprise’s potential.

INTERPRENEUR Intrapreneur is a person who focuses on

innovation and creativity and who transforms an idea into a profitable venture by operating within the organizational environment

General concept: The term entrepreneur designates an enterprising person working within or outside the organization in terms of exploiting the opportunities with innovative ideas.

INNOVATION AND ENTREPRENEURSHIP

Situations leading to innovations1)The unexpected event, success or failure

2) When assumptions & reality are far off

3) Task or process demands improvement

4)Changes in the structure of mkt/industry

5)Changes in demographics

6)Changes in perception / meaning

7) Updating with latest knowledge………

REENGINEERING

Definition by Michael Hammer and James Champy:

Re-engineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service and speed.

REENGINEERING

Key AspectsFundamental rethinking

Radical redesigning

Downsizing / Rightsizing

Dramatic results

Business processes

Technological and human systems

Total managerial system

Know these before you organize

Organizing is not over specialization

Activities are not made routine and mechanical

Not a tool to control one’s discretion

There is no singularly best way to organize – It is only what is suitable to you in the given situation

Formal organization is only an intentional structure of roles

ORGANIZATIONAL STRUCTURE/ DEPARTMENTATION

1.VERTICAL/ TALL/LINE ORGANISATION-

Vertical/ Tall organization : Authority and Responsibility flow from the top to the bottom through all the levels of the managerial hierarchy.

2. Horizontal/ Flat /Staff organisation

Horizontal/ Flat organization refers to an increase in breadth of an organization structure. the number of levels of an organizational hierarchy are a few

ORGANIZATIONAL STRUCTURE

3.Departmentation by Functions – Production, Sales, Finance, Design, R&D, HR,…….

4.Departmentation by Territory – NEWS,..5.Departmentation by Customer type –

Wholesale buyers, Retail buyers, Corporate customers, Individual customers, Savings Bank a/c holders, Current account holders.

6.Departmentation by products7. Matrix or Combo organization(Combination of functional and product or project patterns

of organization).

8.Strategic business unit structure.


STRATEGIC BUSINESS UNITS – SBUSBUs are distinct little businesses set up as units

in a large company.Basic concept – Independent business unitsCriteria for being called an SBUOwn and Distinct missionOwn integrative plansIndependent resource management in key areasHave an optimum size – Neither too small nor big


MERITS OF AN SBU

Product yielding large sales or profits is not lost among others

Preserve entrepreneurial attention and drive

Means of promoting entrepreneurship

SBU – A SMALL POND WITHIN A LARGE POND.


DEMERITS OF AN SBU / POTENTIAL PROBLEMS

The allocation of resources to an SBU may lead to underinvestment in core competencies.

SBU leaders / managers may not share or lend their Human Resources.

Potential danger of developing one upmanship among different SBUs.

ORGANIZATIONAL STRUCTUREHow to make matrix organization more effective?Define the objectives.Clarify the roles, authorities and responsibilities.Basis is knowledge and info, not the rank.Balance the power between functional and project

managers.Assign to a manager who is first a leaderUndertake organization and team development –

continuous process.Install control parameters – quality, time and cost.Establish an appropriate reward mechanism

9.

AUTHORITYAND POWERAuthority: The right in the position and hence the right in

the person occupying the position to exercise discretion in making decisions affecting others and the performance of individuals and others.

Power: The ability of individuals or groups to induce or influence the beliefs or actions of other individuals or groups.

- The Presidential Authority.

- The PM’s Authority.

- The power of a leader (ex. Mr. Vajpayee, Mrs. Sonia Gandhi)

LINE /STAFF AUTHORITY

Note:

Line and staff are distinguished by authority relationships and not by what people do.

A department like R&D, DESIGNS may stand in a predominantly staff position with respect to other departments but within the department, are line relationships.

Ex. VP – Production – generally line function.

But, when he advises the CEO on co’s production policy, the relationship is staff in nature.


CENTRALIZATION:

The act of bringing together the activities under the control of a central authority.

Types of Centralization:

Centralization by performance. – Co. operating in a single location.

Centralization by departments. – Central Maintenance, Central Purchase,….

Centralization as an aspect of Management. – High degree of authority held at or close to the top management. – ex. LML. TATA v/s BIRLAS.


DECENTRALIZATION: More than Delegation. Reflection of Management philosophy. Policy making to guide decision making. Selection and Training of personnel –critical. Essential element of a successful managerial

system. Signifies readiness to accept new challenges,

flexibility, globally dynamic environment.

MERITS OF DECENTRALIZATIONRelieves top management.Encourages decision makingDevelops independent thinkingLeads to establishing broad controls and

measures.High chance to increase motivation.May establish profit centers. Aids product diversification.Helps in developing generalists.Aids developing flexibility and adaptation.


DEMERITS OF DECENTRALIZATION

Difficult to have a uniform policy.

Tough to coordinate multiple decentralized units.

May lead to loss of control by top management

Difficult in establishing control measures.

Short of good managerial talent is a set back.

Calls for expensive training of managers.

May not gel in few situations for certain operations under economy of scale.


Delegation of authority: The process of Delegation:• Determine the specific results expected of a

position.• Assign the tasks to the position.• Delegate the necessary authority to

accomplish these tasks.• Hold the person in that position responsible

for accomplishing the tasks.


Golden Rules of Delegation:What a superior delegates is his

authority and never the responsibility.

You may hold your subordinate responsible, still you are accountable for all the responsibility.


Splintered Authority.Wherever a problem cannot be solved

without pooling the authority of two or more managers, there lies “splintered authority.

Ex. Joint decision by Marketing and Production departments on product mix during the times of short supplies of raw material. Managerial conferences,…


Art of Delegation:Personal attitudes towards delegation.

Receptiveness

Willingness to Let Go.

Willingness to let others make mistakes

Willingness to trust subordinates.

Willingness to establish and use broad controls – Good Feedback mechanism

Guidelines to overcome weak delegation. Assignment of tasks and delegation of

authority should be in light of the results expected.

Select the right person for the job to be done and not the other way.

Establish and sustain open and transparent communication lines.

Establish right methods and measures of control.

Develop a clear feedback mechanism. Reward effective delegation and successful

assumption of authority.

MATRIX ORGANISATION

• combination of functional and product patterns of departmentation in the same organization structure