Download pptx - 2015 POM Chapter 4 Organizing

CHAPTER 4: ORGANIZING

DMG 1213 / DMG1113 / DPM1213 / DPM1113Principles of Management

Laura LawPerak College of Technology

OrganizingCHAPTER 4: ORGANIZING



OrganizingOrganizing is the process of

arranging and allocating work, authority, and resources among an organization’s members so that they can achieve organizational goal.

Stoner, Freeman and Gilbert3

Why organize? Extremely important to the management system

Manager who wants to organize department, they need to determine below;1. Determine what is to be done

2. Assigning tasks

3. Decide on a span of management

4. Decide how much authority you should designate

5. Draw an organization chart

Process of Organizing simplified

5

Why managers have to organize

Able to create and maintain relationship between all organizational resources Which resources are to be used for specified activities

and when, where and how they are used).

Minimize costly weakness

Divide the work according to the nature and similarity of tasks.

Pool resources and increase the efforts which lead to efficiency.

Build continuity and synergy.

Organizing process

Reflecting on plans and objectives

Establisihing major tasks

Dividing major tasks into subtasks

Allocating resources and directives for

subtasks

Evaluating the result of implemented

organizing strategy.

Organizational structure

Basic framework within which manager and his subordinates operate.

Explains the position and official relationship between various individuals in the organization

Basic activity performed;Who decides?Who report whom?Who responds?Who perform what work?

Division of Labor

CHAPTER 4: ORGANIZINGDMG 1213 / DMG1113 / DPM1213 / DPM1113

Principles of ManagementLaura Law

Perak College of Technology

Division of work/ laborDivision of work is main activities in

organization function because one individual can not do all the work but specialization results in efficiency and effectiveness

Within the formal structure of an organization whereby task/work has be divided among the members and different jobs related to each other

This is to maintain a balance between an emphasis on subject matter or function at higher levels of the organization and specialization and concern for staff at the operational level.

Importance of Division of work

Increases productivity of the

organizations

Fosters specialization because it

creates simplified tasks that easily

understood and completed very quickly

Easy to assign task to individual based

upon the talents, interests and position

Limitations of division of work

Sense of control felt by the managers will be different because of the specialization

It will create dissatisfaction among the subordinates that they might don’t like or have no interest to the tasks assigned

Feel boredom because of the routine and specified tasks to be done

Organization Chart




Organization chartA formal diagram that shows the lines of authority.

Each box represents a position within an organization and each line indicates reporting relationships and line of communication.

The purpose to performed organization chart; To indicate to each employees area of responsibility

and to whom each reports To coordinate the division of work and to make those

division clear. To show work to be done. To indicate line of promotion.

Span of Management




Span of managementRefers to the number of subordinates who report

directly to a given manager of supervision.

Major factors that influence

the span

Manageme

nt

Type of work

Ability of manager

Amount & type of

communication required

Location in organization

structure

Span of ManagementADVANTAGES DISADVANTAGESSuperior are forced to delegate

Decisions made by managers tend to be at a bottleneck because of the burden of managing subordinates

Clear policies must be made There is a danger superior’s loss of control

Subordinates must be carefully selected

Management requires exceptional quality managers to handle the situation

Span of Management Organization Structure

Flat structureHave a few organization levels

with flat wide span of authority.

Tall structureHave short span of authority

with many organization levels.

President

President

Tall Organization

Flat Organization

Establishing Reporting Relationships: Tall Versus Flat Organizations

Flat OrganizationsLead to higher levels of

employee morale and productivity.

Create more administrative responsibility for the relatively few managers.

Create more supervisory responsibility for managers due to wider spans of control.

Tall OrganizationsAre more expensive

because of the number of managers involved.

Foster more communication problems because of the number of people through whom information must pass.

Major aspects of organization structure

ASPECTS IN ORGANIZATION STUCTURE

EXPLAINATION

DIVISION OF WORK Represents individual or sub-unit responsible for a given part of the organization’s work load.

MANAGERS AND SUBORDINATES

To indicates who is whose boss and who reports to whom

NATURE OF WORK A descriptions of tasks. Area of responsibility

GROUPING OF WORK SEGMENTS

Indicates division of work / departments

LEVEL OF MANAGEMENT Provide the entire management hierarchy

Departmentalization




Departmentalization and formal structure

Process of grouping into separate units’ activities or tasks

5 types of departmentalization;By FunctionBy ProductBy Multi-divisionBy GeographyBy CustomerBy Matrix

1. Functional structure:

General Manager

Production Dept

Finance Dept

Marketing Dept

HR Deprtment

Structure is created based on the various functions of an organization.

DEPARTMENTALIZATION BY FUNCTION

2. Multi-Division structure

Multiple divisions are created in a related industry.

General Manager

Division I Division II Division III

DEPARTMENTALIZATION BY MULTI-DIVISION

DEPARTMENTALIZATION BY MULTI-DIVISION

Divisional or M-form (Multidivisional) DesignAn organizational arrangement based on

multiple businesses in related areas operating within a larger organizational framework; following a strategy of related diversification.

Activities are decentralized down to the divisional level; others are centralized at the corporate level.

The largest advantages of the M-form design are the opportunities for coordination and sharing of resources.

3. Geographic structure:

General Manager

Eastern Region

Central Region

Western

Region

Departments are created based on geographic regions.

All the activities in one geographic region is categorized into one unit.

DEPARTMENTALIZATION BY GEOGRAPHIC

4. Matrix Organization

Employees

CEO

Projectmanager B

Projectmanager C

Vice president,engineering

Vice president,production

Vice president,finance

Vice president,marketing

Projectmanager A

DEPARTMENTALIZATION BY MATRIX

Departmentalization by matrix

To increase the ability of managers and other employees to process information.

Combines the advantages of the functional and product structure to increase.

Matrix Structure:Advantages:Enhances organizational

flexibility.Team members have the

opportunity to learn new skills.

Provides an efficient way for the organization to use its human resources.

Team members serve as bridges to their departments for the team.

Disadvantages: Employees are uncertain

about reporting relationships.

The dynamics of group behavior may lead to slower decision making, one-person domination, compromise decisions, or a loss of focus.

More time may be required for coordinating task-related activities.

Involves grouping the activities and functions on product basis.

A sensible degree of specialization is encouraged.

Divides into self-contained units, capable of designing, producing, marketingPresident

GMPharmaceutical

product

GMPersonal care

product

5. PRODUCT structure:DEPARTMENTALIZATION BY PRODUCT

Grouping of activities to reflect the interests of different customers.

To ensure a focus on the customer’s need rather than organization’s skills or brand it produces.

President

Institutional banking

Real estate mortgage

Community banking

Corporate banking

6. Customer structure:DEPARTMENTALIZATION BY CUSTOMER

AuthorityCHAPTER 4: ORGANIZING



AuthorityRight to take decisions that arises due to

position in organizational structure.

Authority is the right to perform or command.

It allows its holder to act in certain designated ways and to directly influence the actions of others through orders.

Types of Authority:Line AuthorityStaff Authority

Line Authority • Belongs to managers who have the right to direct

and control (command) the activities of subordinates who perform task essential to achieving organizational goal.

• Each manager is responsible for the work of his unit and its direct contribution to the objectives of the organization.

The chain of command in the organizational structure that flows major decision making power.

The officially sanctioned ability to issue orders to subordinate employees within an organization.

1.Pertains to superior – subordinates relationships

2.Directly related to objectives of organization

3.Deals mainly with the exercise of authority to a channel of line authority

4.Identifies units that initiate and carry through to conclusion the basic activities

5.Manager is a doer6.Designates a line manager

Line Authority

Staff Authority• Right to advise, but not command, other who are not

subordinates in the chain of command.

• Each individual plays a supporting role and contributes indirectly to the objectives of the organization.

Staff authority consists of the right to advise or assist those who possess line authority as well as other staff personnel.

The Advisory or Counseling Role :

The Service Role

The Control Role

1. Characteristically, it is a manager-to-manager

relationship

2. Indirectly related to the objectives of

organization

3. Deals mainly with the exercise of authority to

a channel of line authority

4. Includes all units that are not line

5. Manager has a supporting and aids the doer

6. Designated a staff manager

Staff Authority

LINE FUNCTION STAFF FUNCTION

Activity that contributes directly to creating or selling the company’s product

Does not contribute directly to creating or selling the company product’s but instead supports line activities

Activities that take place within the manufacturing and marketing departments would be considered line function

Marketing managers might consult with the legal staff to make sure the wording of a articular advertisement is legalAccounting, human resource and legal service

Staff & Line Authority

PRESIDENT

MARKETING

FINANCE PRODUCTION

R & DLEGAL

---------------->

LINE AUTHORITY

STAFF AUTHORITY

DelegationCHAPTER 4: ORGANIZING



DelegationConcept describing the passing of formal authority to

another person.

Delegation may become necessary when managers are absent from their job

Step in delegation process;

Assigning Responsibili

ty

Granting Authority

Establishing Accountabil

ity

Factors Lead Manager to Delegate Authority

Culture of the organization

Specific situation involved

Relationship behavior personalities

The capabilities of the people in that situation

Guidelines lead to effective in delegating;

1. Responsibility, Authority and Accountability

2. The Scalar Principle; indicates there must be a clear line of authority from highest to lowest level.

3. Unity of command; suggest each person should report only one superior.

Factors Lead Manager to Delegate Authority

Guidelines lead to effective in delegating;

1. Responsibility, Authority and Accountability

2. The Scalar Principle; indicates there must be a clear line of authority from highest to lowest level. A clear line of authority will make it easier for organization members to understand:

To whom they can delegate Who can delegate them To who they are accountable

3. Unity of command; suggest each person should report only one superior. Advantage as below:-

The more task delegated, the more opportunity there is for managers to accept increased responsibilities

It leads to better decisions, since subordinates closet to the problem or task usually have the best view of facts

To accept responsibility and exercise judgment Speeds up decision

Barriers to effective delegation

Subordinates perspective1. fear of criticism for making a mistake

2. Discouraged because incentive for assuming extra responsibility are not sufficient.

Managers perspective; 1. Fear a loss of power if the subordinates does too good a job

2. Fear that the task won’t be done as well as if they did it themselves

How become a more Effective Delegator

3. Delegate to the right person

4. Be clear on direction and deadlines

5. Provide necessary resources

6. Focus on outcomes, not the process

7. Choose which tasks to delegate

8. Be generous in your praise ad acknowledgement

Centralization




CentralizationCENTRALIZATION (CONCERTRATION ON AUTHORITY)

Location of most authority at the upper levels of the organization

Manager make most decision, even the relatively small ones

Practice of having responsible and authority concentrated in one place made by central controlling body but only little initiative in hands of lower down management ladder.

Leads situation whereby all management decision have to be approved by chief executive before they can pun into operation.

Advantages and disadvantages

ADVANTAGES DISADVANTAGES

Provide absolute control over the organization and ensure adherence to laid down policies

Control can be autocratic and inflexible

Administratively convenient and gladly visible

Leads to frustration among staffs

Possible to have common standard throughout organization

Bureaucratic (Organization) control methods may be imported which will resulting in a proferation of forms and rigid (unbending) procedures

Possible to engage very highly qualified functional experts whose high salaries can be justified

Managers may see themselves not as independent decision makers but rather as order-taking

Decentralization




Decentralization

Location of a significant amount of authority in the lower levels of the organization

High degree of delegation at all levels

Delegating authority to subordinates for many decisions while maintaining control over certain essential matters.

Requires manager to decide what and when to delegate, to select and train personnel carefully and for mutate adequate control.

Guidelines for determining decentralization

i. Greater the number of decisions made by lower level management greater decentralization.

ii. Closer the level at which decision is made in relation to the point arose greater will be the decentralization.

iii. More important decision made at lower management greater decentralization it would be.

iv. The less subordinates check his/her work to superior the greater decentralization.

v. The narrow or the more selective the control by managers the greater decentralization.

Principles of decentralization

o Greater diversity of product, greater decentralization

o Larger the of firm the greater decentralization

o The more changing in the environment, the more decentralized is decision making.

o Managers should delegate decision that involved large amount of time but minimize erosion of their power and control.

CoordinationCHAPTER 4: ORGANIZING



Coordination • Process of integrating the activities of an

organization which involves controlling and coordinating the flow of information, resources and tasks among organizational members.

• Interdependence: refers degree to which work group are interrelated and the extent to which they depend on one another to complete their work.

Levels of Interdependence

POOLED INTERDEPENDENCE

Occurs when organizational units have common resources but no interrelationship with each other

SEQUENTIAL INTERDEPENDENCE

Occurs when organizational coordinate the flow of information resources and tasks from one unit to another

RECIPROCAL INTERDEPENDENCE

Occurs when information, resources and tasks must back and forth between work groups.

Integrating Mechanisms




Integrating mechanisms General management systems

- Some coordination of work units may achieved through development of general management systems.

- e.g.: basic rules and procedures, managerial hierarchy, plans and goals etc.

Increasing coordination potentials

- Information systems and lateral relationships are 2 most common mechanisms for increasing coordination potential in both horizontal and vertical management.

Integrating mechanisms Reducing need for coordination

- to reduce or eliminate need for coordination between work groups.

- organization creates slack resources that will reduce interdependence of work groups.