2015 POM Chapter 4 Organizing

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  1. 1. DMG 1213 / DMG1113 / DPM1213 / DPM1113 Principles of Management Laura Law Perak College of Technology
  2. 2. OrganizingCHAPTER 4: ORGANIZING DMG 1213 / DMG1113 / DPM1213 / DPM1113 Principles of Management Laura Law Perak College of Technology
  3. 3. Organizing Organizing is the process of arranging and allocating work, authority, and resources among an organizations members so that they can achieve organizational goal. Stoner, Freeman and Gilbert 3
  4. 4. 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
  5. 5. Process of Organizing simplified 5
  6. 6. 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.
  7. 7. 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.
  8. 8. 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?
  9. 9. Division of LaborCHAPTER 4: ORGANIZING DMG 1213 / DMG1113 / DPM1213 / DPM1113 Principles of Management Laura Law Perak College of Technology
  10. 10. Division of work/ labor Division 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.
  11. 11. 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
  12. 12. 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 dont like or have no interest to the tasks assigned Feel boredom because of the routine and specified tasks to be done
  13. 13. Organization ChartCHAPTER 4: ORGANIZING DMG 1213 / DMG1113 / DPM1213 / DPM1113 Principles of Management Laura Law Perak College of Technology
  14. 14. Organization chart A 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.
  15. 15. Span of ManagementCHAPTER 4: ORGANIZING DMG 1213 / DMG1113 / DPM1213 / DPM1113 Principles of Management Laura Law Perak College of Technology
  16. 16. Span of management Refers to the number of subordinates who report directly to a given manager of supervision. Major factors that influence the span Management Type of work Ability of manager Amount & type of communication required Location in organization structure
  17. 17. Span of Management ADVANTAGES DISADVANTAGES Superior 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 superiors loss of control Subordinates must be carefully selected Management requires exceptional quality managers to handle the situation
  18. 18. Span of Management Organization Structure Flat structure Have a few organization levels with flat wide span of authority. Tall structure Have short span of authority with many organization levels.
  19. 19. President President Tall Organization Flat Organization
  20. 20. Establishing Reporting Relationships: Tall Versus Flat Organizations Flat Organizations Lead 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 Organizations Are more expensive because of the number of managers involved. Foster more communication problems because of the number of people through whom information must pass.
  21. 21. 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 organizations 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
  22. 22. Departmentalization CHAPTER 4: ORGANIZING DMG 1213 / DMG1113 / DPM1213 / DPM1113 Principles of Management Laura Law Perak College of Technology
  23. 23. Departmentalization and formal structure Process of grouping into separate units activities or tasks 5 types of departmentalization; By Function By Product By Multi-division By Geography By Customer By Matrix
  24. 24. 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
  25. 25. 2. Multi-Division structure Multiple divisions are created in a related industry. General Manager Division I Division II Division III DEPARTMENTALIZATION BY MULTI-DIVISION
  26. 26. DEPARTMENTALIZATION BY MULTI-DIVISION Divisional or M-form (Multidivisional) Design An 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.
  27. 27. 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
  28. 28. 4. Matrix Organization Employees CEO Project manager B Project manager C Vice president, engineering Vice president, production Vice president, finance Vice president, marketing Project manager A DEPARTMENTALIZATION BY MATRIX
  29. 29. 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.
  30. 30. 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.
  31. 31. 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, marketing President GM Pharmaceutical product GM Personal care product 5. PRODUCT structure: DEPARTMENTALIZATION BY PRODUCT
  32. 32. Grouping of activities to reflect the interests of different customers. To ensure a focus on the customers need rather than organizations skills or brand it produces. President Institutional banking Real estate mortgage Community banking Corporate banking 6. Customer structure: DEPARTMENTALIZATION BY CUSTOMER
  33. 33. AuthorityCHAPTER 4: ORGANIZING DMG 1213 / DMG1113 / DPM1213 / DPM1113 Principles of Management Laura Law Perak College of Technology
  34. 34. Authority Right 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 Authority Staff Authority
  35. 35. 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 sanctione