ORGANIZINGChapter Four

04

/09

/20

23

2

PO

M/C

hapte

r 4 - O

rganizin

gPART ONE: INTRODUCTION

1.1 Meaning of organization

1.2 Process of Organization

1.3 Principles of Organization

04

/09

/20

23

PO

M/C

hapte

r 4 - O

rganizin

g

3

DEFINITION OF ORGANIZING

Activities: Identification of

activities Grouping of Activities Assignment of jobs

to formal groups Establishing a

network of authority and responsibility

Providing framework for measurement, evaluation and control

Resources:Determining the

specific need of resources

Allocation of resources into specific groups

Evaluation and control of use of the resources

04

/09

/20

23

4

PO

M/C

hapte

r 4 - O

rganizin

g

ORGANIZING

Organizing 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 Gilbert

04

/09

/20

23

5

PO

M/C

hapte

r 4 - O

rganizin

g

PROCESS OF ORGANIZING

Division of Work Grouping of Work Delegation of Authority Coordination of Work

04

/09

/20

23

6

PO

M/C

hapte

r 4 - O

rganizin

g

PROCESS OF ORGANIZING SIMPLIFIED

04

/09

/20

23

7

PO

M/C

hapte

r 4 - O

rganizin

gPRINCIPLES OF ORGANIZING

1.Unity of Objective2.Specialization3.Coordination4.Authority and Responsibility5.Unity of Command6.Scalar Chain7.Span of Control

8.Exception

9.Efficiency

10.Balance

11.Homogeneity

12.Continuity

13.Simplicity

04

/09

/20

23

8

PO

M/C

hapte

r 4 - O

rganizin

g

PART TWO: ORGANIZATIONAL ARCHITECTURE

2.1 Vertical differentiationTall versus Flat Structure

2.2 Horizontal differentiationFunctional StructureMultidivisional StructureGeographic StructureMatrix Structure

TALL VERSUS FLAT ORGANIZATIONS

6–9

Copyrig

ht ©

by H

oughto

n M

ifflin

C

om

pany. A

ll rights re

serv

ed.

President

President

Tall Organization

Flat Organization

04

/09

/20

23

PO

M/C

hapte

r 4 - O

rganizin

g

10

ORGANIZATIONAL ARCHITECTURE - VERTICAL INTEGRATION

Flat organization:

This type of organizational architecture has few layers and wide span of control.

Tall Organization:

This type of organizational architecture has many layers and narrow span of control.

ESTABLISHING REPORTING RELATIONSHIPS: TALL VERSUS FLAT ORGANIZATIONS

Copyrig

ht ©

by H

oughto

n M

ifflin

C

om

pany. A

ll rights re

serv

ed.

6–11

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.

04

/09

/20

23

PO

M/C

hapte

r 4 - O

rganizin

g

12

1. FUNCTIONAL STRUCTURE:General Manager

Production Dept

Finance Dept

Marketing Dept

HR Deprtment

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

ORGANIZATIONAL ARCHITECTURE – HORIZONTAL DIFFERENTIATION

04

/09

/20

23

PO

M/C

hapte

r 4 - O

rganizin

g

13

2. MULTI-DIVISION STRUCTURE

Multiple divisions are created in a related industry.

General Manager

Division I Division II Division III

ORGANIZATIONAL ARCHITECTURE – HORIZONTAL DIFFERENTIATION

ORGANIZATIONAL ARCHITECTURE – HORIZONTAL DIFFERENTIATION

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.

04

/09

/20

23

PO

M/C

hapte

r 4 - O

rganizin

g

15

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.

ORGANIZATIONAL ARCHITECTURE – HORIZONTAL DIFFERENTIATION

6–16

4. MATRIX ORGANIZATION

Employees

CEO

Projectmanager B

Projectmanager C

Vice president,engineering

Vice president,production

Vice president,finance

Vice president,marketing

Projectmanager A

ORGANIZATIONAL ARCHITECTURE – HORIZONTAL DIFFERENTIATION

04

/09

/20

23

PO

M/C

hapte

r 4 - O

rganizin

g

17

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.

04

/09

/20

23

18

PO

M/C

hapte

r 4 - O

rganizin

gPART THREE: RESPONSIBILITY3.1 Meaning of Responsibility

3.2 Establishing Task and Reporting Relationships

3.3 Creating Accountability

04

/09

/20

23

19

PO

M/C

hapte

r 4 - O

rganizin

g

RESPONSIBILITY:Responsibility is the

obligation to perform

or duty to carryout certain

activities

04

/09

/20

23

20

PO

M/C

hapte

r 4 - O

rganizin

g

ESTABLISHING TASK AND REPORTING RELATIONSHIP:

Task Relationship:How activities related to each other in an

organization.How the basic units of an organization are

formed.Establishment of job description and job

specification Job Specification: Prerequisites of job. Various

skills and experiences needed to perform certain job.

Job Description: The activities that have to be carried out at certain position in a job. It describes the job.

04

/09

/20

23

21

PO

M/C

hapte

r 4 - O

rganizin

g

ESTABLISHING TASK AND REPORTING RELATIONSHIP:

Establishing Reporting Relationship: It is finding out

Chain of command Span of control or span of management

1. Who reports to whom?

2. How many subordinates will a supervisor have?

(Relate it to tall vs flat organizational architecture.)

04

/09

/20

23

22

PO

M/C

hapte

r 4 - O

rganizin

g

ACCOUNTABILITY:Accountability:

the state of being accountable,  liable, or answerable

Requirement to report

It creates a mechanism of control.

04

/09

/20

23

23

PO

M/C

hapte

r 4 - O

rganizin

g

PART FOUR: AUTHORITY

4.1 Line and Staff Authority

4.2 Delegation of Authority

04

/09

/20

23

24

PO

M/C

hapte

r 4 - O

rganizin

g

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

04

/09

/20

23

25

PO

M/C

hapte

r 4 - O

rganizin

g

LINE AUTHORITYThe 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.

04

/09

/20

23

26

PO

M/C

hapte

r 4 - O

rganizin

g

STAFF AUTHORITYStaff 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 

04

/09

/20

23

27

PO

M/C

hapte

r 4 - O

rganizin

gDELEGATION OF AUTHORITYAssigning work to subordinates and giving them necessary authority to do the assigned work effectively.

Simple terms, GRANTING AUTHORITY TO SUBORDINATES

04

/09

/20

23

28

PO

M/C

hapte

r 4 - O

rganizin

g

FEATURES OF DELEGATION OF AUTHORITY:

No delegation of total authorityDelegation of only that authority a

manager hasRepresentation of the superiorDelegation for organizational

purposeRestoration of delegated authorityBalance of authority and

responsibilityNo delegation of responsibility

04

/09

/20

23

29

PO

M/C

hapte

r 4 - O

rganizin

g

CONFLICT BETWEEN LINE – STAFF EMPLOYEES

Assume Line AuthorityDo not give Sound AdviceSteal Credit for SuccessFail to Keep  line personnel  informed of their activities

Do not see the whole picture.

04

/09

/20

23

30

PO

M/C

hapte

r 4 - O

rganizin

g

PART FIVE: CENTRALIZATION AND DECENTRALIZATION

Meaning : Centralization and Decentralization

Reasons: In which case which is needed

Advantages and Disadvantages: of both

04

/09

/20

23

31

PO

M/C

hapte

r 4 - O

rganizin

g

CENTRALIZATIONSystematically retaining power and authority in the hands of higher level managers.

Not dividing authority to lower level employees.

04

/09

/20

23

32

PO

M/C

hapte

r 4 - O

rganizin

g

ADVANTAGES V/S DISADVANTAGES:

Advantages:Facilitates unified decision.Simplifies structureFacilitates quicker decisionEconomy in operationIntegrate operationSuitable for small firms

04

/09

/20

23

33

PO

M/C

hapte

r 4 - O

rganizin

g

ADVANTAGES V/S DISADVANTAGES:

Disadvantages:Unsuitable for large organizationManager is overburdenedPossibility of power misuseLow morale and motivationLack of environmental adaptationIn appropriate for routine

decisions.

04

/09

/20

23

34

PO

M/C

hapte

r 4 - O

rganizin

g

DECENTRALIZATION:Delegation of authority to the

lower levels.

Decentralization is tendency to disperse decision making authority in an organized structure.

• Koontz and Weihrich

04

/09

/20

23

35

PO

M/C

hapte

r 4 - O

rganizin

g

ADVANTAGES V/S DISADVANTAGES

Advantages:Relief to top managementFacilitates managers’

developmentPossibility if better decisionsEffective controlHigh morale and motivationFacilitates diversificationEnvironment adaptation

04

/09

/20

23

36

PO

M/C

hapte

r 4 - O

rganizin

g

ADVANTAGES V/S DISADVANTAGES

Disadvantages:Increase in expenditureConflictUnsuitable for emergency

situationsMaximizes riskDifficulty in communicationUnsuitable for specialized

services

04

/09

/20

23

37

PO

M/C

hapte

r 4 - O

rganizin

g

EMERGING ISSUES IN ORGANIZATION DESIGN

Re-engineering processTeam workNetwork organization structure

Downsizing organizationBoundary-less organization

04

/09

/20

23

38

PO

M/C

hapte

r 4 - O

rganizin

g

STAFFING:CONCEPT AND IMPORTANCE It is the process of obtaining and maintaining

competent employees to fill all positions.

Recruitment: Encouraging people to apply Selection: Finding the right person for

the job Training: Teaching the employees certain

skill Development: Progress/advancement of

career Motivation: Encouraging the employees

to work harder.

04

/09

/20

23

39

PO

M/C

hapte

r 4 - O

rganizin

g

IMPORTANCE OF STAFFING:

Managing effective staffUtilization of physical resources

Increase in productivityFocus on goal achievementHelps to solve problemsJob satisfactionSelf-development of workers

04

/09

/20

23

40

PO

M/C

hapte

r 4 - O

rganizin

g

THANK YOU