Unit iii organizing and staffing

Management & Entrepreneurship

(Course Code:10AL51)

Department of IEM

JSS Academy of Technical Education, Bengaluru-560060

Principles of Management

CHAPTER 3: ORGANIZING AND STAFFING

Outline

• Nature and purpose of organization

• Principles of organization

• Types of organization

• Departmentalization

• Committees

• Centralization Vs Decentralization - authority

• Responsibility

• Span of control – MBO and MBE (Meaning Only)

ORGANIZING

• Nature and importance of staffing

• Process of Selection & Recruitment (in brief).

OutlineSTAFFING

The basic concepts of organization design formulated by early management

writers, such as Henri Fayol and Max Weber.

• Henri Fayol -14 Principles of Management and Weber's –

Bureaucracy.

• They offered structural principles for managers to follow.

Introduction

MEN

MACHINE

MATERIALS

METHODS

MARKET

MONEY

Organization

Definition

Definition

• Organizing is arranging and structuring work to accomplish organizational

goals.

• The process of arranging people and resources to work together to

accomplish the goal.

• Systematic arrangement of activities.

• Organizing in management refers to the relationship between people, work

and resources used to achieve the common objectives.

Definition

Organizing is a process of

• Identifying the activities to be performed.

• Grouping the activities into work units.

• Assigning tasks to the various job position/specialization.

• Defining rules.

• Establishing the relationship of authority and responsibility among individuals.

Organizing viewed in relationship with the other management functions

Characteristics of Organizations

DeliberateStructure

DistinctPurpose

People

1. Consider Plans & Goals

Purposes

Activities

Plans & Goals

2. Determine Work Activities

Selling

Accounting

Delivery

Quality Control

Advertising

Compensating

Training

Production

Purchasing

Budgeting

Recruitment

Maintaining Personnel

3. Classify & Group Activities

>Selling>Advertising>Delivery

>Production>Purchasing>Quality control

>Accounting>Budgeting>Compensating

>Recruitment>Training>Maintaining personnel

MARKETING OPERATIONS FINANCE HUMAN RESOURCES

Functional Departmentalization

Purposes of Organizing

• Divides work to be done into specific jobs and departments.

• Assigns tasks and responsibilities associated with individual

jobs.

• Coordinates diverse organizational tasks.

• Clusters jobs into units.

• Establishes relationships among individuals, groups, and

departments.

• Establishes formal lines of authority.

• Allocates and deploys organizational resources.

Process of Organizing

1. Organization is always related to certain objectives.

2. An organization implies a group of people.

3. Communication is the nervous system of organization.

4. Organization is a continuous process.

5. Organization implies a structure of relationship

6. Organization involves a network of authority and responsibility relationship.

Nature of Organization

The Changing Organization

Traditional New Organization

Stable, Inflexible, Job-focused. Dynamic, Flexible, Skills-focused.

Work is defined by job positions. Work is defined in terms of tasks to be done.

Individual-oriented. Team-oriented.

Permanent jobs. Temporary jobs.

Command-oriented. Involvement-oriented.

Managers always make decisions. Employees participate in decision making.

Work at organizational facility during specific hours. Work anywhere, anytime.

Hierarchical relationships. Lateral and networked relationships.

Relatively homogeneous workforce. Diverse workforce.

Organizational Structure

• Organizational structure is the formal arrangement of jobs within an

organization.

• This structure, which can be shown visually in an organizational chart.

Organizational Structure

• Organization structure explains the position and official relationship between

various individuals in the organization.

Organizational structure

• When managers create or change the structure they’re engaged in organizational design.

• Organizational design is a process that involves decisions about six key elements:

1. Work specialization

2. Departmentalization

3. Chain of command

4. Span of control

5. Centralization and decentralization

6. Formalization



• Dividing work activities into separate job tasks.

Example: Sporting Goods factory

To meet daily output goals, the workers specialize in job tasks such as molding,

stitching and sewing, lacing, and so forth.

• Individual employees “specialize” in doing part of an activity rather than the

entire activity in order to increase work output. (Division of labour).

1. Work Specialization


Work Specialization


2. Departmentalization

• How jobs are grouped together is called departmentalization.

Example: A hotel might have departments such as front desk operations, sales and catering, housekeeping and laundry, and maintenance.• Five common forms of departmentalization are used, although an

organization may develop its own unique classification.

The Five Common Forms of Departmentalization






Divisional structures based on product, geography, customer, and process

Different forms of Departmentalization in a single company

3. Chain of Command


The chain of command is the line of authority extending from

upper organizational levels to lower levels.

E.g.: who reports to whom.

To understand the chain of command, three other important concepts to be understood: 1. Authority2. Responsibility3. Unity of command


3. Chain of Command

1. Authority:

Refers to the rights inherent in a managerial position to tell people what to do and

to expect them to do it.

2. Responsibility:

The obligation or expectation to perform the assigned task/work is known as

responsibility.

3. Unity of command:

Principle states that a person should report to only one manager.

Chain of Command and Line Authority

4. Span of Control


The number of employees a manager can efficiently and effectively manage. Example:

Assume two organizations, both of which have approximately 4,100 employees.

• if one organization has a span of four and the other a span of eight.

• The organization with the wider span will have two fewer levels and approx.

800 fewer managers.

4. Span of Control


Cost: At an average manager’s salary of $42,000 a year, the organization with

the wider span would save over $33 million a year (42%).

(+) Wider spans are more efficient in terms of cost.

(-) Wider spans may reduce effectiveness if employee performance worsens

because managers no longer have time to lead effectively.

4. Span of Control


Wide span of controlNarrow span of control



5. Centralization and Decentralization

Centralization is the degree to which decision making takes place at upper levels of the organization.

• If top managers make key decisions with little input from below, then the organization is more centralized.

• If lower-level employees provide input or actually make decisions, then the organization is decentralized.

• Degree of centralization in an organization depends on the situation.

• Earlier the goal was the optimum and efficient use of employees.

• Traditional organizations were structured in a pyramid.

• Today organizations have become more complex and responsive to

dynamic changes in their environments.

• Many managers believe that decisions need to be made by those individuals closest to

the problems, regardless of their organizational level.


5. Centralization and Decentralization

Top mgt to take Decision

Exercise of Control over

Departments and Divisions


Centralization

Dept-2Dept-3Dept-1

Decentralization

Centralization Decentralization

Environment is stable. Environment is complex, uncertain.

Lower-level managers are not as experienced

at making decisions as upper-level managers.

Lower-level managers are capable and

experienced at making decisions.

Decisions are relatively minor. Decisions are significant.

Organization is facing a crisis / the risk of

company failure.

Corporate culture is open, allowing managers a

say in what happens.

Company is large. Company is geographically dispersed.

Effective implementation of company

strategies depends on managers retaining say

over what happens.

Effective implementation of company strategies

depends on managers having involvement and

flexibility to make decisions.

Centralization v/s Decentralization

6. Formalization


Formalization refers to how standardized an organization’s jobs are and the extent to which employee behaviour is guided by rules and procedures.

In highly formalized organizations,• There are clear job descriptions.• Numerous organizational rules.• Clearly defined procedures and work processes.

Formal vs Informal Organizations

FORMAL INFORMAL

• Have planned structure

• Deliberate attempts to create

patterned relationships

• Usually shown by a chart

• Advocated by traditional theory

• Not formally planned

• Arise spontaneously as a result of

interactions

• Not depicted in a chart

• Stressed by human relation theory

Principles of Organization

The principles are guidelines for planning organization structure.

Principles of Organization

1. Objectives

2. Specialization

3. Span of control

4. Exception

5. Scalar principle / Chain of command

6. Unity of command

7. Delegation

8. Responsibility

9. Authority

10. Efficiency

11. Simplicity

12. Flexibility

13. Balance

14. Unity of direction

15. Personal abilities

Types of Organization


1. Military or Line

2. Functional

3. Line and Staff

4. Project

5. Matrix

6. Committee

7. Free-Form


• Vertical line of authority.

• Greater decision making authority - placed at the top.

• Lesser decision making authority - placed at the bottom.

• Line executives – Involved in the basic activities of the organisation.

• Unity of command.

Military or Line Organisation



(+) Clear division of authority and responsibility and Unity of control

(-) The organization is rigid and inflexible



Line authority - flows down the chain of command.

Examples - Production supervisor gets the rights to direct an employee to operate a particular

machine.

Staff authority is the right to advise or counsel those with line authority.

Examples - HRD employees help other departments by selecting and developing a qualified

workforce.

Line and Staff Organization


Line and Staff Organization

Functional Organization


The work is organised on the basis of specialization.

• Functional organisation at the Top

Whether a worker is in production, finance or marketing department, questions

relating to his salary, promotion etc. will be decided by the personnel manager.

• Functional organisation at the Bottom

The foreman should not be burdened with looking after all the aspects of his

work, instead, the specialists can help him solving technical problems.

Functional Organization


(-) Violates principles of unity of command

The matrix structure combines elements of the functional and the divisional

structures, bringing together specialists from different areas of a business to work

on different projects on a short-term basis.

Matrix Structure


• Each person on the project team reports to two bosses: a line manager and a

project manager.

Matrix Structure

Employees

CEO

Projectmanager B

Projectmanager C

Vice president,engineering

Vice president,production

Vice president,finance

Vice president,marketing

Projectmanager A

• Project organizational structure refers to the creation of an independent project

team.

• The team’s management is separated from the parent organization’s, other

units, have their own technical staff and management, enterprise assigns certain

resources to project team, and grant project manager for implementation of the

project .

Project Organization


Project Organization


Committee Organization

• “A committee is a group of persons performing a group task with the object of solving certain problems”.

• Committee organization brings together individuals from different areas to

consider various organization problems.


Examples: • Advisory committees• Finance committees etc.


(+) Committees provide a forum for the pooling of knowledge and experience of many persons of different skills, ages and backgrounds.


(-) In case a wrong decision is taken by committee, no one is held responsible which may results in irresponsibility among members.

• Also known as boundary less structure.

• Roles, authority and relationships are not clearly defined.

• Members of organisation jointly exercise authority and are jointly

responsible.

Free form Organization


• The mechanistic organization (or bureaucracy) was the natural result of

combining the six elements of structure.

Mechanistic and Organic Structures

• The organic organization is a highly adaptive form that is as loose and

flexible.

Mechanistic and Organic Structures

Why do structures differ ?

Strategy Organization size Technology Environmen

t Global

Implications


Span of controlThe number of employees a manager can efficiently and effectively manage.


Factors affecting the Span of Management

1) Ability of the manager

2) Ability of the employees

3) Type of work

4) Geographic location

5) Well-defined authority and responsibility.6) Level of management

7) Economic considerations

Management by Objectives (MBO)


The father of modern corporate management - Peter

Drucker.

He is considered to be the world’s most influential

corporate guru.

He developed Management by Objectives (MBO)

through his 1954 book ‘The Practice of Management’.

Peter Drucker1909-2005


MBO, a process/principle/practice by which the objectives of an organization

are agreed to and decided between the management and the employees.

This way the employees understand what is expected of them.

By this they attain both their personal goals and the organization’s targets.


In MBO goals are expected to be SMART, i.e.

•Specific

•Measurable

•Achievable

•Realistic

•Time bound


Management by Exception (MBE)

• Management by Exception (MBE) is a method of control.

• Managers intervene the work of employees only when they work outside the

prescribed scope or when they can't meet the goals/set targets.

• Manager leaves employee free till they work within the scope and within they

meet the goals."

STAFFING

Staffing is the process of filling positions/posts in the organization with

adequate and qualified personnel.

Definition

Staffing is the process of acquiring, deploying and retaining a workforce of

sufficient quantity and quality to create positive impacts on the organization's

effectiveness.

Staffing is the function by which managers build an organization through the

recruitment, selection, and development of individuals as capable

employees.

Objectives of Staffing

To understand all function of in an organization.

To understand manpower planning so that people are available at right time

and at a right place.

To understand issues related to job analysis and to overcome the problem.

Importance of Staffing

Training and Development.

Effective Co-ordination.

Effective Recruitment & Placement.

Building effective human resource.

Optimum Use of Resource.

Enhances Corporate Image.

Job Satisfaction.

Elements of Staffing

Manpower planning

Job analysis

Recruitment and selection

Training and Development

Performance appraisal

Staffing Process

Manpower Requirements

Recruitment

Selection

Placement & Orientation

Training & Development

Performance Appraisal

Promotions

Compensation


Manpower Requirements

• Involves Forecasting.

• Determining the number and kind of manpower required by the organization in the future.

Recruitment • Process of locating, identifying, and attracting capable candidates.

Selection• Process of choosing and appointing the right candidates for various job positions in the

organization

Placement &

Orientation

• Placement refers to the employee occupying the position/post.• Orientation is introducing the selected employee to other employees and familiarizing him

with the rules and policies of the organization.


Training & Development • Facilitate Employee Learning.

Performance Appraisal

• Evaluating an employee’s current / past performance as against certain predetermined

standards.

Recruitment

“Recruitment is the process of searching for prospective employees

and stimulating them to apply for jobs in the organization.”

Definition

Vacancies due to promotions, transfers, retirement, termination, permanent

disability and death.

Creation of new vacancies due to growth, expansion and diversification of

business activities of an enterprise.

New vacancies are also possible due to job specification.

Need of Recruitment

Recruitment Sources

Internal Sources

Transfers and Promotions

References

Internal Notifications

External Sources

Management trainee schemes

Press Advertisement

Employment agencies / Consultancies

Educational institutions

Walk-ins

Recommendations/References

Selection Process

Completing application materials

Conducting an interview

Completing any necessary tests

Doing a background investigation

Deciding to hire or not to hire

Socialization

A series of steps from initial applicant screening to final hiring of the new employee.

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Tests

Assessment Centers

Interviews

Step 1 Completing application materials

Gathering information regarding an applicant’s background and

experiences.

Typical application materials includes; Application forms and Résumés

Step 2 Conducting an interview

Interviews can provide rough ideas concerning the person’s fit with the job

and the organization.

Selection Process

Selection Process

Step 3 Completing any necessary tests

Administered before or after the interview.

E.g. of employment tests are; Reasoning / Mechanical aptitudes / Personality.

Step 4 Doing a background investigation

Can be used early or late in selection process.

Background investigations include:

Basic level checks.

Reference checks.

Selection Process

Step 5 Deciding to hire or not to hire

A physical examination may be required if it is relevant to job performance.

Negotiation of salary and/or benefits for some jobs.

Step 6 Socialization

The final step in the staffing process.

Involves orienting new employees to:

The firm & work units in which they will be working.

The firm’s policies and procedures and organizational culture.

End of Module