“Organizing”

Contents:
 Organizing
 What is an Organizational Structure?
 Define Formal versus Informal Structure
 Traditional Organizational Structures:
 Functional
 Divisional
 Matrix
 Developments in Organization Structures:
 Team Structures
 Network Structures
 Organizing trends in modern workplace
 Delegating authority and responsibility
Organizing
 The process of arranging people and
other resources to accomplish tasks
in service of a common purpose...to
Facilitate the Plan
 When well done, organizing should
clarify who is supposed to do what,
identify who is in charge of whom
and establish official channels for
communication.
Organizing

Organization
- A collection of people in a
division of labor working together
to achieve a common purpose.
What is an Organization chart?

 A diagram describing the basic

arrangement of work positions
within an organization.

 It also provides a representation

of the organization's Formal
Structure.
What is an Organization chart?
What does it tells us?
 The Division of Work
 The Type of Work Performed
 Supervisor - Subordinate
Relationships
 Formal Communication Channels
 Major Subunits
 Levels of Management
Organizational Structure

 Organizational structure determines the

manner and extent to which roles, power,
and responsibilities are delegated,
controlled, and coordinated, and how
information flows between levels of
management.
 This
structure depends entirely on the
organization's objectives and the strategy
chosen to achieve them.
“Formal organizational structure”

 A formal organizational structure is

one in which the social positions and
the relationships among them have
been explicitly specified and are
defined independently of the personal
characteristics of the participants
occupying these positions“. The
process of creating and maintaining a
formal structure is formalization.
Formalization

 is the extent to which rules and

procedures are followed in an
organization. This element varies
greatly across organizations.
“Informal organizational structure”

 In an informal structure it's

impossible to separate the role from
the person, and as participants enter
and leave the system their roles
develop and change as a function of
their personal characteristics.
“Traditional organizational structure

 Any organization is a network of

interconnecting groups, and
 Managers serve as linking pins
along the Vertical and Horizontal
dimensions of the organization.
Functional Structure

 Employees within the functional divisions of an

organization tend to perform a specialized set of
tasks, for instance the engineering department
would be staffed only with engineers. This leads
to operational efficiencies within that group.
However it could also lead to a lack of
communication between the functional groups
within an organization, making the organization
slow and inflexible.
Functional Structure
 Grouping together people with similar skills who
perform similar tasks.

 They work well for smaller and less complex

organizations dealing with only one or a few
products or services.

 They also work best in relatively stable

environments that allow organizations to pursue
relatively stable strategies.
Functional Structure
 Potential Disadvantages:
 Functional Chimneys Problem
 A lack of communication and coordination
across functions.
 Slow decision making and problem solving.
 Loss of clear responsibility for cost
containment, product or service quality and
timeliness, and innovation in response to
environmental changes.
Functional Structure
Business Firm

President

VP VP VP VP VP
Mkt Finance Prod. HR R&D
Divisional Structure
 Also called a "product structure", the divisional
structure groups each organizational function
into a divisions. Each division within a divisional
structure contains all the necessary resources
and functions within it. Divisions can be
categorized from different points of view. There
can be made a distinction on geographical basis
(an US division and an EU division) or on
product/service basis (different products for
different customers: households or companies).
Divisional Structure

 Grouping together people with

diverse skills and tasks, but who work
on the same product, with similar
customers or clients, or in the same
geographical region.
Divisional Structure
Various Divisional Structures

President

Tube Night
Drugs Europe Govt
Plant Shift
Matrix Structure
 The matrix structure groups employees by
both function and product. This structure
can combine the best of both separate
structures. A matrix organization frequently
uses teams of employees to accomplish
work, in order to take advantage of the
strengths, as well as make up for the
weaknesses, of functional and
decentralized forms.
Matrix Structure

 Uses the permanent cross-functional

teams to blend the technical strengths of
functional structures with the integrating
potential of divisional structures.
 Often found in organizations pursuing
growth strategies in dynamic and complex
environments.
Matrix Structure
General
Manager
.

Mgr Mfg Engr Sales

Projects Mgr Mgr
Mgr

Proj
Mgr

Proj
Mgr
Potential Strengths of Matrix Structures

 More Inter-functional Cooperation

 Flexibility
 Customer Service
 Better Accountability
 Improved Decision Making
 Improved Strategic Management
Disadvantages of Matrix Structures

 Power Struggles - "Two Boss" System

 Groupitis - Teams become too focused

on themselves.

 Increased Costs - Extra salaries for

program managers.
Team Structures
 One of the newest organizational structures
developed in the 20th century is team. In small
businesses, the team structure can define the
entire organization . Teams can be both
horizontal and vertical. While an organization is
constituted as a set of people who synergize
individual competencies to achieve newer
dimensions, the quality of organizational
structure revolves around the competencies of
teams in totality.
Network Structure
 Another modern structure is network. While
business giants risk becoming too clumsy to
proact (such as), act and react efficiently, the
new network organizations contract out any
business function, that can be done better or
more cheaply. In essence, managers in network
structures spend most of their time coordinating
and controlling external relations, usually by
electronic means.
Organizing trends in the modern workplace

 Organizationsdepend on the success of

two separate but complementary forces:

Differentiation
The creation of differences through a
division of labor.
Integration
The coordination of results so that
some common purpose is achieved.
Organizing trends in the modern workplace

 Shorter Chains of Command

The line of authority that links all persons with
successively higher levels of management.
Scalar Principle
“There should be a clear and unbroken chain of
command linking every person in the
organization with successively higher levels of
authority up to and including the top manager."
Organizing trends in the modern workplace

 Less Unity of Command

Each person in an organization should report to
one and only one supervisor.
The objective of this classical management
principle is to ensure that subordinates do not
receive work directions from more than one
source.

Cross-functional teams, task forces, and matrix

structures are seriously challenging this
principle.
Organizing trends in the modern workplace

 Wider Spans of Control

Increased numbers of people reporting
directly to a manager.

A narrow span of control will result in more

levels of management than a wide span of
control.
Wide Spans = Flat Organizations
Narrow Spans = Tall Organizations
Organizing trends in the modern workplace

 More Delegation and Empowerment

Delegation is the process of distributing and
entrusting work to other persons.
The three steps in delegation are:
The manager assigns responsibility
The manager grants authority to act

The manager creates accountability

They are the foundation of vertical coordination

through delegation.
Delegating authority and responsibility
Responsibility
The obligation to perform that results when a
subordinate accepts an assigned task.

Authority
The right to assign tasks and direct the activities of
other persons.

Accountability
The requirement for a subordinate to show
results of assigned duties to a supervisor.
Delegating authority and responsibility

 Authority
should equal responsibility when
work is delegated from supervisor to
subordinate.

 A manager can and should delegate

responsibility but that same manager
cannot delegate accountability.