CHAPTER 4

ORGANIZING
Learning Objectives
1. Define what organizing is.
2. Describe the concepts of responsibility and
authority.
3. Contrast centralization and decentralization.
4. Explain delegation.
5. Cite various types of span management.
6. Distinguish between the different types of
departmentalization and power.
Definition
 Organizing is the process of arranging people and
other resources to work together to accomplish a
goal.
(John R. Schermerhorn, Jr)
 Organizing is deciding how best to group
organizational activities and resources.
(Ricky W. Griffin)
What is Organizing?
 Involves activities like establishing procedures,
developing an organization structure and providing
the factors necessary to carry out company plans
 To structure or arrange the relationship between
people, the work to be done and the facilities so
that the goals are achieved
Why Organize?
 Can divide work according to the nature and
similarity of tasks
 Can pool resources and increase the efforts which
lead to efficiency
 Can build synergy and continuity
The Process of Organizing

Required Job design

The set of tasks and
activities that are
grouped together to
define a particular
job.
Job descriptions =
detail the
responsibilities and
tasks associated with
a given job.
 What is Organizational Structure?
 Shows the flow of interactions within the organization
 Specifies its division of work activities and shows how
different functions of activities are linked
 Shows level of specialization of work activities
 Indicates the organization’s hierarchy and authority
structure
 Shows organization’s reporting structure
Organizational Chart
 A formal diagram that shows the lines of authority
 The purpose of organization chart – to indicate
responsibility and to whom each reports, to
coordinate division of work and make it clear, to
show work to be done, and, to indicate line of
promotion
Organization Chart
 Division of work
 Manager and
subordinates
 The type of work being
performed
 The grouping of work
segments
 The level of
management
Division of Work
 Works are divided among members and different
jobs related to one another in a formal
organization structure
 Advantages – increase productivity, specialization
and task according to capabilities
 Disadvantages- different sense of control and,
dissatisfaction and boredom
Chain of Command & Unity of
Command

 Chain of Command
 Theline of authority and responsibility that flows
throughout the organization.
 Unity of Command
A principle that each employee in the organization
is accountable to one, and only one, supervisor.

11
What is Authority?
 The right to make decisions with respect to work
assignments
 The right to require subordinates to perform
assigned tasks in accordance with the decision
made
 Types of authority – line authority and staff
authority
Line Authority
Each manager with the line authority is responsible for the
work of his unit and its direct contribution to the objectives
of the organization
 Pertains to superior-subordinate relationship

 Directly related to the objective of the organization

 Deals mainly with the exercise of authority along the

channel of line authority
 Identifies units that initiate and carry through to conclusion
the basic activities
 The manager is a doer

 Designates a line manager

Staff Authority
Each individual or group plays a supporting roles and
contributes indirectly to the objectives of the organization.
 It is a manager-to-manager relationship

 Indirectly directed to the objectives of organization

 Deals mainly with the exercise of authority to a channel

of line authority
 Includes all unit that are not line

 Manager has a supporting role and aids the doer

 Designates a staff manager

Responsibility and Accountability
 Responsibility
o The obligation to
perform the duties
assigned.
 Accountability
◦ Responsibility to the
supervisor for results
of decisions made
and actions taken
with delegated
authority.
Centralization
 The practice of having responsibility and authority
concentrated in one place
 Major decision are made by the central controlling
body and little initiatives is in the hand of those
lower down the management ladder
Advantages of Centralization
 Provides total control over organization and policies
 Convenient and easy to understand by all functions
 Have common standards
 Able to engage exclusive specialists
 Reduce cost
Advantages of Decentralization
 Unburden top management
 Improved decision made
 Better training; increase in worker’s morale and
initiative at the lower levels
 Flexibility and faster decision making
Disadvantages of Decentralization
 Wrong decision may be made at lower level
 Loss of power by top management
 Costly because need proper coordination and
leadership
What is Delegation?
 The passing of formal authority to another person
 Manager delegate because the culture of the
organization, specific situation involved and the
relationship between behavior, personalities and
the capabilities of the people in the situation
Steps in Delegation Process
1. Decide which tasks can be delegated
2. Decide who should get the assignment
3. Delegate the assignment
4. Establish a feedback system
Guideline to Effective Delegation
1. Responsibility, authority and accountability –
authority is the right to act as a result of organizational
position. Responsibility is the obligation to carry out
assigned task. Accountability is being held answerable
for results.
2. The scalar principle – members of the organization
should know where they stand in the chain of command;
to whom they can delegate, who can delegate them and
to whom they are accountable
3. Unity of command – each person should report to only
one superior.
The Advantages of Effective
Delegation
1. The more task delegated, the more opportunity
there is for managers to accept increased
responsibilities
2. It leads to better decisions, since subordinates
closest to the problem or task usually have the
best view of the facts
3. It causes subordinates to accept responsibilities
and exercise judgment
4. It speeds up decision-making
Barriers to Effective Delegation
1. From perspective of managers– reluctant to take
chances, fear a loss of power
2. Managers to disorganized or inflexible to plan for
delegation or set up control system so that
subordinates action can be monitored
3. From perspective of subordinates- fear of
criticism, discouraged because of incentives
Overcoming Barrier to Delegation
 Managers allow subordinates to develop own
solutions
 Managers allow mistakes and subordinates learn
from mistakes
 More support and training
 Improve communication
 Gradually increase the degree of delegation
Signs of Delegating Too Little
 Taking work home
 Performing employees tasks
 Being behind work
 Continual feeling of pressure and stress
 Rushing to meet deadlines
 Not meeting deadlines
 Employees’ seeking approval before acting
Span of Management
 Refers to the number of subordinates who report
directly to a given manager or supervisor
 Two organization structures – wide/flat and
tall/narrow span of management
Span of Management
Wide/Flat Span of Management
 Have few organization levels with wide span of
authority
 Advantages – superiors are forced to delegate,
clear policies must be made and subordinates must
be carefully selected
 Disadvantages – decisions made by managers tend
to be bottleneck, superior’s loss of control, and
requires exceptional quality manager
Narrow/Tall Span Management
 Have short span of authority with many
organization levels
 Advantages – close supervision, close control, and
rapid communication between subordinates and
superiors
 Disadvantage – superiors tend to get involved with
subordinates work, high cost, excessive distance
between the lowest level and the highest level.
Departmentalization Structure
 Process or grouping into separate units activities or
task that are intended
 For logical and efficiency purposes
 There are 7 types of departmentalization- function,
product, territory/geography, customer, matrix and
other designs
Departmentalization by Function
 Common, logical and basic form
 Used mainly by smaller firms that offer limited line of products
 Eliminate overlapping in activities
 Useful in stable environments where technical efficiency and
quality are important
 Advantages – easier supervision, easier to mobilize
specialized skills, and require little coordination and fewer
interpersonal skills
 Disadvantages – difficult to get quick decision, difficult to
determine accountability and gauge performance, cause
isolation in other department, does not foster innovation, does
not foster development of general managers, and, foster
conflicts over product practices
FUNCTIONAL STRUCTURE
Departmentalization by Product
 Involves grouping the activities and functions on the
basis of products manufactured by the company
 Advantages – places attention and effort on product
line, responsibility of profits at the divisional level,
improves coordination of functional activities,
furnishes measurable training ground, and allow
growth and diversity of products and services
 Disadvantages – requires more personnel with
general manager, maintenance of central services
becomes difficult, top management will face a
difficulty in controlling, and costly.
PRODUCT DIVISIONAL STRUCTURE
Departmentalization by
Territory/Geography
 A company or a part of it is organized around the
places where operations is located
 Found in sales or manufacturing processes
 Advantages – offer better services at low cost, places
responsibility for profits at a lower level, place
emphasis on local markets and problems, and offers
better communication with local interest
 Disadvantages – requires more staff with general
managers abilities, and top management has less
control of the regional managers
GEOGRAPHIC DIVISIONAL
STRUCTURE
Departmentalization by Customer

 Grouping of activities to reflect the interest of

different customers
 Advantages – concentrate on customers’ needs,
understand the customers, and develop expertise in
the customer handling
 Disadvantages – difficult to coordinate operations
between competing customer demand, managers and
staff to be expert in customers problems, and unclear
customers group
CUSTOMER DIVISIONAL STRUCTURE

CEO

COUNTER CREDIT REAL ESTATE LOAN

CARD MORGAGE
Departmentalization by Matrix
 assigns specialists from different functional
departments to work on one or more projects
 Advantages – efficient use of resources, flexible and
adaptable to environment, and develop the general
and specialist management skills
 Disadvantages – frustration and confusion from dual
chain of command, high conflict between two side of
matrix, and more meeting and discussion rather than
action
MATRIX STRUCTURE
Departmentalization by other design
(Network Approach)
 Services are provided by separate organization
working under contract and connected electronically
to the central office (outsourcing)
 Advantages – global competitiveness, workforce
stability or challenge, and reduced administrative
overhead
 Disadvantages – no hands-on control, can lose
organization part and weak employee loyalty
NETWORK STRUCTURE
Types of Network Structure
 Internal Network
 A network structure that relies on internally developed units
to provide services to a core organizational unit.
 Stable Network
 A network structure that utilizes external alliances selectively
as a mechanism for gaining strategic flexibility.
 Dynamic Network
 A network structure that makes extensive use of outsourcing
through alliances with outside organizations.
Types of Power
4. Coercive power – influences others by controlling
experience they find un pleasant or unwelcome
such as pain, ridicule, penalty, rejection and denial
of rewards
5. Legitimate power –influences others by means of
position that tradition or society endows the right
to influence e.g. formal position such that of a
president, general or supervisor
What is Coordination?
 Coordination is the process of integrating the
objectives and activities of separate departments in
order to pursue organizational goals effectively.
 Depends on the nature of the tasks performed and
the degree of interdependence of people in the
various units performing them.
 A high degree of coordination is likely to be best for
non routine work for which interdependence is high.
Types of Coordination
Pooled Interdependence
Occurs when organizational
units have a common resource
but no interrelationship with one
another.
A

F B
Head-
quarters
E C

D
Sequential Interdependence
Occurs when organizational units must coordinate the
flow of information, resources, and tasks from one unit
to another.

A B C
Reciprocal Interdependence
Occurs when information,
resources, and tasks must
be passed back and forth
between work groups. A B

C D

E F
Barriers to Effective Coordination
 Differences in orientation towards a particular goal.
 Different in time orientation.
 Differences in interpersonal orientation.
 Differences in formality structure,
Approaches to Achieve Effective
Coordination
 Basic management techniques.
◦ Managerial hierarchy
◦ Rules and procedures
◦ Plans and goals
 Increase coordination potential.
◦ Vertical information system
◦ Lateral relationship
 Reduce need for coordination.
◦ Slack resources
◦ Independent units
Exercise
1. What is the distinction between centralization and
decentralization, and decentralization and
delegation?
2. Define division of work.
3. Distinguish by definition the following terms:
authority, power, and delegation.
4. Why do managers refuse to delegate authority
or task to their subordinates?
THANK YOU