ORGANIZING

Chapter Four
PART ONE: INTRODUCTION

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 1.1 Meaning of organization

POM/Chapter 4 - Organizing
 1.2 Process of Organization

 1.3 Principles of Organization

2
DEFINITION OF ORGANIZING

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 Activities:  Resources:
 Identification of  Determining the
activities

POM/Chapter 4 - Organizing
 Grouping of Activities
specific need of
 Assignment of jobs to resources
formal groups  Allocation of
 Establishing a resources into
network of authority
and responsibility specific groups
 Providing framework  Evaluation and
for measurement, control of use of
evaluation and control
the resources 3
ORGANIZING

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Organizing is the process of
arranging and allocating

POM/Chapter 4 - Organizing
work, authority, and
resources among an
organization’s members so
that they can achieve
organizational goal.
4
 Stoner, Freeman and Gilbert
PROCESS OF ORGANIZING

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 Division of Work
 Grouping of Work

POM/Chapter 4 - Organizing
 Delegation of Authority

 Coordination of Work

5
 2/16/2020 POM/Chapter 4 - Organizing
6
PROCESS OF ORGANIZING SIMPLIFIED
 PRINCIPLES OF ORGANIZING
Unity of Objective 8.Exception

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1.
2. Specialization
9.Efficiency

POM/Chapter 4 - Organizing
3. Coordination
4. Authority and 10.Balance
Responsibility
11.Homogeneity
5. Unity of Command
6. Scalar Chain 12.Continuity
7. Span of Control
13.Simplicity 7
 2/16/2020
 2.1 Vertical differentiation
 Tall versus Flat Structure

POM/Chapter 4 - Organizing
 2.2 Horizontal differentiation
Functional Structure
Multidivisional Structure

Geographic Structure

Matrix Structure
8
TALL VERSUS FLAT ORGANIZATIONS
Tall Organization
President

Company. All rights reserved.

Copyright © by Houghton Mifflin
Flat Organization
President

6–9
ORGANIZATIONAL ARCHITECTURE
- VERTICAL INTEGRATION

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 Tall Organization:  Flat organization:
 This type of This type of

POM/Chapter 4 - Organizing
organizational organizational
architecture has architecture
many layers and
has few layers
narrow span of
control. and wide span
of control.
10
 ESTABLISHING REPORTING RELATIONSHIPS:
TALL VERSUS FLAT ORGANIZATIONS
 Tall Organizations  Flat Organizations
 Are more expensive  Lead to higher levels of
because of the employee morale and

Company. All rights reserved.

Copyright © by Houghton Mifflin
number of managers productivity.
involved.  Create more
 Foster more administrative
communication responsibility for the
problems because of relatively few managers.
the number of people  Create more supervisory
through whom responsibility for
information must managers due to wider
pass. spans of control. 6–11
 ORGANIZATIONAL ARCHITECTURE –
HORIZONTAL DIFFERENTIATION
1. FUNCTIONAL STRUCTURE:

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General Manager

POM/Chapter 4 - Organizing
Productio Finance Marketing HR
n Dept Dept Dept Deprtment

Structure is created based on the

various functions of an
organization. 12
 ORGANIZATIONAL ARCHITECTURE –
HORIZONTAL DIFFERENTIATION
2. MULTI-DIVISION STRUCTURE

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General

POM/Chapter 4 - Organizing
Manager

Division I Division II Division III

 Multiple divisions are created in a

related industry.
13
ORGANIZATIONAL ARCHITECTURE –
HORIZONTAL DIFFERENTIATION

 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.
ORGANIZATIONAL ARCHITECTURE –
HORIZONTAL DIFFERENTIATION
3. GEOGRAPHIC STRUCTURE:

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General

POM/Chapter 4 - Organizing
Manager  Departments are
created based on
geographic regions.
 All the activities in

Eastern Central Western one geographic region

Region Region Region is categorized into one
unit.

15
ORGANIZATIONAL ARCHITECTURE –
HORIZONTAL DIFFERENTIATION
4. MATRIX ORGANIZATION
CEO

Vice president, Vice president, Vice president, Vice president,

engineering production finance marketing

Employees
Project
manager A

Project
manager B

Project
manager C

6–16
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.
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 Disadvantages:
 Employees are uncertain
about reporting
POM/Chapter 4 - Organizing
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. 17
PART THREE: RESPONSIBILITY

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3.1 Meaning of Responsibility

POM/Chapter 4 - Organizing
3.2Establishing Task and
Reporting Relationships

3.3 Creating Accountability

18
RESPONSIBILITY:

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Responsibility is the

POM/Chapter 4 - Organizing
obligation to perform
or
duty to carryout certain
activities

19
ESTABLISHING TASK AND REPORTING
RELATIONSHIP:

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 Task Relationship:
 How activities related to each other in an

POM/Chapter 4 - Organizing
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.
20
ESTABLISHING TASK AND REPORTING
RELATIONSHIP:

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 Establishing Reporting Relationship:
 It is finding out

POM/Chapter 4 - Organizing
 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.)

21
SPAN OF CONTROL

C/D/DC/I/T (c) 2010

Span of 8 Span of 4
(Classical) (Contemporary)
CLASSICAL VIEWPOINT
SPAN OF 8

Operatives =
1 4 096
8
64 Managers
(levels 1-4)
512 = 585
C/D/
DC/I

4 096 /T
(c)
2010
CONTEMPORARY VIEWPOINT
1 SPAN OF 4
4
Operatives =
16 4 096
64
256 Managers
(levels 1-6)
1 024 = 1 365
C/D/
DC/I

4 096 /T
(c)
2010
CENTRALIZATION &
DECENTRALIZATION

C/D/
DC/I
/T
(c)
2010
CENTRALIZATION &
DECENTRALIZATION

C/D/
DC/I
/T
(c)
2010
CREATING ACCOUNTABILITY

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 Accountability:
 Requirement to report

POM/Chapter 4 - Organizing
27
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4.1 Line and Staff Authority

POM/Chapter 4 - Organizing
4.2 Delegation of Authority

28
AUTHORITY:

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 Right to take decisions that arises due to
position in organizational structure.

POM/Chapter 4 - Organizing
 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 29
LINE AUTHORITY

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The chain of command in the
organizational structure that

POM/Chapter 4 - Organizing
flows major decision making
power.
The officially
sanctioned ability to issue orders
to subordinate employees within
an organization. 30
STAFF AUTHORITY

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 Staff authority consists of the right
to advise or assist those who possess

POM/Chapter 4 - Organizing
line authority as well as other staff
personnel.

 The Advisory or Counseling

Role :
 The Service Role
 The Control Role
31
DELEGATION OF AUTHORITY

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Assigning work to subordinates
and giving them necessary

POM/Chapter 4 - Organizing
authority to do the assigned
work effectively.

Simple terms,
GRANTING AUTHORITY TO SUBORDINATES
32
FEATURES OF DELEGATION OF
AUTHORITY:

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 No delegation of total authority
 Delegation of only that authority a

POM/Chapter 4 - Organizing
manager has
 Representation of the superior

 Delegation for organizational purpose

 Restoration of delegated authority

 Balance of authority and responsibility

 No delegation of responsibility
33
CONFLICT BETWEEN LINE – STAFF EMPLOYEES

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Assume Line Authority
Do not give Sound Advice

POM/Chapter 4 - Organizing
Steal Credit for Success
Fail to Keep line
personnel informed of their
activities
Do not see the whole picture. 34
 DECENTRALIZATIO
CENTRALIZATION
N

Environment is stable Environment is complex, uncertain

Lower level managers (LLM) are not

LLM are capable and experienced a
as capable or experienced at making
making decisions
decisions as upper level mangers

LLM do not want to have a say in

LLM want a voice in decisions
decisions

C/D/
Decisions are significant Decisions are relatively minor DC/I
/T
(c)
2010
 DECENTRALIZATIO
CENTRALIZATION
N
Corporate culture is open to allowing
Organization is facing a crisis or the
managers to have a say in what
risk of company failure
happens

Company is large Company is geographically dispersed

Effective implementation of company

Effective implementation of company
strategies depends on managers
strategies depends on managers
having involvement and flexibility to
retaining say over what happens
make decisions

C/D/
DC/I
/T
(c)
2010
CENTRALIZATION AND DECENTRALIZATION

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POM/Chapter 4 - Organizing
37
EMERGING ISSUES IN ORGANIZATION
DESIGN

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POM/Chapter 4 - Organizing
38
 2/16/2020 POM/Chapter 4 - Organizing
39
STAFFING: CONCEPT AND IMPORTANCE