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ORGANIZING.

Managers must first make decisions regarding division of labor, work specialization,
chain of command, departmentalization, centralization and formalization. After these
decisions are finalized, groups then mobilize to achieve a stated goal.

The division of labor involves deciding who does particular jobs. Some workers or
departments have special skills while others have different sets of abilities. Managers
must organize these workers in certain ways to get jobs done.

Jobs are then divided into different departments. One of the most common ways to
departmentalize is to group workers together by function. If certain workers and jobs
serve similar functions, those people should logically work together.

The chain of command, along with the span of management, determines who is
responsible for getting various tasks done. Managers must decide how many people to
oversee effectively to get the tasks done. Similarly, centralization and formalization
refer to rules, procedures and decision-making. This process sets forth who has the
authority to enforce the rules along the chain of command.

Organizing decisions can be influenced by strategy, size, environment and technology.


Organizing as a function of management was first proposed by Frenchman Henri
Fayol in 1916 in his article "General and Industrial Administration."

Importance of Organizing Function

Specialization - Organizational structure is a network of relationships in which the


work is divided into units and departments. This division of work is helping in
bringing specialization in various activities of concern.

Well defined jobs - Organizational structure helps in putting right men on right job
which can be done by selecting people for various departments according to their
qualifications, skill and experience. This is helping in defining the jobs properly
which clarifies the role of every person.

Clarifies authority - Organizational structure helps in clarifying the role positions to


every manager (status quo). This can be done by clarifying the powers to every
manager and the way he has to exercise those powers should be clarified so that
misuse of powers do not take place. Well defined jobs and responsibilities attached
helps in bringing efficiency into managers working. This helps in increasing
productivity.

Co-ordination - Organization is a means of creating co-ordination among different


departments of the enterprise. It creates clear cut relationships among positions and
ensure mutual co-operation among individuals. Harmony of work is brought by higher
level managers exercising their authority over interconnected activities of lower level
manager.
Authority responsibility relationships can be fruitful only when there is a formal
relationship between the two. For smooth running of an organization, the co-
ordination between authority- responsibility is very important. There should be co-
ordination between different relationships. Clarity should be made for having an
ultimate responsibility attached to every authority. There is a saying, Authority
without responsibility leads to ineffective behaviour and responsibility without
authority makes person ineffective. Therefore, co-ordination of authority-
responsibility is very important.

Effective administration - The organization structure is helpful in defining the jobs


positions. The roles to be performed by different managers are clarified.
Specialization is achieved through division of work. This all leads to efficient and
effective administration.

Growth and diversification - A companys growth is totally dependant on how


efficiently and smoothly a concern works. Efficiency can be brought about by
clarifying the role positions to the managers, co-ordination between authority and
responsibility and concentrating on specialization. In addition to this, a company can
diversify if its potential grow. This is possible only when the organization structure is
well- defined. This is possible through a set of formal structure.

Sense of security - Organizational structure clarifies the job positions. The roles
assigned to every manager is clear. Co-ordination is possible. Therefore, clarity of
powers helps automatically in increasing mental satisfaction and thereby a sense of
security in a concern. This is very important for job- satisfaction.

Scope for new changes - Where the roles and activities to be performed are clear and
every person gets independence in his working, this provides enough space to a
manager to develop his talents and flourish his knowledge. A manager gets ready for
taking independent decisions which can be a road or path to adoption of new
techniques of production. This scope for bringing new changes into the running of an
enterprise is possible only through a set of organizational structure.

Organizational psychologist Edgar Schein proposed four common elements of an


organization's structure: common purpose, coordinated effort, division of labor, and
hierarchy of authority.

Common purpose unifies employees or members by giving everyone an


understanding of the organization's mission, strategy, and values.

Coordinated effort is the organization of individual efforts into a group or collective


effort.

Division of labor is an arrangement in which different people perform discrete parts


of a task for greater efficiency.
Hierarchy of authority is the control mechanism for making sure the right people do
the right things at the right time. This control enables organization members to make
decisions quickly when necessary.

Common Elements of Organizations


Organizational psychologist Edgar Schein proposes four common elements of an
organization's structure:

1. Common purpose

2. Coordinated effort

3. Division of labor

4. Hierarchy of authority

From a manager's point of view, operations are made successful by instilling a


common purpose to create a coordinated effort across the organization and organizing
resources based on tasks and decision making. Each of the four elements is relatively
straightforward in theory but represents a critical component of an effective structure.

Common Purpose
An organization without a clear purpose or mission soon begins to drift and become
disorganized. A common purpose unifies employees or members and gives everyone
an understanding of the organization's direction. Ensuring that the common purpose is
effectively communicated across organizations (particularly large organizations with
many moving parts) is a central task for managers. Managers communicate this
purpose by educating all employees on the general strategy, mission statement, values,
and short- and long-term objectives of the organization.

Coordinated Effort
Coordinating effort involves working together in a way that maximizes resources. The
common purpose is achieved through the coordinated effort of all individuals and
groups within an organization. The broader group's diverse skill sets and personalities
must be leveraged in a way that adds value. The act of coordinating organizational
effort is perhaps the most important responsibility of managers because it motivates
and distributes human resources to capture value.

Division of Labor
Division of labor is also known as work specification for greater efficiency. It
involves delegating specific parts of a broader task to different people within the
organization based upon their particular abilities and skills. Using division of labor, an
organization can parcel out a complex work effort for specialists to perform. By
systematically dividing complex tasks into specialized jobs, an organization uses its
human resources more efficiently.

Hierarchy of Authority
Hierarchy of authority is essentially the chain of commanda control mechanism for
making sure the right people do the right things at the right time. While there are a
wide variety of organizational structuressome with more centralization of authority
than othershierarchy in decision making is a critical factor for success. Knowing
who will make decisions under what circumstances enables organizations to be agile,
while ambiguity of authority can often slow the decision-making process. Authority
enables organizations to set directions and select strategies, which can in turn enable a
common purpose.

FOUR MAJOR FUNCTION OF MANAGERS

Planning

The first of the managerial functions is planning. In this step, the manager will create
a detailed action plan aimed at some organizational goal.

Organizing

The second of the managerial functions is organizing.


This step requires to determine how the manager will distribute resources and
organize his/her employees according to the plan. Managers need to identify different
roles and ensure that he/she assigns the right amount of employees to carry out his/her
plan. He/she will also need to delegate authority, assign work, and provide direction
so that her team of sales representatives can work towards higher sales numbers
without having barriers in their way.

Leading

The third function of management is leading. In this step, Melissa spends time
connecting with her employees on an interpersonal level. This goes beyond simply
managing tasks; rather, it involves communicating, motivating, inspiring, and
encouraging employees towards a higher level of productivity. Not all managers are
leaders. An employee will follow the directions of a manager because they have to,
but an employee will voluntarily follow the directions of a leader because they believe
in who he or she is as a person, what he or she stands for, and for the manner in which
they are inspired by the leader.

Controlling

Controlling is the final function of management. Once a plan has been carried out, the
manager evaluates the results against the goals. If a goal is not being met, the manager
must also take any necessary corrective actions to continue to work towards that goal.
Six Key Elements in Organizational Design

O rganizational design is engaged when managers develop or change an organization's


structure. Organizational Design is a process that involves decisions about the
following six key elements:

I. Work Specialization
Describes the degree to which tasks in an organization are
divided into separate jobs. The main idea of this organizational
design is that an entire job is not done by one individual. It is broken down into
steps, and a different person completes each step. Individual employees specialize
in doing part of an activity rather than the entire activity.

II. Departmentalization
It is the basis by which jobs are grouped together. For instance every organization
has its own specific way of classifying and grouping work activities.

There are five common forms of departmentalization:

1. Functional Departmentalization. As shown in the Figure 2-1, it groups jobs by functions


performed. It can be used in all kinds of organizations; it depends on the goals each of them
wants to achieve.

Figure 2-1Functional Departmentalization example

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o Efficiencies from o Poor communication


putting together similar across functional areas
specialties and people
with common skills, o Limited view of
knowledge, and organizational goals
orientations

o Coordination
within functional area
o In-depth
specialization

2. Product Departmentalization. It groups jobs by product line. Each manager is


responsible of an area within the organization depending of his/her specialization

Figure 2: Product Departmentalization example


Source: Bombardier Annual Report

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o Allows specialization in o Duplication of functions


particular products and
services o Limited view of
organizational goals
o Managers can become
experts in their industry

o Closer to customers

3. Geographical Departmentalization. It groups jobs on the basis of territory or


geography.

Figure 2-3: Geographical Departmentalization example


Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o More effective and o Duplication of functions


efficient handling of
specific regional issues o Can feel isolated from
that arise other organizational areas

o Serve needs of unique


geographic markets
better

4. Process Departmentalization. It groups on the basis of product or customer flow.


Figure 2-4: Process Departmentalization example

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o More efficient flow of o Can only be used with


work activities certain types of products

5. Customer Departmentalization. It groups jobs on the basis of common customers


Figure 2-5: Customer Departmentalization example

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o Customers' needs and o Duplication of functions


problems can be met by
specialists o Limited view of
organizational goals

6.

III. Chain of command


It is defined as a continuous line of authority that extends from upper
organizational levels to the lowest levels and clarifies who reports to whom. There
are three important concepts attached to this theory:

Authority: Refers to the rights inherent in a managerial position to tell people what to do
and to expect them to do it.

Responsibility: The obligation to perform any assigned duties.

Unity of command: The management principle that each person should report to only one
manager.

IV. Span of Control


It is important to a large degree because it determines the number of levels and
managers an organization has. Also, determines the number of employees a manager can
efficiently and effectively manage.

V. Centralization and Decentralization

More Centralization More Decentralization

Environment is stable Environment is complex,


uncertain.
Lower-level managers are
not as capable or Lower-level managers are
experienced at making capable and experienced
decisions as upper-level at making decisions.
managers.
Lower-level managers want
Lower-level managers do a voice in decisions.
not want to have say in
decisions Decisions are relatively
minor.
Decisions are significant.
Corporate culture is open
Organization is facing a to allowing managers to
crisis or the risk of have a say in what
company failure. happens.

Company is large. Company is geographically


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

VI. Formalization
It refers to the degree to which jobs within the organization are standardized and
the extent to which employee behavior is guided by rules and procedures.

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