Organizing and Staffing

Source: Management - A Global Perspective

byWeihrich and Koontz 11th Edition
Organizing is…
 The identification and classification of required
activities.
 The grouping of similar activities necessary to
attain objectives.
 The assignment of each group to a manager with the
authority necessary to supervise it.
 The provision for coordination horizontally (on the
same or a similar organizational level) and vertically
(e.g., between corporate headquarters, division, and
department) in the organization structure.
 Organizing Process
Enterprise
Objectives

Identification
and
Classification
of Activities

Staffing
Grouping of Delegation of Leading
Activities Authorities Controlling
Organization
 It is a formalized intentional structure of
roles or positions.
 It includes all the behaviors of all
participants.
 It is the total system of social and cultural
relationships.
Formal Organization
 Formal Organization means the intentional
structure of roles in formally organized
enterprise.

 Individual effort in group situation must be

channeled toward group and organizational
goals.
Formal Organization
Formal Organization
Informal Organization
 It is a network of interpersonal relationships
that arise when people associate with each other.

 It can also be described as any joint personal

activity without conscious joint purpose,
although contributing to joint results.

 Thus, informal organizations—relationships

that do not appear on the organization
chart—might include, the sixth floor crowd, the
Friday evening bowling gang, and the morning
coffee “regulars”.
 Formal and Informal Organizations

President

Vice president

etc.
Division
managers
etc.
Department
managers

Informal organization: Informal organization: Informal organization:

Morning coffee Bowling team Chess group
“regulars”
Formal and Informal Organizations
Formal and Informal Organizations
 Fundamentals of Organizing
Pattern of authority:
Enables each employee to know exactly for
whom and to whom he or she is responsible.

Characteristics of Authority

1. Authority is vested in Organizational positions, not

people.

2. Authority is accepted by subordinates.

3. Authority flows down the vertical hierarchy

 Fundamentals of
Organizing
Chain of Command
– The path that a directive or answer or request should take through each
level of an organization; also called a scalar chain or the line of authority

 Centralization
The retention of decision-making authority by a
high-level manager

 Decentralization
An organization member has the right to make a
decision without obtaining approval from a higher level manager.
 Fundamentals of Organizing

Organization Chart
– A chart that shows the structure of the
organization including the title of each
manager’s position and, by means of
connecting lines, who is accountable to
whom and who has authority for each area.
Organizational Levels and the Span of
Management*

 While the purpose of organizing is to make human

cooperation effective, the reason for levels of organization is
the limitation of the span of management.
Span of Management
 Span of management or span of control refers to the number
of people who report to one manager or supervisor
 A wide span results in a flat organization --- that is, a large
number of employees reporting to one supervisor and is
associated with a few organizational levels
 A narrow span results in a tall organization, in which a
small number of employees report to a supervisor,
necessitating a larger number of supervisors
 No formula exists for determining the ideal span of control.
Organization Structures with Narrow and Wide
Spans
Organization with narrow spans
Advantages:
· Close supervision
· Close control
· Fast communication between subordinates and
superiors
Organization with wide spans
Advantages:
· Superiors are forced to delegate
· Clear policies must be made
· Subordinates must be carefully selected
Disadvantages:
· Superiors tend to get too involved in
subordinates’ work
· Many levels of management
· High costs due to many levels
· Excessive distance between lowest level and
top level
Disadvantages:
· Tendency of overloaded superiors to become
decision bottlenecks
· Danger of superior’s loss of control
· Requires exceptional quality of managers
Factors Determining an Effective Span
 The number of subordinates a manager can
effectively manage on the impact of underlying
factors.
 Aside from such personal capacities as
comprehending quickly, getting along with
people, and commanding loyalty and respect, the
most important determinant is a manager’s
ability to reduce the time he or she spends with
subordinates.
Factors Determining an Effective Span
Table 1 Factors influencing the span
of management
Narrow spans (a great deal of
time spent with subordinates)
· Little or no training of subordinates
· Inadequate or unclear authority
delegation
· Unclear plans for nonrepetitive
operations
· Nonverifiable objectives and standards
· Fast changes in external and internal
environments
· Use of poor or inappropriate
communication techniques, including
vague instructions
· Ineffective interaction of superior and
subordinate
· Ineffective meetings
· Greater number of specialties at lower
and middle levels
· Incompetent and untrained manager
· Complex task
· Subordinates’ unwillingness to assume
responsibility and reasonable risks
· Immature subordnates
Wide spans (very little time
spent with subordinates)
· Thorough training of subordinates
· Clear delegation and well-defined tasks
· Well-defined plans for repetitive
operations
· Verifiable objectives used as standards
· Slow changes in external and internal
environments
· Use of appropriate techniques, such as
proper organization structure and written
and oral communication
· Effective interaction between superior
and subordinate
· Effective meetings
· Greater number of specialties at upper
levels (top managers concerned with
external environment)
· Competent and trained manager
· Simple task
· Subordinate’s willingness to assume
responsibility and reasonable risks
· Mature subordinates
Page 1
Organizational Division: The Department

 One aspect of organizing is the establishment of

departments.
 A department is a distinct area, division, or
branch of an organization over which a manager
has authority for the performance of the specified
activities.
Organization Structure
1. Departmentation by Enterprise Function
 It is the grouping of activities according to the functions
of the enterprise
 key functions of a manufacturing company include
production, purchasing, marketing, accounting,
and personnel
 functions of a hospital include surgery, psychiatry,
nursing, housekeeping, and billing
 The most widely employed basis for organizing
activities and is present in almost every enterprise at
some level in the organization structure
Organization Structure
A functional organization grouping (in a manufacturing company)

President

Assistant to
Personnel
president

Marketing Engineering Production Finance

Market Engineering Production Financial

Research Administration planning planning

Marketing Preliminary Industrial Budgets

Planning Design engineering

Advertising
Electrical Production General
and Promotion
Engineering engineering accounting

Sales Mechanical Purchasing Cost

administration Engineering accounting

Sales Hydraulic Tooling Statistics and

Engineering data
processing

Packaging General
production

Quality
Control

Advantages: Disadvantages:
· Logical reflection of functions · De-emphasizes overall company objectives
· Maintains power and prestige of major · Overspecializes and narrows viewpoints of
functions key personnel
· Follows principle of occupational · Reduces coordination between functions
specialization · Responsibility for profits is at the top only
· Simplifies training · Slow adaptation to changes in the
· Furnishes means of tight control at the top environment
· Limits development of general managers
Organization Structure
Organization Structure
2. Departmentation by Territory or Geography
 It is the grouping of activities by area or
territory that is common in enterprises
operating over wide geographic areas.
 Organizations that are spread over a wide
area may find advantages in organizing along
geographic lines so that all the activities
performed in a region are managed together.
Organization Structure
A territorial, or geographic, organization grouping (in a manufacturing company)
President

Marketing Personnel Purchasing Finance

Western Southwest Central Southeast Eastern

region region region region region

Personnel

Engineering Production Accounting Sales

Advantages: Disadvantages:
· Places responsibility at a lower level · Requires more persons with general manager
· Places emphasis on local markets and problems abilities
· Improves coordination in a region · Tends to make maintenance of economical central
· Takes advantage of economies of local operation services difficult and may require services such as
· Better face-to-face communication with local personnel or purchasing at the regional level
interests · Makes control more difficult for top management
· Furnishes measurable training ground for general
managers
Organization Structure

3. Departmentation by Customer Group

 It is the grouping of activities that reflects a
primary interest in customers.
Organization Structure
Customer departmentation (in a large bank)
President

Community-
Corporate Institutional
city banking
banking banking

Real estate and

Agricultural
mortgage loans
banking

Advantages:
· Encourages focus on customer needs
· Gives customers the feeling that they have an
understanding supplier (banker)
· Develops expertness in customer area
Disadvantages:
· May be difficult to coordinate operations
between competing customer demands
· Requires managers and staff expert in
customers’ problems
· Customer groups may not always be clearly
defined (e.g., large corporate firms vs. other
corporate business)
Organization Structure
4. Departmentation by Product
 It is the grouping of activities according to
products or product line, especially in
multiline, large enterprises.
 All the activities necessary to produce and
market a product or group of similar products
are grouped together.
Organization Structure
A product organization grouping (in a manufacturing company)
President

Marketing Personnel Purchasing Finance

Indicator Industrial
Instrument Name
Lights Tools Title
division
Division Division

Engineering Accounting Engineering Accounting

Production Sales Production Sales

Advantages: Disadvantages:
· Places attention and effort on product line · Requires more persons with general manager
· Facilitates use of specialized capital, facilities, skills, abilities
and knowledge · Tends to make maintenance of economical central
· Permits growth and diversity of products and services services difficult
· Improves coordination of functional activities · Presents increased problem on top of management
· Places responsibility for profits at the division level control
· Furnishes measurable training ground for general
managers

* Product departmentation is also used in in nonmanufacturing companies.

Organization Structure

5. Matrix Organization
 It is the combination of functional and project
or product patterns of departmentation in the
same organization structure.
Organization Structure
Matrix Organization (in engineering)

Director
Of
Engineering

Chief of Chief Chief Chief Chief

Preliminary Mechanical Electrical Hydraulic Metallurgical
Design Engineering Engineer Engineer Engineer

Project A
manager

Project B
manager

Project C
manager

Project D
manager

Advantages:
· Oriented toward end results
· Professional identification is maintained
· Pinpoints product-profit responsibility
Disadvantages:
· Conflict in organizational authority exists
· Possibility of disunity of command
· Requires a manager effective in human
relations
Choosing The Pattern Of
Departmentation
 There is no one best way of departmentizing that is
applicable to all organizations and all situations
 Managers must determine what is best by looking at
the situation they face
– the jobs to be done and the way they should be done,
– the people involved and their personalities,
– the technology employed in the department,
– the users being served, and
– other internal and external environmental factors in the
situation
Authority and Power

Authority and Power

Power is the ability of individuals or groups to
induce or influence the beliefs or actions of
other persons or groups.
Authority is the right in a position to exercise
discretion in making decisions affecting others.
 Bases of Power
1. Legitimate Power
 It normally arises from and derives from our cultural
system of rights, obligations, and duties whereby a
“position” is accepted by people as being
“legitimate”.
2. Expertness of a person or a group
 This is the power of knowledge. Physicians,
lawyers, and university professors may have
considerable influence on others because they are
respected for their specialized knowledge.
3. Referent Power
 It is an influence that people or groups may exercise
because people believe in them and their ideas.
Bases of Power
4. Reward Power
 It refers to the power that arises from the
ability of some people to grant rewards.

5. Coercive Power
 It is the power to punish, whether by
firing a subordinate or by withholding a
merit pay increase.
Line / Staff Concepts and
Functional Authority
1. Scalar principle
 “The clearer the line of authority, the clearer will be the
responsibility for decision making and the more effective
will be organizational communication.”
2. Line authority
 The relationship in which a superior exercises direct
supervision over a subordinate.
3. Staff relationship
 It’s nature is advisory.
Decentralization of Authority

Decentralization is the tendency to

disperse decision-making authority in
an organized structure.
Delegation of Authority
 Authority is delegated when a superior
gives a subordinate discretion to make
decisions.
 Clearly, supervisors cannot delegate
authority they do not have, whether they are
members, presidents, vice presidents, or
supervisors.
Delegation of Authority
The process of delegation involves:
1. Determining the results expected from a
position
2. Assigning tasks to the position
3. Delegating authority for accomplishing
these tasks
4. Holding the person in that position
responsible for the accomplishment of the
tasks.
The Art of Delegation
Personal Attitudes toward Delegation
 Receptiveness
An underlying attribute of managers who will
delegate authority is a willingness to give
other people’s ideas a chance.
Decision making always involves some
discretion, and a subordinate’s decision is not
exactly the one a superior would have made.
 The Art of Delegation
 Willingness to let go
A manager who will effectively delegate authority
must be willing to release them to make decisions
to subordinates.
A major fault of some managers who move up the
executive ladder—or of the pioneer who has built
a large business from the small beginning of, say, a
garage machine shop—is that they want to
continue making decisions for the positions they
have left.
 The Art of Delegation
 Willingness to allow mistakes by subordinates
Although no responsible manager would sit idly by and let
a subordinate make a mistake that would endanger the
company or the subordinate’s position in the company,
continual checking on the subordinate to ensure that no
mistakes are ever made will make true delegation
impossible.
Since everyone makes mistakes, a subordinate must be
allowed to make some, and their cost must considered an
investment in personal development.
 The Art of Delegation
 Willingness to trust subordinates
Superiors have no alternative to trusting their
subordinates, for delegation implies a trustful attitude
between them.

 Willingness to establish and use broad controls

Since superiors cannot delegate responsibility for
performance, they should not delegate authority unless
they are willing to find means of getting feedback, that
is, of assuring themselves that authority is being used to
support enterprise or departmental goals and plans.
 Three (3) Elements of Delegation
1. Responsibility – means that a person is assigned
a task that he or she is supposed to carry out.

2. Authority – means that the person has the power

and the right to give orders, draws upon resources,
and do whatever else is necessary to fulfill the
responsibility.

3. Accountability – means that the subordinate’s

manager has the right to expect the subordinate to
perform the job and to take corrective action in the
event the subordinate fails to do so.
Recentralization of Authority and
Balance as the Key to Decentralization
 Recentralization is centralization of
authority that was once decentralized;
normally not a complete reversal of
decentralization, as the authority delegated
is not wholly withdrawn.
Staffing
 It is defined as filling, and keeping filled, positions in
the organizational structure.
 Work specialization – degree to which the work
necessary to achieve organizational goals is broken
down into various jobs.
 Job design – specification of task activities
associated with a particular job (e.g. a job as an
administrative assistant may include typing, filing and
photocopying, or it could involve such activities as
coordinating travels and meetings, investigating
trouble spots, and making decisions about a certain
range of issues).
 Staffing
Approaches to Job Design
 Job simplification – the process of designing jobs so that
jobholders have only a small number of narrow activities
to perform.
 Job rotation – practice of periodically shifting workers
through a set of jobs in a planned sequence.
 Job enlargement – the allocation of a wider variety of
similar tasks to a job in order to make it more challenging.
 Job enrichment – process of upgrading the job-task
mix in order to increase significantly the potential for
growth, achievement, responsibility, and recognition.
Job Simplification

Job Simplification

Worker 1 Worker 2 Worker 3

Task 1 Task 1 Task 1

Job Rotation

Job Rotation

Worker 1 Worker 2 Worker 3

Task 1 Task 2 Task 3

 Job Enlargement
Job Enlargement

Worker 1 Worker 2 Worker 3

Task 1,2,3 Task 1,2,3 Task 1,2,3

 Movement of Personnel
 RECRUITMENT is the process of encouraging,
inducing, or influencing applicants to apply for a certain
vacant position.

 SELECTION is the process of getting the most qualified

applicant from among different job seekers.

 TRAINING is the systematic development of the

attitude/knowledge/behaviour patterns for the adequate
performance of a given job or task.

 TRANSFER refers to the shifting of an employee from

one position to another without increasing his duties,
responsibilities, or pay.

 PROMOTION refers to the shifting of an employee to a

new position to which both his status and
responsibilities are increased.
 Movement of Personnel
 OUTPLACEMENT is the process of helping people who have been
dismissed from the company to regain employment elsewhere.
 LAY-OFF is a type of separation, temporary and involuntary, usually
traceable to a negative business condition
 DISCHARGE is a permanent separation of an employee, at the will
of an employer, if a person is not competent in his job, guilty of
breaking rules like delinquency and insubordination, and other
violations
 RESIGNATION is voluntary and permanent separation of an
employee due to due to low morale, low salary, etc.
 RETIREMENT can either be voluntary or involuntary; if an employee
retires upon reaching the number of years of services in a company as
provided for by its policies or upon reaching the age of 65.
 PERFORMANCE APPRAISAL is the process of defining,
measuring, evaluating, and recording expectations from employee
performance.