ORGANIZING

Chapter Four
PART ONE: INTRODUCTION

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 1.1 Meaning of organization

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 1.2 Process of Organization

 1.3 Principles of Organization

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DEFINITION OF ORGANIZING
 Activities:
 Identification of
activities
 Grouping of Activities
 Assignment of jobs to
formal groups
 Establishing a network
of authority and
responsibility
 Providing framework for
measurement, evaluati
on and control
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 Resources:
 Determining the
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specific need of
resources
 Allocation of
resources into
specific groups
 Evaluation and
control of use of
the resources 3
ORGANIZING

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Organizing is the process of
arranging and allocating

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

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 Division of Work
 Grouping of Work

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 Delegation of Authority

 Coordination of Work

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 1/8/2012 POM/Chapter 4 - Organizing
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PROCESS OF ORGANIZING SIMPLIFIED
 PRINCIPLES OF ORGANIZING
8.Exception

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1. Unity of Objective
2. Specialization
9.Efficiency

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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
PART TWO: ORGANIZATIONAL ARCHITECTURE

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 2.1 Vertical differentiation
 Tall versus Flat Structure

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

Geographic Structure

Matrix Structure
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TALL VERSUS FLAT ORGANIZATIONS
Tall Organization
President

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Copyright © by Houghton Mifflin Company.
Flat Organization
President

6–9
ORGANIZATIONAL ARCHITECTURE -
VERTICAL INTEGRATION

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

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organizational organizational
architecture has architecture
many layers and
has few layers
narrow span of
control. and wide span
of control.
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 ESTABLISHING REPORTING RELATIONSHIPS:
TALL VERSUS FLAT ORGANIZATIONS
 Tall Organizations  Flat Organizations
 Are more expensive  Lead to higher levels of
employee morale and

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

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General Manager

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Production Finance Marketing HR
Dept Dept Dept Deprtment

Structure is created based on the

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

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General Manager

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Division I Division II Division III

 Multiple divisions are created in a

related industry.
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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

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Manager  Departments are
created based on
geographic regions.
 All the activities in one

Eastern Central Western geographic region is

Region Region Region categorized into one
unit.

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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

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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
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about reporting
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- 17
related activities.
PART THREE: RESPONSIBILITY

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3.1 Meaning of Responsibility

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3.2Establishing Task and
Reporting Relationships

3.3 Creating Accountability

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RESPONSIBILITY:

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Responsibility is the

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obligation to perform
or
duty to carryout certain
activities

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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.
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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.)

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CREATING ACCOUNTABILITY

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 Accountability:
 Requirement to report

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PART FOUR: AUTHORITY

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4.1 Line and Staff Authority

4.2 Delegation of Authority

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AUTHORITY:

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

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 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 24
LINE AUTHORITY

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The chain of command in the
organizational structure that flows

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

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

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line authority as well as other staff
personnel.

 The Advisory or Counseling

Role :
 The Service Role
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 The Control Role
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
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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
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CONFLICT BETWEEN LINE – STAFF EMPLOYEES

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Assume Line Authority

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Do not give Sound Advice
Steal Credit for Success
Fail to Keep line
personnel informed of their
activities
Do not see the whole picture. 29
PART FIVE:
CENTRALIZATION AND DECENTRALIZATION

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 Meaning : Centralization and Decentralization

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 Reasons: In which case which is needed

 Advantages and Disadvantages: of both

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EMERGING ISSUES IN ORGANIZATION DESIGN

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STAFFING: CONCEPT AND IMPORTANCE

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