 Meaning, process and principles of organizing.

 Organization Architecture: vertical differentiation –

tall versus flat hierarchies, horizontal differentiation
– functional structure, multidivisional structure,
geographic structure, and matrix structure.
 Responsibility: establishing task and reporting
relationships, creating accountability.
 Authority: line authority and staff authority.
 Delegation of authority.
 Centralization, Decentralization and Devolution:
meaning, reasons, advantages and disadvantages.
Emerging issues in organization design.
 Staffing: concept and importance.
Organization Design is an overall set of
structural elements and the relationships
among those elements used to manage the
total organization.
We must note two point:
1. Organization are design and not left intact. It
keep on changing from time to time.
2. Organization for larger organization is
extremely complex.
Organizing is a process of arranging and allocating
work, authority and resources among an
organization’s members so that they can achieve
organizational goals.
-Stoner, Freeman and Gilbert.
 It involves the assignment of function and the tasks
to group and to individual employee. It includes
delegation of authority to subordinate managers
and operating employee so that they can properly
carry out their duties.

 It establish pattern of interrelationship observed by

all members of the organization.

 Structuring the work system.

Division of Work
Coordination Departmentation

Allocation of Hierarchy
resources
◦ Division of work: Dividing total workload of
organization into tasks & sub- task.
◦ Departmentation: Dividing task which are similar in
nature.
◦ Hierarchy: Establishing reporting relationships between
jobs.
◦ Coordination: Coordinating activities among jobs units
and other activities.
◦ Allocation of resources: Materials & equipments need
to be to allocated at the right place & time to produce
goods & services
• Divides work to be done into specific jobs and
departments.
• Assigns tasks and responsibilities associated with
individual jobs.
• Coordinates diverse organizational tasks.
• Clusters jobs into units.
• Establishes relationships among individuals, groups,
and departments.
• Establishes formal lines of authority.
• Allocates and deploys organizational resources.
 Clarity About Objective
 Division of Works
 Unity of Command
 Scalar Chain
 Span Of Control
 Departmentation
 Decentralization
 Separation of line and staff functions
 Authority and Responsibility
 Simplicity
 Flexibility
 Identify organizational goals and work activities.

 Classify and group the necessary work activities.

 Establish relationships.

 Delegate authority.

 Provide for coordination and control.

Classical Approach

Behavioral Approach

System and Contingency

Approach
Classical Approach:
 F.W Taylor
 Max Weber
 Henry Fayol

Behavioral Approach:
 McGregor’s theory

Systems and Contingency Approaches:

 The determination of an individual’s work-related
responsibilities
 The starting point of job design is determining the
level of specialization.

 Job Specialization:
◦ the degree to which the overall task of the
organization is broken down and dividend into
smaller component parts.
◦ Evolved from the concept of division of labor
Advantages:
1. Worker performing small, simple task will become very
proficient.
2. Transfer time between task decreases
3. The more narrowly defines the job is the easier it is to
develop specialized equipment to assist that jobs.
4. When an employee who perform a highly specialized task is
absent or reigns the manager can train other in a relatively
low cost.

Disadvantages:
1. The worker who perform highly specialized may become
bored and dissatisfied
2. It may increases absenteeism, the quality of work may
suffers.
3. It does not offer challenges and stimulation
1. Job Rotation: It involves systematic moving
employee from one job to another.
2. Job Enlargement: It involves giving employee
more tasks to perform.
3. Job Enrichment: It involves increases both
the number of task and the control the
worker has on the job.
4. Job characteristic model: It suggest that job
should be diagnosed and improved along
five core dimension taking into account both
the work system and employee preference.
 The process of grouping jobs according to
some logical arrangement

Common Bases for Departmentalization:

 Functional Departmentalization
 Product Departmentalization
 Customer Departmentalization
 Location Departmentalization
 A function is a group of people, working together,
who possesses similar skills or use the same kind
of knowledge, tools, or techniques to perform their
jobs,

 The employee who perform similar kinds of work

are grouped together into one functional unit
called department.

 It is one of the popular form of organization

structure,

 DEPARTMENT on the basis of marketing, finance,

accounting, harm, etc
It involves grouping and arranging activities around
product or products groups. The advantages of this
type of Departmentalization is:

 It facilitate interaction and communication among

employee who produce the same product of service.
 People have full time commitment to a particular
product.
 IT reduces coordination problem
 It also increases and promotes accountabilities and
performance
The disadvantages :

 IT increases duplication of recourses

 It will be difficult to coordinate and monitor
 Administrative cost rise .
 Under utilization of plant capacity
 Ignorance of he overall organization
objective.
 Possibilities of conflict.
When the organization deals with different types of
customer this type of department is suitable. Such
Departmentalization is created to serve special
customer effectively.

Advantages:
1. It is best for organization with various type of
customer.
2. Manager can concentrate on identified and
potential customer.
3. It provide benefit of specialization.
4. Quick adaptation of environmental change
 Disadvantages:

1. Under utilization of facilities

2. Duplication of activities
3. Difficulties in coordination
4. Overemphasis on customer may lead to
wastages of recourses.
5. Possibilities of conflict.
 In this type of Departmentalization activities are
classified on the basis of territory, geographic
location. It is appropriate when the organization
operational activities is spread over a wide
geographic areas

 Advantages:
1. It helps to maintain regional activities effective.
2. It facilitate expansion of organization
3. It helps adjustment in the environment quickly
4. It will facilitate catering customer on the basis of
their needs, interest and taste
 Disadvantages

1. Problem if integration of various regional

department
2. Possibilities of duplication of facilities
3. Difficulties in maintaining control and
coordination.
4. It increases cost.
5. Lack of efficient and skilled employee for all
regions.
 Functional (U-Form) Design
 Conglomerate (H-Form) Design
 Divisional (M-Form) Design
 Matrix Design
 Hybrid Design
Functional (U-Form) Design:
 an arrangement based on the functional approach to
departmentalization
 Unitary form
 Members and units in the organization are grouped into
functional departments such as marketing and production

Conglomerate (H-Form) Design:

 Used by an organization made up of a set of unrelated
businesses
 Holding form
 Based on the product form of departmentalization
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.
Matrix Design:

◦ An organizational arrangement based on two

overlapping bases of departmentalization (e.g.,
functional departments and product categories).
◦ A set of product groups or temporary departments
are superimposed across the functional
departments.
Hybrid Design:

◦ An organizational arrangement based on two or more

common forms of organization design.

◦ An organization may have a mixture of related divisions

and a single unrelated division.

◦ Most organizations use a modified form of organization

design that permits them to have sufficient flexibility to
make adjustments for strategic purposes.
 Based on the assumption that the optimal design for any
given organization depends on a set of relevant situational
factors
 Four basic situational factors:
◦ Technology
◦ Environment
◦ Size
◦ Organizational life cycle

Technology:
◦ Conversion processes used to transform inputs into
outputs
◦ As technology became more complex, the number of levels
of management increased
Environment:
 Organization’s environment can affect how it should be
designed

 Mechanistic organization:
◦ Found in stable environments
◦ Free from uncertainty
◦ Organizations structured their activities in rather predictable ways by
means of rules, specialized jobs and centralized authority

 Organic organization:
◦ Found in unstable and unpredictable environments
◦ Very flexible and informal model of organization design, most often found
in unstable and unpredictable environments
Size:
 total number of full-time or full time-equivalent employees
 Characterized by higher levels of job specialization, more
standard operating procedures, more rules, more regulations
and a greater degree of decentralization

Organizational Life Cycle:

 Progression through which organizations evolve as they grow
and mature
◦ Birth: first stage;
◦ youth: growth and expansion of organizational resources;
◦ midlife: period of gradual growth evolving eventually into stability;
◦ maturity: period of stability
 Informal groups may evolve according to the needs and
interests of the members.
 It is the undocumented and officially unrecognized
relationship between members of an organization that
inevitably emerge out of the personal and group needs of
employees.
 Herbert A. Simon has described this as “ the interpersonal
relationships in the organization that affect decisions within it
but either are omitted from the formal scheme or are not
consistent with it.”
 One of the first scholars to recognize the importance of
informal structure was Chester Bernard who noted that
informal relationships help organization members satisfy
their social needs and getting things done.
Authority:
 Authority is power that has been legitimized by the
organization. As organizations grow authority is also
distributed among many managers and employees.

 Authority is the right to act and the power to make decisions,

issue orders, etc.

 The authority flows down the vertical hierarchy.

 The authority has to be adequate for the performance of the

task assigned to the executive.

 The authority need to be accepted by the subordinates.

Without its acceptance, authority becomes dysfunctional.
 Authority can be classified into:

 Line Authority:
 Employee with line authority are called line manager
 Also known as scalar type of structure
 Each manager is given a complete charge of the work
assigned

 Staff Authority:
 Involves giving advice and counsel to line managers to
carry out their operations
 Manager with staff authority is called staff manager
 Used in larger organizations
Power:
 Power is an attribute of an individual’s influence over other
individuals.
 Power can be best utilized for control measure in the
organization so that its resources can be best utilized while
achieving goals.
 Power can be from various sources which we use to influence
others in different situations:

◦ Legitimate Power
◦ Reward Power
◦ Coercion
◦ Expert Power
◦ Referent Power
Responsibility:
 Responsibility is an obligation to the work that is assigned. A
manager is responsible for his or her department. Each staff
is responsible for doing his or her work effectively.
 Everyone in the organization is responsible to his or her job.
The chief executive officer is responsible for overall
organization and its objectives. Similarly middle level and line
managers have responsibility for their departments and units
respectively.
 Top level managers have more authority and responsibility
and lower level managers have less of them with more of
supervisory work.
 It is the process by which managers assign a portion of their
total workload to others.

Reasons for Delegation:

◦ To enable the manager to get more work done by utilizing
the skills and talents of subordinates.
◦ To foster the development of subordinates by having them
participate in decision making and problem solving.

Characteristics of Delegation:
◦ it enables a manager to function independently
◦ The superior does not delegate the total authority
◦ A manager cannot delegate what he or she himself or
herself does not possess
◦ Delegation does not mean giving away authority
◦ The superior, who delegates the authority, cannot escape
responsibility
Problems in Delegation:
 Manager
◦ Reluctant to delegate.
◦ Disorganization prevents planning work in advance.
◦ Subordinate’s success threatens superior’s advancement.
◦ Lack of trust in the subordinate to do well.
◦ Loss of control
◦ Fearing of losing importance
 Subordinate
◦ Reluctant to accept delegation for fear of failure.
◦ Perceives no rewards for accepting additional responsibility.
◦ Prefers to avoid any risk and responsibility.
◦ Lack of motivation
◦ Incompetent subordinates
Tasks for effective delegation:

 Decide which tasks can be delegated

 Decide who should get the assignment
 Provide resources for carrying out the delegated
tasks
 Delegate the assignment
 Be prepared to run interference
 Establish a feedback system
 As organization grows in size and complexity,
decentralization tends to increase.
 The faster the rate of organizational growth, the greater the
need for decentralization.
 When the managers and supervisors at the middle and lower
levels are given considerable autonomy in decision-making,
the organization is considered to be decentralized.
 In a highly decentralized structure, more decisions are made
at lower levels.
 Is important when the business environment is fast-changing
and decisions must be made quickly as well.
 Helps to lighten the load of top management
 The development of generalists rather than specialist is encouraged
 Familiarity with important aspects of special work is readily acquired.
 Organizations having widespread units, managers can obtain full
advantage of local conditions
 Risks involving possible losses of personnel, facilities, equipment, etc.
are spread out.
 To make decentralization effective, the employees must be better
trained and educated
 It is time-consuming and cost affair
 Misutilization of power may create problem
 The team organization
 The virtual organization
 The learning organization
 Boundary less organization