Unit III - Organizing

MG6851 – Principles Of
Management

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Designing Organizational Structure
• Organizing – Arranging and structuring work to accomplish
the organization’s goals

• Organizational Structure – The formal arrangement of

jobs within an organization

• Organizational Chart – The visual representation of an

organization’s structure

• Organizational Design – Creating or changing an

organization’s structure

• Work Specialization – Dividing work activities into

separate job tasks
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 Purposes of Organizing
1. Divides work to be done into specific jobs and departments.
2. Assigns tasks and responsibilities associated with individual
jobs.
3. Coordinates diverse organizational tasks.
4. Clusters jobs into units.
5. Establishes relationships among individuals, groups, and
departments.
6. Establishes formal lines of authority.
7. Allocates and deploys organizational resources.

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 Groups in Organization
Groups - Two or more interacting and interdependent
individuals who come together to achieve specific goals.
• Formal groups are work groups that are defined by the
organization’s structure and have designated work
assignments and specific tasks directed at accomplishing
organizational goals.
• Informal groups are social groups. These groups occur
naturally in the workplace and tend to form around
friendships and common interests.

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 Formal Groups
1. Command Groups — Groups that are determined by the
organization chart and composed of individuals who report
directly to a given manager.
2. Task Groups — Groups composed of individuals brought
together to complete a specific job task; their existence is often
temporary because when the task is completed, the group
disbands.
3. Cross-functional Teams — Groups that bring together the
knowledge and skills of individuals from various work areas or
groups whose members have been trained to do each others’ jobs.
4. Self-managed Teams — Groups that are essentially
independent and that, in addition to their own tasks, take on
traditional managerial responsibilities, such as hiring, planning
and scheduling, and evaluating performance.
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 Informal Groups
• Interest Groups — People working together to attain a
specific objective with which each is concerned.
• Friendship Groups — People brought together because
they share one or more common characteristics.

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 Why and How Organizational
Charts are Used
• A graphic portrayal of a unit’s formal structure, that provides
a clear picture of the area of responsibility and reporting
relationships within the unit.
• Used to define the roles and responsibilities of positions
within a unit; visualize the structure of the workforce; and
establish a structure of authority, communication channels,
and specific operational functions and tasks.
• Used in many human resource related processes to make
decisions including, but not limited to, recruitment,
classification, organizational development activities such as
restructuring, and training.
• Used to establish decision-making processes and specific
operational functions.
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 What Should Be Included?
1. Organization / Department / Unit name
2. Working title, Job Title or Position Title
3. Current incumbent name or indication of vacancy
4. Position number
5. Position FTE [Full-time equivalent – a unit that indicates the
workload of an employed person]
6. Two levels of supervision above the position being reviewed or
established, including dotted line reporting structures.
7. Names and position titles of direct reports, if applicable.
8. Revision date

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Mechanistic and Organic Structures
• Mechanistic Organization – An organizational design
that’s rigid and tightly controlled
• Organic Organization – An organizational design that’s
highly adaptive and flexible

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 Contingency Factors Affecting
Structural Choice
• Strategy and Structure
• Size and Structure
• Technology and Structure
o Unit Production – The production of items in units or
small batches
o Mass Production – The production of items in large
batches
o Process Production – The production of items in
continuous processes
• Environmental Uncertainty and Structure

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Traditional Organizational Designs
1. Simple Structure
– An organizational design with low departmentalization,
wide spans of control, centralized authority, and little
formalization
– Strengths: Fast; flexible; inexpensive to maintain; clear
accountability.
– Weaknesses: Not appropriate as organization grows;
reliance on one person is risky.

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2. Functional Structure
– An organizational design that groups together similar or
related occupational specialties
– Strengths: Cost-saving advantages from specialization
(economies of scale, minimal duplication of people and
equipment); employees are grouped with others who have
similar tasks.
– Weaknesses: Pursuit of functional goals can cause
managers to lose sight of what’s best for the overall
organization; functional specialists become insulated and
have little understanding of what other units are doing.

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3. Divisional Structure
– An organizational structure made up of separate,
semiautonomous units or divisions
– Strengths: Focuses on results—division managers are
responsible for what happens to their products and
services.
– Weaknesses: Duplication of activities and resources
increases costs and reduces efficiency.

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Contemporary Organizational
Designs

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• Example of a Matrix Organization

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• Virtual Organization - An organization that consists of a
small core of full-time employees and outside specialists
temporarily hired as needed to work on projects
• Network Organization - An organization that uses its own
employees to do some work activities and networks of outside
suppliers to provide other needed product components or
work processes

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 Departmentalization
• The basis by which jobs are grouped together

Cross-functional Team – A work team composed of

individuals from various functional specialties

The Five Common Forms of Departmentalization

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 Chain of Command
The line of authority extending from upper organizational levels to
the lowest levels, which clarifies who reports to whom
1. Authority – The rights inherent in a managerial position to
tell people what to do and to expect them to do it
a. Acceptance Theory of Authority – The view that
authority comes from the willingness of subordinates to
accept it
– Barnard contended that subordinates will accept orders
only if the following conditions are satisfied:
1. They understand the order.
2. They feel the order is consistent with the organization’s
purpose.
3. The order does not conflict with their personal beliefs.
4. They are able to perform the task as directed.
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 b. Line Authority – Authority that entitles a manager
to direct the work of an employee
c. Staff Authority – Positions with some authority
that have been created to support, assist, and advise
those holding line authority
2. Responsibility – The obligation or expectation to
perform any assigned duties
3. Unity of Command – The management principle that
each person should report to only one manager

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Line Versus Staff Authority

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Chain of Command and Line
Authority

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 Span of Control
The number of employees a manager can efficiently and
effectively manage

Contrasting Spans of Control

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 Delegation of Authority
The process of granting authority to carry out specific functions
is called the delegation of authority.

Delegation of authority:
• Grants authority to carry out specific functions.
• Is issued by the chief elected official, chief executive officer, or
agency administrator in writing or verbally.
• Allows the Incident Commander to assume command.
• Does NOT relieve the granting authority of the ultimate
responsibility for the incident.

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A delegation of authority may be needed:
• When the incident is outside the Incident Commander’s
jurisdiction.
• When the incident scope is complex or beyond existing
authorities.
• When required by law or procedures.

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A delegation of authority should include the following
elements:
• Legal authorities and restrictions.
• Financial authorities and restrictions.
• Reporting requirements.
• Demographic issues.
• Political implications.
• Agency or jurisdictional priorities.
• Plan for public information management.
• Process for communications.
• Plan for ongoing incident evaluation.

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Centralization and Decentralization
• Centralization is the degree to which decision making takes
place at upper levels of the organization.

• On the other hand, the more that lower-level employees

provide input or actually make decisions, the more
decentralization there is.

• As organizations have become more flexible and responsive to

environmental trends, there’s been a distinct shift toward
decentralized decision making. This trend, also known as
employee empowerment, gives employees more authority
(power) to make decisions.

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Centralization or Decentralization

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 Formalization
• Formalization refers to how standardized an organization’s
jobs are and the extent to which employee behavior is guided
by rules and procedures.
• In highly formalized organizations, there are explicit job
descriptions, numerous organizational rules, and clearly
defined procedures covering work processes.

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 Organizing for Collaboration
1. Internal Collaboration
• Cross-functional Team – A work team composed of
individuals from various functional specialties
• Task Force (or ad hoc committee) – A temporary
committee or team formed to tackle a specific short-term
problem affecting several departments
• Communities of Practice – Groups of people who share
a concern, a set of problems, or a passion about a topic,
and who deepen their knowledge and expertise in that
area by interacting on an ongoing basis

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2. External Collaboration
• Open Innovation – Opening up the search for new ideas
beyond the organization’s boundaries and allowing
innovations to easily transfer inward and outward
• Strategic Partnerships – Collaborative relationships
between two or more organizations in which they combine
their resources and capabilities for some business purpose

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 Flexible Work Arrangements
• Telecommuting – A work arrangement in which employees
work at home and are linked to the workplace by Computer
• Compressed Workweek – A workweek where employees
work longer hours per day but fewer days per week
• Flextime (or Flexible Work Hours) – A scheduling
system in which employees are required to work a specific
number of hours a week but are free to vary those hours
within certain limits
• Job Sharing – The practice of having two or more people
split a full-time job

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 The Human Resource
Management Process
Why Is HRM Important?
• First, it can be a significant source of competitive advantage as
various studies have concluded.
• Second, HRM is an important part of organizational
strategies.
• Finally, the way organizations treat their people has been
found to significantly impact organizational performance.

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High-Performance Work Practices
• Self-managed teams
• Decentralized decision making
• Training programs to develop knowledge, skills, and abilities
• Flexible job assignments
• Open communication
• Performance-based compensation
• Staffing based on person–job and person–organization fit
• Extensive employee involvement
• Giving employees more control over decision making
• Increasing employee access to information

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HRM Process

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 Identifying and Selecting
Competent Employees
1. Human Resource Planning
– Ensuring that the organization has the right number and
kinds of capable people in the right places and at the right
times
– HR planning entails two steps: (1) assessing current
human resources, and (2) meeting future HR needs.
– Current Assessment
• An important part of a current assessment is job analysis,
an assessment that defines a job and the behaviors necessary
to perform it.
• A job description is a written statement describing a job
typically job content, environment, and conditions of
employment.

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 • A job specification states the minimum qualifications that
a person must possess to successfully perform a given job. It
identifies the knowledge, skills, and attitudes needed to do
the job effectively.
• Both the job description and job specification are important
documents when managers begin recruiting and selecting.
– Meeting Future HR Needs
• Future HR needs are determined by the organization’s
mission, goals, and strategies.
• Demand for employees results from demand for the
organization’s products or services.

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2. Recruitment and Decruitment
– Recruitment – Locating, identifying, and attracting
capable applicants
– Decruitment – Reducing an organization’s workforce
– Recruiting Sources

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• Decruitment Options

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3. Selection
– Screening job applicants to ensure that the most
appropriate candidates are hired
– Selection Tools / Process
• Application Forms
– Almost universally used
– Most useful for gathering information
– Can predict job performance but not easy to create
one that does
• Written Tests
– Must be job related
– Include intelligence, aptitude, ability, personality,
and interest tests
– Are popular (e.g., personality tests; aptitude tests)
– Relatively good predictor for supervisory positions
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• Performance-Simulation Tests
– Use actual job behaviors
– Work sampling—test applicants on tasks
associated with that job; appropriate for routine or
standardized work
– Assessment center—simulate jobs; appropriate for
evaluating managerial potential
• Interviews
– Almost universally used
– Must know what can and cannot be asked
– Can be useful for managerial positions
• Background Investigations
– Used for verifying application data—valuable
source of information
– Used for verifying reference checks—not a valuable
source of information
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 • Physical Examinations
– Are for jobs that have certain physical requirements
– Mostly used for insurance purposes
– Validity and Reliability
• A valid selection device is characterized by a proven
relationship between the selection device and some relevant
criterion.
• A reliable selection device indicates that it measures the
same thing consistently. On a test that’s reliable, any single
individual’s score should remain fairly consistent over time,
assuming that the characteristics being measured are also
stable.
– Realistic Job Previews [RJP]
• A preview of a job that provides both positive and negative
information about the job and the company
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4. Providing Employees with Needed Skills and
Knowledge
– Orientation
• Introducing a new employee to his or her job and the
organization
• Work Unit Orientation – familiarizes the employee with
the goals of the work unit, clarifies how his or her job
contributes to the unit’s goals, and includes an introduction
to his or her new co-workers.
• Organization Orientation – informs the new employee
about the company’s goals, history, philosophy, procedures
and rules.

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– Employee Training
• Employee training is an important HRM activity. As job
demands change, employee skills have to change.
• Managers, of course, are responsible for deciding what type
of training employees need, when they need it, and what
form that training should take.
– Types of Training

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– Training Methods
• Traditional Training Methods
– On-the-job — Employees learn how to do tasks simply
by performing them, usually after an initial introduction
to the task.
– Job Rotation — Employees work at different jobs in a
particular area, getting exposure to a variety of tasks.
– Mentoring and Coaching — Employees work with an
experienced worker who provides information, support,
and encouragement; also called apprenticeships in
certain industries.
– Experiential Exercises — Employees participate in
role playing, simulations, or other face-to-face types of
training.
– Workbooks / Manuals — Employees refer to training
workbooks and manuals for information.
– Classroom Lectures — Employees attend lectures
designed to convey specific information. 48
• Technology-Based Training Methods
– CD-ROM / DVD / Videotapes / Audiotapes /
Podcasts — Employees listen to or watch selected
media that convey information or demonstrate certain
techniques.
– Video-Conferencing / Tele-Conferencing /
Satellite TV — Employees listen to or participate as
information is conveyed or techniques demonstrated.
– E-learning — Internet-based learning where employees
participate in multimedia simulations or other
interactive modules.

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5. Retaining Competent, High-Performing Employees
– Once an organization has invested significant amount in
recruiting, selecting, orienting, and training employees, it
wants to keep them, especially the competent, high-
performing ones!
– Two HRM activities that play a role in this area are;
• Managing employee performance and
• Developing an appropriate compensation and benefits
program.
– Employee Performance Management
• Establishes performance standards that are used to evaluate
employee performance

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• Performance Appraisal Methods
– Written Essay
» Evaluator writes a description of employee’s
strengths and weaknesses, past performance, and
potential; provides suggestions for improvement.
» (+) Simple to use
» (-) May be better measure of evaluator’s writing
ability than of employee’s actual performance
– Critical Incident
» Evaluator focuses on critical behaviors that separate
effective and ineffective performance.
» (+) Rich examples, behaviorally based
» (-) Time-consuming, lacks quantification

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– Graphic Rating Scale
» Popular method that lists a set of performance
factors and an incremental scale; evaluator goes
down the list and rates employee on each factor.
» (+) Provides quantitative data; not time-consuming
» (-) Doesn’t provide in-depth information on job
behavior
– BARS (Behaviorally Anchored Rating Scale)
» Popular approach that combines elements from
critical incident and graphic rating scale; evaluator
uses a rating scale, but items are examples of actual
job behaviors.
» (+) Focuses on specific and measurable job behaviors
» (-) Time-consuming; difficult to develop
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– Multiperson Comparison
» Employees are rated in comparison to others in work
group.
» (+) Compares employees with one another
» (-) Difficult with large number of employees; legal
concerns
– MBO
» Employees are evaluated on how well they
accomplish specific goals.
» (+) Focuses on goals; results oriented
» (-) Time-consuming
– 360-Degree Appraisal
» Utilizes feedback from supervisors, employees, and
coworkers.
» (+) Thorough
» (-) Time-consuming
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• Compensation and Benefits
– Skill-based Pay - A pay system that rewards employees
for the job skills they can demonstrate. Under this type of
pay system, an employee’s job title doesn’t define his or
her pay category, skills do. Research shows that these
types of pay systems tend to be more successful in
manufacturing organizations than in service
organizations and organizations pursuing technical
innovations.
– Variable Pay - A pay system in which an individual’s
compensation is contingent on performance
– Although many factors influence the design of an
organization’s compensation system, flexibility is a key
consideration.
– However, whatever approach managers use, they must
establish a fair, equitable, and motivating
compensation system that allows the organization to
recruit and keep a talented and productive workforce.
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What Determines Pay and
Benefits

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 Contemporary Issues in
Managing Human Resources
• Downsizing
– The planned elimination of jobs in an Organization
• Sexual Harassment
– Any unwanted action or activity of a sexual nature that explicitly or
implicitly affects an individual’s employment, performance, or work
environment
• Managing Work–life Balance
– Family-friendly Benefits - Benefits that accommodate employees’
needs for work–life balance (such as on-site child care, flextime,
telecommuting, and so on.)
• Controlling HR Costs
– Employee health care costs – through employee health initiatives
– Employee pension plan costs - by eliminating or severely limiting them.
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 Career Planning and
Management
• Introduction

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What is a Career?

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Traditional Vs. Protean Career

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A Model of Career Development

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Career Motivation

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What is Career Management?

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Why is Career Management
Important?

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The Career Management
Process

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Employee’s Role in Career
Management

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Manager’s Role in Career
Management

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Company’s Role in Career
Management

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 How Can I Have a Successful
Career?
• Understand yourself — your abilities and disabilities; your
strengths and weaknesses
• Protect your personal brand — watch what you share online
and in interactions with others, and watch your e-mails
• Be a team player — focus on knowing your peer group and your
organization and on the best ways to work within them
• Dress appropriately — first impressions count, but so do other
impressions that you make every day
• Network — develop and keep your links to other professionals
open and active by participating in professional organizations,
staying in touch with classmates and friends, using online
networking sites, and so forth

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• Ask for help — if you find yourself facing an issue you’re not sure
how to handle, ask someone for advice or guidance; seek out a
mentor
• Keep your skills updated — although you might think you know
it all, you don’t; keep learning about your profession and your
industry
• Set goals and then work hard to achieve them — showing
your boss that you’re able to set goals and reach them is always
impressive
• Do good work — above all, having a successful career means
doing your job well, whatever that job might be

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