LESSON 06: ORGANIZING

DR. TISSA RAVINDA PERERA

Senior Lecturer

Department of Management and Organization Studies

Faculty of Management and Finance
University of Colombo

DM 142 Principles of Management

Semester I ( 2020)
Diploma in Marketing

August 16, 2020 1

 INTRODUCTION
Organizing is deciding how best to group organizational
activities and resources

Imagine asking a child to build a castle with set of

building blocks. He selects a few small blocks and several
larger ones. When he finishes he has his own castle like
any other.

 Another child presented with the same task constructs a

different castle. The childes activities in choosing a
certain combination of blocks and then putting them
together in a unique way are analogous to the manger’s
job of organizing
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 INTRODUCTION
There are six basic building blocks that managers can use
in constructing and organization:

1. DESIGNING JOBS
2. GROUPING JOBS
3. ESTABLISHING REPORTING RELATIONSHIPS BETWEEN JOBS
4. DISTRIBUTING AUTHORITY AMONG JOBS
5. COORDINATING ACTIVITIES BETWEEN JOBS
6. DIFFERENTIATING BETWEEN POSITIONS

The logical starting point of organizing is designing jobs

for people within the organization

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 1. DESIGNING JOBS
 Job design is the determination of an individual’s work related responsibilities

 The natural starting point for designing jobs is determining the level of desired
specialization

 Job specialization: the degree to which the overall task of the organization is
broken down and divided into smaller component parts. Job specialization
evolved with the concept of division of labor.

 Benefits of specialization

 Workers performing small simple task will become very proficient at that task
 Transfer time between task decreases. If employees perform several different
tasks, some time is lost as they stop doing the first task and start doing next
 When an employees performs a highly specialized job is absent of resigns, the
manager is able to train someone new at relatively lower cost

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 DESIGNING JOBS

 LIMITATIONS OF SPECIALIZATION

 Worker who perform a highly specialize job may become bored and dissatisfied
 It is difficult to replace the worker to another job

 ALTERNATIVES TO SPECIALIZATION

 JOB ROTATION: systematically moving employees from one job to another. Job rotation
has not been very successful in enhancing employee motivation or satisfaction.
Workers who are rotated to a new job may be more satisfied at first but satisfaction
soon wanes.

 JOB ENLARGEMENT: giving employees more tasks to perform. As a result all workers
perform wide verity of tasks, which presumably reduces the level of job dissatisfaction.
Disadvantages: training cost usually rise, unions have argued that pay should increase
because the worker is doing more tasks, in many cases the worker remain boring and
routine even after job enlargement

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 DESIGNING JOBS
 ALTERNATIVES TO SPECIALIZATION

 JOB ENRICHMENT: job enrichment assumes that increasing the range and variety of
tasks is not sufficient itself to improve employee motivation. Thus job enrichment
attempts to increase both the number of tasks a worker does and the control the
worker has over the job. To implement this managers delegate more authority to
employees. Disadvantages: work system is not properly analyzed before enrichment,
employee preference is not ask before enrichment

 JOB CHARACTERISTICS APPROACH: this method suggest that jobs should be diagnosed
and improved along five core dimensions, taking into account both work system and
employee preferences. This approach suggests that jobs should be diagnosed and
improves along five core dimensions. They are:

a. Skill variety: the number of things a person does in a job

b. Task identity: the extent to which the worker does complete or identifiable portion of
the total job.

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 DESIGNING JOBS
c. Task significance : the perceived importance of the task

d. Autonomy : the degree of control the worker has over how the work is
performed.

e. Feedback: the extent to which the worker know how well the job is being
performed.

 The higher the rates to those dimensions the more employees will experience
various psychological states. Experiencing these state in turn lead to high
motivation, high quality performance, high satisfaction and low absenteeism
and turnover

 WORK TEAMS: group is given the responsibility for designing the work system
to be used in performing an interrelated set of jobs. In work team the group
itself decides how jobs will be allocated among employees
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 2. GROUPING JOBS: DEPARTMENTALIZATION
 Rationale for Departmentalization: as an organization grows personally supervising all
the employees become more and more difficult for owner/manager. Consequently new
managerial positions are created to supervise the work of others. Employees are not
assigned to a particular manager randomly. Rather jobs are grouped according to a plan.

 COMMON BASES FOR DEPARTMENTALIZATION

 FUNCTIONAL DEPARTMENTALIZATION: grouping jobs involving the same or similar

activities.

Advantages: each department can be staffed by experts in that functional area,

supervision is also facilitated because an individual manager needs to be familiar with
only a relatively narrow set of skills, coordinating activities inside each department is
easier.

Disadvantages: decision making tend to become slower , employees concentrate on their

unity not on the total organization, accountability and performance become increasingly
difficult to monitor
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 GROUPING JOBS: DEPARTMENTALIZATION
 PRODUCT DEMINERALIZATION: grouping and arranging activities
around products or product groups.

 Advantages: all activities associated with one product group can be

easily integrated and coordinated, speed and effectiveness of decision
making are enhanced, the performance of individual products of
product group can be assesses more easily thereby improving the
accountability of departments.

 Disadvantages: managers in each department may focus on their

products of product group to the exclusion of the rest of the
organization, administrative costs arise because departments must have
its own functional specialists for things like marketing research and
financial analysis

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 GROUPING JOBS: DEPARTMENTALIZATION
Functional departmentalization: grouping jobs on the
basis of defined functions of the organizations

 Location demineralization: grouping jobs on the basis

of defined geographic sites

Customer demineralization: grouping activities to

respond to and interact with specific customers or
customer group.

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 3. ESTABLISHING REPORTING RELATIONSHIPS
 The basic elopement of organizing is the establishment of reporting
relationships among positions.

 Suppose and organization hire two managers such as marketing and

production. Who reports to who?

 Chain of command: a clear and distinct line of authority among the

positions in an organization. This has two components. First is unity of
command suggests that each person within an organization must have
a clear reporting relationship to one and only one boss. The second is
called the scalar principle suggests that there must be a clear and
unbroken line of authority extends from the lower to the higher
position in the organization.

 Span of control: the number of people who report to a particular

manager. Should it be NARROW OR WIDE?
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 3. ESTABLISHING REPORTING RELATIONSHIPS
 Wide span of control result in FLAT ORGANIZATION and TALL ORGANIZATIONS
have narrow span of control

 FACTORS OF INFLUENCING THE SPAN OF CONTROL

 Competence of supervisor and subordinates ( the greater the competence the

wider the potential span)

 Extent of non supervisory work in manager’s job ( the more non supervisory
work, the narrower the potential span)

 Degree of required interaction ( the more required interaction, the wider the
potential plan)

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 4. DISTRIBUTING AUTHORITY
 Another important thing in structuring organization is the determination of how
authority is to distributed among positions

 Authority is power that has been legitimized by the organization

 Two specific issues that managers must address when distributing authority are
delegation and decentralization

A. DELEGATION IS THE PROCESS BY WHICH MANAGERS ASSIGN A PORTION OF THEIR

TOTAL WORKLOAD TO OTHERS

 Reasons for Delegation:

 Enable the manger to get more work done

 Subordinates help ease the manger’s burden by doing major portions of the
organization's work and in some instances the subordinates may have more expertise in
addressing some issues.
 It helps develop subordinates 20
 DISTRIBUTING AUTHORITY
 PARTS IN DELEGATION PROCESS: this process involves three steps.

 The manger assigns responsibility or gives the subordinates to do the job

 Along with the responsibility the manger give the authority to do the job
 The manager establishes the subordinate's accountability. The subordinate
accepts an obligation to carry out the task assigned by the manger

 PROBLEMS IN DELEGATION

 Some managers are reluctant to delegate

 Some mangers may worry that subordinates will do too well and pose a threat
to their own advancement
 Managers may not trust the subordinates to do the job well
 Some subordinates are reluctant to accept delegation

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 DISTRIBUTING AUTHORITY
B. DECENTRALIZATION AND CENTRALIZATION

 Decentralization is the process of systematically delegate power and authority

throughout the organization to middle and lower level managers

 Centralization is the process of systematically retaining power and authority in

the hands of higher level managers

 REASONS FOR DECENTRALIZATION AND CENTRALIZATION

 Organizational external environment. Greater the complexity and uncertainty

in the environment the organizations go for centralization
 Nature of the decisions. More costlier and riskier decisions are going to be
centralized.
 Abilities of the lower level managers

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 5. COORDINATING ACTIVITIES
 As we discussed earlier job specialization and departmentalization
involves breaking down into small units and then combining those
jobs into departments.

 Once this has been done, the activities of departments must be linked.
This is done by coordination

 Coordination it the process of linking the activities of various

departments of the organization

 The need for Coordination

 Departments and work groups are interdependent.

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 6. DIFFERENTIATING BETWEEN POSITIONS
 The last building block of organizing structure is
differentiating between line and staff positions in the
organization

 A line position is a position in the direct chain of command

that is responsible for the achievement of an organization's
goal

 Staff position is a position intended to provide expertise,

advice and support for line positions

 The most obvious difference between line and staff is

purpose- line managers work directly towards organizational
goals, where as staff managers advice and assist.

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ORGANIZATIONAL DESIGN
 INTRODUCTION

 Organizations don't need to have identical structures

 Organizations which are in the same size don’t need to

have same structure

 How do managers decide what organizational design to

be used

 The decisions are based on certain contingency factors

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 MECHANISTIC AND ORGANIC ORGANIZATIONS

Mechanistic organization is a rigid and tightly

controlled structure. It is characterized by high
specialization, rigid departmentalization, narrow span
of control, little participation in decision making by
lower level employees

Organic organization is highly adaptive and flexible

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 CONTINGENCY FACTORS
 What is an appropriate type of structure may depends upon contingency
factors. They are organization’s strategy, size, technology and degree of
environmental uncertainty

 Strategy and structure: an organizational structure should help an organization

to achieve its goals. Because goals are an important part of the organization's
strategies. Strategy and the structure should be closely linked. If an
organization change the strategy should change the structure accordingly.

 Size and structure: there is considerable evidence that an organization’s size

significantly affects it structure. It seems that an organization grows past a
certain size, size has less influence on structure

 Technology and structure: the more routine the technology the more
mechanistic the structure. Organizations with more non routine technology are
more likely to have organic structures.

 Environmental uncertainty and structure: the greater the uncertainty the more
an organization needs the flexibility offered by an organic structure. On the
other hand in stable, simple environments, mechanistic designs tend to be more
effective
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 COMMON ORGANIZATIONAL DESIGNS
1. TRADITIONAL ORGANIZATIONAL DESIGN

A. SIMPLE STRUCTURE: most organizations start as an entrepreneurial businesses with

simple structure consisting of owner and employees. A simple structure is an
organizational design with low departmentalization, wide span of control, authority
centralized to a single person. This structure is most commonly used in small
businesses.

Advantages: Fast, flexible, inexpensive to maintain , clear accountability

Disadvantages: not appropriate as organizations grow, reliance on one person is
risky

B. FUNCTIONAL STRUCTURE: an organizational design that groups similar or related

occupational specialties together

Advantages: cost saving advantage from specialization, employees are grouped

with others who have similar tasks
Disadvantages: pursuit of functional goals, little understanding of what other units
are doing
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 COMMON ORGANIZATIONAL DESIGNS
1. TRADITIONAL ORGANIZATIONAL DESIGN

A. DIVISIONAL STRUCTURE: an organizational structure made up

of separate business units or divisions. In this structure each
unit or division has limited autonomy with a division manager
responsible for performance and who has strategic and
operational authority over his or her unit.

 Advantages: focus on results ( division managers are

responsible for what happens to their product or service)

 Disadvantages: duplication of activities and resources

increases cost and reduce efficiency

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 COMMON ORGANIZATIONAL DESIGNS
2. CONTEMPORARY ORGANIZATIONAL DESIGNS

 TEAM STRUCTURE: the entire organization is made up of work groups

or teams. Employee empowerment is very high in this type of a
structure. Employee teams are free to designing work in the way they
think best. The teams are also held responsible for all work and
performance results in their respective areas.

 MATRIX AND PROJECT STRUCTURES: this is a structure the with two

channels of command .The key feature of the matrix is functional and
project line of authority are overlaid to form a matrix and managerial
authority is shared between the functional manager and project
manager. Subordinates have a continuing dual assignment of their
project and to their functional division

 Boundaryless organizations

 Virtual organizations

 Network organizations
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Questions?

Thank you !

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