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Organization is an activity which establishes harmonious adjustment among all the factors of production. Organizations are social entities which coordinates the activities of a number of people for the achievement of some common goal through Division of labor and through well defined systems of working.

Principles of organization
Principle of objectives Principles of specialization Principles of span of control Principles of exception The principle of authority The principle of unity of command Principle of delegation Principle of responsibility Principle of flexibility Principle of simplicity Principle of continuity Principle of unity of direction Principles of efficiency Principles of balance

Deciding how best to group organizational activities and resources. organizing is determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made. organizing is a management function involving assigning duties, grouping tasks, delegating authority and responsibility and allocating resources to carry out a specific plan in an efficient manner. organizing refers to the grouping of activities and resources in a logical fashion. As the process of creating organization structure.

Organizing process

Purposes of Organizing
Divides work to be done into specific jobs and departments Assigns task and responsibilities associated with individual jobs Coordinates diverse organizational task Clusters jobs into units Establishes formal line of authority allocates and deploys organizational resources

There are six basic building blocks that managers can use in constructing an organization: 1. Designing jobs 2. Grouping hobs 3. Establishing reporting relationships between jobs, 4. Distributing authority among jobs, 5. Coordinating activities between jobs 6. Differentiating between positions

1.Designing jobs
Job design: the determination of an individual's work-related responsibilities Job specialization: the degree to which the overall task of the organization is broken down and divided into smaller component parts. Alternatives of specialization:to counter the problems associated with specialization managers have sought other approaches to job design that achieve a better balance between organizational demands for efficiency and productivity and individual needs for creativity and autonomy. Job rotation: involves systematically moving employees from one job to another. Job enlargement: involves giving the employee more tasks to perform. Job enrichment: involves increasing both the number of tasks the worker does and the control the worker has over the job

Job characteristics approach: suggests that jobs should be diagnosed and improved along five core dimensions, taking into account both the work system and employee preferences. Five core dimension: Skill variety:the number of things a person does in a job Task identity:the extent to which the worker does a complete or identifiable portion of the total job. Task significance: the perceived importance of the work. Autonomy:the degree of control the worker has over how the work is performed. Feedback:the extent to which the worker knows how well the job is being performed. Work team: that allows an entire group to design the work system it will use to perform an interrelated set of tasks.

2. Grouping jobs
Departmentalization : the process of grouping jobs according to some logical arrangement.or the process of grouping individuals into separate units or departments to accomplish organizational goals. Common bases for departmentalization: Functional departmentalization Product departmentalization Customer departmentalization Location departmentalization

3. Establishing reporting relationships

Chain of command: a clear and distinct line of authority among positions in an organization. Span of control or span of management: states that there is a limit to the number of subordinates a manager can effectively supervise. how many subordinates a manager can effectively an efficiently supervise.or number of people who report to a particular manager.

Factors influencing the the span of management

Narrow spans(a great deal of time spent with subordinates)related to Little or no training Inadequate or unclear authority delegation Wide spans(very little time spent with subordinates)related to Thorough training of subordinates Clear delegation to undertake welldefined tasks

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

Well-defined plans for repetitive operations

Verifiable objectives used as standards Slow changes in external internal environments Use of appropriate techniques such as proper organization structure, written and oral communication

Narrow spans(a great deal of time spent with subordinates)related to Ineffective interaction of superior and subordinate Ineffective meetings Greater number of specialties at lower and middle levels Incompetent and untrained managers Complex task Subordinates unwillingness to assume responsibility and reasonable risks Immature subordinates

Wide spans(very little time spent with subordinates)related to Effective interaction between superior and subordinate Effective meetings Number of specialties at upper levels(top managers concerned with external environment) Competent and trained managers Simple task Subordinates willingness to assume responsibility and reasonable risks Mature subordinates

Wide spans of management result in flat organizations which may lead to increased employee morale and productivity as well as increased managerial responsibility.

Tall organization (organization with narrow spans


Advantages : Close supervision Close control Fast communication between subordinates and supervisors

Disadvantages: Supervisors tend to get too involved in subordinates work Many levels of management High costs due to many levels Excessive distance between lowest and top level

Flat organization (organization with wide spans)


Advantages : Superiors are forced to delegate Clear policies must be made Subordinates must be carefully selected

Disadvantages: Tendency of overloaded superiors to become decision bottlenecks Danger of superior's loss of control Requires exceptional quality of managers.

4. Distributing authority
Authority: power that has been legitimized by the organization. Of the rights inherent in a managerial position to give orders and expect them to be obeyed. Authority in organization is the right in a position(and ,through it, the right of the person occupying the position) to exercise discretion in making decisions affecting others. Line authority: authority that entitles a manager to direct the work of a subordinate. Staff authority: authority given to individual who support, assist, and advise others who have lie authority. Power: the capacity to influence decisions. Responsibility: an obligation to perform assigned activity. Delegation process: Delegation of authority: the process by which a manager assign a portion of his or her total work load to others.

Steps in delegation process

Step 1 Assigning responsibility Step 2 Granting authority Step 3 Creating accountability







The manager assigns responsibility, or gives the subordinate a job to do, the assignment of responsibility might range from telling a subordinate to prepare a report to the individual is also given the authority to do the hob. The manager may confidential files or to direct a group of other workers. Finally, the manager establishes the subordinate's accountability. Problems in Delegation: Manager may be reluctant to delegate. Some subordinates are reluctant to accept delegation They may perceive that there are no rewards for accepting additional responsibility Prefer to avoid risk

Centralization and Decentralization

Centralization: the process of systematically retaining power and authority in the hands of higher-level manager. Decentralization: the process of systematically delegating the power and authority throughout the organization to middle and lower-level managers.

Factors influencing the amount of centralization and Decentralization

More Centralization Environment is more stable. Lower-level managers are not as capable or experienced at making decisions. More Decentralization Environment is complex, uncertain. Lower-level managers are capable and experienced at making decisions.

Lower-level managers do not want to Lower-level managers want a voice in have a say in decisions. decisions.
Decision are more significant. Organization is facing a crisis or the risk of company failure. Decision are relatively minor. Corporate culture is more open to allowing managers to have a say in what happens.

Company is large Effective implementation of company strategies and depends on managers retaining more say over what happens.

Company is geographically dispersed Effective implementation of company strategies depends on managers having more involvement and flexibility to make decisions.

5.Coordinating activities between jobs

The process of linking the activities of the various departments of the organization. The need for coordination: the primary reason for coordination is that departments and work groups are interdependent. They depend on each other for information and resources to perform their respective activities. The greater the interdependence between departments the more coordination the organization requires. Structural coordination techniques: The Managerial hierarchy Rules and Procedures Liaison Roles Task Forces Integrating departments.

6.Differentiating between positions

Line position: a position in the direct chain of command that is responsible for the achievement of an organization's goals Staff position: a position intended to provide expertise, advice and support for the line positions.

Organizational structures
Refers to the way in which an organization's activities are divided, grouped, and coordinated into relationships between managers and employees, managers and managers, and employees and employees. An organization's departments can be formally structured in three ways: by function, by product or market, or in matrix form

Organization structure refers to an organization's frame work as expressed by its degree of complexity, formalization, and centralization. Complexity: the amount of of differentiation in an organization Formalization: the degree to which an organization relies on rules and procedures to direct the behavior of employees. Centralization: the concentration of decision-making authority in upper management. Decentralization : the handling of decision-making authority to lower levels in an organization. Decentralization: the handling of decision-making authority to lower levels in an organization.

Types of organizational structures

Refers to the way in which an organization's activities are divided, grouped, and coordinated into relationships between managers and employees, managers and managers, and employees and employees. 1. Functional organization: a form of departmentalization in which individuals engaged in one functional activity such as marketing or finance, are grouped into one unit.

Functional organization chart for manufacturing company


Vice president Production

Vice president Marketing

Vice president Finance

Vice president Human resources

The strengths of simple structure are it's fast, flexible, and inexpensive to maintain, and accountability is clear and weakness is that it's effective only in small organizations

Divisional\product\market organization: Division organization: large organization department that resembles a separate business; may be devoted to making and selling specific products or serving a specific market. Product organization: the organization of a company into divisions that bring together those involved with a certain type of product. Market organization: the organization of a company into divisions that bring together those involved with a certain type of market.

Divisional structure

Pharmaceutical products

Consumer durables

Personal care products

Matrix design
An organization structure where in a product-based form of departmentalization is superimposed on to an existing functional arrangement. Project manager: head of project group composed of representatives or workers from different functional departments. Multiple command structure: a structure in which an individual reports to both a functional superior and one or more project managers simultaneously

A Matrix organization

Vice president,


Vice president. Production

Vice president, Finance

Vice president, Marketing

Project Manager A Project Manager B Project Manager C

Team based structure: an organization structure made up of work groups or teams that perform that organization's work. Boundaryless organization: an organization whose design is not defined by or limited to the boundaries imposed by a predefined structure.

Organization design
The overall set of structural elements and the relationships among those elements used to manage the total organization. Bureaucracy model: a universal model of organizational design based on a legitimate and formal system of authority. Behavioral model :A model of organizational design that paralleled the emergence of the human relations school of management thought; the model emphasized developing work groups and interpersonal processes Rensis Likert, a management researcher, studied several large organizations to determine what made some more effective than others. He found that the organizations in his sample that used the bureaucratic model of design tended to be less effective than those that used a more behaviorally oriented model consistent with the emerging human relations movement . Or organization that paid more attention to developing work groups and were more concerned about impersonal processes.

Likert developed a framework that characterized the organization in terms of eight important processes; leadership, motivation, communication, interactions, decision making, goal setting, control, and performance goals. System 1design : a form of organizational design based on legitimate and formal authority; developed as part of the behavioral model of organization design. System 4 design: A form of organization design that uses a wide array of motivational processes and promotes open and extensive interaction processes, developed as part of the behavioral model of organization design.

System1 and system 4 organizations

System 1organization 1. Leadership process includes no perceived confidence and trust. Subordinates do not feel free to discuss job problems with their superiors, who in turn do not solicit their ideas and opinions 2. Motivational process taps only physical, security, and economic motives through the use of fear and sanctions. Unfavorable attitudes towards the organization prevail among employees 3. Communication process is such that information flows downward and tends to be distorted, inaccurate, and viewed with suspicion by subordinates. System 4 organization Leadership process: includes perceived confidence and trust between superiors and subordinates in all matters. Subordinates feel free to discuss job problems with their superiors, who in turn solicit their ideas and opinions. Motivational process taps a full range of motives through participatory methods. Attitudes are favorable toward the organization and its goals Communication process is such that information flows freely throughout the organization-upward, downward,and laterally the information is accurate and undistorted.

4. Interaction process is closed and restricted; subordinates have little effect on departmental goals, methods, and activities. 5. Decision process is located at the top of the organization; it is relatively centralized. 6. Goal-setting process is located at the top of the organization; discourages group participation.

Interaction process is open and extensive; both superiors and subordinates are able to affect departmental goals, methods, and activities. Decision processes occurs at all levels through group processes; it is relatively decentralized Goal-setting process encourages group participation in setting high, realistic objectives.

7. Control process is centralized and Control process is dispersed throughout emphasizes fixing of blame for mistakes. the organization and emphasizes selfcontrol and problem solving 8. Performance goals are low and passively sought by managers who make no commitment to developing the human resources of the organization. Performance goals are high and actively sought by superiors who recognize the necessity for making a full commitment to developing through training, the human resources of the organization.

Situational influence on Organization design Based on the assumption that the optimal design for any given organization depends on a set of relevant situational factors

Mechanistic and Organic Organizations

Mechanistic Organic

Tasks are highly fractionated and Tasks are more interdependent; specialized; little regard is paid to emphasis is on relevance of tasks clarifying relationship between tasks and organizational objectives. and organizational objectives Tasks tend to remain rigidly defined unless altered formally by top management Tasks are continually adjusted and redefined through interaction of organization members

Specific roles are defined(rights, obligations, and technical methods are prescribed for each member) Structure of control, authority, and communication is hierarchical; sanctions derive from employment contract between employee and organization

Generalized roles are define(member accept general responsibility for task accomplishment beyond individual role definition) Structure of control, authority and communication is a network; sanctions derive more from community of interest than from contractual relationship.

Information relevant to situation Leader is not assumed to be and operations of the organization is omniscient; knowledge centers are formally assumed to rest with chief identified throughout organization. executive Communication is primarily vertical Communication is both vertical and between superior and subordinate horizontal, depending on where need information resides Communications primarily take form of instructions and decisions issued by superiors, of information and requests for decisions supplied by inferiors Communications primarily take form of information and advice

Insistence on loyalty to organization Commitment to organization's tasks and obedience to superiors is and goals is more highly valued that present loyalty or obedience Importance and prestige are attached to identification with organization and its members Importance and prestige are attached to affiliations and expertise in external environment.

Some mistakes in organizing Failure to plan properly Failure to clarify relationships Failure to delegate authority Failure to balance delegation Granting authority without exacting responsibility Misuse of functional authority