Organizing

Chapter 4
Nature of
Organization
Lesson 1
Differentiation of the organization’s
Internal Environment
Differentiation in organizations involves
division of labor and specialization
according to Bateman and Snell (2008).
These necessarily result from the
organizations composition-many different
work units with different kills and work
activities coordinating with one another for
a common end.
Division of labor involves assigning different
task to different people in the organizations
different work units. Related to it is
specialization, the process in which different
individuals and unit perform different task.
An organizations overall work is complex
and would be to much for any individual,
therefore, the bigger the organization, the
more work units or work division and
specializations are to be expected.
Integration Work of Units

Integration is another process in the

organization’s internal environment which involves
the collaboration and coordination refers to the
procedures that connect the work divisions/units
of the firm in order to achieve its overall goal.
Structural mechanisms may be devised in order to
increases collaboration and coordination. The
more highly differentiated one’s organization is,
the greater the need for integration among the
different units
 Types of Organization
Structures

Lesson 2
The vertical organizational structure
is a strict hierarchical structure with
power emanating from the top to
the bottom. With a chain of
command well defined, decisions
usually move from the top down
through layer by layer, and people
at the bottom have the least
autonomy.
Organizations are set up in specific
ways to accomplish different goals,
and the structure of an organization
can help or hinder its progress toward
accomplishing these goals.
Organization large and small can
achieve higher sales and other profit
by properly matching their needs
with the structure they use to operate
There are three main types of
Organizational Structure:

Functional Structure
Divisional Structure
Matrix Structure
Functional Structure of an Organization

Functional Structure is set up so that each

portion of the organization is grouped
according to its purpose. In this type of
organization, for example, there may be a
marketing department, a sales department
and a production department, The functional
structure works very well for small business in
which each department can rely on the talent
and knowledge of its workers and support itself.
However, one of the drawbacks to
a functional structures is that the
coordination and communication
between departments can be
restricted by the organizational
boundaries of having the various
department working separately.
Divisional Structure of an Organization

Divisional structure typically is used in larger

companies that operate in a wide geographic
area or that have separate smaller organizations
within the umbrella group to cover different types
of products or market areas, for example, the
now-defunct Tecumseh Products Company was
organized divisionally- with a small engine division,
a compressor division, a parts division and divisions
for each geographic area to handle specific
needs
 The benefit of this structure is that need can be met
more rapidly and more specifically, as each division can
operate more or less independently for the other
divisions in the company. However a divisional
arrangement can also be cumbersome, as
communication is inhibited because employees in
different divisions are not working together. Divisional
structure is costly because of its size and scope. Small
businesses can use a divisional structure on a smaller
scale, having different offices in different parts of the
city, for example, or assigning different sales teams to
handle different geographic areas.
Matrix Structure of an Organization

 The third main type of organizational structure,

called the matrix structure, is a hybrid of divisional
and functional structure. Typically used in large
multinational companies, the matrix structure allows
for the benefits of functional and divisional structures
to exist in one organization. This can create power
struggles because most areas of the company will
have a dual management – a functional manager
and a product or divisional manager working at the
same level and covering some of the same
managerial territory
Organization Theories
and Application

Lesson 3
There are two main classification of
theories regarding organizational
design according to Robbins and
Coulter (2009): traditional and
modern. Traditional pertains to the
usual or old-fashioned ways, while
modern refers to contemporary or
new design.
Traditional organizational deisgn
theories include:
Simple
-This organization design few departments,
wide spans of control, or a big number of
subordinates directly reporting to the manager;
has a centralized authority figure and has very
little formulization of works usually used by the
companies that start out as entrepreneurial
ventures
Simple Organizational Design

Strengths Weaknesses
-Flexible -Risk that
-Fast decision-making overdependence with
ad result over-dependence on a
-Clear accountability single person
-No longer appropriate
as the company grows
Traditional organizational deisgn
theories include:

Functional
-This organizational design
groups together similar or
related specialties
Functional Organizational Design

Strengths Weaknesses
-cost-saving -managers have little
advantages knowledge of others
-management is units’functions
facilitated because
workers with similar tasks
are grouped together
Traditional organizational deisgn
theories include:
Divisional
-This organizational design is made up of
separate business divisions or units, where
the parent corporation. Act as overseer to
coordinate and control the different
divisions and provide financial and legal
support services.
Divisional Organizational Design

Strengths Weaknesses
-focused on results -possible duplication of
-managers are activities and resources
responsible for what -increased cost and
happens to their reduced efficiency
products and services
Modern Organizational design theories
include:
Team Design
-the entire organization is made up of
work groups or teams. It advantages
include the empowerment of team
members and it also has a disadvantage
including a clear chain of command and
great pressure on teams to perform
Modern Organizational design theories
include:
Matrix-Project Design
-It
refers to an organization design
where specialists from different
department work on projects that are
supervised by a project manager.
This design result in a double chain of
command wherein workers have two
managers; their functional area
manager and their project manager
who share authority over them.
Advantage: Specialists are involved in
the project
Disadvantage: Task and personality
conflicts
Project Design refers to an
organizational design where
employees continuously work on a
project.
Advantage: Flexible design ands fast
decision-making
Disadvantage: Complexity of assigning
people to projects and tasks and
personality conflicts
Boundary-Less Design
This is another modern organizational
design where the design is not defined or
limited by vertical, horizontal and externa
boundaries. In other words, there are no
hierarchical levels that separate
employees, no departmentalization and
no boundaries that separate the
organization from costumer, supplier and
other stakeholders.
 Delegation

Lesson 4
Delegation refers to assigning a new or
additional task to a subordinate; it may
also refer to getting work done through
others by giving them right to make
decisions and take actions. Elements in
delegation includes: authority or the right
to set officially or legally, responsibility of
the state of being answerable
legally/morally for the discharge of a
duty and accountability is to be liable to
be called to explain
Steps in delegation include:
1.Delegating the goal clearly. Managers must
clearly explain the task objective and the
work or duties someone else is expected to
do.
2.Selecting the person who will be given the
task. The selected subordinate must be
competent and must share the manager’s
task objectives.
3.Assigning of Responsibility. Managers must
explain that the responsibility assign to the
selected subordinate is an expectation for
him or her to perform the assigned task.
4. Asking the person assigned about his or her
planned approach to accomplish the tasks
objective. It is expected that the person chosen to
do the task already has a tentative plan of action
that maybe presented to the manager, to assure
him or her that the person assigned could achieve
the task objective.
5.Granting the assigned person the authority to
act. If the manager is satisfied with the tentative
plan of action presented, grating of the authority
to act immediately follows. Authority is a right to
act in ways needed to carry out the assigned
tasks.
6. Giving the assigned person enough time and
resources to do the task, while at the sometime
emphasizing hos or her accountability.
Accountability is the assigned person’s willingness
to complete the job, as agreed upon.
7. Checking the task accomplishment progress.
Following up and discussing the task
accomplishment process at regular intervals is
necessary.
8. Making sure that the task objective has been
achieved. The above steps of delegation were
given by Weihrich and Krontz (2005).
 Delegation
Advantages Disadvantages
-It prevents work overload among -It may cause laziness among
organization managers. organization managers
-It provides opportunities for employee -It may encourage too much
or subordinates assigned to do the dependence on others.
task to fully utilize their talents on the -It may cause lack of control over
job. priority management problems
-It leads to empowerment of - It may cause low self-confidence
employees or subordinates assigned among managers
to di the task, as it allows them
freedom to contribute ideas and to
perform their job in the best possible
way
-It increases job satisfaction among
the assigned employees or
subordinates, that mat lead to better
job performance.
Formal and Informal
Organization

Lesson 5
Formal Organizations have the
following function:
1. Accomplish goals the require cooperation or
collaboration among the formal groups in the
organization
2. Produce or bring about new and creative ideas and
solutions to company problems.
3. Coordinate interdepartmental activities.
4. Implement company rules/regulations and policies.
5. Orient/train new employees.
Informal Organizations’ Function
include the following:
1. Satisfy the members’ need for affiliation
2. Give the individual members a chance to develop
their self-esteem
3. Give individual members an opportunity to share
their ideas
4. Lessen individual members’ insecurities
5. Provide a mechanism to solve members’ personal
and interpersonal problems
Definition of terms:
Formal Organization
Refers to organizations formed by the company
owner or manager to help the firm accomplish its
goals; made up of formal groups (work groups/project
team/committee) similarly formed by company
authorities and achieve their objectives.
Informal Organization
Refers to organizations that exist because of
friendship or common interest; made up of informal
groups which exist for the members’ need for social
affiliation
Whether an organization is formal or informal is
determined by the kind of relationships that
prevail in each organization type. Formal
organization are characterized by hierarchical
reporting relationships among groups or
members. On the other hand. Informal groups
born out of the need for social affiliation,. Both
formal and informal organization may exist in the
same organization structure. Formal
organizations and informal organization both
have function and advantages that benefit the
organization and its members.
 Formal
Advantage
-working systematically
-established on and for the
organization objectives
-no duplication or
overlapping of work
-efficient coordination
among departments
-implementation of
command and professional
relationship
Disadvantage
-delay in feedback and
action due to the
established chain of
command
-ignores the psychological
and social need of
employees
-emphasis on work only and
overlook the human
relations, talent and
creativity of employees
 Informal
Advantage Disadvantage
-fast communication due to -more susceptible to rumor
the absence of standard mongering
operating procedures and -there is no systematic
protocol workflow in place
-gives importance to the -difficulty in implementing
psychological and social new rules and policies
needs of employees -more emphasis on the
-top managers can solicit individual interest of each
feedback directly from the employee rather that the
employees on new policies over all goal of the
and plans company