Chapter 4

Fundamentals of
Organizing
Organizing

The management function of setting up the group,

allocating resources, and assigning work to achieve
goals.
Supervisors organize the work within their own
department and may help organize work among
departments within the organization.
Organizations, except for very small ones, are
structured into departments by
work groups, product lines,
geographic location,
customer groups, or
the goods or services being produced.
Takeaway 1: Organizing as a Management Function

Organizing as a management
function
Organizing
Arranges people and resources to work together
to accomplish a goal /Create Structure
Organizing viewed in relationship with the other
management functions
Organization structure

 The system of tasks, reporting relationships, and communication

linkages
PRINCIPLES OF
ORGANIZATION
The four principles of organization are:
Parity principle
Unity of command
Chain of command
Span of control
Parity Principle
The principle that personnel who are given
responsibility must also be given enough authority to
carry out that responsibility.
Unequal parity will result in ineffective supervision
Unity of Command
The principle that each employee should have only
one supervisor.
When more than one person makes requests using the
same time frame, employees are unable to determine
what commands to follow.
Chain of Command
The flow of authority in an organization from one
level of management to the next.
Similar to unity of command in that each person
communicates with the person above or below without
skipping a link in the chain.
Skipping a link going up the chain is referred to as going
over someone’s head.
Span of Control
The number of people the manager supervises.
The greater the number, the greater the span of control
Delegating
Giving another person the authority and responsibility
to carry out a task.

Since the supervisor cannot accomplish all of the

department’s work, others must be assigned duties with
the authority and responsibility to accomplish the task
Empowerment
Delegation of broad decision-making authority and
responsibility.
Delegating Process
Decide what work to delegate
Assign the work
Create an obligation
Grant authority
Follow-up
 ORGANIZATIONAL CHART
Takeaway 1: Organizing as a Management Function
An organization chart is a diagram describing
reporting relationships and the formal arrangement
of work positions within an organization. It
includes:
Takeaway 1: Organizing as a Management Function
Informal structures

The set of unofficial relationships between

organization members
Social network analysis
Identifies informal structures and social
relationships in the organization
 Study Question 1: What is organizing as a
management function?

Potential advantages of informal structures:

 Helping people accomplish their work

 Overcoming limits of formal structure
 Gaining access to interpersonal networks
 Informal learning
Takeaway 1: Organizing as a Management Function
 Takeaway 2: Traditional Organization Structures

 Organization structures

Departmentalization
 Groups people with and jobs into work units or formal teams
 These formal teams are linked to create three major types of
traditional organizational structures
 Takeaway 2: Traditional Organization Structures

Functional structures
People with similar skills and performing similar tasks are
grouped together into formal work units
Members work in their functional areas of expertise
Are not limited to businesses
Work well for small organizations producing few products
or services
Functional structures in a business, branch bank, and community
hospital
 Takeaway 2: Traditional Organization Structures

Potential advantages of functional structures:

Economies of scale
Task assignments consistent with expertise and training
High-quality technical problem solving
In-depth training and skill development
Clear career paths within functions
Takeaway 2: Traditional Organization Structures
 Takeaway 2: Traditional Organization Structures

Divisional structures

Group together people who work on the same product or

process, serve similar customers, and/or are located in the
same area or geographical region
Common in complex organizations
Avoid problems associated with functional structures
Divisional structures based on product, geography, customer,
and process
 Takeaway 2: Traditional Organization Structures

Potential advantages of divisional structures:

More flexibility in responding to environmental changes

Improved coordination
Clear points of responsibility
Expertise focused on specific customers, products, and
regions
Greater ease in restructuring
Takeaway 2: Traditional Organization Structures
 Takeaway 2: Traditional Organization Structures

Matrix structure
Combines functional and divisional structures to gain
advantages and minimize disadvantages of each
Used in:
Matrix structure in a small, multi-project business firm
 Takeaway 2: Traditional Organization Structures

Potential advantages of matrix structures:

Better cooperation across functions
Improved decision making
Increased flexibility in restructuring
Better customer service
Better performance accountability
Improved strategic management
Takeaway 2: Traditional Organization Structures
 Takeaway 3: Horizontal Organization Structures

Team structures
Extensively use permanent and temporary teams to solve
problems, complete special projects, and accomplish day-
to-day tasks
Often use cross-functional teams composed of members
from different functional departments
Project teams are convened for a specific task or project
and disbanded once completed
 How a team structure uses cross-functional teams for improved
lateral relations
 Takeaway 3: Horizontal Organization Structures

Potential advantages of team structures:

Eliminates difficulties with communication and decision
making
Eliminates barriers between operating departments
Improved morale
Greater sense of involvement and identification
Increased enthusiasm for work
Improved quality and speed of decision making
Takeaway 3: Horizontal Organization Structures
 Takeaway 3: Horizontal Organization Structures

Network structures
Uses information technologies to link with networks of
outside suppliers and service contractors
Own only core components and use strategic
alliances or outsourcing to provide other components
A network structure for a Web-based retail business
 Takeaway 3: Horizontal Organization Structures

Potential advantages of network structures:

Firms can operate with fewer full-time employees and less
complex internal systems
Reduced overhead costs and increased operating efficiency
Permits operations across great distances
Takeaway 3: Horizontal Organization Structures
 Takeaway 3: Horizontal Organization Structures

Boundaryless organizations
Eliminate internal boundaries among subsystems and
external boundaries with the external environment
A combination of team and
network structures, with the
addition of “temporariness”
 Takeaway 3: Horizontal Organization Structures

Boundaryless organizations
Key requirements:
 Absence of hierarchy
 Empowerment of team members
 Technology utilization
 Acceptance of
impermanence
 Takeaway 3: Horizontal Organization Structures

Boundaryless organizations
Encourage creativity, quality, timeliness, flexibility, and
efficiency
Knowledge sharing is both a goal and essential component
 Takeaway 3: Horizontal Organization Structures

Virtual organization
A special form of boundaryless organization
Operates in a shifting network of external alliances that are
engaged as needed,
using IT and the Internet
The boundaryless organization eliminates internal and
external barriers
 Takeaway 4: Organizational Designs

ORGANIZATIONAL DESIGN

Process of creating structures that accomplish mission and

objectives
A problem-solving activity that should be approached from
a contingency perspective
 Takeaway 4: Organizational Designs

Bureaucracy
A form of organization based on logic, order, and the
legitimate use of formal authority
Bureaucratic designs feature …
 Clear-cut division of labor
 Strict hierarchy of authority
 Formal rules and procedures
 Promotion based on competency
 Takeaway 4: Organizational Designs

Contingency perspective on bureaucracy asks the

questions:
When is a bureaucratic form a good choice for an
organization?
What alternatives exist when it is not a good choice?
 Takeaway 4: Organizational Designs

Environment determines the most appropriate design

Mechanistic designs work in a stable environment

Organic designs work in a rapidly changing and uncertain
environment
 Adaptive organizations operate with a minimum of bureaucratic
feature and encourage worker empowerment and teamwork
Takeaway 4: Organizational Designs
A continuum of organizational design alternatives: from
bureaucratic to adaptive organizations
 Takeaway 4: Organizational Designs

CONTEMPORARY ORGANIZING TRENDS INCLUDE:

Fewer levels of management

 Shorter chains of command
 Less unity of command
Wider spans of control
More delegation and empowerment
Decentralization with centralization
Reduced use of staff
Takeaway 4: Organizational Designs
Takeaway 4: Organizational Designs
Takeaway 4: Organizational Designs
Takeaway 4: Organizational Designs
 Takeaway 4: Organizational Designs

More delegation and empowerment

Delegation is the process distributing and entrusting work
to other persons
The manager assigns responsibility, grants authority to act,
and creates accountability
Authority should be commensurate with responsibility
 Takeaway 4: Organizational Designs

Decentralization with centralization

Takeaway 4: Organizational Designs
Takeaway 4: Organizational Designs