CHAPTER 8

ORGANISING
Chapter content
• Introduction
• The importance of organising
• The fundamentals of organising
• The http://smallbusiness.chron.com/org
informal organisation
anization-skills-important-285.html
• Factors that influence organisational
structure
• Summary
 Why Organisational skills are
important in a small business
• http://smallbusiness.chron.com/organiza
tion-skills-important-285.html
 Introduction
• Organising is the Second component of management process
• Management needs to develop mechanisms to implement the
strategy
• Organising is the process of delegating and co-ordinating
tasks, activities and resources in order to achieve
organisational objectives
• Most important is the grouping of staff and coordinating of
staff and their activities
• Organising leads to organisational structure design
o Formal tasks are assigned to individuals and departments

o Formal reporting relationships established – lines of

authority and responsibility are shown

o Design of systems to ensure effective co-ordination of

employees across all departments

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The importance of organising 225
• Organising entails a detailed analysis of work to be
done and resources to be used to accomplish the
aims of the business.
• Organising divides the total workload into activities
that can be done by a group or individual
• Organisation promotes the productive deployment
and utilisation of resources
• Activities are grouped together rationally in
specialised departments
• The development of the organisational structure co-
ordinates the activities of the whole business into a
complete, uniform, harmonious structure
 The fundamentals of organising
227
• Provides detailed analysis of work to be done and
resources to be used to accomplish goals of
business. Establish systems
• Establish Duties, procedures, responsibilities,
methods and resources used
• Divides the total workload into activities that can
comfortably be performed by an individual or a
group. If done well improves productivity
• Promotes productive deployment and utilisation of
resources
 THE FUNDAMENTAL STEPS IN
ORGANISING 227
1. DESIGNING JOBS
2. GROUPING JOBS
3. ESTABLISHING REPORTING
RELATIONSHIPS
4. ESTABLISHING AUTHORITY
RELATIONSHIPS
5. COORDINATING ACTIVITIES
 1. Designing jobs 227
• Job Design -Determination of an employee’s
work-related responsibilities
• A departure point is determining the level of
specialisation within the organisation
• Job specification explains what must be done
and sets the expected performance standards
• Specialisation is the way in which a task is broken
up into smaller units to take advantage of
specialised knowledge or skills to improve
productivity
• Breaking a business down too far can have
negative consequences
The benefits and limitations of
specialisation 229
Alternatives to counter boredom
and dissatisfaction of
specialisation are …….
 Page 228
• Job Rotation – systematically move employees
from one job to another. Often used as a training
device
• Job Enlargement – Increase the number of
tasks that a worker performs. Training costs
increase and unions argue for a pay increase.
• Job Enrichment – Increase number of tasks and
the amount of control the employee has.
Delegation of authority
• Work Teams – allow the group to design the
work system it will use to perform the required
tasks
2. GROUPING JOBS
Various organisational structures may be
developed through departmentalisation
Common bases for Departmentalisation include the following :-

1.Functional eg marketing, finance

2.Product departmentalisation eg Clothes and food

3.Locational eg EC, KZN, Gauteng

4.Customer eg TV industry, airline industry

5.The Matrix Organisation – combination of all

Functional departmentalisation 229
Product departmentalisation 229
Location departmentalisation 230
Customer departmentalisation 230
Matrix organisational structure 230
 DESIGN AN ORGANISATIONAL
STRUCTURE TASK
• The Company is small
• Has 4 geographical areas – WC,EC, Gauteng and
KZN
• The company has 2 product line – Clothes and Food –
both upmarket lines
• They do not manufacture – they distribute only
• Get into groups and design a simple structure for this
company
• You have 20 minutes to do this and then please elect
one person to come and present the structure you
have chosen and reasons why you have done so
• SECOND SESSION
• https://quizlet.com/125596494/organisati
on-and-management-the-four-functions-
of-management-flash-cards/

• https://quizlet.com/170285678/organisati
on-and-management-flash-cards/
 ESTABLISHING REPORTING
RELATIONSHIPS 232
• Establish Reporting Lines - Who will report to who ?
• CHAIN OF COMMAND – a clear and distinct line of
authority between positions
• Unity of command – only report to one person
• Scalar principle – an unbroken line of authority from
top to bottom of the organisation
• SPAN OF MANAGEMENT – how many people report
to one manager. Narrow or wide
 SPAN OF MANAGEMENT 234
• Develop clear
and precise
reporting lines
• Establish the
chain of
command
• Determine the
span of
management
• Narrow or wide
 SPAN OF MANAGEMENT 234

• Narrow span – a few subordinates per

manager. Tall structure.
Managers underutilised / excessive
control over staff
• Wide span – many subordinates per
manager . Flat structure
Difficult to co-ordinate and control so
many staff .
 Establishing authority
relationships 235
• Assignment of tasks to sections and members of staff
also entails the assignment of responsibility and authority
• Responsibility – the duty to perform the task or activity
assigned
• Authority – right to command or give orders – this is
FORMAL authority.
 Formal authority is vested in organisation not people
 Formal authority is accepted by subordinates
 Formal authority flows down the vertical line of the
organisation
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Responsibility by Jeff Muir Thats Easy Learning.mp4
 Establishing authority
relationships 235
o Line authority – delegated down through
the line of command eg The MD has line
authority over the financial, HR and
Marketing managers

o Staff authority – indirect and

supplementary eg legal advisor and
market research. Their source of authority
is their specialist knowledge in a particular
field
Line and staff authority in the
organisational structure 236
 ACCOUNTABILITY/DELEGATION

• The mechanism whereby authority and

responsibility are brought into alignment
• People with authority and responsibility have
to report back and justify actions to those
above them in the chain of command
• Delegation – the process used by managers
to transfer authority and responsibility to
positions below them. The manager STILL
remains accountable
• ..\VIDEO DOWNLOADS\How To Teach
Accountability & Responsibility by Jeff
Muir Thats Easy Learning.mp4
Decentralisation/centralisation
• Decentralisation - Delegating power
and authority throughout the
organisation to middle and lower level
managers.
• Centralisation – retaining power and
authority in the hands of higher level
managers.
 Coordinating activities

• Process of linking the activities of the

various departments n the organisation into
a single integrated iunit once
departmentalisation done
• Primary reason is that departments and
groups within a business are interdependent
and require each other to perform their
activities
• Timing is necessary because various smaller
tasks have to be scheduled to mesh with one
another
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Behavior Movie 2_ Gossip and
Grapevine Communication.mp4
• ..\VIDEO DOWNLOADS\Richard West
Build the organisation around informal
processes, networks and
relationships.mp4
 Factors that influence organisational
structure – environmental 237
• There is no best structure, every business is different.
• One of the most important factors affecting the
structure is the environment in which a business
operates, types:
o Stable environment – functional structure suitable
as there is little in the way of innovation
o Turbulent environment – change is the norm.
product departmentalisation – speeds up decision-
making eg pharmaceuticals
o Technologically dominated environment –
adaptable structure needed. Managers at more
levels and more levels of management because
more specialisation needed.
• The relationship between strategy and structure –
structure must follow strategy. Strategy provides direct input
into the design of the organisational structure.
• The size of the business – An increase in the size of the
business = increase in departments, greater specialisation and
more levels of management.
• Staff employed by the business – competence of staff

• The organisational culture – the beliefs and values shared

by people in the business. A formal or informal culture will
determine the structure.
• ..\VIDEO DOWNLOADS\Richard West Build the organisation
around informal processes, networks and relationships.mp4
 Revision and Key Terms
• Page 241/242
Summary
• Development of a structure of framework for
accomplishment of goals
• Resources allocated to individuals and
departments to make it happen
• Division of labour must be coordinated
• Lead in setting in motion activities involved in
planning, organising and control