ORGANIZING

INTRODUCTION
 Management function that involves arranging and structuring work to accomplish the
organization’s goals
 Organization Structure - The formal arrangement of jobs within an organization. This structure,
which can be shown visually in an organizational chart, also serves many purposes.
 When managers create or change the structure, they’re engaged in organizational design, a
process that involves decisions about six key elements:
 Departmentalization
 Work Specialization
 Chain of command
 Span of Control
 Centralization & Decentralization
 Formalization
WORK SPECIALIZATION
 Dividing work responsibilities into separate job
tasks. Also known as division of labour.
 Makes efficient use of diverse skills that workers
have.

 At some point, the human diseconomies from

division of labor— boredom, fatigue, stress, low
productivity, poor quality, increased absenteeism,
and high turnover—exceed the economic
advantages
WORK SPECIALIZATION
 McDonald’s uses high work specialization to get its products made and delivered to customers
efficiently and quickly—that’s why it’s called “fast” food. One person takes orders others cook
and assemble the hamburgers, another works the fryer, another bags orders, and so forth.
 However many companies like Avery Dennison, Ford Australia, Hallmark, and American
Express use minimal work specialization and instead give employees a broad range of tasks to
do
JOB ROTATION
 Because of the efficiency of specialised jobs, companies are often reluctant to eliminate them.
 Consequently, job redesign efforts have focused on modifying jobs to keep the benefits of
specialised jobs, while reducing their obvious costs and disadvantages. Three methods – job
rotation, job enlargement and job enrichment – have been used to try to improve specialised
jobs.
 Periodically moving employees from one specialised job to another to give them more variety
and the opportunity to use different skills
 Retain the economic benefits of specialized work.
JOB ENLARGEMENT VS JOB
ENRICHMENT
 Job enlargement increases the number of different tasks that an employee performs within one
particular job.
 Employees with enlarged jobs are given several tasks to perform.
 For example, an enlarged ‘mirror attacher’ job might include attaching the mirror, checking to
see that the mirror’s power adjustment controls work and then cleaning the mirror’s surface.
 Once again, as with job rotation, the work is generally at the same level of skill, responsibility
and pay.
 Job enrichment is increasing the number of tasks and by giving employees the authority and
control to make meaningful decisions about their work
DEPARTMENTALIZATION -
FUNCTION
• Organises work and workers into separate
units responsible for particular business
functions or areas of expertise.
• The basic organising principle underlying
this kind of structure is ‘What job do you
do?
• A common functional structure might have
individuals organised into accounting,
sales, marketing, production and human
resources departments.
• If a new employee with marketing skills is
hired to work on marketing functions, they
will move into the marketing department.
FUNCTION
DEPARTMENTALIZATION
• Not all functionally departmentalized companies have similar
functions.
• Allows work to be done by specialists
• Clear career path for employees
• Lowers cost by reducing duplication
• Cross department coordination may be difficult
• Can lead to slower decision making as organization grows
DEPARTMENTALIZATION
 Especially attractive to large scale firms
 Plant can assign security or support personnel in this
manner.
 Used by government bodies to replicate and
provide services simultaneously.
 Often used in sale and production
 Finance is usually concentrated at the
headquarters.
TERRITORY
DEPARTMENTALIZATION
 Organises work and workers into separate units responsible for particular kinds of customers.
 The organising principle is ‘What kind of customers do you work with?’ For example, a
typical telecommunications company could be organised into departments that cater to
business customers, individual consumers and mobile broadband operations
 Duplication of effort
 Coordination difficulties
DEPARTMENTALIZATION – BY
CUSTOMER GROUP
 When each customer group is managed by one
department head
 Caters to the requirement of different groups
 Organises work and workers into separate units
responsible for particular kinds of customers.
 The organising principle is ‘What kind of
customers do you work with?’
 For example, a typical telecommunications
company could be organised into departments that
cater to business customers, individual consumers
and mobile broadband operations
DEPARTMENTALIZATION- BY
CUSTOMER GROUP
 Focuses on customer need.
 Specialize based on customer need
 Duplication of resources
 Coordination issues
DEPARTMENTALIZATION – BY
PRODUCT
 Organises work and employees into separate units responsible for producing particular
products or services.
 Permits top management to delegate to a division executive authority over the manufacturing,
sale, service and engineering functions relating to a particular product with profit
responsibility.

 Here, the organising principle is ‘What product or service do you work on?
DEPARTMENTALIZATION – BY
PRODUCT
 Allows managers and workers to specialize in one
area of expertise.
 Broad set of experiences related to entire product
line.
 Easier for top managers to assess work unit
performance
 Product Duplication Higher costs
 Coordination among departments
MATRIX
DEPARTMENTALIZATION
 Hybrid structure in which two or more forms of departmentalisation are used together.
 It is not simple to apply any one organising principle to matrix structure, although often an
organisation will move to matrix departmental structure if its work is on a series of separate
projects.
 The most common matrix combines the product and functional forms of departmentalisation,
but other forms may also be used.
 An example of an organisation working on projects which could benefit from matrix
departmentalisation would be a big construction and engineering company that could be
involved in different major projects at the same time: a skyscraper in Delhi, a bridge in
Kozhikode, a tunnel in Nepal.
 In those cases, functional experts could be moved into project teams, each responsible for its
single project and reporting to the project manager
MATRIX
DEPARTMENTALIZATION
 Most employees report to two bosses
 Cross functional interaction
 Significant Coordination is needed
 simple matrix a form of matrix
departmentalisation in which managers
in different parts of the matrix negotiate
conflicts and resources
 complex matrix a form of matrix
departmentalisation in which managers
in different parts of the matrix report to
matrix managers, who help them sort out
conflicts and problems
CHAIN OF COMMAND
 The chain of command is the line of authority extending from upper organizational levels to
lower levels, which clarifies who reports to whom.
 Managers need to consider it when organizing work because it helps employees with questions
such as “Who do I report to?” or “Who do I go to if I have a problem?”
 Authority - rights inherent in a managerial position to tell people what to do and to expect
them to do it. The early management writers distinguished between two forms of authority:
line authority and staff authority.
 Line authority entitles a manager to direct the work of an employee. It is the employer–
employee authority relationship that extends from the top of the organization to the lowest
echelon, according to the chain of command.
CHAIN OF COMMAND
 A manager with line authority has the right to direct the work of employees and to make
certain decisions without consulting anyone. As organizations get larger and more complex,
line managers find that they do not have the time, expertise, or resources to get their jobs done
effectively.
 In response, they create staff authority functions to support, assist, advise, and generally
reduce some of their informational burdens.
 For instance, a human resource management director who cannot effectively handle managing
all the activities the department needs creates a recruitment department, performance
management department, and compensation and rewards department, which are staff
functions.
RESPONSIBILITY & UNITY OF
COMMAND
 When managers use their authority to assign work to employees, those employees take on an
obligation to perform those assigned duties. This obligation or expectation to perform is
known as responsibility
 The unity of command principle states that a person should report to only one manager.
Without unity of command, conflicting demands from multiple bosses can occur.
 Times have changed
 Many employees in organizations where work involves around projects find themselves
reporting to more than one manager.
 Information Technology has enabled employees the means to communicate with anyone
without going through the chain of command.
SPAN OF CONTROL
 The number of employees a manager can efficiently and effectively manage
 Determining the span of control is important because, it determines the number of levels and
managers in an organization
 All other things being equal, the wider or larger the span, the more efficient the organization.
 However, at some point, wider spans may reduce effectiveness if employee performance
worsens because managers no longer have the time to lead effectively
SPAN OF CONTROL
 There is no magic number as such
 Many factors influence the number of employees a manager can efficiently and effectively
manage. These factors include the skills and abilities of the manager and the employees and
the characteristics of the work being done
 Apple CEO Tim Cook has 17 direct reports
 Other contingency variables that determine the appropriate span include similarity and
complexity of employee tasks; the physical proximity of subordinates; the degree to which
standardized procedures are in place; the sophistication of the organization’s information
system; the strength of the organization’s culture and the preferred style of the manager.
SPAN OF CONTROL
 Recent years trend towards larger span of control
 For instance, at one Nissan plant, 300 supervisors are responsible for 4,300 employees who
produce thousands of vehicles daily