Chapter 4

The Organizing Function

 4.1 Meaning and concepts
Organizing is the process of identifying and grouping
tasks to be performed, assigning responsibilities and
delegating authority and establishing relationships for the
purpose of enabling workers to work most effectively
together in the accomplishments of objectives.

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 Steps in organizing
Step 1) Reviewing of objectives to be accomplished
Step 2) Determining tasks necessary to accomplish
objectives
Step 3) Grouping of activities according to their
similarities to form department/s
Step 4) Assigning work and delegating authorities
Step 5) Hierarchical relationship development

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 4.2 Classification of organization

A. Formal organization is the official organizational structure

created by management.
 It is organization formed purposefully to achieve well defined
and formal objectives.
B. Informal organization is the network of personnel and
social relation ships that arises spontaneously as people
associate with one another in a work environment.
 It is natural grouping of people in the work situation based on
their behavioral patterns, interests, beliefs, objective etc.

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 4.3 Organization Chart
Organization Chart- is graphic illustration of the
organization’s management hierarchy and departments and
their working relationships.

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Organizational chart remains useful because it provides different
important information regarding;
 Who reports to whom-, chain of command.
 Span of control- how many subordinates does a manager have?
 Channels of formal communication shown by solid lines that
connect each job(box)
 Bases of departmentalization- how organization is departmentalized
by function, customer, or product, geographical etc
 Activities in each position- The labels in boxes describe each
individual ‘s activities
 The hierarchy of decision making-where the decision maker for a
problem is located
 Authority relationships- solid connections between boxes illustrate
line authority, Zigzag lines show staff authority, and broken line
show functional authority
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 4.4 Departmentalization :Meaning and Bases

Departmentalization; is grouping of related activities in to

units.
 After reviewing the plans, usually the first step in the
organizing process is departmentalization.
Bases of Departmentalization
The major bases of departmentalization include: function,
Product, customer, process and territory.

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 Bases of Departmentalization

Functional departmentalization
Product Departmentalization
Customer Departmentalization
Territory (Geographic)
Departmentalization
Departmentalization by process
Matrix departmentalization

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 4.5 Span of management (span of control)

Span of control refers to the number of employees

reporting to a manager, or the number of subordinates a
manager directly supervises.
Wide and narrow spans of control
Based on the numbers of subordinates supervised by
managers, span of control can be classified in to wide
and narrow span of control.
Wide span of control:-span of control in which as many
as 10 or 15 people may report to the same person, results
in a flat organization structure.

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A narrow span of control:- span of control which result in a
tall organizational structure.  

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4.6 Authority and power and their sources

Authority: - is the formal and legitimate right of a manager to

make decisions, give orders, and allocate resources.
It is the right to command.
Source of authority-comes with the position, “
The person who occupies a position has his/her formal
authority as long as he or she remains in that position.
Types of authority
i. Line authority – defines the relationship between superior
and subordinates.
 It refers to make decisions and issue orders down through
the chain of command.
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 ii. Staff authority- is the authority to serve in an advisory
capacity.
managers who provide advice or technical assistance are
granted advisory(staff) authority.

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 Functional authority; is an authority which permits staff
mangers make decision on specific activities performed by
employees with in other departments.
It is the right of staff personnel to issue orders to line
personnel in established areas of responsibility.
Example: If the maintenance dep’t determines that a machine
is unsafe, the department may issue an order to line manger
not to use the machine.

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 Responsibility and Accountability
Responsibility is the obligation to do assigned tasks.
Accountability is answering for the result of one's
actions or omissions.
 It is the reckoning, wherein one answers for his or her
actions and accepts the consequences, good or bad.

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 Power and Its Sources
Power is ability to exert influence in the organization. OR
Power is the ability to exert influence in the organization
beyond authority, which is derived from position.
Power can be positional and personal.
Position power is derived from top management and is
delegated down the chain of command.
Personal power is derived from the follower based on the
individual behavior.
Note: A person does not need to be manager to have power.
Some administrative assistants of top mangers have
considerable power, but no authority.
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 Sources of Power
Reward
Power

Legitimate Coercive
Power Power

Enable managers to be
leaders & influence
subordinates to
achieve goals

Expert Referent
Power Power
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 Sources of power
(i) Legitimate or position power – The power possessed by a
manager and derived from the position in the formal
organization.
(ii) Reward power- The power that comes from the ability to
promise or grant rewards.
(iii)Coercive power – is the threat of sanctions. It includes the
ability to dismiss, assign undesirable work, or restriction of
movement.
(iv)Referent (charismatic) power – is the power that is based on
the kind of personality or charisma that an individual has and
how others perceive it.
(v). Expert Power- is power derived from an individual’s
20 knowledge and expertise.
4.7 Delegation, Centralization and Decentralization
Delegation is the process of assigning authority and creating
obligation to accomplish objectives.
It is the down ward transfer of formal authority from one person to
another
Process of Delegation
Step 1) Assignment of Tasks
Step 2) Delegation of Authority
Step 3) Creation of accountability
Step 4) Establishment of Control System
Delegation is an integral component of the organizing process. Since
a manager is responsible for the performance of such a large variety
of tasks, activities and functions that s/he can not perform them all
by him/herself.
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 Centralization and decentralization

Centralization is a philosophy of management that

focuses on systematical retaining of authority in the hand
of higher level managers. i.e. it is the degree to which
decision-making is concentrated in top management's
hands.
Decentralization is a philosophy of management that
focuses on systematical delegation of authority
throughout the organization to middle and lower level
managers. i.e. it is the degree to which decision-making
authority is pushed down the organization structure and
shared with many lower-level employees.
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If authority is decentralized:
-Greater number of decision will be made at lower level
-Important decisions are made at lower level, and
subordinates will refer less their superiors to make
decisions.
The reverse is true if authority is centralized.
4.8 Groups and committees
Group;-is a social unit consisting of two or more
interdependent, interactive individuals who are striving to
attain common goals.
Types of groups
 Formal
23 Informal

Formal groups are classified as follows
Task group/work group consists of people with
different skill for performance of a common task.
Command group consists of managers and their
employees formed due to authority and
responsibility relationship.
Mediating group formed to resolve conflict that
may arise between departments and individuals.
Policy making group:- established to formulate
operating policy.

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Informal groups are groups created spontaneously when members join
together voluntarily because of similar interest.

Committee is a group of members that represents functional areas

of expertise.
It is best example of formal group
The primary function of committee is to make or suggest decisions
on problems requiring integration of different departments. 
Types of committee
i. Ad hoc committees: - are formed for a particular purpose.
If the objectives are for which they are established have been met, they are
disbanded (dispersed) and they are temporary.
ii. Standing committee- are permanent in nature and they are not disbanded.
there is always enough work to justify their existence.

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 End of chapter 4

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