CHAPTER 10:

Fundamentals
of organizing
 The four fundamentals of organizing
1. Ensure work activities are designed to be completed in the best
way to accomplish the overall work of the organization
This component involves understanding the overall mission and strategy of the
organization, and breaking it down into smaller steps and specific activities that,
taken together, can help accomplish the overall work of the organization. Like
all 4 fundamentals, it includes both formal and informal elements.

FBL TBL SET

Standardization = Enlightened standardization = a Experimentation =
developing uniform variation of FBL standardization members’ ongoing
practices for that embraces SET experimentation voluntary
organizational when it profitably reduces negative implementation of
members to follow in socio-ecological externalities new-and-possibly-
doing their jobs better ways of
performing tasks on a
trial basis

Note that each of the three approaches to management has some emphasis on
both standardization and experimentation; the key difference is in their relative
emphasis on each.
 The four fundamentals of organizing
2. Ensure that tasks assigned to members are the ones required to
achieve the overall work of the organization
This component involves taking all the specific activities that need to be
performed, and assigning them to specific organization members to make sure
the activities are completed .
FBL TBL SET
Specialization = Enlightened specialization = a Sensitization = members
selecting sub-sets variation of FBL specialization actively being aware of how
of standardized that embraces SET sensitization in their work fits with co-
organizational instances where it profitably workers and others and
tasks and reduces negative socio-ecological improving practices via
allocating them to externalities experi-ments that take
separate jobs advantage of opportuni-ties
or address needs

Note that each of the three approaches to management has some emphasis on
both specialization and sensitization; the key difference is in their relative
emphasis on each.
 The four fundamentals of organizing
3. Ensure that there is orderly deference among members.
This component involves ensuring that members know who makes which
decisions, who assigns tasks, and who should be listened to in which situation.

FBL TBL SET

Centralization = the Enlightened centralization = a Dignification =
extent to which variation of FBL centralization treating everyone with
decision-making that embraces SET dignification dignity and respect in
authority resides atop on a piecemeal basis when it community.
the organization’s profitably reduces negative socio-
hierarchy ecological externalities

Note that each of the three approaches to management has some emphasis on
both centralization and dignification; the key difference is in their relative
emphasis on each.
 The four fundamentals of organizing
4. Ensure that members work together harmoniously.
This component pulls everything together, ensuring that the different pieces of
the organizational puzzle are working harmoniously

FBL TBL SET

Departmentalization = Enlightened
how members and departmentalization = a
resources are grouped variation of FBL
together to achieve the departmentalization that
work of the larger embraces SET participation
organization when it profitably reduces
negative socio-ecological
externalities.
Participation = mutual
discernment and giving
stakeholders a voice in
how the organization is
managed and how jobs
are performed

Note that each of the three approaches to management has some emphasis on
both departmentalization and participation; the key difference is in their
relative emphasis on each.
 The four fundamentals of organizing
Four types of departmental structures
 The four fundamentals of organizing
Four types of departmental structures
A divisional structure is evident when members are placed together based on
them working as a subunit that provides a specific kind of product or service,
serves similar customers, or operates in the same geographic region.

A functional structure places members in the same department based on their

having similar technical skills and using similar resources to perform their
tasks.

A hybrid structure seeks to get the advantages of the functional structure (by
achieving internal efficiencies and developing internal expertise in some
areas) and the advantages of the divisional structure (by being able to adapt to
changes in a dynamic external environment).

Matrix departmentalization occurs when an organization has both divisional

and functional departments, and members are simultaneously assigned to
both.
 Entrepreneurial implications
Fundamental #1: Experimentation > standardization
Rather than develop specific standards, entrepreneurs often use the organization’s
overarching goals to: (a) serve as general guidelines for members’ decision-
making, (b) facilitate coordinated decision-making, & (c) motivate members by
showing how their work matters.

Fundamental #2: Sensitization > specialization

Entrepreneurs value workers who are sensitive to understanding (and improving)
the big picture, and who are generalists rather that specialists.
Fundamental #3: Dignification > centralization
Entrepreneurs tend to have very strong ideas and tend to micromanage everything,
but they often learn the merit in focusing their efforts on those tasks that are the
most crucial for the success of the start-up, and delegating authority to others to
complete less essential tasks.
Fundamental #4: Participation > departmentalization
Participation is easier to implement and more appropriate for start-up organizations
who are engaging in ongoing learning.
Taken together, weekly staff meetings go a long way in helping
entrepreneurs to manage the four fundamentals of organizing.
QUESTIONS FOR REFLECTION AND DISCUSSION
1. Describe the four fundamental components of organizing. What are
the general differences between the three management approaches
(FBL, TBL, and SET) in terms of how the organizing function is
carried out?

2. Do you think virtual organizations will become more prevalent

during your career? Why, or why not?

3. If you treat others with dignity, will that change (increase or

decrease) the amount of power that you have? Is the effect of treating
others with dignity the same for all people, regardless of how much
power they have to start with? Explain.
QUESTIONS FOR REFLECTION AND DISCUSSION
4. Review the Semco case at the start of the chapter. Should employees
be trusted to set their own salaries, choose their own hours, and hire
their own managers? Should university students be trusted to assign
their own grades? In your view, what sort of information should
instructors provide, and what should students provide, to set up a fair
way for students to self-assign marks?

5. Ricardo Semler writes: “I’m not preaching anti-materialism. We do,

however, desperately need a better understanding of the purpose of
work, and to organize the workplace and the workweek accordingly.
Without it, the purpose of work degenerates to empty materialism on
one side and knee-jerk profiteering on the other.” Do you agree with
Semler’s observations? Explain what you understand to be the purpose
of work. How might you as a manager best structure the workplace
based on your understanding? How does you analysis related to Figure
5.1?
QUESTIONS FOR REFLECTION AND DISCUSSION
6. Think of an organization you might want to start. Describe how you
would manage each of the four fundamentals of organization,
describing your approach to: 1) standardization and experimentation; 2)
specialization and sensitization; 3) centralization and dignification, and
4) departmentalization and participation. Why do you think your
choices are the best ones? What effect will they have on the
organization?

7. Imagine that you just started the organization as described in your

answer to question #6. What sorts of changes in how you manage the
four fundamentals of organizing would you expect to see after 5 years
of operations? What factors would affect the changes? Explain your
answer.