CHAPTER

ORGANIZING
4
6–1
 What Is Organizing?
 Organizing
– Arranging the activities of the enterprise in such a
way that they systematically contribute to the
enterprise’s goals.

Must decide;

 How to divide the work

 Who does what?
 Who reports to whom?
 How to coord. organs activities..
 Organizing
 Organizing is the process of grouping activities
necessary to attain common objectives and the
assignment of each grouping to a manager, who has
the authority necessary to supervise the people
performing the activities.
 Organization as a group of persons: a group of
people contributing their efforts towards certain goal.
 Organization as a structure of relationships: sets up
the scope of activities of the enterprise by laying down
the structure of relationships.
 Cont…
 Organization as a function of management: one of the
basic functions of management. It involves determination
and provision of various resources for the achievement of
predetermined goal.
 Organization as a process: Organization is the process of
establishing relationship among the members of the
organization., consists of departmentalization, linking of
departments, defining authority and responsibility and
prescribing authority relationships.
The organizing process involves
 Determination of activities
 Grouping of activities
 Provide the necessary physical means
 Allotment of duties to specified persons
 Delegation of authority
 Defining relationship
 Co-ordination of activities
 Formal Vs Informal Organization
 Formal organization is an organization that is deliberately
and rationally designed and approved by management
through organizing process to achieve organizational goals/
objectives.
In general Formal Organization is:
 Consciously designed,
 Based on delegated authority
 Organizational chart is drawn
 Deliberately impersonal Positions in an organization are
not personal properties. They are always open to someone
who fit the position.
 Informal
 Informal organization is an organization which
establishes the relationship on the basis of the likes and
dislikes of officers without considering the rules,
regulations and procedures & structure of the formal
organization. They always exist in the formal organization;
nothing can destroy them; they cannot be avoided. They are
natural grouping of people in the work situation based on
their behavioral patterns; interests; beliefs; objectives; etc..
Reason for IO
 Mutual benefits
 Friendship
 The need to fulfill social needs
 Physical work condition/proximity
 Administrative practice
Purpose of Organization
 To facilitate pattern of communication
 To allocate authority and responsibility
 To locate decision centers
 To create proper balance
 To stimulate creativity
 To encourage growth
 To make use of technological improvements
 Departmentalization
Involves the grouping of common activities or
similar activities of a business under a single
person's control for the purpose of facilitating
smooth administration at all levels.
Bases or Patterns of Departmentalization
1. By functions
2. By products or service
3. By regions (area or location) or territory
4. By customers & by Process
 Span of Management

 Indicates the number of subordinates (people) who

report directly to a given manager (person)
 Narrow Span: the number of subordinates under a
given supervisor is very few.
– The organizational structure is tall
– There are many managerial levels
– The number of employees supervised will be very
few.
 Advantages of Narrow Span of Control
– Close supervision of employees of work is possible
– Close control and coordination is possible.
– Close contact between superiors and subordinates
Disadvantages of Narrow Span Control
– Superiors tend to get too involved in
subordinates’ work.
– There are many levels of management, and
therefore the cost is high.
– The distance between the lowest level and the top
level is long
– Distorted communication
 Wide Span of control
 the numbers of subordinates under a given supervisor are many
– The organizational structure is flat
– There are few managerial levels
– There are few middle level managers.
 Advantages of Wide Span of Supervision
– Superiors are forced to delegate authority.
– Clear policies are required,
– Subordinates are carefully selected.
– Expedites communication between managers &
subordinates
 Disadvantages of Wide Span of Supervision.
– Overload
– danger of losing control on the part of superiors
 Factors affecting organizational structure

 Organizational Factors
– Complexity of Jobs
– Clarity of Plans
 Subordinate related factors
– Ability and competence of Subordinates
– Motivation and Commitment
– Need for Autonomy
 Superior related factors
– Quality of a Manager
– Clarity of Delegation of Authority
– Manager’s personality and Style
Authority and Responsibility
 It is the power derived from the rights that comes with
position. Authority represents legitimate exercise of power
in the organization structure Responsibility is considered to
be the duty to perform certain assigned tasks in a
satisfactory manner.
Types of authority
1. Line authority-relationship between superior and
subordinate
2. Staff authority-is advisory in nature, Managers whose role is
to provide advice or technical assistance are granted
advisory authority
3. Functional authority-The right to control activities of other
departments ,
 Power
Power is the ability to exert influence. Authority on the other
side only holds functional with relationship within
organizations
The Sources of Power
 Reward Power: is based on one person having the ability
to reward another person
 Coercive Power: based on the ability to punish another
individual for not meeting requirements.
 Legitimate Power: the power which is derived from a
person’s official position in an organization.
 Expert Power: the belief that the influencer has some
relevant expertise or special knowledge that the person
being influenced.
 Referent Power: based on the desire of the influenced to
be like or identify with the influencer.
 Delegation of Authority
 Delegation of authority is the act of entrusting formal
authority and assigning responsibility to a subordinate
for completion of specific activities
 Importance of Delegation of Authority
– Delegation allows prompt decisions
– It gives executives more time on strategic planning
and policy making
– It can be a training ground for executive ability
– It can result in better decisions
– It can improve motivation
 Delegation of Authority
Factors Determining Delegation of Authority
 Personal Attitude of Superiors
– Receptiveness
– Willingness to Let Decision Making Authority Go
– Autocratic Attitude
– Perfectionism
– Willingness to Trust Subordinates/Confidence in
Subordinates
 Attitudes of Subordinates
– Love of spoon-feeding
– Fear of criticism
– Lack of information or resource
– Lack of self-confidence.
– Too much workload, Inadequate incentives
– Fear of failure
Delegation of Authority
The Steps of delegation process
A. Decide which task can be delegated and
the expected results
B. Decide who should get the assignment
C. Create an obligation (responsibility)
D. Delegate the authority
E. Establish a feedback system
Centralization and Decentralization
 Centralization is the concentration or systematic
reservation of decision making power at the top of the
organization.
 Decentralization implies the placing of greater power in
the hands of persons away from the center.
Determinants
 The external environment in which the firm operates
 The nature of the decision itself
 The abilities of low-level managers
 The organization’s tradition of management
 Power and authority
 Authority is the power that has been legitimized by the organization. Where as
Power is ability to exert influence on others, or the ability to do something.
 The source of power can be competency, expertise, position, knowledge, skills,
charisma and ability to reward and punish.
 Power without authority may be abuse and authority without power is totally
meaningless.

Principles of Organizing
Objectives Responsibility
Specialization Authority
Span of control Efficiency
Exception Simplicity
Scalar principle/ chain Flexibility
of command. Balance.
Unity of command: Unity of direction
Delegation Personal abilities
Individual Assignment topics
1. Policy vs. Strategy 1. Divisor of work & specialization
2. Matrix departmentalization
2. Project vs. Program
3. Motivation Vs Performance
3. Goals vs Objectives
4. Financial management
4. Management vs Administration 5. Operation Management
5. Vision vs Mission 6. Marketing Management
6. Leadership Vs management 7. Human resource management
7. Sources of power 8. Types of Leadership
8. Authority vs responsibility 9. Communication