Topic 5

Organising
5.0 Organising
After studying this topic, you should be able to :
1. Define the concept of organising;
2. Understand the elements of organisational structure;
3. Differentiate between Mechanistic and Organic structure;
4. Explain the bureaucratic structure.
5.1 Definition of Organising
1. The way work is arranged and allocated among members of the organization, so that
the goals of the organization can be effectively achieved.

2. Process assuring that there is/are physical and human resources to carry out the
plan/s and attain organization goal/s.

• It involves :
• Delegating activities- All the activities which have to be performed in a concern have to be
identified first. For example, preparation of accounts, making sales, record keeping, quality
control, inventory control, etc. All these activities have to be grouped and classified into
units.
• Dividing work specifically- In this step, the manager tries to combine and group similar and
related activities into units or departments. This organization of dividing the whole concern
into independent units and departments is called departmentation.
• Clarifying authority between individual and group- the manager likes to classify the powers
and its extent to the managers. This activity of giving a rank in order to the managerial
positions is called hierarchy. The top management is into formulation of policies, the middle
level management into departmental supervision and lower level management into
supervision of foremen.
• Combining group of activities into a logical sub division or department.- Relationships are
established among various groups to enable smooth interaction toward the achievment of
the organizational goal.
 5.2 The importance of Organising
• To improve the skill of organization members as they carry out specialized activities- Organizational
structure is a network of relationships in which the work is divided into units and departments. This
division of work is helping in bringing specialization in various activities of concern.

• To assure the use of organization resources efficiently- The organization structure is helpful in
defining the jobs positions. The roles to be performed by different managers are clarified.
Specialization is achieved through division of work. This all leads to efficient and effective
administration

• To avoid duplication of work to minimize the cost- putting right men on right job which can be done
by selecting people for various departments according to their qualifications, skill and experience.

• To encourage cooperation among organization members because everybody as his/her own roles to
attain the organization goals- Organization is a means of creating co-ordination among different
departments of the enterprise. It creates clear cut relationships among positions and ensure mutual
co-operation among individuals
 5.3 The Concept of Organisational
Structure
• The function of organizing begins after planning has been accomplished.
• Out of organizing, emerges an organization structure that shows the flow of interactions within
the organization :
• who decides what?
• who report whom?
• who responds?
• who performs what work?
• This organization structure will specify its division of work activities and shows how different
functions of activities are linked and also shows the level of specialization of work activities.
• It will also indicate the organization’s hierarchy and authority structure and shows its reporting
structure.
• There are SIX (6) key elements engaged when managers change the structure in
organizations as work specialization, departmentalization, chain of command. Span of
control, centralization and decentralization and formalization.
5.3 The Concept of Organisational Structure
1. Work specialisation
Defined as dividing work activities into separate job tasks. Individual employees
specialise in doing part of an activity rather than entire activity in order to increase
work output. Another term for work specialisation is division of work.

Job Design : It specifies the set of tasks an activities that are grouped together to define
a particular job.
• Approaches to Job Design including job enlargement, job enrichment and job
rotation.
a. Job Enlargement
• Programs designed to broaden job scope.
• Job scope refers to the number of different activities
required in a job and the frequency with which each activity
is performed.
• While job enlargement programs have typically been
considered as a means of enriching jobs, sometimes
reducing job scope has a positive impact on productivity and
job satisfaction.
b. Job Depth and Job Enrichment
• Job depth refers to the degree of control given to a job
holder to perform their job.
• Closes the gap between planning, doing and controlling a
particular set of activities.
• Jobs that have high job depth typically rate more favorably
on the core job dimensions than jobs with low job design.
• Job enrichment can be an effective means of motivating
employees and improving job satisfaction.
c. Job Rotation
• Assigning individuals to a variety of job positions.
• Employees rotate through a number of job
positions that are at approximately the same level
and have similar skill requirements.
• While job rotation has proven particularly
beneficial in manufacturing settings, it can also be
used effectively in service organizations.
2. Departmentalization
• Is the process of dividing the organization into various
departments or sub-units

Functional Types Matrix

Structure Structure
of
departmentalization

Product
Structure Geographic
Structure

Divisional
Structure
i. Product Structure

- Involves grouping activities and functions by product of an organization

ii. Divisional Structure

- Required if the products need their own marketing

- Responsible for only own division’s marketing

iii. Functional Structure

- Everyone engaged in one functional activity such as marketing, finance etc.

(is grouped into one unit).
- Involves effort to identify main function to be carried out to attain the organizational
goals.

iv. Matrix Structure

-Combination of the elements of product and functional, in the form of ‘ad-hoc’ or temporary.
-Also referred as ‘project organization management’
-Each employee reports to both functional/ division manager and to a project /group manager.

v. Geographic Structure
-Based on organization’s geographical location.
-It is commonly found in sales or manufacturing operations.
i. Product / Market Organization
• Most larger multiproduct companies are organized according to a product or a market
organization structure.

• Example : Can follow one or the 3 major patterns:

i. Division by products
• Each department is responsible for a product or related family of product

PRESIDENT

GM VP VP VP
Proprietary Marketing Production Finance
Products

GM VP GM Personal
Pharmaceuti- R&D Care
cal Products Products

 Each General Manager – in charge of major category of products.

 Vice presidents of functional areas provide supporting services to General Manager.
ii. Division by geography

 Brings together in one department; all activities performed in the

region when the unit conducts its business.

PRESIDENT

VP VP VP VP
Human Marketing Production Finance
Resource

VP VP Latin VP Europe,
North America America & Africa &
Far East Middle East

 Each area V.P – in charge of company’s business in one geographic

area.
 Advantages Disadvantages

• Suited to fast change. • Fosters politics in resource

allocation.
• Allows for high product visibility.
• Does not foster coordination of
• Allows full time concentration on activities among divisions.
task.
• Encourages neglect of long term
• Clearly defines responsibilities. priorities.

• Permits parallel processing of • Permits in –depth competencies to

parallel tasks. decline.

• Facilities the training of general • Create conflicts between divisional

managers. tasks and corporate priorities.

• Communication problems.
iii. Division by customer
 Occurs when the division sells most or all of its products to a particular
class of customer.

PRESIDENT

VP VP
VP
Industrial Military
Customer
Products Products
Products

 Functional V.P – provide supporting services or coordination assistance

for their areas of responsibility.

 Each V.P – in charge of a set of products grouped according to the

type of customer to whom they will be marketed.
ii. Functional Organization
• The most logical and basic form of departmentalization.

• Used mainly by smaller firms that offer a line of products

because it makes efficient use of specialized resources.

• Example :

President

Vice Vice Vice Vice

President President President President
Production Marketing Financial Human
Resource

* Each vice president is responsible for each organization’s main function.

 iii.Matrix Organization

• Matrix departmentation attempts to combine

functional and task force (project) departmentation
designs to improve the synchronization of multiple
components for a single activity, to improve
economies of scale and to better serve the
customer and company.

• Employees have 2 bosses  dual authority.

• Also known as ‘multiple command system’.

Example :

GENERAL MANAGER

PRODUCTION FINANCIAL ENGINEERING

MANAGER MANAGER MANAGER

PROJECT A PRODUCTION FINANCIAL ENGINEERING

MANAGER
UNIT UNIT UNIT

PROJECT B PRODUCTION FINANCIAL ENGINEERING

MANAGER
UNIT UNIT UNIT

PROJECT C PRODUCTION FINANCIAL ENGINEERING

MANAGER
UNIT UNIT UNIT

PROJECT D PRODUCTION FINANCIAL ENGINEERING

MANAGER
UNIT UNIT UNIT
 Advantages of Matrix Org. Disadvantages of Matrix Org.
Risk creating a feeling of
Give flexibility to an anarchy.
organization.
Encourages power struggle.
Stimulates interdisciplinary
Involves & challenges people. May lead to more discussion
than action.
Develop employee skills.
Requires high interpersonal
Free top management for skills.
planning.
Costly to implement.
Motivates people to identify
with end products. Risk duplication of effort by
project teams.
Allows experts to be moved
to crucial areas as needed. Affects morale when
personnel are rearranged.
3. Chain of Command and Unity of Command
• Chain of Command
• The line of authority and responsibility that flows throughout the organization.
• Unity of Command
• A principle that each employee in the organization is accountable to one, and only one,
supervisor.
3. Chain of Command and Unity of
Command
• To understand the chain of command, you have to understand
three other concepts as below :

 Responsibility  obligation to carry out tasks competently

 Authority  - the right to act
- the power to carry out the assigned
responsibilities
 Accountability  being held answerable for results
(compliments or criticism)
4. Span of Control
• The number of employees reporting to a particular manager.
• In theory, when tasks are very complex, span of control should be relatively narrow.
• In contrast, where jobs are highly standardized and routine (low complexity), a manager will
not need to spend as much time supporting individual subordinates, and the span of control
may be larger.

4.a Scalar principle

There must be a clear line of authority from the highest to the lowest
level of the organization.

Clear line of authority makes it easier for organization members to

understand :
- to whom they can delegate
- who can delegate to them
- to whom they are accountable
Wide Vs. Narrow
Span of Control
4.b Line and Staff Responsibilities

• Line Personnel
• Those organizational members that are directly
involved in delivering the products and services of
the organization.
• Staff Personnel
• Those organizational members that are not
directly involved in delivering the products and
services to the organization, but provide support
for line personnel.
5. Centralization and Decentralization
Differentiation between Centralization & Decentralization

Centralization Decentralization

Definition The extent to which authority is The delegation of power and authority from
concentrated at the top of the higher to lower levels of the organization,
organization. often accomplished by the creation of
small, self contained organizational units.

Characteristics of oControl by a few individuals at top level oControl by many because believe that
because they are important; don’t trust participation can increase effectiveness
the organization subordinates and like to build and efficiency.
empire(domain).

oTherefore, decisions are made at top oTherefore, decisions are made at all levels.
level.

oDisadvantages are possibility of negative oDisadvantage is, control by too many and
attitude / behavior and moral in decision it difficult to come up with decisions.
making.
 5. a Delegation
• The process of transforming the responsibility for a specific activity
or task to another member of the organization, and
• Empowering that individual to accomplish the task effectively.
5. a The Process of Delegation
• Assigning responsibility
• Responsibility refers to the employee’s obligation to complete the activities that he or she
has been assigned.
• Granting authority
• Authority is the formal right of an employee to marshal resources and make decisions
necessary to fulfill work responsibilities.
5. a The Process of Delegation
• Establishing accountability
• Where there is accountability for performance, employees understand that they must
justify their decisions and actions with regard to the tasks for which they have assumed
responsibility.
5. a Benefits of Delegation & Empowerment
• Leads to a more involved and empowered workforce.
• Improved response time as a result of decisions and information not needing to be
passed up and down the organization.
• Leads to better decision making.
• Provides opportunity for employee to develop analytical and problem solving skills.
• Provides managers the opportunity to accomplish more complicated, difficult, or
important tasks.
5. a Reasons for Failing to Delegate
• The “time crunch.”
• Lack of confidence in the abilities of subordinates.
• Managers try to avoid the potential pitfalls of dual
accountability.
• Managers may be insecure about their own value to the
organization.
DO YOU Learning to Delegate
KNOW Effectively
Principle 1: Match the employee to the task.

Principle 2: Be organized and communicate clearly.

Principle 3: Transfer authority and accountability with the

task.

Principle 4: Choose the level of delegation carefully.

 6. Formalization
• Refers to how standardized an organization’s jobs are and the extend to which
employee behaviour is guided by rules and procedures.
• When formalization in an organization is low then employees have more discretion
in doing their works.
• When formalization in an organization is high then employees have to do according
to rules and procedures.
5.4 Mechanistic vs Organisational Structure
 Refer to an organization’s response/s towards external
environment.

 According to GM Stalker & Tom Burns, there are 2 types of

management system :

Management
System

Mechanistic structure Organic structure

 Mechanistic structure Organic Structure

 Suits organization with • Suits organization which the

stable environment. environment changes often.

 Rigid hierarchical • Collaboration (both vertical &

relationship. horizontal).

 Fixed duties (clear). • Low formalization.

 High formalization. • Informal communication

(horizontal).
 Formalized communication
channels (vertical). • Decentralized decision
authority.
 Centralized decision
authority. • Not clear communication
hierarchy system.
 Clear communication
hierarchy system.
5.5 Approaches to organizational design
Management
Theory

Pre-Classical Classical Behavioral Quantitative Contemporary

Contributors Viewpoint Viewpoint Viewpoint Viewpoint

Scientific Early Management Systems Theory

Management Behaviorist Science

Bureaucratic Hawthorne Operation Contingency

Management Studies Management Theory

Administrative Human Relation Management Emerging Views

Management Movement Information
System

Behavioral
Science Approach
5.5 Weber’s bureaucratic organization

• Bureaucratic management relies on rules, a set hierarchy, a clear division of labor

and detailed procedures. This theory provides a blueprint of how an entire
organization should operate.

• Max Weber (1864-1920), a German social historian, is most closely associated with
bureaucratic management.
 Characteristics of Weber’s Ideal Bureaucracy :

Formal Selection
Division of labor 1
Formal Rules
2 4
Managerial Hierarchy
3 5 6
Impersonality

Career Development
1. Division of labor
 Labor is divided so that authority and responsibility are clearly defined.

2. Managerial Hierarchy
 Offices or positions are organized in a hierarchy of authority.

3. Formal Selection
 All employees are selected on the basis of technical qualifications demonstrated by
formal examination, education or training.

4. Career Orientation
 Managers are professionals rather than owners of the units they administer. They
work for fixed salaries and pursue “careers” within their respective fields.

5. Formal Rules and Other Controls

 All employees are subject to formal rules and other controls regarding the performance
are enforced.

6. Impersonality
 Rules and other controls are impersonal and uniformity, involvement with personalities
and personal preferences is avoided.
Advantages : Disadvantages

Efficiency will increase through
specialization.
A clear chain of command will
develop from the highest to the
lowest level of an organization.
Employees will be hired
promoted based on merit
expertise.
Rules and other controls may take
on a significance of their own & as a
consequences, become ends in
themselves.
Extreme devotion to rules may
lead to situation in which past
& decisions are blindly repeated
& without appreciation or concern for
changed conditions.

The hiring of career Prompting subunit conflict &

professionals will result in a decreased effectiveness.
continuity of operations.
Working to the rules – performing
Efficiency will increase as formal exactly what is required by
rules & other controls relating to prevailing work rules and nothing
employee performance are more.
enforced.

When rules and other controls

are applied impersonally &
uniformly, involvement with
personalities & personal
preferences is avoided.