Chapter 7
superior-subordinate relationships are
Organizing – is a management function which
relates to the structuring of resources and
activities to accomplish objectives in an efficient
and effective manner.
The aim of organizing activities is to have
a collection of people in the organization who
perform activities for a specific purpose.
In plain language, organizing is the process of
combining and coordinating productive
resources in order to accomplish efficiently and
effectively the established objectives of the
organization.
Clearly, the human factor is the key to the
success of the organizing process.
Professor Schumpter calls the human factor
the entrepreneur.
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IMPORTANCE OF ORGANIZING (3) CEP
1. Clear and Specific job Description
2. Existence of Coordination
3. Presence of Formal Structure
1. Clear and specific job description.
Every employee knows what to do. The
tasks and duties of all employees,
sections, departments, and divisions are
clearly and specifically stated.
It is easy to determine the scope and
limits of authority.
2. Existence of coordination.
This reduces or eliminated confusions
and conflicts. Policies on
interrelationships among the various
work units are defined.
For every designated task of the
organization, there is no person who has
the authority to coordinate all plans for
the said task.
3. Presence of formal structure
By means of the organizational chart
which diagrams the various departments,
functions, and positions, and which
shows their relationships, the formal
indicated. Such a chart is helpful in
defining managerial authority,
responsibility and accountability. It also
shows the whole management hierarchy.
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STEPS IN ORGANIZING (5) EIGAD
1. Evaluate Plans and Objectives
2. Identify the various activities
3. Group similar or related activities
4. Assign activities with appropriate
authority
5. Design a hierarchy of relationships
STEP 1 Evaluate plans and objectives
Organizational objectives, together with the
activities are indicated in the plans. Objectives
and plans change if there is a change in the
environment of the organization, or if there is a
change in its mission.
STEP 2 Identify the various activities
These are activities to be performed to
accomplish organizational objectives.
STEP 3 Group similar or related activities
For efficiency, similar or related activities should
be grouped under one department or division.
This is based on the concept of division of labor
or specialization.
STEP 4 Assign activities with appropriate
authority
The various activities will be assigned to
competent individuals. However, it is very
necessary to give them adequate authority to be
able to do their jobs efficiently and effectively.
STEP 5 Design a hierarchy of relationships
These are the working relationships of the
various components of the entire organization.
This is called the organizational structure. It
indicates the vertical and horizontal relationships
of the organization.
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Chapter 7
THE ORGANIZATIONAL STRUCTURE AND
ITS DETERMINANTS
- The structure is the means by which the
organization will attain its objectives and
goals. Apart from the organization’s
goals and objectives, the structure must
be one that considers, its resources, and
its environment, both internal and
external.
The determinants of an organization structure
are:
1. Strategy or plans for achieving the
company’s objectives.
2. Technology that will be used in carrying
out the strategy.
3. People employed at all levels and their
functions; and
4. Size of the organization.
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PRINCIPLES OF ORGANIZING (5)
UgSocCocUocDoa
---------------------------------------------------------------
THE FORMAL ORGANIZATION (3) OcOmPm
- The formal organization, as described by
Nelson and Quick “is the part of the
system that has legitimacy and official
recognition.
relationships, details the functions of
major organizational units, and describes
job procedures.
3. Policy Manual – describes personnel
activities and company policies.
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INFORMAL GROUPS
- There are instances, however, when
members of an organization
spontaneously form a group of friendship
as a principal reason for longing. This
group is referred to as an informal group.
Reason for joining:
1. Friendship
2. Common Interest
3. Proximity
4. Need Satisfaction
5. Collective Power
6. Group Goals
THE GRAPEVINE- an informal organizational
communication network that is active in almost
every organization.
Provides a channel for issues not suitable
for formal communication channels.
The impact of information passed along
the grapevine/gossip can be countered
by open and honest communication with
employees.
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FORMAL GROUPS vs. INFORMAL GROUPS

1. Organizational Chart – is a diagram of

the organization’s official positions and
formal lines of authority.
2. Organizational Manual- provides
written descriptions of authority
Chapter 7
LEVELS OF MANAGEMENT AND - Managers are afforded with more time to
SUPERVISION attend to other important problems.
DISADVANTAGE:
- Communication tends to be slower and
distorted because of the number of levels
it has to pass through.
- The number of management levels also
hinders effective decision making
rendering such activity slower and less
accurate.
- It is more expensive to maintain as there
are more managers to compensate.
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BASIC ELEMENTS OF ORGANIZATIONAL
FLAT SRUCTURE STRUCTURE (5) WDPSC
ADVANTAGE: 1. Work specialization
2. Departmentation
- Communication is generally faster and
3. Pattern of authority
less distorted.
4. Span of control
- Decisions can be made quickly
5. Coordination of activities
- Supervisor’s salaries are eliminated
The degree to which task are divided in the
DISADVANTAGE:
organization is referred to as work
- They require managers with experience specialization.
in the various task
Departmentation – refers to the grouping of jobs
- A manager may have little time for all
based on the criteria that managers believe help
subordinates
in the coordination and control of activities.
- When manager is out, the group is
without a leader Pattern of Authority – as an element in
- Managers may have little time to designing organizational structure refers to the
anticipate problems. extent by which organization members are
allowed to make decisions without getting
TALL STRUCTURE
approval of another member.
ADVANTAGE:
Span of Control is another consideration in
- Since the average span of control is designing the organizational structure. It refers to
narrower, the supervisory load is less for the number of subordinates reporting to a single
each manager. supervisor.

- There are more opportunities for The span of control may either be narrow or
promotion because there are more levels wide. It is narrow when there are few
of positions. subordinates reporting to a supervisor.

- Managers are provided with Characteristics of a narrow Span of

opportunities to specialize. Control:

- There is less demand for managers with 1. There is closer relationship between
multiple skills. managers and subordinates.
2. There is less delegation of authority.
Chapter 7
3. Controlling activities are more tight.
4. There is more time for rewarding behavior.
Characteristic of a wide Span of Control:
1. Employees work with little supervision.
2. There is a high level of delegation of authority.
3. Controlling is lighter.
4. There is less time for rewarding behavior.
Coordination of Activities - Another basic
element considered in designing the
organizational structure is coordination.
These terms refer to the linking of activities in the
organization that serve to achieve a common
goal or objective.
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CENTRALIZATION vs. DECENTRALIZATION
- The Weberian perspective suggest that a
bureaucracy is a model of organization
design based on a legitimate and formal
system of authority. Many people
associate bureaucracy with “red tape”,
rigidity, and passing the buck.
- For example, how many times have you
heard people refer disparagingly to “the
federal bureaucracy”?
- Many times U.S. managers believe the
bureaucracy in the Chinese government
is a major impediment to U.S. firm’s
ability to do business there.
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5 CHARACTERISTICS OF THE IDEAL
BUREAUCRACY
1. The organization should adopt a distinct
division of labor, and each position
should be filled by an expert.

- Centralized authority is better suited for 2. The organization should develop a

stable environments, while consistent set of rules to ensure that task
decentralized authority is for complex performance is uniform.
and changing environments.
3. The organization should establish a
ADVANTAGE OF DECENTRALIZE hierarchy of positions or offices that
AUTHORITY: creates a chain of command from the top
organization to the bottom.
- Efficiency
- Flexibility 4. Managers should conduct business in an
- Initiative impersonal way and maintain an appropriate
- Development social distance between themselves and
their subordinates.
DISADVANTAGE OF DECENTRALIZE
AUTHORITY: 5. Employment and advancement in the
organization should be based on technical
- Control expertise, and employees should be
- Duplication protected from the arbitrary dismissal.
- Centralized expertise
- Competency SITUATIONS INFLUENCES ON
ORGANIZATIONAL DESIGN
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- The situational view of organization
THE BUREAUCRATIC MODEL OF
design is based on the assumption that
ORGANIZATIONAL DESIGN
the optimal design for any given
- Max Weber, an influential German organization depends on a set of relevant
sociologist, was a pioneer of classical situational factors. In other words,
organization theory. At the core of situational factors play a role in
Weber’s writings was the bureaucratic determining the best organization design
model of organizations. for any particular circumstance.
Chapter 7
Four basic situational factors – (tesolc)
technology, environment, size, and
organizational life cycle.
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APPROACHES TO ORGANIZING (5) FGPCM
1. Functional
2. Geographic
3. Product
4. Customer
5. Matrix
1.FUNCTIONAL APPROACH
- This is the most common and basic
approach to organizing. Small
2.GEOGRAPHIC APPROACH
enterprises which have limited product
lines adopt the functional approach. - This is applicable to big organizations and giant
Similar or related activities are grouped business enterprises like the multinational
under one department. corporations. Vice-presidents or directors are
- The common departments are finance, assigned to the different regions of the country or
production, marketing and personnel. the world.
Strengths of Functional Design: - The geographic structure is most suitable when
different laws, policies, currencies, and culture
- Efficient use of resources
exist among various regions.
- In-depth skill development
- Clear career paths
- Unity of direction
- Enhanced coordination with functions
Weaknesses of the functional Design:
- Slow decision making
- Less innovation
- Unclear performance responsibility
- Limited management training
- Poor coordination across functions
3.PRODUCT APPROACH
- Most large multiproduct corporations are
structured on product organization, particularly
for products that require unique strategy,
production process, or distribution system.
- Some advantages of the product structure are
faster decisions, better coordination, and higher
Chapter 7
product viability. Its major disadvantage is higher
cost of operations.

4.CUSTOMER APPROACH
- There are groups of customers which are
different in their demands, preferences, or
needs. In the case of government agencies, their
big purchases require competitive biddings,
specifications, regulations, and supervision of
production.
- In the case of agricultural product and industrial
product buyers, their tastes, preferences are STRENGTHS OF MATRIX
different. Such differences among customers APPROACH/DESIGN:
require different suitable strategies in order to
maximize customer satisfaction. 1. allows demands from the environment to be
met simultaneously;
2. provides flexibility;
3. encourages resource efficiency;
4. enhance skills development;
5. increases motivation and commitment among
employees; and
6. aids top management in planning
WEAKNESSES OF MATRIX
APPROACH/DESIGN:
1. creates confusion;
2. power struggle within the group are potential
5.MATRIX APPROACH/DESIGN problems; and

- An organization with Matrix Design is one that 3. places stress on individuals.

implements functional and divisional structures
simultaneously in each department. The
employee is supervised by the functional
manager in his work as a specialist.
The following conditions favor the use of matrix
design:
1. Environmental pressures exist for a dual
focus such as innovation and quality;
2. Large quantities of information must be
processed; and
3. Efficiency is needed in the use of resources.
Chapter 7