Chapter Eleven

Basic Elements of Organizing

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Learning Objectives
After studying this chapter, you should be able to:
1. 2. 3. 4. 5. 6. 7. Identify the basic elements of organizations. Describe alternative approaches to designing jobs. Discuss the rationale and the most common bases for grouping jobs into departments. Describe the basic elements involved in establishing reporting relationships. Discuss how authority is distributed in organizations. Discuss the basic coordinating activities undertaken by organizations. Describe basic ways in which positions within an organization can be differentiated.

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The Elements Organizing

Organizing
Deciding how to best group organizational activities and resources.

Organization Structure
The set of building blocks that can be used to configure an organization.

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Designing Jobs
Job Design
The determination of an individuals workrelated responsibilities.

Job Specialization (Division of Labor)

The degree to which the overall task of the organization is broken down and divided into smaller component parts.

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Designing Jobs (contd)

Job Specialization (Division of Labor)
Benefits of Specialization
Workers can become proficient at a task. Transfer time between tasks is decreased. Specialized equipment can be more easily developed. Employee replacement becomes easier.

Limitations of Specialization
Employee boredom and dissatisfaction with mundane tasks. Anticipated benefits do not always occur.

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Adam Smiths Example of Job Specialization

Making a pin (nail) requires 18 tasks
1 worker doing all 18 tasks might make 20 pins (nails) a day.

20 workers = (20 x 20) = 400 pins ______________________________

With specialization:
20 workers make 100,000 pins a day. 1 worker = 5,000 pins 20 pins vs. 5,000 pins per worker
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Alternatives to Specialization
Job Rotation
Systematically moving employees from one job to another in an attempt to reduce employee boredom.

Job Enlargement
An increase in the total number of tasks workers perform.

Job Enrichment
Increasing both the number of tasks the worker does and the control the worker has over the job.

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Alternatives to Specialization (contd)

Job Characteristics Approach:
Core Dimensions
Skill varietythe number of tasks a person does in a job. Task identitythe extent to which the worker does a complete or identifiable portion of the total job. Task significancethe perceived importance of the task. Autonomythe degree of control the worker has over how the work is performed. Feedback the extent to which the worker knows how well the job is being performed.

Growth-Need Strength
The desire for some people to grow, develop, and expand their capabilities that is their response to the core dimensions.
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Figure 11.1: The Job Characteristics Approach

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Alternatives to Specialization (contd)

Work Teams
An alternative to job specialization that allows the entire group to design the work system it will use to perform an interrelated set of tasks.

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Grouping Jobs: Departmentalization

Departmentalization
The process of grouping jobs according to some logical arrangement.

Rationale for Departmentalization

Organizational growth exceeds the ownermanagers capacity to personally supervise all of the organization.
Additional managers are employed and assigned specific employees to supervise.

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Grouping Jobs: Departmentalization (contd)

Functional Departmentalization
Grouping jobs involving the same or similar activities.
Advantages
Each department can be staffed by functionalarea experts. Supervision is facilitated in that managers only need be familiar with a narrow set of skills. Coordination inside each department is easier.
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Disadvantages
Decision making becomes slow and bureaucratic. Employees narrow their focus to the department and lose sight of organizational goals/ issues. Accountability and performance are difficult to monitor.
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Figure 11.2: Bases for Departmentalization

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Product Departmentalization Form

Product Departmentalization
Grouping activities around products or product groups.
Advantages
All activities associated with one product can be integrated and coordinated. Speed and effectiveness of decision making are enhanced. Performance of individual products or product groups can be assessed.
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Disadvantages
Managers may focus on their product to the exclusion of the rest of the organization. Administrative costs may increase due to each department having its own functional-area experts.
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Customer Departmentalization
Customer Departmentalization
Grouping activities to respond to and interact with specific customers and customer groups.

Advantage
Skilled specialists can deal with unique customers or customer groups.

Disadvantage
A large administrative staff is needed to integrate activities of various departments.

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Location Departmentalization
Location Departmentalization
The grouping of jobs on the basis of defined geographic sites or areas.

Advantage
Enables the organization to respond easily to unique customer and environmental characteristics.

Disadvantage
Large administrative staff may be needed to keep track of units in scattered locations.

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Departmentalization
Other Forms of Departmentalization
Grouping activities by time
By specific units of time By sequence. By a characteristic of the customer, product, or service

Other Considerations
Departments are often called by other names.
Divisions, units, sections, and bureaus

Organizations are likely to employ multiple bases of departmentalization, depending on level.

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Establishing Reporting Relationships

Chain of Command
A clear and distinct line of authority among the positions in an organization. Unity of Command
Each person within an organization must have a clear reporting relationship to one and only one boss.

Scalar Principle
A clear and unbroken line of authority must extend from the bottom to the top of the organization.

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Establishing Reporting Relationships (contd)

Narrow Versus Wide Spans
Span of Management (Span of Control)
The number of people who report to a particular manager.

A. V. Graicunas
Subordinate interactions
Directmanagers relationship with each subordinate. Crossamong the subordinates themselves. Groupbetween groups of subordinates. Formula for the number of interactions of all types: I = N(2N/2 + N - 1), where I is the total number of interactions and N is number of subordinates.

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Establishing Reporting Relationships (contd)

Narrow Versus Wide Spans
Ralph Davis
Operative span for lower-level managers of up to 30 workers. Executive span for middle and top managers set at 3 to 9. Span depends on managers jobs, company growth rate, and similar factors

Lyndall Urwick and General Ian Hamilton

Executive span should never exceed six

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Establishing Reporting Relationships: Tall versus Flat Organizations

Tall Organizations
Are more expensive because of the number of managers involved. Foster more communication problems because of the number of people through whom information must pass.

Flat Organizations
Lead to higher levels of employee morale and productivity. Create more administrative responsibility for the relatively few managers. Create more supervisory responsibility for managers due to wider spans of control.

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Figure 11.3: Tall Versus Flat Organizations

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Table 11.1: Factors Influencing the Span of Management

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Distributing Authority
Authority
Power that has been legitimized by the organization.

Delegation
The process by which managers assign a portion of their total workload to others.

Reasons for Delegation

To enable the manager to get more work done by utilizing the skills and talents of subordinates. To foster development of subordinates by having them participate in decision making and problem.

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Figure 11.4: Steps in the Delegation Process

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Problems in Delegation
Manager
Reluctant to delegate. Disorganization prevents planning work in advance. Subordinates success threatens superiors advancement. Lack of trust in the subordinate to do well.

Subordinate
Reluctant to accept delegation for fear of failure. Perceives no rewards for accepting additional responsibility. Prefers to avoid any risk and responsibility.

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Decentralization and Centralization

Decentralization
Systematically delegating power and authority throughout the organization to middle- and lowerlevel managers.

Centralization
Systematically retaining power and authority in the hands of higher-level managers.

Factors Determining Choice of Centralization

External environments complexity and uncertainty History of the organization Nature (cost and risk) of the decisions to be made.
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Coordinating Activities
Coordination
The process of linking the activities of the various departments of the organization.

The Need for Coordination

Departments and work groups are interdependent; the greater the interdependence, the greater the need for coordination.

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Coordinating Activities: Three Major Forms of Interdependence

Pooled interdependence
When units operate with little interaction; their output is simply pooled at the organizational level.

Sequential interdependence
When the output of one unit becomes the input of another unit in sequential fashion.

Reciprocal interdependence
When activities flow both ways between units.

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Structural Coordination Techniques

The Managerial Hierarchy
Placing one manager in charge of interdependent departments or units.

Rules and Procedures

Routine coordination activities can be handled via rules and procedures that set priorities and guidelines for actions.

Liaison Roles
A manager coordinates interdependent units by acting as a common point of contact, facilitating the flow of information.

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Structural Coordination Techniques (contd)

Task Forces
Used with multiple units when coordination is complex, requiring more than one individual and the need for coordination is acute. Disbanded when need for coordination has been met.

Integrating Departments
Permanent organizational units that maintain internal integration and coordination on an ongoing basis. May have authority and budgetary controls.

Electronic Coordination
E-mail, electronic scheduling, PDAs, cell phones
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Differentiating Between Positions

Line Positions
Positions in the direct chain of command responsible for the achievement of an organizations goals.
Have formal (legitimate) authority.

Staff Positions
Positions intended to provide expertise, advice, and support to line positions.
Have advisory authority; can give compulsory advice. Have functional authority to enforce compliance with organizational policies and procedures.

Administrative Intensity
The degree to which managerial positions are concentrated in staff positions.
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Key Terms
organizing organization structure job design job specialization job rotation job enlargement job enrichment job characteristics approach work teams departmentalization functional departmentalization product departmentalization customer departmentalization location departmentalization chain of command span of management authority delegation centralization coordination pooled interdependence

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Key Terms (contd)

sequential interdependence reciprocal interdependence line position staff position administrative intensity

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