CHAPTER SIX

THE ORGANIZING
FUNCTION
 Objectives
Students are expected to be able to:
 Define the organizing function
 Evaluate the organizing process
 Evaluate the considerations for developing an
organizational structure
 Examine the forms of organizational structure
 Grasp concepts such as span of control, delegation,
centralization and decentralization
 Evaluate techniques for achieving coordination
 Introduction
•There are numerous activities in an organization and
these activities are usually divided in ways intended
to get the work done efficiently and effectively.

•Inpractice, organizing produces a synergy effect and

dwells much on the assumption that a “coordinated
whole” produces benefits that are greater than the
sum of its individual parts.

•The organizing function includes the following:

 Introduction
•Creating job positions with defined duties,
responsibilities, requirements and salary ranges based
on job requirements.

•Arranging positions into a hierarchy to establish

authority-reporting relationships.

•Determining the number of hierarchical levels in the

organization, and the most appropriate way to set up
departments.
 Definition
Two definitions are considered:

An ostensive/ universal definition

Organizing is the management function of assembling and coordinating
human, financial, physical information and other resources needed to
achieve goals.

A working definition
Organizing is the process of developing a formal pattern of prescribed roles
and role relationships, the allocation of activities and resources into separate
sub-units, the distribution of authority among administration positions, and
the coordination of activities to achieve organizational objectives.
 The Organizing Process
1. Set the objectives for which one is organizing
2. Determine task necessary to achieve objectives
3. Divide tasks into separate jobs and define duties and
responsibilities associated with each job
4. Group separate jobs into logical units or
departments
5. Assign authority to managers and define their
respective responsibilities
6. Provide the needed financial and physical resources
7. Coordinate the various units in the organization
 Organizational Structure
•This is a final plan for achieving an efficient division
of labour and the effective coordination of member
activities.

•It is generally concerned with the pattern of

authority, communication and workflow, and does not
include physical things like buildings and equipment.
Definition of O
rganizational S
tr ucture
•The network arrangement of positions and
departments through which the essential tasks of an
enterprise are subdivided and grouped to create the
systems, decision centres and behavioural linkages
that carry out business strategies.

•Itmay also be defined as the sum total of the ways in

which an organization divides its labour into distinct
tasks and then achieve coordination between them.
 Considerations for Developing an
Organizational Structure
1. Simplicity

2. Least cost solution

3. Motivation of those involved

4. Existing organizational structure

5. Organizational strategy
 Organization Chart
•An organization chart is the visual representation of
the structure of that organization.

•Itis often described as the reporting structure of an

organization which depicts the major positions or
departments in that organization.
 Information Provided by Organization
Charts
1. Tasks carried out in the organization

2. Sub-divisions of the total organization

3. Levels of management

4. Lines of authority

5. Relationships
 Merits and Demerits of Org. Chart
Merit
•It helps employees to identify how their own specialized
task relates to the total task of the whole organization.
Demerits
•It is a static model which do not lend itself to change.
•It shows only the formal and not the informal
organizational structure.
•It is only a picture of the organization at a certain time
and is rapidly outdated by changes in structure or
personnel.
 Formal and Informal Organizational
Structure
Formal Organizational Structure
Officially defined and often documented by management.

Characteristics:

 Clearly defined structure of authority-responsibility relationships

 Well-established communication system

 Relatively stable and permanent

 Expand in size and become complex as organization grows

Informal Organizational Structure

Unofficial, and emerges as a result of personal and group needs of employees
 The Simple and Complex Organizational
Structure
Simple Organizational Structure: This is one in which the number of managerial
levels and departments are relatively few.

The simple structure has flat organization- one in which there are relatively few
layers of management, with each manager having a wide span of control.

The major characteristic of the simple or flat organization include:

 Centralized authority
 Few authority levels
 Wide span of control
 Less costly
 Faster decision-making
 Faster vertical communication
 The Simple and Complex
Organizational Structure cont’d…
Complex Organizational Structure: is a structure in which the
number of managerial levels and departments are relatively numerous.
It is most common among older and large-scale organizations with
various lines of authority.

Characteristics:
 Decentralized authority
 Many managerial levels
 A narrow span of control
 Can be very expensive
 Unnecessary delays in decision-making and communication
 Basic elements of an Organizational
Structure
 Work specialization
Evolved from Adam Smith’s concept of division of
labor.

It is the degree to which the overall task is broken

down into component parts.

Work specialization can be of a high or low degree.

 Basic elements of an Organizational
Structure cont’d…
Advantages of work specialization:
1. Employees can specialize in the part of work they can do
best
2. Easy training
3. Transfer time between tasks is eliminated
4. Easy development of specialized equipment
5. Greater levels of control over tasks

Disadvantages of work specialization:

6. Tends to cause monotony and boredom
7. Greater need for coordination
 Dealing with the limitations of work
specialization
 Job rotation

 Job enlargement

 Job enrichment
 Basic elements of an Organizational
Structure cont’d…
 Departmentalization
It is the fundamental principle by which individual resources and activities
grouped into departments (separate but interdependent sub-units).

The basic rationale is to ensure efficient and effective supervision of

organizational activities.

Benefits:
 Establishes a system of common supervision
 Typically creates common measures of performance
 Encourages informal communication.
 Bases of Departmentalization
Three of these are frequently used:
1. Departmentalization by Function- done according to common employees skills
and similar work activities.

Advantages:
 Efficiency is fostered through specialization of tasks
 Specialists can work in their field
 It is simple, straightforward and logical
 Clear career paths are defined
 Coordination is enhanced
 Very well suited for structuring a single business
 Promotes in-depth functional expertise
 Direct supervision and control are easier
Cont.
Disadvantages:
 Employees tend to concentrate too narrowly on their own
unit goals

 May promote over-specialization and narrow

management viewpoints

 Can lead to inter-functional rivalry, conflict, and empire

building

 Forces profit responsibility to the extreme top

2.Divisional Departmentalization- This refers to the grouping of organizational activities
and resources into separate autonomous units or divisions that are capable of designing,
producing and marketing its own goods and services. Each division has its own functional
centers.

There are three ways of creating divisional structures:

Division by product/ service category

Advantages:
 Clearly defines responsibility in terms of product performance
 Improved knowledge about product
 Specialized equipment usage is facilitated
 Best suited for fast changing environments

Disadvantages:
 Does not foster overall coordination
 It limits career mobility of personnel
 Creates duplication of efforts.
 Divisions may become too autonomous
Division by geographic location

Advantages:
 Provides an excellent training ground for incoming managers
 Enables the firm to adapt to local customs and laws, and to
service customers more quickly
 Allows a strategic tailoring of operations to the needs of each
geographic market
 Easy coordination within each region
 Decision-making is made more decentralized

Disadvantages:
 Does not foster coordination across geographic divisions
 May cause conflict between the goals
 Duplication of efforts and functions
Division by customer requirement
Advantages:
 Allows a faster response to environmental changes
 Strong orientation to customer requirements
 Ensures accurate measurement of performance in the entire
organization
 Simultaneous concentration on all customers

Disadvantages:
 Does not foster coordination across customer division
 Can lead to the neglect of overall organizational goals
 Sometimes breeds unnecessary competition among divisions
The Matrix Design, Structure or Organization: It’s a hybrid design in
which both functional and divisional structures are combined to leverage the
benefits of both.

There are usually two superiors (dual line of command)- one a functional
manager, and the other a divisional manager

Advantages:
 Duplication of functional department at each division is avoided
 Higher management levels are not overloaded with operational decisions.
 Project teams can be created, modified and dissolved quickly and
continuously
 Increases motivation and commitment of subordinates
 Individual specialists as well as equipment can be shared across projects
Cont.
 Communication is enhanced both laterally and vertically
 Frequent contact between members from different departments
expedites decision-making and adaptive responses

Disadvantages:
 Can lead to power struggles among functional and divisional
managers
 They are very complex to manage
 Employees used to rigid bureaucracies may find it difficult in
adjusting to its relatively fluid nature
 Contributes to ambiguity and role conflict
 Conflicts may occur as boundaries of authority and responsibility
overlap.
 Reporting relationships
Some concepts to note:
 Scalar chain/ chain of command: A clear and unbroken
chain of authority and responsibility should be
established to link every person and department in the
organization.

 Unity of command: Each employee should be assigned to

one and only one superior.

 Span of control: The number of subordinates who

directly to a single supervisor.
Factors to Determine Appropriate Span of
Control
 The level of competence of supervisor as well as
subordinates
 Physical dispersion of subordinates
 The degree of interaction required of a supervisor
 The similarity or dissimilarity of work of
subordinates
 The amount of non-supervisory task of a superior
 The presence of clear standards and rules.
 Forms of Formal Organizational Relationships
 Line relationships: This refers to the direct vertical relationship
between a superior and a subordinate.

 In line relationships, authority flows vertically down through the

organizational hierarchy. The relationship between the corporate
president and his vice is an example.

 Line and staff relationships: Staff relationship exists between

line managers and people in staff position such as research, legal
and public relations who offer professional advice, but do not
have the authority to insist that their advice is taken.
 Forms of Formal Organizational Relationships
 Functional relationships: This is the relationship between line managers and
functional specialists in charge of specialized activities like production,
marketing, finance and personnel.

 Unlike the staff, the functional specialists offer a common service throughout
all departments of the organization, but have no direct authority over line
managers who make use of the service

 Lateral relationships: Lateral relationships exist between individuals of

different departments or sections on the same hierarchical level.

 Lateral relationships are based on contact and consultations, and are

established to maintain coordination and effective organizational performance.
 The Distribution of Authority
Normally, a voluntary co-operation among people is not enough. Someone in a higher
position is often required to make legitimate request and to maintain control over people,
things and processes in the organization.

There is the need for the distribution of authority backed by formalized legal systems to
give them the necessary backing and protection. In addressing this, the following
concepts come to fore:

Delegation: the process of assigning tasks to subordinates, giving them adequate

authority to carry those assignments and making them obligated to complete the tasks
satisfactorily.

The functions include:

 Determining the expected results (standards)
 Allocating tasks to subordinates
 Grant them commensurate authority
 Hold them responsible for the completion of the work and achievement of results
The process of delegation entails:

 Responsibility – a sense of obligation

 Authority – right to take action, make decisions, command others
 Accountability – explanation of possible variances

Achieving Effective Delegation:

 Ensure that the objective to be achieved is made clear to subordinate
 Indicate required performance standard
 Decide and grant appropriate level of authority
 Give guidance, support, and training on how to perform the job
 Allocate adequate resources
 Ensure clear reporting arrangements are made
 Rewards subordinates for their effort.
Reasons for delegation:
1. Frees a manager from routine and time-
consuming duties.
2. Provides a good training ground for “up and
coming managers”.
3. Provides “qualified-back-up people” to fill
vacancies.
4. Ensures maximum utilization of the abilities and
skills of personnel at lower levels.
5. Allows subordinates to exercise more autonomy,
satisfying the desire to participate in problem-
solving.
Barriers to delegation:
 Fear of blame if subordinates fail
 Lack of time to train subordinates
 There are also managers who wish to hold on to their
authority and power
 Some managers feel threatened by subordinate’s competence
 Inability to plan work in advance
 There is also the fear of being called lazy

Why subordinates fail to accept delegation:

1. Fear of being reprimanded when they fail to achieve results
2. The perception that there are no additional rewards for
accepting additional responsibility
3. Some subordinates lack the self-confidence needed

4.Subordinates are already overloaded and too busy

5. Some lack the requisite training, resources and

support
Decentralization- the dispersion of authority and
decision-making to operating units throughout an
organization.

Centralization- retention of decision-making

authority in the hands of few executives at the top of
the managerial hierarchy.
 The Continuum of centralization and
decentralization
Absolute centralization or decentralization is hardly found. There are
only degrees of centralization and decentralization.

Establishing the degree of centralization or decentralization:

The following factors affect this:
 Size of the organization and growth rate
 Geographical dispersion of an organization
 Abilities of lower managers
 History and culture of the organization
 Cost and risk associated with a decision
 Environmental uncertainty
Advantages of Centralization:
1. Senior executives have broad knowledge and experience to
make better decisions than lower level managers
2. Greater uniformity of policy and action
3. Few or no mistakes are committed
4. Easier to maintain the secrecy of strategic plans and proposals
5. Facilitates coordination of individual units or activities
6. Reduces duplication of efforts and resources

Disadvantages of Centralization:
7. Autocratic and does not allow personal initiatives
8. Ineffective use of human resource at the lower levels
9. Increased work load on senior executives
Advantages of Decentralization:
1. Top management can concentrate on more important issues
2. Generally, lower level managers have more detailed and up-
to-date information
3. Increased motivation and enthusiasm of lower level managers
4. Provides an excellent training ground for lower level
managers
5. Problems at lower level management can be solved more
quickly

Disadvantages of Decentralization:
6. Narrowed knowledge and experience of lower level managers
7. Difficult to effectively spread innovative ideas
Coordinating Activities
Coordination: it is the integration of the activities of
the separate parts of an organization that serves to
achieve a common goal of objective.

Techniques for Achieving Coordination:

 The use of managerial hierarchy
 Mutual adjustment
 Coordination through committees
 Coordination through liaison
 Coordination through independent department
Thank You!