ORGANIZING

Topic 3
At the end of this lesson, student should be
able to..
• Define organizing, organizational
structure and design
• Recognize the importance of organizing
• Step in organizing process
• Identify 6 key elements in organizational
culture
– Work specialization
– Departmentalization ..part 1
 – Authority & responsibility
– Span of control
– Centralization & decentralization
– Formalization
• Discuss traditional organizational design
– Simple structure
– Functional structure
– Divisional structure

• Discuss contemporary organizational design

 Team-structure
 Matrix-project structure
 Boundaryless structure
..part 2
 DEFINITION
• An efficient way of managing
organizational resources in order to
achieve the planned goals and
objectives.

• Emphasizes the process of dividing jobs

that are in line with organizational goals
and directions.
 Organizational Structure
• Shows the way each activity in an organization is
performed, the way formal jobs are allocated,
the way resources are optimally allocated and
the way departments are coordinated.
• Shows the position of an unit or division in the
organization and the relationship between each
division in the organization.
• Shows types of the jobs performed in an
organization and the relationship between the
jobs.
• Known as organization chart.
 Organization design

• The process of making decisions about

how specialized jobs should be, the rules
to guide employees’ behaviors, and the
level at which decisions will be made.

• When managers develop or change the

organization’s structure.
 Importance of Organizing
1 It shows the job division or specialization whereby a unit
or department bears a specific job burden and
responsibilities in an organization.
2 It shows the duties and responsibilities of each
department in an organization.
3 It shows the reporting relationship between managers and
subordinates.
4 It shows the types of jobs performed in an organization.

5 It shows the grouping of work segments in an

organization.
6 It shows the departments or units at each management
level in the organizational hierarchy.
THE ORGANIZING PROCESS
Listing The Jobs

Dividing the jobs

Establishing the departments

Coordinating the jobs

Performing evaluations and adjustment

 1. Listing the jobs
• Jobs performed by employees must be
identified.
• Determine the resources that will be used by
the employees.
• List the details od each job or activity that is
to be performed by the employees.
 2. Dividing the jobs
• Jobs will be allocated to the individuals or
groups of individuals according to their
abilities and skills
• Job division must be conducted in a fair &
balanced way.
• If an employee is given a heavy workload, he
might not be able to perform his task
efficiently.
 3. Establishing the departments
• Organizations need to conduct
departmentalization – refer to gathering
employees who would be performing the
same tasks into 1 group.
• Example: Production department, HR
department
 4. Coordinating the jobs
• Mechanism of coordinating different jobs between
departments is created as without job coordination,
conflicts or confusions would happen among
employees from different department due to the
overlapping jobs
• An effective coordination mechanism enables these
problems to be solved using established rules,
procedures & policies
5. Performing evaluations and adjustments

• As organizations are always changing, steps in the

organizing process also faces changes
• Therefore, managers need to:
• evaluate the effectiveness of the organizing process
that was implemented
• Make the necessary adjustment towards any changes
occur
 Elements in Organizational
Structure
Six key elements:
• Work specialization
• Departmentalization
• Authority &
responsibility
• Span of control
• Centralization v.
decentralization
• Formalization
 Work specialization
• Each employee will perform specific or
specialized jobs according to their skills,
qualifications and abilities.
• Generated higher productivity and work output.
• Allows organizations to efficiently use the
diversity of skills that workers have.
• Human diseconomies—boredom,
fatigue(keletihan), stress, low productivity, poor
quality, increased absenteeism, and high
turnover.
 Work specialization
• Two important aspects:
I. Job depth
II. Job scope
i. Job depth:
 Emphasizes the degree of freedom employees
have in performing their jobs at the work place
 Low job depth : Management establishes strict
rules, provides details tasks and supervises the
work movement in detail
 High job depth : Employees can perform their jobs
better without feeling stressed and can master all
aspects of their work.
 Work specialization
ii. Job scope:
• Involves steps to overcome employee’s level
of dissatisfaction by increasing or widening
the job scope of employee.
• Increasing the number of jobs that must be
performed by the employee
• Example: audit clerk –dissatisfied and bored,
manager can increase number of job such as
prepare accounting or financial report
 Job Design
• Different positions offer different activities
and responsibilities.
• Important for two reasons:

 To function effectively, task activities must be

grouped logically.
 The configuration or design of the job can
influence employee motivation.
Job Design
•The way to design a job:
i. Job enlargement
ii. Job enrichment
iii. Job rotation
iv. Job simplification
 Job Enlargement
• Refers to the number of employees, the
different jobs performed by employees
and the frequency off jobs performed
by the employee
• If the jobs and the frequency of the job
performed reduces---the job scope is
narrow.
• As the number of jobs and frequency of
jobs is increases---the job is enlarge
 JOB ENRICHMENT
• To overcome employees boredom
• To provides employees with the
opportunity to make decisions
and improve themselves
• Will be given challenging jobs and
bigger responsibilities in an
organization tend to work harder
 JOB ROTATION

 Involves the transfer of employees to another

department within a similar job scope.
 The approach aim to reduce boredom of job
simplification with some task variety.
 Provides opportunities for employees to learn
various skills related to their new job.
Job simplification
• Jobs are designed to have a small number of
narrow activities.
• Focus on reducing jobs to narrow tasks and
training workers how to do the best.
• Jobs involved are simple and repetitive.
 DEPARTMENTALIZATION
• Groups of individuals into units, and units into
departments and larger units to achieve
organizational goals.
• Referred to Organizational Designs
• 4 commons patterns
 Functional
 Divisional
 Hybrid
 Matrix
 Authority and Responsibility
• Chain of command - the line authority extending
from upper organizational levels to lower levels
which clarifies who reports to whom.
• Authority - the rights inherent in a managerial
position to give orders and expert to orders to be
obeyed
• Responsibility - an obligation to perform assigned
duties.
• 2 forms of authority:
– Line authority
– Staff authority
 Line Authority
• Authority that entitles a manager to direct the
work of an employee.
• Manager with line authority has the right and
direct responsibility to command and control
subordinates
• Line authority flows to lower level of the
organization through the chain of commands.
 Staff Authority
• Cannot give commands to other employees
through the chain of commands.
• Managers are given power by individuals or
groups to provide advise, support, assist,
advise and suggest, conduct research and
share knowledge and expertise with others.
• Position with some authority that have been
created to support and assist those holding
line authority.
Line and Staff Authority
 Authority and Power

• Authority – A right;
legitimacy is based on
authority figure’s position in
the organization
• Power – An individual’s
capacity to influence
decisions
Authority and Power: Differences
Sources of Power
 Span of Control
Span of control – The number of employees a manager
can efficiently and effectively supervise
Narrow / Sempit

Wide / Luas
Centralization and Decentralization

Centralization – Decentralization –
Decision making takes Lower-level managers
place at upper levels provide input or
of the organization. actually make
decisions.
 Formalization
• How standardized an organization’s jobs are and
the extent to which employee behavior is
guided by rules and procedures.
• 2 situation:
– Highly formalized organizations:
• Explicit job descriptions
• Numerous organizational rules
• Clearly defined procedures covering work process
• Therefore= employees have title discretion over what’s,
when and how it’s done
– Low formalization organization:
• Employees have more discretion in how they do their
work
TRADITIONAL ORGANIZATIONAL DESIGN

Simple Structure
Functional structure
Divisional structure
 Simple Structure
• An organizational design with:
i. low departmentalization
ii. wide spans of control
iii. authority centralized in a single person
iv. little formalization.
• Widely used in smaller businesses .e.g. owners and a
few employees.
• Strengths: fast, flexible, inexpensive to maintain,
clear accountability.
• Weaknesses: not appropriate as organization grows,
reliance on one person is risky.
 Functional Structure
• Activities or tasks are grouped according to
organizational function such as production,
marketing, finance, purchasing and etc.
• Similar as functional departmentalization
applied to the entire organization.
• Example:
– Revlon, Inc. is organized around the functions of
operations, finance, human resources, and
product research and development.
 Functional Structure

PRESIDENT

Vice President Vice President Vice President Vice President

Operation Production Marketing Finance
 Functional Structure

Advantages Disadvantages
• Emphasizes job • Involves the implementation of
specialization in each routine and monotonous tasks.
department. • Lack of communication.
• Avoid conflicts in resource • Career and personal development is
allocation. limited to certain areas.
• Employees tend to concentrate on
• Problem solving process
achieving departmental objective.
more effective.
• Cannot produce employees who are
• Decision making process
skilled in many areas.
more effective.
• Vice president who manage different
• Easier to control the expertise in same functional group
employees. make it extremely difficult for work
• Ease coordination within coordination or assessing their
department. activities individually.
 Divisional Structure
• Made up of separate business units or divisions.
• Each division has limited autonomy and has a
division manager who has authority over his or
her unit and is responsible for performance
• The parent corporation typically acts as an
external overseer to coordinate and control the
various divisions, and often provides such
support services as financial and legal.
• Divided into three types of departmentalization:
– Product department
– Geographical department
– Customer department
 Divisional Structure
Divisional structures group various
organizational functions into product or regional
divisions.
 Product Department
General
Manager

Manager Manager Manager

Fresh milk Beef Butter
 Geographical Department

General Manager

Perak Branch Johor Branch Sarawak Branch

Manager Manager Manager
 Customer Department

General Manager

Manager Manager
Manager Office
Industrial Ordinary
customer
customer customer
 Divisional Structure
• Advantages
• Reacts fast to any changes in
the external environment.
• Facilitates coordination and
cooperation of functions in
every division.
• Emphasizes customer
demands and needs.
• Fulfills customer needs
quickly and accurately.
• Major project coordination
can be performed more
effectively.
• Disadvantages
• Conflicting resource
allocation in every
division.
• Focus towards divisional
objectives.
• The purchase of new
technology involves high
costs.
• Feelings of anger might
arise between
departments due to the
fight for positions.
Traditional Departmentalization
CONTEMPORARY ORGANIZATIONAL DESIGN

• Team Structure
1

• Matrix-project Structure
2

• Boundaryless
3 OrganizationStructure
 Team Structure
A structure in which the entire organization is made
up of work groups or teams. Thus, employee
empowerment is crucial because there is no top-
bottom line of managerial authority.

Advantages: Disadvantages:
• Employees are more • No clear chain of
involved and command.
empowered. • Pressure on teams to
• Reduced barriers perform.
among functional areas.
 Matrix Structure
• Human resources are utilized efficiently because the
skills possessed by each employee are conbined to
develop a new product or to perform functional
duties.
• It creates a dual chain of command since employees
have two managers who share authority their
functional area manager and their product or project
manager.
 Cont…..
• The project manager has authority over the
functional members who are part of his or her
project team in areas related to the project’s goals.

• Decisions about promotions, salary

recommendations, and annual reviews typically
remain the functional manager’s responsibility.

• To work effectively, both managers have to

communicate regularly, coordinate work demands,
and resolve conflicts together.
• Strength :
• Fluid and flexible design that can respond to
environmental changes.
• Faster decision making.

• Disadvantages :
• Complexity of assigning people to projects.
• Task and personality conflicts.
Boundaryless Organizations
• Do not have structures and its approach to
business is based on the free flow of
information and ideas to drive innovation,
efficiency and growth.
• Two types of boundaries:
Internal boundaries
External boundaries
• Can be minimized or eliminated by using
virtual or network structural designs
End of chapter 3….

ASSESSMENT : CHAP 2 & 3 PROJECT & PRESENTATION