Chapter 5 ORGANIZING Objectives: At the end of the discussion the following objectives will be accomplished: + Explain the importance of organizing for the business; ¢ Understand how the organizing function relates to using various fesources in order to accomplish strategic goals * Know the advantages and disadvantages of centralization and decentralization; * Describe how the organization provides for accountability through authority and responsibility; * Demonstrate ability to delegate responsibilities; and * Develop procedures for efficient workflow. Definition of Organizing Organizing is a managerial function that usually comes after planning. It is viewed as the second step in the management cycle. The concern of organizing as a management function is to put together all the necessary resources and devise a design so that individuals may end up accomplishing their activities in the most effective and efficient manner. The main intentions of organizing covers the determination of the tasks to be done in order to fulfill objectives, division of tasks into specific jobs, grouping jobs into departments, detailing reporting and authority relationships, delegating the authority necessary for task accomplishment, and allocating and deploying resources in a coordinated fashion. Organizing plays a significant role in the management process. Once plans are organized the manager's task and responsibility is to see that they are implemented. Given a well defined mission, core values, objectives, and strategy, the role of organizing is to start the process of carrying out the plan by defining jobs and working relationships. The organizing function of management affects almost all levels of an organization's operations. It determines who is to do what, who is in charge of whom, and how different people and parts of the organization link to and do their work with oneanother. All of these, of course, can be done in a variety of ways. The challenge of the strategic leader is to choose the best organizational form that will tailor-fit to the strategy and other situational needs of the firm. It is vital for the management any organization to be properly trained and well-acquainted in all functions of the organization. It is unfortunate, that many organizations do not allot ample time to consider the organizing function of management. Importance of Organizing Organizing is pooling of human, physical and/or financial Tesources so as to achieve the objectives taking into account the organizational structure and environment. It sets the systematic utilization through delegating and harmonizing tasks. Organizing translates plans into reality by decisive deployment of resources inside a decision-making structure known as the organizational structure. Plans direct organizing and convey where organization is heading and how to go there. In order to be well- organized, one has to identify what is the proper time to do the task and then afterwards schedule the preferential task for that particular time. The resources needed for the task have to be pinpointed then. Itshould be guaranteed that the required resources are obtainable in right quantity and right quality. A plan of action should be readied for what task to be done, at what time and how much budget. This would assist in doing a task efficiently and effectively. Both planning and organizing make ready an organization for meeting future difficulties. The Process of Organizing . Organizing must be cautiously worked out and must have a directed process. Theend outcome of | this processis anorganization-a whole consisting of an orchestrated parts working in consolidation to administer tasks to accomplish objectives more effectively and efficiently. : The following are the five steps that have to be consecutively Teiterated in order to ensure that organizing j 7 F i possible: i 8 is as efficient as1. Examine-plans and objectives Management must take to initiate the organizing process by reflecting on the organization’s plans and objectives. Objectives are the particular activities that must be terminated to fulfill goals. On the other hand, plans mold the activities necessary to reach these goals. 2. Determine major tasks essential to fulfill objectives Management must shortlist and decomposes all major tasks or jobs to be done within the realization of organizational goals. For some managers this task may appear engulfing. 3. Dividing major tasks into subtasks Major jobs may be divided into manageable work units. Management can categorized group activities in accordance to various models of departmentalization like functional, divisional, matrix, team or virtual. 4, Allocating resources and directives for subtasks This step supply sufficient resources for'the staff to realize the tasks. Management also assigns the prescribed activities to definite individuals. In addition, each individual must be given authority to execute the assigned tasks. 5, ‘Evaluating results of organizing strategy The fifth step is in many perspectives, the most significant. The feedback gathered provides information on how well the strategy is attaining the goals. The key is to keep learning from the mistakes and to continuously polish the process. The Organizational Chart An organizational chart is a diagram that visualizes the vertical structure of an organization, It shows the connections and relative ranks of its parts and positions/ jobs. It is also concerned with relationships among tasks and the authority to do the tasks. Eight kinds of relationships can be envisioned in an organization chart: 1. The division or specialization of labor 2. Relative authority 3. Departmentalization 4. Span of controleuag The levels of management Coordination centers Formal communication channels Decision responsibility An organizational chart of a company usually illustrates the managers and subordinates who make up an organization. It also demonstrates the relationships between the organization’s staff members which can be one of the following: 1 Line is a direct relationship between superior and subordinate. Lateral is relationship between different departments on the same hierarchical level. Staff is relationship between a managerial assistant and other areas. The assistant will be able to offer advice to a line manager. However, they have no authority over the line manager actions. Functional is relationships between specialist positions and other areas. The specialist will normally have authority to assert that a line manager executes any of their instructions. Inmany big companies the organization chart canbe sizable and unimaginably complex. Sometimes it is decomposed into smaller charts for each individual department within the organization. Organization charts have significant weaknesses that should be of interest to management developing and using them: 1 iz 3. They may imply a formality that doesn’t exist. They may not be in consonance with reality. Their usual top-down perspective. often minimizes the role of clients, front-line managers and employees without management responsibilities. They fail to consider the informal structure and informal communication. They often imply that a pyramidal structure is the best or sole way to organize. They fail to direct the possible power and authority of staff positions equated with line positions,7. Itonly shows ‘formal relationships’ and tells nothing of the pattern of human (social) relationships which develop. 8. It shows nothing about the managerial style adopted. Organizational Structure A. Division of Labor The Scottish economist Adam Smith saw division of labor as a key to economic progress by providing a cheaper and more efficient means of producing goods. Division of labor also known as work specialization is the breaking down of work into simple, repetitive tasks to eliminate unessential motion and confines the handling of different tools and parts. Smith inferred that division of labor enhanced productivity and efficiency by letting workers to specialize and become skilled at a particular task. This principle, together with technological progress, made feasible the astounding productivity of industrial companies in the 20th century. During the 1940s most manufacturing jobs in developed countries were highly specialized, with laborers working on specific, standardized, and repetitive tasks. The aftermath of this is decline in the cost of staffing, training, and compensation, since highly experienced workers were often no longer essential. Employees tend to become very expert at their respective tasks because of doing the same task repetitively. Despite the gains in productivity made feasible by the division of labor, managers must be aware of the disadvantages of specialization like fatigue, stress, boredom, low quality products, absenteeism, and turnover. With too much specialization, employees are isolated and do only a sole, small and irksome job. Such problems have led many organizations to create programs geared toward job enlargement and job enrichment. Others rotate assignments in order to challenge workers. B. Departmentalization Departmentalization is the categorizing of jobs under the supervision of a sole manager, based on some logical basis, for the purposes of planning, coordination and control. So after the work to be done is organized into distinguishable jobs through the process of division of labor, jobs are then integrated intorational sections or departments for effective harmonized effort. In practice the following are several manners to departmentalize, each with its own significant advantages and disadvantages: 1, Functional departmentalization, which includes grouping parallel jobs into their own function, like accounting, sales, human resources, information system, and engineering. Divisions may also be made by occupational groupings. Figure 1. Functional Structure Source: [Link] Advantages: : a. Easy communication and sharing of information with each other who are considered specialists in their own field. b. Quick and effective decisions in solving problems because of having the same perspective. c. Makes it easier for people in the same discipline to improve their skills and abilities from one another's experiences and thereby enhances individual and * organizational performance. d. Facilitates ease in monitoring performance evaluation for supervisor, because they usually possess high levels of skill in the particular function. e. Allows performance evaluation for group members to monitor and control one another’s behavior and performance levels.f. Creates teamwork that encourages high performance. g- Creates a career ladder based on superior performance through promotion. Disadvantages: a. Results in limited outlook because of the distinctiveness of each department; foreseeing the changing needs of consumers may become hard. b. Reduced cooperation and communication may happen because of the many layers of hierarchy. c. Serving needs of different regions by only a single functional department becomes difficult as companies grow and expand their operations 2. Divisional is the grouping of common product, market (customers) or geographical location. By segmenting according to the different products, the different customers served or the different geographical locations in which the entity operates, it will not be difficult to monitor all the company’s products and activities. Figure 2. Divisional Structure-Disney in the Early 1990s Attractions Magic kingdom Florida Source: [Link]Product Division is product departmentalization, which considers organizing around an enterprise’s product portfolio. Each product division contains the functions necessary to that service the specific goods or services it produces. Market Division functions into divisions that can be receptive to the needs of specific types of customers. Geographic Division services customers according to different geographic areas like regional, national or international level. Advantages: a. Quality products and customer service having focused their activities on a specific kind of good, service, or customer. Facilitates communication that resulted in improved decision making, which led to increasing performance. Customized management and problem solving like in geographic structure which placed managers proximate to the scene of operations than are managers at central headquarters; regional managers are well positioned tobe responsive to local situations such as the needs of regional customers and to fluctuations in resources. Thus regional divisions are often able to find solutions to region-specific _ problems and to use available resources more effectively than are managers at corporate headquarters. Facilitates teamwork among employees and able to combine their skills and knowledge and brainstorm creative and innovative ideas for products or improved customer. Having obtained a common identity and strategy to solving problems, their bonding heightens, and the result is better decision making. Easy for organizations to evaluate and reward the performance of each divisions and their managers and to give corresponding rewards in a manner related to their performance. Regional operations can be evaluated toward another by corporate managers which could facilitate sharingof ideas between regions and looking ways to better performance. h. Having developed personal relations with clients, regional managers and employees will find it natural to give customized service. i, Close recognition by managers with division employees can increase the latter commitment, loyalty, and job satisfaction. Disadvantages: a. Each division operates with its own set of functions so it would entail high operating and managing costs for the organization. b. Divisional structures with more managers and more levels of management hierarchy, poor communication may arise during coordination of their activities. c. Conflicts among divisions may arise as they compete for organizational resources and may even address their objectives at the expense of organizational ones. 3. Matrix is mix functional and divisional and is used by highly technical organizations for projects with specific time frame. It is a complex form which simultaneously categorized employees in two ways - by the function of which they are a member and by the product team on which they are currently working. Employees are supervised by both their regular supervisor and their current project manager. In practice the individual member of the organization has two bosses ~ a functional boss and a product boss. Figure 3, Matrix Structure ‘Chief Executive Officer, Vice President Vice President Engineering Manufacturing Project Manager i ae a L Project Manager iG Source: [Link] Vice President Manufacturing Vice President FinanceAdvantages a. It supports the development of specialized technical expertise while spreading out this expertise to the most appropriate operational areas. b. It eases speedy product development. c. Maximizes communication and cooperation between team members. d. Ease innovation and creativity. e. Facilitates solving . problems through team brainstorming. .£ Provides a work setting that empowers each employee for their work activities. z Disadvantages a. Increase role conflict and vulnerable to role ambiguity due to the demands on a two-boss employee relations. b. High levels of work stress because of role conflict and ambiguity. c. Limited opportunities for promotion having lateral (team to team) and not vertical for upper management positions. d. Violates unity of command because the employees have two bosses simultaneously for a period of time. e. Someemployees may not have a strong commitment to temporary assignment. Teamis one of the recent organizational structures developed in the 20th century, It is created usually for the purpose of accomplishing specific tasks. The creation of teams is mostly temporary in nature. For larger bureaucratic organizations they can benefit from the flexibility nature of teams; thus actively use teams to perform tasks.Figure 4, Team Structure Plant Manager New Product] Manufacturing Sales HumanResource | pjversity Development Manager Manager Manager Task Force Team [ erp [epee [snpove’ | [sia el [secrete Team Assignments Source: [Link] 5. Network is another tirnely and modern structure. Big businesses become too risky and difficult to manage. This is the reason why big firms outsource business function that can be done better and lesser in cost. Basically, managers in network structures consume most of their time coordinating * and controlling external relations, usually via electronic ways. Figure 5. Network Structure Management Inform: —, Source: [Link] Administration 6. Boundaryless structure The most advance idea in today’s organizational structure is the concept of boundarylessness. This a mix of feam and network structures, plus being temporary in nature. A company under this kind of structure works hand in hand with suppliers by giving technical support, leasing . them equipment, and giving advice. It implements low-cost focused strategy:a. Virtual Virtualisa special typeof boundaryless organization. It works in a network of external alliances, using the Internet. Basically, the core of the organization can be small but still the compan y can be market leader globally in its niche. The Web has an unlimited shelf space that the cost of selling niche goods is really decreasing. Using this type of structure, companies make good profit even if they do not sell in bulk. Most organizations especially big ones develop, modify and change their structures so that they tailor- fit with their strategies. The main tendency for the past decades is to go back to flatter structures. This structure seems also fitted for small companies. Maintaining multiple management levels is too costly and is not flexible enough to cope with new threats in the environment. C. Chain of Command The chain of command is a line of authority extending from the top to the bottom of the organizational structure. It is an unbroken line of authority that links all individuals whether managers or employees in the organization and specifies who reports to whom. Classic principles of organizing emphasize that one must be aware of the need to describe the scope of managers’ responsibility and authority by particularizing their place in the chain of,command. Another principle of organizing akin to the chain of command is unity of command, which states that a person should be held accountable to only one supervisor. Accountability means that the people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command. 1, Authority Authority is the formal and legal right of any manager to generate decisions, issue orders, and utilize resources in order to accomplish planned objectives. This authority is laid down in his job description. There are three basic significant principles in organizational authority, namely: + a. Authority is based on position in the organization and individuals in the same position have the same authority.b. Authority is approved by subordinates, so they comply with any orders because they believe in the managers legitimate authority. c. Authority emanates down the vertical hierarchy, so position at the top level has more formal authority than _ those at the lower level. Types of Authority The following are the different types of authority, namely: * Line Authority gives individuals in management positions the formal power to direct and govern immediate subordinates with consulting others. * Staff Authority is granted to staff specialists in their areas of expertise, limited than line authority and includes the right to advise, service, recommend, and counsel in the staff specialists’ area of expertise. © Functional Authority is delegated to individuals in management positions to have formal power over a specific subset of activities undertaken by personnel in the department. A legal department, for example, may have functional authority to intercede in any activity that could have legal consequences and implications. Delegation of Authority Delegation is the downward shift of authority and responsibility from a manager to a subordinate. Delegation separates the manager from the dictate of exigency. Delegation separates the manager to use his time on high priority activities. Most organization, most especially complex ones are being encourage practicing the art of delegation, because it can improve flexibility to meet customers’ needs and adaptation to competitive environments. Delegation also results to empowerment. Involvement through empowerment can enhance job satisfaction which would lead to good job performance. Overwork managers and underutilize workers are the negative outcomes of non- delegation of authority.In order to successfully delegate authority and responsibilities, managers must bear in mind the following steps: 1, Distinctively assign tasks to individuals in the team. Be particular with the assignments to be given to subordinates, Make sure: that they understand the responsibilities underlying the assigned tasks. Managers must also consider the skills, capabilities and willingness needed in completing the tasks, Give members appropriate degree of authority to do assigned tasks. The degree or level of authority is commensurate with the task. It is very difficult for a-subordinate to finish an assigned task if given little authority. In order to meet expectations on his assignment an individual without ample authority may just depend on persuasion and luck. Authority beyond ‘the limit of his responsibility may result to abuse of an individual. Generate acceptance of responsibility from team members. Responsibility is the twin brother of authority. Through delegation the obligation is shared by the manager and the subordinate and not shifted from manager to subordinate. In relation to his assigned duties, the subordinate has the right to make commitments, utilize resources, and make necessary actions. Establish accountability. Accountability on the part of the subordinate means being responsible for one’s actions and bearing whatever will be the consequences. Managers should monitor performances and reward outstanding outcomes of subordinates, Likewise, subordinates must report regularly and explain outcomes to their superiors. Managers should support authority delegation but at times find it very difficult to do so, because of the following reasons: * Delegation needs planning which needs time to do. Other managers prefer to do the task themselves than take the initial step of training someone to do the assignment. These managers overlook the time they would have saved in [Link] run and the improved process that could be attained through delegation.* Lack of confidence by managers in their subordinates’ competence. Managers must be confident in the capacity of his people to try delegating. However, proper training of subordinates by managers themselves may be sufficient to make everyone happy in performing their duties. * Insecurity of managers about their worth in the organization. The value of every manger comes from his productive and competent subordinates. * Dual accountability of managers. Managers are responsible fortheiractionsand that of theirsubordinates. Failure to perform assigned tasks of their subordinates means they fail too. On the other hand, subordinates’ achievements are shared success. Other Key Principles and Concepts in Delegation of Authority * Exceptional principle - Someone must be in charge. A person higher in the organization handles exceptions to the usual. The most exceptional, rare, or unusual decisions end up at the top management level because no one lower in rank inside the organization has the authority to handle them. * Scalar chain of command - The formal distribution of organizational. authority is in a hierarchical manner, so the higher the position one has in an organization, the more authority one has. * Parity principle - .Delegated authority must equate responsibility. With responsibility for completing a job goes the authority to accomplish the job. * Unity principle - Realistically speaking, no one in an organization can. repott to more than one supervisor. Employees should not have to determine which of their supervisors to satisfy because of the impossibility of carrying out all the instructions given them. . Span of Management Also known as span of control, is a very important concept of organizing function of management. It refers to the number of subordinates that can be handled effectively by a superior in an organization. It signifies how the relations are plannedbetween superior and subordinates in an organization. The typical and traditional guideline is a span of control of no more than 5-6 people. Basically, an ideal span of control depends upon the nature of an organization, skills and capabilities of manager, the employees’ skills and abilities, the nature of job, and the degree of interaction required between superior and subordinates. When organizing, managers must bear these limits in mind. Wide spans of management lead to flat organizational structures with fewer layers of management, and are thus considered more efficient. However, if spans become too wide managers may not be able to provide enough direction to subordinates. Narrow spans of management lead to tall organizational structures with many layers of management. Although narrower spans of management allow for closer supervision of subordinates they have many disadvantages, including cost, communication problems, and difficulty in developing the initiative and autonomy of subordinates. In general, the trend is toward wider spans of management, with an accompanying decrease in management hierarchy. Technological advancements and innovations in information processing and communication have made wider spans of management more feasible. 1, Narrow Span (Tall) vs. Wide Span (Flat) structure Span of management is generally grouped under two * categories, namely narrow span and wide span. Narrow span of management means a single manager supervises a few number of subordinates which result toa tall organizational structure. While, a wide span of management means a single manager or supervisor overlooks a big number of subordinates which leads to a flat organizational structure. There is a reverse relation between the span of control and the number of hierarchical levels in an organization. Factors influencing wider span of control are: a. Work performed by subordinates is uniform and monotonous. b. Subordinates perform standardized work tasks. ¢. Subordinates are fixed in a single place.d. Subordinates are highly skilled and necessitate little direction in doing tasks. e. Rules and procedures describing task activities are obtainable. f, Support systems and personnel are sufficient for the managers. g Little time is imperative in non-supervisory activities like coordination with other functional departments in the organization. E. Degree of Centralization Authority is said to be centralized when solely managers at the top level of an organization can make significant decisions. Centralization is the location of decision making authority near top hierarchy levels of the organization. Centralization is fit when close control of organizational operation is significant to its success. Using centralization, more managers areneeded, and the organizationmay respondsslowly to changes in the environment because of slow communications through the hierarchy. Close control is generally not fitted in supervising professionals Authority is decentralized when managers throughout the hierarchy are allowed to make significant decisions. Decentralization is the location of decision making authority near lower organizational levels. It results in few levels of operations and may mark down costs by necessitating fewer middle management positions. Decentralization is fit when initiative and quick responsiveness to the environment are necessary. A decentralized firm would allow its branch managers in regional offices to make tie-up decisions about their clients’ compliance with regulations. In order to lessen the communication and decision-making troubles that go with hierarchy’s growth, organizations may prefer decentralization to centralization, choosing to distribute authority to managers at all levels of the hierarchy and giving them responsibility for making decisions. The following are possible determinants of the extent of centralization or decentralization of firms: 1, The external environment of the organization — A complex and unpredictable environment necessitates low level management to make significant decisions.2, The nature of the decision - The riskier and the ‘more significant the decision, it is better to be centralized. 3, The abilities of low-level managers - Managers must have high decision-making skills to practice decentralization. 4. Managerial tradition of the organization - Whatever is the tradition in terms of decision making since the start, the firm may just continue. Formalization. Formalization is the extent to which there are standardized tules and procedures controlling the activities of employees in the organization. Thus, an organization with high degree of formalization has detailed job description and written documentation for, rules and procedures used to direct and handle employee behaviors. The more an organization can depend on formalization to detail imperative behaviors, the less it necessitates using direct supervision from the hierarchy. Formalization can affect in decrease operating costs and thus enhanced organizational performance in terms of efficiency. Once rules have been formed, they are inexpensive to apply and cost little to execute and sustain. All that is required is that newly hired employees ‘be educated the applicable rules to follow in various situations. Although some rules are essential to the smooth operation of an organization, excessive formalization can give rise to a number of issues: 1. Repress employee creativity and lessen flexibly to respond in critical and new situations. 2. Strict observance of rules without thinking about their outcomes can diminish the quality of decision making. 3. Difficult for an organization to modify and create new rules. - : . Informal Structure In addition to a formal structure in each organization created by management, there is a privy side that cannot be seen in the organizational chart. This hidden informal structure is Prescribed by the patterns, behaviors and interactions from the Personal rather than the official relationships of organizationalmembers, The influence in this structure comes from informal power associated to a particular individual. ' The informal structure ‘has no documented rules, is changeable in form and scope, is not easy to distinguish, and has unclear or unknown membership policies. For management, the informal structure may bean advantage or disadvantage. One of the advantageous qualities includes the ability to maintain company-wide information flow. The informal structure also accords people a sense of belongingness, thus satisfying employees’ social needs. Management can furnish information into the informal structure at very minimal cost. The disadvantageous qualities of the informal structure reflect the ‘positive qualities in several manners. The more sensational a rumor, the more likely is the informal structure to Te say it, outspread it and make it into the “truth.” Management may not determine what information is coming through the informal structure. Employees may spoil a great part of time cherishing and partaking in the informal structure. Lastly, the informal structure can discriminate new employees, good performers and change agents even if how hard the effort of the formal structure making them a part of the organization. 1. Informal groups Members of the organization’ may create an informal groupings based on similarities of their interests and hobbies like playing bowling or badminton, forming a union, discussing everyday work challenges or eating together during lunch breaks. Other join informal group just because they wanted to be accepted as coworkers. This group may continue for a few hours, for a day or two or for several years. 2. The grapevine The grapevine is an informal communication network within the organization. Most of the time, it is more speedy to use it than the organization’s formal channels of communication. Formal communication follows the pattern of the chain of command while information transmitted through the grapevine is multidirectional across organizational structure. Grapevine information may be important or of no significance at all; highly precise or completely twisted; and very intellectual to pure gossip.Management must try to tune in to it rather than extinguish it. People who are key to the flow of information must be pinpointed so that they can be utilized in spreading useful information to others in the organization. The Organizational Design Organizational design is the generation or modification of an organization structure to reflect efforts in responding to environmental changes both internal and external and ensuring collaboration. In many ways the creation of organization design is just like playing a jigsaw puzzle, picking parts one at a time and tries to assemble them to make a whole. Basically, there are tow basic forms of organizational structure which aré the mechanistic and organic. However, for the purpose of discussion bureaucracy is included for readers’ appreciation. Bureaucracy During the past decades, most: organizations followed the bureaucratic pattern of structure. A bureaucracy is a form of organization characterized by logic, order and legitimate use of formal authority. It has the objectives of orderliness, fairness and high efficiency. It has features like clear-cut division of labor, strict hierarchy of authority, formal rules and procedures, and promotion based on competency. Today, many organizations find bureaucracy ahindrance to responding to changes in the innovative environments. Mechanistic Structure At times mechanistic structure is synonymously used with bureaucracy, because it is also based on formal authority which is carefully outlined and accurately followed. The following are main characteristics of an organization using this structure, namely: 1, Clearly particular tasks; 2. Accurate description of the rights and obligations of members; 3. Accurately described line and staff ‘positions with formal relations between the two; and 4. Formal communication throughout — the organization structure.Rigid and formal procedures in mechanistic structure ensure equitable and fair service to a large number of people. Although, the guarantee of uniform treatment is evident, these rules and procedures tend to impede organizational growth due to time- consuming communication and decision-making processes. Mechanistic structure is tailor-fit to organizations when the external environmentisstable. The significant disadvantage of this structure is inflexibility to adjust to change and coping with the unexpected. Organic Structure An organic structure is based on collaboration and knowledge- based authority. It is less formal in nature and the lines of authority may change depending on the circumstance. It works better in a dynamic environment because of being more flexible. This structure does not depend heavily on documented rules and procedures so it can develop new ones as the need arises. The following are main characteristics of an organization using this structure, namely: Roles that are not elaborately defined; Tasks that are continually reassigned; Minimal dependence on formal authority; Decentralized control; Expedite decision-making; and Informal patterns of both delegation and communication. arene Organization Life Cycle Like human beings, most organizations follow certain stages knownaslifecycle. Eachstagehas features thatcanhaveconnotations on the firm structure. There four stages in the organization life cycle which are birth, youth, midlife and maturity. * Birth, Birth stage is the beginning or founding of a firm. It does not have formal structure or delegation of authority. The founder rules the organization. * Youth. The organization is trying to grow at this stage. The focus is on how to expand the firm through attending to customer needs, The organization is becoming, more organic trying to formalize its structure and delegating authority.Midlife, Atthe height ofits success, an organizationin its midlife is larger with more complex and formal structure. Additional levels are evident in the chain of command and founder may find it difficult to remain in supervision. As the organization matures, it becomes more mechanistic in structure. Maturity. Having maintained a stable and secure environment, as the firm reaches maturity, it becomes less innovative and less inclined to expanding. Organizations in this stage are slowly moving to bankruptcy with decline in sales and reduced profits, Firms however, may’ start modifying strategies necessary to revitalize. Factors Affecting Organizational Design Decisions Strategy. Strategy is how an organization tries to position itself in the market in terms of its product/service. A company may use to be always the first in the market with its newest and best unique product, which is called differentiation strategy. It may also settle to produce product already in the market for cost efficiency, which is a cost-leadership strategy. Managers organize in order to accomplish the objectives of the organization for which they work, Thus, the strategy of the firm affects organizing decisions. Changes in strategy frequently necessitate changes in the way the enterprise is organized. Companies using differentiation strategy may use organic structure to respond quickly to changes. Companies using cost- leadership strategy may elect to utilize mechanistic structure. Size. Small enterprises tend to have less formalization, centralization, and complexity in their organizational structure. Individuals in small firms may perform tasks based on their likes, dislikes, ability or needs. Small organizations follow the organic structure. As the organization grows there is already the need for formal work assignments and delegation of authority, thus the creation of a formal structure. Communication and hierarchical relationships serve as basis for authority, responsibility and control. In order to maximize specialization, operate effectively and improve efficiency, larger organizations use mechanistic structure.Environmental Conditions. The environment is the world in which the organization operates and includes factors like economic, socio-cultural, legal-political, technological and natural conditions. The key element in the external environment that is material to organizing is uncertainty. Some organizations face competitive environments that are dynamic and are quite complex, while others face relatively stable conditions. Generally, dynamic environments call for organizing decisions that lead to less formalization and centralization in the organizational structure to give way to continuous proactive improvement and updating. While, organizations that operate in stable environments need to use mechanistic structure for _ their advantage. Technology. Technology is the way tasks are done using tools, equipments, techniques and human-know-how. Advancements in technology create competitive pressures for all organizations, although it basically results in efficiency for firms. The desires of customers refashion with changes in technology. The processes by which an enterprise converts inputs into outputs may also affect organizing decisions. Organic structure is fit for small-batch and continuous processes while mass production works best in mechanistic structure.