Organizing

THE PROCESS OF DEPLOYING RESOURCES TO ACHIEVE

STRATEGIC GOALS
The process of organizing takes place within a structure
reflected by the way in which the organization

Divides its labor into departments and jobs

Establishes formal lines of authority
Establishes mechanisms for coordinating diverse
tasks
 NATURE & PURPOSE

 (1) Verifiable objectives, which, as indicated in part, are a major part of

planning;
 (2) a clear idea of the major duties or activities involved, and
 (3) An understood area of discretion or authority so that the person
filling the role knows what he or she can do to accomplish goals.
 In addition, to make a role work out effectively, provision should be
made for supplying needed information and other tools necessary for
performance in that role.
 PROCESS

1. Identification of tasks: all the relevant activities and tasks are identified. Number of activities
depends upon the objectives of the organization. It should be done effectively such that no
important activity is omitted or repeated.
2. Grouping jobs: Once all the activities are identified the next step is grouping of the related
jobs. This leads to set up of the departments and divisions in the organization like production
department, finance department, marketing department, and personnel department.
3. Assigning work: When activities are divided among departments the next step would be to
appoint suitable persons for the various tasks. Experts in their fields are appointed as appointed
as heads of their departments and for lower positions peoples are appointed.
4. Delegation of authority: When some work is assigned to someone then he must be given
some authority to do that work effectively. Assigning work and delegation goes parallel to each
other. Assigning work without proper authority is meaningless.
5. Coordination: As all activities in organization are distinct but they are interdependent so there
must be coordination among the departments. In absence of coordination ultimate goal of the
organization will not be achieved. Success of the organization is fully dependent on better
coordination between the different divisions and managers.
 Formal Organization

 Formal Organisation is formed when two or more persons come

together.
 They have a common objective or goal and are willing to work
together to achieve this similar objective.
 Formal Organisation has its own rules and regulation.
 These rules must be followed by the members (employees and
managers).
 A formal organisation has a system of co-ordination.
 It also has a system of authority.
 It has a clear superior-subordinate relationship.
 In a formal organisation, the objectives are specific and well-
defined.
 All the members are given specific duties and responsibilities.
Examples of formal organisation are:- a company, a school, a
college, a bank, etc.
 Informal Organization

 Informal Organisation exists within the formal organisation.

 An informal organisation is a network of personal and social relationships.
 People working in a formal organisation meet and interact regularly.
 They work, travel, and eat together.
 Therefore, they become good friends and companions.
 There are many groups of friends in a formal organisation.
 These groups are called informal organisation.
 An informal organisation does not have its own rules and regulation.
 It has no system of co-ordination and authority.
 It doesn't have any superior-subordinate relationship nor any specific and
well-defined objectives.
 Here in informal organisation, communication is done through the
grapevine.
Organizing process leads to creation of an
Organizational Structure

Formal tasks assigned

Formal reporting relationships
Systems design for coordination across departments
Features of Organizational Structure

President

Vice President Vice President Vice President

 Departmentalization by different strategies
 a. Functional departmentalization—jobs are grouped by the functions
(i.e., marketing, finance, human resources) performed. This approach can be
used in all types of organizations, although the functions change to reflect the
organization’s objectives and work activities.

 b. Product departmentalization—jobs are grouped by product line. In

this approach, each major product area is placed under the authority of a
manager who’s a specialist in, and is responsible for, everything having to do
with that product line.

 c. Geographical departmentalization—jobs are grouped on the basis of

a territory or geography such as southern, midwestern, or northwestern regions
for an organization operating only in the United States; or for a global
company, maybe U.S., European, Canadian, and Asian-Pacific regions.
Departmentalization by different strategies

d. Process departmentalization—this method

groups jobs on the basis of product or customer flow. In
this approach, work activities follow a natural processing
flow of product or even customers.

e. Customer departmentalization—jobs are

grouped on the basis of common customers who have
common needs or problems that can best be met by
having specialists for each.
 Work Specialization

Also called division of Labor

Specialists get good at a specific task
Efficiency increases
Employees are selected based on specific skills
Training is geared toward increased efficiency.
Based on a mechanistic organization
 Chain of Command

An unbroken line of authority

Unity of Command-Everyone has only one
supervisor
Scalar Principle-Everyone has at least one boss.
Everyone is included
 Authority
 The formal rights of a
manager to manage
 Vested in the organizational
position, not the person.
 Provides the manager with
positional power
 Authority is accepted by the
subordinates
 Authority flow from the top,
down.
 Line authority

Authority is based on superior-subordinate

relationships and is managerial in nature
Authority to give orders to subordinates
The authority to direct subordinates and require
them to comply to decisions, policies, plans, and
objectives
Generally follows the principle of unity of command
 Staff Authority

Authority is based on expertise in specialty areas

Provides information, counsel, advice, and guidance
in specialty areas and is not managerial in nature
The authority to make recommendations to line
organization
The recommendations can be accepted, rejected, or
altered by the line organization
 Responsibility
 The duty to perform the task the employee has been assigned.

 Responsibility and Authority are delegated together and make

the employee accountable to superiors
 Line and Staff Organizations

Line departments perform the organization’s

primary tasks.
 Production, marketing, sales, R&D
Staff Departments provide specialized skills in
support of line departments.
 Engineering, Human Resources, Legal,
 Advise and council in areas of expertise
 Span of Management (Control)

The number of employees reporting to a supervisor.

Size varies with the
 type of organization,
 skill of the subordinates,
 Geographic dispersion
 Managerial skill and preference
 Centralization

Decision making is done high in the organization

Tendency toward decentralization
 Greater use of employee skills
 Less mechanistic
 Relieve burden on manager to do everything
 Decisions made closer to the action
 Decisions are make quicker
 Factors influencing Decentralization
 Amount of change and uncertainty in the environment
 Corporate strategy and culture
 Size and dispersion of the organization
 The risk of failure
 The greater the risk, the higher up the decisions are made.
Departmentalization or Structure

Division

Corporate Headquarters

Division Division
 Functional Approach
 Grouping of positions based on skills of functions.

General Manager

Marketing Manufacturing Sales

 Advantages and Disadvantages of
Functional Organization Structures

 Advantages
 Efficient use of resources
 In depth skills
 Specialized career development
 Coordination within functions
 Excellent technical problems solving
 Disadvantages
 Poor communications across functions
 Slow response to external changes
 Requires high level coordination
 Limited general management training
 Divisional Approach
 Based on outputs e.g. products, sbu’s etc.

Beverage
Beverage

Can
CanMfg.
Mfg. Trucking
Trucking
Corp.
Corp.

International
International Bottle
BottlePlant
Plant
Operations
Operations
Advantages and Disadvantages of
Divisional Structure

 Advantages
 Customer oriented
 Faster response to varied environmental changes
 Coordination between functions within structure
 Easy to fix blame
 Emphasis on overall product and division goals
 Disadvantages
 Duplicate resources
 Less specialization within divisions
 Less top management control
 Competition for corporate resources
 Matrix Organization

 Two sets of bosses-functional and divisional.

 Violates the chain of command, e.g. two bosses, not clear line of
authority.
 Attempts to lower the risks of functional and divisional
structures
 Requires employee to manage two sets of bosses.
 Team Structure

Delegate authority
Push decision making to the lowest level
Gain commitment from workers
Marketing

Sales Production

Engineering
 Team Approach

 Advantages
 Same as functional departments
 Reduces barriers among functions
 Lower response time
 Better morale and enthusiasm
 Less overhead
 Disadvantages
 Lots of meetings
 Dual loyalties
 Network or Value Chain Management
 Do what you do well, sub-contract everything else to those who do better than
you.
 Look for the best industry practices
 Management the value chain rather than the organization
 Advantages
 Increased competitiveness
 Flexibility
 Reduced costs
 Disadvantages
 Requires a different kind of management
 Need to sell the concept
 Less control
Change Management-A Process
 Models of Planned Organizational Change

Change can be managed

Organizational change is the adoption of a new idea
or behavior by an organization
Change comes from recognition that environmental
changes will create mismatches
 Forces for change

 Mismatches occur between the company and its external environment

 Customers
 Competitors
 Technology
 Economics
 International
 Government
 As well as its internal environment
 Management
 Employees
 Unions
 Inefficiencies
Managers must be aware of the mismatches as
they develop and initiate change
 Initiating Change

Change can be made by

 finding established ways to eliminate the mismatch
 Downsizing to eliminate mismatch of department size and reduced
demand.
 Create new ways
 Two people share one job
 Creativity to Initiate Change
 Define it please
 “From the top of the barn, a horse looks like a violin” -Mark Twain
 The ability to view ordinary situations in unique ways
 Function of Organizational Climate and Individual characteristics
 Climate
 Open communications
 Good mix of experts and non experts
 Freedom to choose problems
 Resources available without a specific reason
 Individual Characteristics
 Originality
 Curosity
 Open Mindedness
 Focused approach
 Persistance
 Playful attitude
 Receptiveness to new ideas
 Creativity in Organizations
 Creativity can be built
into an organization by
creating an appropriate
structure
 New Venture teams
(intrapreneurship)
 Idea Champions
 New Venture Funds
 Change Management – Two Paths of
Change

Effectiveness
Efficiency
 Efficiency

Classical, hierarchical, mechanistic structure

Environment slow to change
TQM
Management changes the culture (top down)
Teams uses Shewhart Cycle, quality circles to
continuously improve efficiency
 Effectiveness

 Reengineered or OD oriented, team based structure

 Environment quick to change
 Structural coupling to the environment in order to keep up
with the change
 Employees coupled to and focusing on the customer’s needs
 Individual controls all the processes needed to support each
customer
Making it happen—Implementing Change.

Implementing change involves perturbing the

system.
Resistance to change is natural
 Feedback loops keep change from happening
 Change involves hard work by everyone
 Employees sense they will lose something
Resistance can’t be ignored
 A feedback loop

Employees Management
Get nervous Audits progress

Employee changes Management

Process back again Changes process

Employee hides
His change
 Force Field Analysis to Overcome
Resistance

 When a change is introduced, some forces drive it while

some inhibit it
 Remove the forces that inhibit the change
 The forces that drive it will make it happen
 You can also
 Communicate and Educate
 Encourage participation by all
 Negotiate
 Coerce
 Types of Planned Change

Strategy
Technology
New Products
Structure
Culture
Changes are interrelated. A change in one affects the
others.
 Part One

SELECT AN ORGANIZATION WITH WHICH YOU

ARE MOST FAMILIAR WITH, PREFERABLY ONE
WITH WHICH YOU ARE MOST FAMILIAR WITH
AT THIS TIME. IT COULD BE A DEPARTMENT
WITHIN A LARGER ORGANIZATION
 Describe the organization as a spider
plant. Let your imagination run wild.

Characteristics of a Spider Parallels to my organization

Plant
How does the image fit? Does it grasp
the nature of the organization? Any
new insights
 Now use the spider plant to think
about how your organization could
be.
 In other words, use the image interpreted -in whatever way you
wish- as the basis for a new organizational design. If you had the
opportunity to design your organization as a spider plant, how
would it be?

Spider Plant Characteristics Parallels in the New Design

What are the differences between the new
one and the one you described in part one?