Chapter 5

Basic Elements of
Organizing

Slide content created by Charlie Cook, The University of West Alabama

Copyright © Houghton Mifflin Company. All rights reserved.
 Learning Objectives
After studying this chapter, you should be able to:
1. Identify the basic elements of organizations.
2. Describe alternative approaches to designing jobs.
3. Discuss the rationale and the most common bases for grouping jobs
into departments.
4. Describe the basic elements involved in establishing reporting
relationships.
5. Discuss how authority is distributed in organizations.
6. Discuss the basic coordinating activities undertaken by
organizations.
7. 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 individual’s work-
related 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 (cont’d)
• 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 Smith’s 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 11–6
 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 (cont’d)
• Job Characteristics Approach:
– Core Dimensions
• Skill variety—the number of tasks a person does in a job.
• Task identity—the extent to which the worker does a complete
or identifiable portion of the total job.
• Task significance—the perceived importance of the task.
• Autonomy—the 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 (cont’d)
• 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 owner-
manager’s 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 (cont’d)
• Functional Departmentalization
– Grouping jobs involving the same or similar activities.

• Advantages • Disadvantages
– Each department can be – Decision making becomes
staffed by functional-area slow and bureaucratic.
experts. – Employees narrow their
– Supervision is facilitated focus to the department
in that managers only and lose sight of
need be familiar with a organizational goals/
narrow set of skills. issues.
– Coordination inside each – Accountability and
department is easier. 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 • Disadvantages
– All activities associated – Managers may focus on
with one product can be their product to the
integrated and coordinated. exclusion of the rest of
– Speed and effectiveness of the organization.
decision making are – Administrative costs may
enhanced.
increase due to each
– Performance of individual department having its
products or product groups own functional-area
can be assessed. 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 (cont’d)
• 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
– Direct—manager’s relationship with each subordinate.
– Cross—among the subordinates themselves.
– Group—between 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 (cont’d)
• 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 • Flat Organizations
– Are more expensive – Lead to higher levels of
because of the number employee morale and
of managers involved. productivity.
– Foster more – Create more
communication problems administrative
because of the number responsibility for the
of people through whom relatively few managers.
information must pass. – 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 • Subordinate
– Reluctant to delegate. – Reluctant to accept
– Disorganization prevents delegation for fear of
planning work in failure.
advance. – Perceives no
– Subordinate’s success rewards for
threatens superior’s accepting additional
advancement.
responsibility.
– Lack of trust in the
subordinate to do well.
– 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 lower-
level managers.
• Centralization
– Systematically retaining power and authority in the
hands of higher-level managers.
• Factors Determining Choice of Centralization
– External environment’s 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 (cont’d)
• 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 organization’s 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 • functional
• organization structure departmentalization
• product departmentalization
• job design
• customer departmentalization
• job specialization • location departmentalization
• job rotation • chain of command
• job enlargement • span of management
• job enrichment • authority
• job characteristics • delegation
approach • centralization
• work teams • coordination
• departmentalization • pooled interdependence

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 Key Terms (cont’d)
• sequential
interdependence
• reciprocal
interdependence
• line position
• staff position
• administrative
intensity

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