3 Organizing and Organizatiytjfytuyuon

8/13/2019 3 Organizing and Organizatiytjfytuyuon

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Organizing and Organization

Chapter Highlights and Glossary of Key Terms:

I. Business Organizations as Systems

System - A self collection of interacting and independent components,

working toward a common purpose.

A. Characteristics of Organizational Systems

Primary TasksDefined duties that are necessary because of the

nature of the systems products or services.

Hierarchy of SystemsThe process whereby self-contained

subsystems develop within a parent organization, such as a

laboratory within a hospital.Open SystemsSystems that interact with their environment by

both receiving and delivering products and services.

EquilibriumA state of stability within and between the system

and its environment.

Self-RegulationThe feedback process by which the system monitorsperformance and provides information to its members.


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. B. Functions of Organizational Systems

Input MechanismThe process through which needed resources are

acquired and replaced.

TransformationThe internal process whereby resources received

through the input channels are converted into the products and services

produced by the organization.Output MechanismThe process of delivering the goods and services

produced to the external environment.

II. Structure of Organizations

Formal BureaucracyThe officially sanctioned lines of authority assigned by

the owners of the organization.Informal GroupsAlliances that form outside the boundaries of the formal

bureaucracy from the interaction and allegiance of people with common

interests.


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A. Formal Organizational Structure

1. Design elements and factors

2. Design strategies and models

a. Bureaucratic models

b. Situational models

B. Characteristics of Formal and Informal Groups

1. Leaders

2. Followers

3. Group goals

4. Shared opinions

5. Performance and commitment expectations

6. Sanctions

C. Group Management and Coordination


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IV. Authority

AuthorityThe empowerment by formal job classification of an individual to

make commitments and act on behalf of the organization.

A. Responsibility

B. Job-Related Authority

C. Types and Roles of Authority

Line Authoritysupervisory responsibility assigned through the formal

delegation of authority.

Staff AuthorityInfluence exerted through the control of support

services, such as the business office and personnel, which provide

recommendations to the line manager and set institution-wide policies.Functional AuthorityThe power to enforce directives, such as

physicians medical orders, within the context and boundaries of a

clearly defined specialty and span of control.


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D. Delegation of Authority

DelegationThe temporary assignment of the authority and

responsibility to perform a duty normally perfromed by a supervisor.

1. Delegation routes

2. When to delegate

3. Fear of delegation

V. Organization Charts

Organization ChartThe formal written presentation of the structural plan of

the organization.

A. Traditional Organization Chart Format

B. Alternative Chart Format

VI. Principles of Organizational Structure and Authority

A. Departmentalization

DepartmentalizationThe grouping together of related activities to

expedite the production process.


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SpecializationThe process of having an individual or group of people

who are highly trained in a specific and limited area or task, with

specialized work space and equipment, to effectively produce a product

or service.

B. Decentralization

DecentralizationThe process of assigning the decision-makingprocess to those who are actually permorming the work.

C. Unity of Command

Unity of CommandThe process of ensuring that each individual

reports to only one supervisor.

D. Scalar PrincipleScalar PrincipleA linear system of authority providing a direct vertical

link from the board of directors to the lowest-level worker.

E. Span of Control

Span of ControlThe theory that there is a definable limit to the

number of people one person can effectively supervise, within the limits

of specific work parameters and situations.


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F. Exception Principles

Exception PrincipleThe principle of referring for resolution by a

superior only those things that cannot be solved by the employees at

their own level.


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Organizing

Process

a course of action, a route, a progression

Structure

an arrangement, a configuration, a

construction


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Organizing

The process of deploying resources to

achieve strategic goals


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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


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Organizing process leads to creation of

an Organizational Structure

Formal tasks assigned

Formal reporting relationships

Systems design for coordination across

departments


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Features of Organizational Structure

President

Vice President Vice President Vice President


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Work Specialization

Also called division of Labor

Specialists get good at a specific task

Efficiency increases

Employees are selected based on specificskills

Training is geared toward increasedefficiency.

Based on a mechanist ic organizat ion


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Chain of Command

An unbroken line of authority

Unity of Command-Everyone has only one

supervisor

Scalar Principle-Everyone has at least oneboss. Everyone is included


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Authority

The formal rights of amanager to manage

Vested in the organizationalposition, not the person.

Provides the manager with

positional power Authority is accepted by the

subordinates

Authority flow from the top,down.


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Responsibility

The duty to perform the task the employee has been

assigned.

ResponsibilityandAuthorityare delegated togetherand make the employee accountableto superiors


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Line and Staff Organizations

Line departments perform the organizations

primary tasks.

Production, marketing, sales

Staff Departments provide specialized skills insupport of line departments.

Engineering, Human Resources, Legal,

Advise and council in areas of expertise


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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


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Centralization

Decision making is done high in theorganization

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


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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.


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Departmentalization or Structure


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Functional Approach

Grouping of positions based on skills of functions.

General Manager

Marketing Manufacturing Sales


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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


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Divisional Approach

Based on outputs e.g. products

Can Mfg.

InternationalOperations

Bottle Plant

Trucking

Beverage

Corp.


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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


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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.


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Team Structure

Delegate authority

Push decision making to the lowest level

Gain commitment from workersMarketing

Production

Engineering

Sales


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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


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Network or Value Chain Management

Do what you do well, sub-contract everything else to those who dobetter 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

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