Fundamentals of Organizing

Organizing arranging the activities of the enterprise in such a way that they

systematically contribute to the enterprise’s goals the process of determining how resources are allocated and

prepared to accomplish an organization’s mission the process by which managers establish working relationships

among employees to achieve goals

Results of Organizing tasks and authority, reporting relationships, grouping of jobs, and

systems of coordination

Nature of organisational structure

Formal pattern of interactions and co-ordination designed by management to link

the tasks of individuals and groups in achieving organisational goals.

OR

Layout of jobs and their linkage to one another for the completion of tasks and successful

achievement of organizational goals.

organizational structure

Four elements:

1. Assignment of tasks and responsibilities to individuals and units.

2. Clustering these to form a hierarchy.

3. Mechanisms for vertical co-ordination.

4. Mechanisms for horizontal co-ordination.

Nature of organisational structure The organisation chart

Line diagram depicting broad outlines of an organisation’s structure. They indicate, how jobs are grouped and who manages the relationships.

Developing an organizational chart is the overall responsibility of the management.

Principles of developing a goog chart design Charts should show who has authority over who. Charts should show official lines responsibility &

communication.

Chairperson,M.D., and C.E.O.

Secretary’s Office

GMMarketing

GeneralCounsel

GMOperations

GMH.R.

GMFinance

Market Support

Communication

Field Mgmt Region 2

Field Mgmt Region 1

Actuarial

Insurance Operations

IMS

Health Unit

H.R. Develop

Training

Investment

Internal Audit

Financial Analysis

Real Estate

Tax

Organization Chart

ExecutiveVice President

V icePresident

DistrictA

DistrictB

Region1

DistrictC

DistrictD

Region2

DistrictE

DistrictF

Region3

VicePresident

V icePresident

President ExecutiveVice President

Chief ExecutiveOfficer

Chain of Command

Unbroken line of authority that ultimately links each individual with the top position in the organization.

Chain of command also shows the connection at every successive layer.

The Chain of Command

DistrictA

DistrictA

DistrictB

DistrictB

DistrictC

DistrictC

DistrictD

DistrictD

DistrictE

DistrictE

DistrictF

DistrictF

DistrictG

DistrictG

Region1

Region1

Region2

Region2

Region3

Region3

Region4

Region4

Region5

Region5

VicePresident

VicePresident

VicePresident

VicePresident

VicePresident

VicePresident

VicePresident

VicePresident

VicePresident

VicePresident

Chief ExecutiveOfficer

Chief ExecutiveOfficer

ExecutiveVice President

ExecutiveVice President

ExecutiveVice President

ExecutiveVice President PresidentPresident

Methods of vertical co-ordination:

How People communicate

‘vertically’

Formalisation: Degree to which written policies, rules,

procedures, job descriptions and other documents specify what actions are(not) to be taken under a given set of circumstances. (written policies and procedures)

It is all about having a formal base for your organization.

For Example: written policy of how to conduct elections, how to organize a meeting; how to deal with a problem in the finance department etc.

Small V/S BIG businesses

Span of Management

Number of subordinates reporting to a specific manager.

It is an important element, that affects the shape and height of an organizational structure.

More levels in the organization means more chances of ineffective communication and management.

In order to make effective, management, communication and control from top to bottom, it is essential that there not too many or very few levels

BUT WHY??????

Can we put more people under the supervision of every

manager depends upon the following:

Factors influencing span of management: Low interaction requirements. High competence levels. Work similarity (between organisational peers). Low problem frequency and seriousness. Physical proximity. Few non-supervisory duties of managers. Considerable available assistance. High motivational possibilities of work.

Levels in the Hierarchy

Tall Structure Flat Structure

TALL

STRUCTURE

TALL

STRUCTURE

F L A T S T R U C T U R E

Tall V/S Flat

What if you have to go from Tall to Flat????

Downsizing

Rightsizing

Decision Making and Authority

Who makes decisions in irganizations

CentralisationExtent to which power & authority are retained at the top organisational levels.

De-centralisationExtent to which power & authority are delegated to lower levels.

Factors favouring De-centralisation Large organisational size Geographic dispersion Technological complexity Environmental uncertainty.

Methods of vertical co-ordination

‘… extent to which power and authority will be retained at upper levels’. Influenced by:

‘… extent to which power and authority will be retained at upper levels’. Influenced by:

Large size: larger organisations likely to be more Decentralised.

Large size: larger organisations likely to be more Decentralised.

Geographic dispersion: more dispersed likely to be decentralised, to enable control at a number of sites.

Geographic dispersion: more dispersed likely to be decentralised, to enable control at a number of sites.

Technological complexity:with more complex technology,need to devolve authority to lower levels.

Technological complexity:with more complex technology,need to devolve authority to lower levels.

Environmental uncertainty:with rapid change, need for moreemployees to be involved in responding to challenges.

Environmental uncertainty:with rapid change, need for moreemployees to be involved in responding to challenges.

DelegationAssignment of part of a manager’s work to others, along with both responsibility & authority necessary to achieve expected results.

Factors restraining delegation Fear subordinate failure. Time to train subordinates. Enjoy doing tasks.

Authorities in an Organization:

Configuration of line and staff positions: Line authority

Authority following the chain of command established by the formal hierarchy.

Functional authorityAuthority of staff over others in the organisation in matters related directly to their respective functions e.g. HRM dept.

Methods of horizontal co-ordinationHorizontal co-ordination:

Linking of activities across departments at similar levels.

Need for information processing across the organisation.

Promotes innovation through dissemination of ideas & information.

Methods of horizontal co-ordination

Horizontal co-ordination promoted by: Slack resources

Cushion of resources that facilitates adaptations to internal/external pressures, as well as initiation of changes.

Information systemsOne information source for many users.

Lateral relationsDirect contact, liaison roles, task forces, teams.

Lecture summary

Methods of vertical co-ordination Formalisation Span of management Centralisation vs de-centralisation Delegation Line & staff authority.

Methods of horizontal co-ordination Slack resources Information systems Lateral relations.