Module 3

ORGANISING IN ORGANISING IN

MANAGEMENTMANAGEMENT

Management 8/e - Chapter 10Management 8/e - Chapter 10 22

Planning AheadPlanning Ahead

What is organizing as a management function?What is organizing as a management function? What are the major types of organization What are the major types of organization

structures?structures? What are the new developments in What are the new developments in

organization structures?organization structures? What organizing trends are changing the What organizing trends are changing the

workplace?workplace?


OrganizingOrganizing

The deployment of organizational resources The deployment of organizational resources to achieve strategic goals.to achieve strategic goals.

The deployment of resources is reflected in The deployment of resources is reflected in the division of labor.the division of labor.

Formal lines of authority and mechanisms Formal lines of authority and mechanisms for coordinating diverse organization tasks.for coordinating diverse organization tasks.


What is organizing as a management What is organizing as a management function?function?

Organizing and organization structureOrganizing and organization structure OrganizingOrganizing

The process of arranging people and other resources to The process of arranging people and other resources to work together to accomplish a goal.work together to accomplish a goal.

Organization structureOrganization structure The system of tasks, workflows, reporting relationships, The system of tasks, workflows, reporting relationships,

and communication channels that link together diverse and communication channels that link together diverse individuals and groups.individuals and groups.


Figure :Figure :Organizing viewed in Organizing viewed in relationship with the other management relationship with the other management

functions.functions.



Organizing Process: consists of Organizing Process: consists of a. Function of identifying, defining and grouping of a. Function of identifying, defining and grouping of

work/activities or tasks, establishing authority work/activities or tasks, establishing authority relationships among people and assigning tasks to relationships among people and assigning tasks to people.people.

b. Defining authority, responsibility, delegation and b. Defining authority, responsibility, delegation and accountabilityaccountability

c. Allocating resources of an organization to achieve c. Allocating resources of an organization to achieve the specific orgn’l goals efficiently and effectively.the specific orgn’l goals efficiently and effectively.



Organising Process: steps:Organising Process: steps:1.1. Consideration of orgl objectivesConsideration of orgl objectives2.2. Grouping of activities into depatmentsGrouping of activities into depatments3.3. Deciding which department will be key Deciding which department will be key

departments (key result areas)departments (key result areas)4.4. Determining levels at which various Determining levels at which various

decisions are to be made.decisions are to be made.5.5. Determining the span of managementDetermining the span of management6.6. Setting up a coordination mechanismSetting up a coordination mechanism


Organsiation Structure: Formal And Organsiation Structure: Formal And InformalInformal

Formal structures Formal structures The structure of the organization in its official state.The structure of the organization in its official state. The intentional structure of roles in a formally The intentional structure of roles in a formally

organized enterprise.organized enterprise. An organization chart is a diagram describing reporting An organization chart is a diagram describing reporting

relationships and the formal arrangement of work relationships and the formal arrangement of work positions within an organization.positions within an organization.

An organization chart identifies the following aspects An organization chart identifies the following aspects of formal structure:of formal structure:

The division of work.The division of work. Supervisory relationships.Supervisory relationships. Communication channels.Communication channels. Major subunits.Major subunits. Levels of management.Levels of management.


Informal structures Informal structures A A “shadow” organization made up of the unofficial, but “shadow” organization made up of the unofficial, but

often critical, working relationships between often critical, working relationships between

organization members.organization members.

A network of interpersonal relationships that arise A network of interpersonal relationships that arise

when people associate with one another.when people associate with one another.

Potential advantages of informal structures:Potential advantages of informal structures: Helping people accomplish their work.Helping people accomplish their work.

Overcoming limits of formal structure.Overcoming limits of formal structure.

Gaining access to interpersonal networks.Gaining access to interpersonal networks.

Informal learning.Informal learning.


Informal structures (cont.) Informal structures (cont.) Potential disadvantages of informal structures:Potential disadvantages of informal structures:

May work against best interests of entire organization.May work against best interests of entire organization.

Susceptibility to rumor.Susceptibility to rumor.

May carry inaccurate information.May carry inaccurate information.

May breed resistance to change.May breed resistance to change.

Diversion of work efforts from important objectives.Diversion of work efforts from important objectives.


Four Points AboutFour Points Aboutthe Organization Chartthe Organization Chart

Visual representation

Set of formal tasks

Formal reporting relationships

Framework for vertical control


Relatively narrow Relatively narrow span of controlspan of control

Relatively wide span Relatively wide span of controlof control

Organizational Structure and Span of Organizational Structure and Span of ControlControl


Span of ManagementSpan of Management

The number of employees reporting The number of employees reporting to a supervisor.to a supervisor.

Traditional view, seven or so per Traditional view, seven or so per manager.manager.

Many organizations today, 30 or Many organizations today, 30 or more per manager.more per manager.

Generally if supervisors must be Generally if supervisors must be closely involved with employees span closely involved with employees span should be small.should be small.


Large Spans of Control:Large Spans of Control:Factors:-Factors:-

Work is stable or routine.Work is stable or routine. Similar task is performed by everyone.Similar task is performed by everyone. A single location.A single location. Employees are highly trained.Employees are highly trained. Rules and procedures are available.Rules and procedures are available. Support systems and personnel are available Support systems and personnel are available

for supervisor.for supervisor. Little time is required in nonsupervisory Little time is required in nonsupervisory

activities.activities. Personal preferences and styles of Personal preferences and styles of

management favor a large span.management favor a large span.


Tall versus Flat Structure Tall versus Flat Structure

Span of control used in an organization Span of control used in an organization determines whether the structure is tall or flat.determines whether the structure is tall or flat.

Tall structure has a narrow span and more Tall structure has a narrow span and more hierarchical levels.hierarchical levels.

Flat structure has a wide span, is horizontally Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels.dispersed and fewer hierarchical levels.

The trend has been toward wider spans of The trend has been toward wider spans of control.control.


Tall verses Flat StructureTall verses Flat Structure


Basic Forms ofBasic Forms ofOrganizational StructureOrganizational Structure

Divisional Divisional OrganizationOrganization

International International OrganizationOrganization

Functional Functional OrganizationOrganization

Matrix Matrix OrganizationOrganization


What are the major types of organization What are the major types of organization structures?structures?

Functional structuresFunctional structures People with similar skills and performing similar People with similar skills and performing similar

tasks are grouped together into formal work units.tasks are grouped together into formal work units. Members work in their functional areas of Members work in their functional areas of

expertise.expertise. Are not limited to businesses.Are not limited to businesses. Work well for small organizations producing few Work well for small organizations producing few

products or services.products or services.


Potential advantages of functional structures:Potential advantages of functional structures: Economies of scale.Economies of scale. Task assignments consistent with expertise and Task assignments consistent with expertise and

training.training. High-quality technical problem solving,High-quality technical problem solving, In-depth training and skill development.In-depth training and skill development. Clear career paths within functions.Clear career paths within functions.


Figure 2 Figure 2 Functional structures in a Functional structures in a business, branch bank, and community business, branch bank, and community

hospital.hospital.


Potential disadvantages of functional Potential disadvantages of functional structures:structures: Difficulties in pinpointing responsibilities.Difficulties in pinpointing responsibilities. Functional chimneys problem.Functional chimneys problem. Sense of cooperation and common purpose break Sense of cooperation and common purpose break

down.down. Narrow view of performance objectives.Narrow view of performance objectives. Excessive upward referral of decisions.Excessive upward referral of decisions.


Divisional structuresDivisional structures Group together people who work on the same Group together people who work on the same

product or process, serve similar customers, and/or product or process, serve similar customers, and/or are located in the same area or geographical are located in the same area or geographical region.region.

Common in complex organizations.Common in complex organizations. Avoid problems associated with functional Avoid problems associated with functional

structures.structures.


Figure 3 Figure 3 Divisional structures based on Divisional structures based on product, geography, customer, and process.product, geography, customer, and process.


Potential advantages of divisional structures:Potential advantages of divisional structures: More flexibility in responding to environmental More flexibility in responding to environmental

changes.changes. Improved coordination.Improved coordination. Clear points of responsibility.Clear points of responsibility. Expertise focused on specific customers, products, Expertise focused on specific customers, products,

and regions.and regions. Greater ease in restructuring.Greater ease in restructuring.


Potential disadvantages of divisional Potential disadvantages of divisional structures:structures: Duplication of resources and efforts across Duplication of resources and efforts across

divisions.divisions. Competition and poor coordination across Competition and poor coordination across

divisions.divisions. Emphasis on divisional goals at expense of Emphasis on divisional goals at expense of

organizational goals.organizational goals.


Types of divisional structures and how they group job Types of divisional structures and how they group job

and activities:and activities: Product structures focus on a single product or service.Product structures focus on a single product or service.

Geographical structuresGeographical structures focus on the same location or focus on the same location or

geographical region.geographical region.

Customer structuresCustomer structures focus on the same customers or focus on the same customers or

clients.clients.

Process structuresProcess structures focus on the same processes.focus on the same processes.


Matrix structureMatrix structure Combines functional and divisional structures to gain Combines functional and divisional structures to gain

advantages and minimize disadvantages of each.advantages and minimize disadvantages of each. Used in:Used in:

ManufacturingManufacturing Service industriesService industries Professional fieldsProfessional fields Non-profit sectorNon-profit sector Multi-national corporationsMulti-national corporations


Fig 4 Fig 4 Matrix structure in a small Matrix structure in a small multi-project business firm.multi-project business firm.


Potential advantages of matrix structures:Potential advantages of matrix structures: Better cooperation across functions.Better cooperation across functions.

Improved decision making.Improved decision making.

Increased flexibility in restructuring.Increased flexibility in restructuring.

Better customer service.Better customer service.

Better performance accountability.Better performance accountability.

Improved strategic management.Improved strategic management.


Potential disadvantages of matrix structures:Potential disadvantages of matrix structures: Two-boss system is susceptible to power struggles.Two-boss system is susceptible to power struggles.

Two-boss system can create task confusion and Two-boss system can create task confusion and

conflict in work priorities.conflict in work priorities.

Team meetings are time consuming.Team meetings are time consuming.


What are the new developments in What are the new developments in organization structures?organization structures?

Guidelines for horizontal structures:Guidelines for horizontal structures: Focus the organization around processes, not functions.Focus the organization around processes, not functions.

Put people in charge of core processes.Put people in charge of core processes.

Decrease hierarchy and increase the use of teams.Decrease hierarchy and increase the use of teams.

Empower people to make decisions critical to performance.Empower people to make decisions critical to performance.

Utilize information technology.Utilize information technology.

Emphasize multiskilling and multiple competencies.Emphasize multiskilling and multiple competencies.

Teach people how to work in partnership with others.Teach people how to work in partnership with others.

Build a culture of openness, collaboration, and performance Build a culture of openness, collaboration, and performance

commitment.commitment.



Team structuresTeam structures

Extensively use permanent and temporary Extensively use permanent and temporary

teams to solve problems, complete special teams to solve problems, complete special

projects, and accomplish day-to-day tasks.projects, and accomplish day-to-day tasks.

Often use cross-functional teams.Often use cross-functional teams.


Fig 5 Fig 5 How a team structure uses cross-How a team structure uses cross-functional teams for improved lateral functional teams for improved lateral

relations.relations.


Potential advantages of team structures:Potential advantages of team structures: Eliminates difficulties with communication and Eliminates difficulties with communication and

decision making.decision making. Eliminates barriers between operating Eliminates barriers between operating

departments.departments. Improved morale.Improved morale. Greater sense of involvement and identification.Greater sense of involvement and identification. Increased enthusiasm for work.Increased enthusiasm for work. Improved quality and speed of decision making.Improved quality and speed of decision making.


Potential disadvantages of team structures:Potential disadvantages of team structures:

Excessive time spent in meetings.Excessive time spent in meetings.

Effective use of time depends on quality of Effective use of time depends on quality of

interpersonal relations, group dynamics, and team interpersonal relations, group dynamics, and team

management.management.


Network structuresNetwork structures A central core that is linked through networks of A central core that is linked through networks of

relationships with outside contractors and relationships with outside contractors and

suppliers of essential services.suppliers of essential services.

Own only core components and use strategic Own only core components and use strategic

alliances or outsourcing to provide other alliances or outsourcing to provide other

components.components.


Figure 10.6 Figure 10.6 A network structure for a A network structure for a Web-based retail business.Web-based retail business.


Potential advantages of network structures:Potential advantages of network structures:

Firms can operate with fewer full-time employees Firms can operate with fewer full-time employees

and less complex internal systems.and less complex internal systems.

Reduced overhead costs and increased operating Reduced overhead costs and increased operating

efficiency.efficiency.

Permits operations across great distances. Permits operations across great distances.


Potential disadvantages of network structures:Potential disadvantages of network structures: Control and coordination problems may arise from Control and coordination problems may arise from

network complexity.network complexity. Potential loss of control over outsourced activities.Potential loss of control over outsourced activities. Potential lack of loyalty among infrequently used Potential lack of loyalty among infrequently used

contractors.contractors. Excessively aggressive outsourcing can be Excessively aggressive outsourcing can be

dangerous.dangerous.


A Matrix OrganizationA Matrix OrganizationMARTHA STEWART

Media Group

Magazines Books Internet Radio/Newspaper

Network/Cable TV

Merchandising Group

Kmart line

Catalog line

Sears Paint

Specialty retailing

Area Specialists

Cooking

Entertainment

Weddings

Crafts

Gardening

Home

Holidays

Children


An International OrganizationAn International Organization

CEOCEO

Retail Retail Division ADivision A

Retail Retail Division BDivision B

International International DivisionDivision

Latin Latin AmericaAmerica EuropeEurope AsiaAsia


The Future of The Future of Organizational StructureOrganizational Structure

Boundary-less OrganizationsBoundary-less Organizations

Team OrganizationsTeam Organizations

Virtual OrganizationsVirtual Organizations

Learning OrganizationsLearning Organizations



Deadly sins of outsourcing:Deadly sins of outsourcing: Outsourcing activities that are part of the core.Outsourcing activities that are part of the core. Outsourcing to untrustworthy vendors.Outsourcing to untrustworthy vendors. Not having good contracts with the vendor.Not having good contracts with the vendor. Overlooking impact on existing employees.Overlooking impact on existing employees. Not maintaining oversight; losing control to vendors.Not maintaining oversight; losing control to vendors. Overlooking hidden costs of managing contracts.Overlooking hidden costs of managing contracts. Failing to anticipate need to change vendors, cease Failing to anticipate need to change vendors, cease

outsourcing.outsourcing.



Boundaryless organizationsBoundaryless organizations Eliminate internal boundaries among subsystems and external Eliminate internal boundaries among subsystems and external

boundaries with the external environment.boundaries with the external environment. A combination of team and network structures, with the addition of A combination of team and network structures, with the addition of

“temporariness.”“temporariness.” Key requirements:Key requirements:

Absence of hierarchy.Absence of hierarchy. Empowerment of team members.Empowerment of team members. Technology utilization.Technology utilization. Acceptance of impermanence.Acceptance of impermanence.

Boundaryless organizations (cont.)Boundaryless organizations (cont.) Encourage creativity, quality, timeliness, flexibility, and efficiency.Encourage creativity, quality, timeliness, flexibility, and efficiency.

Knowledge sharing is both a goal and essential componentKnowledge sharing is both a goal and essential component


Figure 10.7 Figure 10.7 The boundaryless The boundaryless organization eliminates internal and organization eliminates internal and

external barriers.external barriers.



Team OrganisationTeam Organisation

Virtual organization.Virtual organization. A special form of boundaryless organization.A special form of boundaryless organization.

Operates in a shifting network of external alliances that Operates in a shifting network of external alliances that

are engaged as needed, using IT and the Internet.are engaged as needed, using IT and the Internet.

Learning organizationLearning organization


Informal GroupsInformal Groups The GrapevineThe Grapevine IntrapreneuringIntrapreneuring

The Informal OrganizationThe Informal OrganizationA Powerful Dynamic orgnA Powerful Dynamic orgn


What organizing trends are changing the What organizing trends are changing the workplace?workplace?

Contemporary organizing trends include:Contemporary organizing trends include: Shorter Shorter chains of commandchains of command..

Less Less unity of commandunity of command..

Wider Wider spans of controlspans of control.. More More delegation and empowermentdelegation and empowerment..

DecentralizationDecentralization with centralization with centralization..

Reduced Reduced use of staffuse of staff..


Shorter chains of commandShorter chains of command The line of authority that vertically links all The line of authority that vertically links all

persons with successively higher levels of persons with successively higher levels of management.management.

Organizing trend:Organizing trend: Organizations are being “streamlined” by cutting Organizations are being “streamlined” by cutting

unnecessary levels of management.unnecessary levels of management. Flatter structures are viewed as a competitive Flatter structures are viewed as a competitive

advantage.advantage.


Less unity of commandLess unity of command Each person in an organization should report to Each person in an organization should report to

one and only one supervisor.one and only one supervisor. Organizing trend:Organizing trend:

Organizations are using more cross-functional teams, Organizations are using more cross-functional teams, task forces, and horizontal structures.task forces, and horizontal structures.

Organizations are becoming more customer conscious.Organizations are becoming more customer conscious. Employees often find themselves working for more than Employees often find themselves working for more than

one boss.one boss.


Wider spans of controlWider spans of control The number of persons directly reporting to a The number of persons directly reporting to a

manager.manager. Organizing trend:Organizing trend:

Many organizations are shifting to wider spans of Many organizations are shifting to wider spans of control as levels of management are eliminated.control as levels of management are eliminated.

Managers have responsibility for a larger number of Managers have responsibility for a larger number of subordinates who operate with less direct supervision.subordinates who operate with less direct supervision.


Fig-8 Fig-8 Spans of control in “flat” versus “tall” Spans of control in “flat” versus “tall” structures.structures.


More delegation and empowermentMore delegation and empowerment Delegation is the process of entrusting work to Delegation is the process of entrusting work to

others by giving them the right to make decisions others by giving them the right to make decisions and take action.and take action.

The manager assigns responsibility, grants The manager assigns responsibility, grants authority to act, and creates accountability.authority to act, and creates accountability.

Authority should be commensurate with Authority should be commensurate with responsibility.responsibility.


Guidelines for effective delegation:Guidelines for effective delegation: Carefully choose the person to whom you delegate.Carefully choose the person to whom you delegate. Define the responsibility; make the assignment clear.Define the responsibility; make the assignment clear. Agree on performance objectives and standards.Agree on performance objectives and standards. Agree on a performance timetable.Agree on a performance timetable. Give authority; allow the other person to act independently.Give authority; allow the other person to act independently. Show trust in the other person.Show trust in the other person. Provide performance support.Provide performance support. Give performance feedbackGive performance feedback Recognize and reinforce progress.Recognize and reinforce progress. Help when things go wrong.Help when things go wrong. Don’t forget your accountability for performance results.Don’t forget your accountability for performance results.


More delegation and empowerment (cont.)More delegation and empowerment (cont.) A common management failure is unwillingness to A common management failure is unwillingness to

delegate.delegate. Delegation leads to empowerment.Delegation leads to empowerment. Organizing trend:Organizing trend:

Managers are delegating more and finding more ways to Managers are delegating more and finding more ways to empower people at all levels.empower people at all levels.


Decentralization with centralizationDecentralization with centralization

Centralization is the concentration of authority for Centralization is the concentration of authority for

making most decisions at the top levels of the making most decisions at the top levels of the

organization.organization.

Decentralization is the dispersion of authority to Decentralization is the dispersion of authority to

make decisions throughout all levels of the make decisions throughout all levels of the

organization.organization.


Decentralization with centralization (cont.)Decentralization with centralization (cont.) Centralization and decentralization not an Centralization and decentralization not an

“either/or” choice.“either/or” choice. Organizing trend:Organizing trend:

Delegation, empowerment, and horizontal Delegation, empowerment, and horizontal structures contribute to more decentralization in structures contribute to more decentralization in organizations.organizations.

Advances in information technology allow for Advances in information technology allow for the retention of centralized control.the retention of centralized control.


Reduced use of staffReduced use of staff Specialized staff Specialized staff

People who perform a technical service or provide People who perform a technical service or provide special problem-solving expertise to other parts of the special problem-solving expertise to other parts of the organization.organization.

Personal staffPersonal staff People working in “assistant-to” positions that provide People working in “assistant-to” positions that provide

special support to higher-level managers.special support to higher-level managers.


Reduced use of staff (cont.)Reduced use of staff (cont.) Line and staff managers may disagree over staff authority.Line and staff managers may disagree over staff authority.

Advisory Authority.Advisory Authority. Functional authority.Functional authority.

No one best solution for dividing line-staff responsibilities.No one best solution for dividing line-staff responsibilities. Organizing trend:Organizing trend:

Organizations are reducing staff size.Organizations are reducing staff size. Organizations are seeking increased operating efficiency by Organizations are seeking increased operating efficiency by

employing fewer staff personnel and smaller staff units.employing fewer staff personnel and smaller staff units.

Module 3

Business

Transcript of Module 3