1. Chapter 8 Concepts of Organizing

2. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-2 1.Identify the organizing function of management. 2. Explain the unity of command principle and its applications. 3.Define the span of management principle and the factors that influence its applications. 4.Describe departmentation and alternative approaches for grouping activities and assigning work. 5.Explain the importance of authority to supervisory management. 1.Identify the organizing function of management. 2. Explain the unity of command principle and its applications. 3.Define the span of management principle and the factors that influence its applications. 4.Describe departmentation and alternative approaches for grouping activities and assigning work. 5.Explain the importance of authority to supervisory management. After studying this chapter, you will be able to:

3. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-3 6.Explain the meaning of line and staff authority and how these influence organizational structures and supervisory relationships. 7.Describe how functional authority may be granted to specialized staff for certain purposes. 8.Discuss applications of matrix-type organizational structure. 9.Define downsizing (restructuring) and its implications for organizational principles. 6.Explain the meaning of line and staff authority and how these influence organizational structures and supervisory relationships. 7.Describe how functional authority may be granted to specialized staff for certain purposes. 8.Discuss applications of matrix-type organizational structure. 9.Define downsizing (restructuring) and its implications for organizational principles. After studying this chapter, you will be able to:

4. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-4 THE ORGANIZING FUNCTION OF MANAGEMENT Organization —Group structured by management to carry out designated functions and accomplish certain objectives People are the substance and essence of any organization. Organizational success is more likely if employees are given top-priority attention by their managers and supervisors. Organization —Group structured by management to carry out designated functions and accomplish certain objectives People are the substance and essence of any organization. Organizational success is more likely if employees are given top-priority attention by their managers and supervisors. 1

5. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-5 THE UNITY OF COMAMAND PRINCIPLE Unity of command principle —Each employee has only one direct supervisor. Having more than one direct supervisor usually leads to unsatisfactory performance by the employee due to confusion of authority. Unity of command principle —Each employee has only one direct supervisor. Having more than one direct supervisor usually leads to unsatisfactory performance by the employee due to confusion of authority. 2

6. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-6 THE SPAN OF MANAGEMENT PRINCIPLE The principle that there is an upper limit to the number of subordinates that a supervisor can manage effectively. Also called span of supervision, span of authority, and span of control. The principle that there is an upper limit to the number of subordinates that a supervisor can manage effectively. Also called span of supervision, span of authority, and span of control. 3

7. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-7 FACTORS INFLUENCING THE SPAN OF MANAGEMENT Supervisory competence: Training, experience, and know-how have a direct impact on the number of employees who can be supervised effectively. Specialized staff assistance: Quality help from others in the organization. Employee abilities: The greater the employees’ capacity for self-direction, the greater the feasible managerial span. Supervisory competence: Training, experience, and know-how have a direct impact on the number of employees who can be supervised effectively. Specialized staff assistance: Quality help from others in the organization. Employee abilities: The greater the employees’ capacity for self-direction, the greater the feasible managerial span. 3

8. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-8 FACTORS INFLUENCING THE SPAN OF MANAGEMENT Location of employees: When located in close proximity to employee, observation and communication are relatively easy. Nature and complexity of activities: The simpler, routine, and more uniform the work activities, the greater number of people one supervisor can manage. Objective performance standards: Good performance standards support a broader span of management. Eliminates the need for frequent discussions concerning performance. Location of employees: When located in close proximity to employee, observation and communication are relatively easy. Nature and complexity of activities: The simpler, routine, and more uniform the work activities, the greater number of people one supervisor can manage. Objective performance standards: Good performance standards support a broader span of management. Eliminates the need for frequent discussions concerning performance. 3

9. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-9 THE SPAN OF MANAGEMENT PRINCIPLE Relationship of Managerial Levels Lead person— Employee placed in charge of other employees who performs limited managerial functions but is not considered part of management. The narrower the span of management, the more managerial levels have to be introduced in organizational design. An organization’s structures tend to be taller when spans of management are narrower. Relationship of Managerial Levels Lead person— Employee placed in charge of other employees who performs limited managerial functions but is not considered part of management. The narrower the span of management, the more managerial levels have to be introduced in organizational design. An organization’s structures tend to be taller when spans of management are narrower. 3

10. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-10 RELATIONSHIP OF MANAGEMENT AND ORGANIZATIONAL LEVELS 4

11. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-11 DEPARTMENTATION AND APPROACHES FOR GROUPING ACTIVITIES Division of work (specialization) —Dividing work into smaller components and specialized tasks to improve efficiency and output. Department —Organizational unit for which a supervisor has responsibility and authority. Flexible workforce —Employees trained in a variety of skills to perform multiple tasks. Division of work (specialization) —Dividing work into smaller components and specialized tasks to improve efficiency and output. Department —Organizational unit for which a supervisor has responsibility and authority. Flexible workforce —Employees trained in a variety of skills to perform multiple tasks. 4

12. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-12 Functional departmentation: Grouping departments by the jobs to be done. Provides better coordination than having the same functions performed in different departments under different supervisors. Product or service departmentation: Grouping departments by product or service into relatively independent units within the organization. Functional departmentation: Grouping departments by the jobs to be done. Provides better coordination than having the same functions performed in different departments under different supervisors. Product or service departmentation: Grouping departments by product or service into relatively independent units within the organization. DEPARTMENTATION AND APPROACHES FOR GROUPING ACTIVITIES 4

13. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-13 Geographic (territorial, locational) departmentation: Units of organization are physically dispersed or functions performed in different locations. Customer departmentation: Grouping activities based on customer considerations to better service differing needs and characteristics of different customers. Geographic (territorial, locational) departmentation: Units of organization are physically dispersed or functions performed in different locations. Customer departmentation: Grouping activities based on customer considerations to better service differing needs and characteristics of different customers. DEPARTMENTATION AND APPROACHES FOR GROUPING ACTIVITIES 4

14. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-14 Process and equipment departmentation: Grouping activities by the process involved or equipment needed. Time departmentation: Grouping according to the time period during which the work is performed. Other factors, such as function and service, may also influence time and shift departmentation. Mixed departmentation: Use of several types of departmentation, such as functional, geographic, and time, simultaneously. Process and equipment departmentation: Grouping activities by the process involved or equipment needed. Time departmentation: Grouping according to the time period during which the work is performed. Other factors, such as function and service, may also influence time and shift departmentation. Mixed departmentation: Use of several types of departmentation, such as functional, geographic, and time, simultaneously. DEPARTMENTATION AND APPROACHES FOR GROUPING ACTIVITIES 4

15. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-15 MIXED DEPARTMENTATION 4

16. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-16 Work Assignments and Organizational Stability Principle of organizational stability —No organization should become overly dependent on one or several key “indispensable” individuals. A supervisor’s task of assigning departmental work will be less difficult by consistently utilizing the strengths and experience of all employees. Principle of organizational stability —No organization should become overly dependent on one or several key “indispensable” individuals. A supervisor’s task of assigning departmental work will be less difficult by consistently utilizing the strengths and experience of all employees. DEPARTMENTATION AND APPROACHES FOR GROUPING ACTIVITIES 4

17. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-17 IMPORTANCE OF AUTHORITY TO SUPERVISORY MANAGEMENT Understanding Managerial Authority and Its Delegation Managerial authority —The legitimate right to direct and lead others. Delegation of authority —The process of assigning duties and related authority to subordinates. Managerial authority —The legitimate right to direct and lead others. Delegation of authority —The process of assigning duties and related authority to subordinates. 5

18. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-18 IMPORTANCE OF AUTHORITY TO SUPERVISORY MANAGEMENT Understanding Managerial Authority and Its Delegation In order to learn how to give an order, you must first learn how to take an order. If you give people a job to do, give them the authority they need to carry out their responsibilities. In order to learn how to give an order, you must first learn how to take an order. If you give people a job to do, give them the authority they need to carry out their responsibilities. 5

19. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-19 UNDERSTANDING MANAGERIAL AUTHORITY AND ITS DELEGATION Acceptance Theory of Authority: A manager only possesses authority when the employee accepts it The origin of authority can be considered from two viewpoints: The formal way that originates from the top and reaches down As something subordinates confer on a supervisor by the degree of willingness they accept or respond to direction. The origin of authority can be considered from two viewpoints: The formal way that originates from the top and reaches down As something subordinates confer on a supervisor by the degree of willingness they accept or respond to direction. 5

20. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-20 LIMITATIONS TO AUTHORITY Limitations to a supervisor’s authority may arise from many factors, both within and outside of the company. Some of these are: Explicit and implicit External and internal Political Legal Explicit and implicit External and internal Political Legal Ethical Moral Social Economic Ethical Moral Social Economic 5

21. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-21 LINE AND STAFF AUTHORITY AND ITS INFLUENCE Organization chart —Graphic portrayal of authority and responsibility relationships Line authority —The right to direct others and to require them to conform to decisions, policies, rules, and objectives. Line-type organizational structure —Structure that consists entirely of line authority arrangement with a direct chain of authority relationships. Organization chart —Graphic portrayal of authority and responsibility relationships Line authority —The right to direct others and to require them to conform to decisions, policies, rules, and objectives. Line-type organizational structure —Structure that consists entirely of line authority arrangement with a direct chain of authority relationships. 6

22. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-22 LINE AND STAFF AS AUTHORITY RELATIONSHIPS All supervisors should know whether they are part of the organization in a line or staff capacity, and what these words imply in relation to their positions and other departments. 6

23. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-23 LINE TYPE OF ORGANIZATIONAL STRUCTURE 6

24. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-24 LINE AND STAFF TYPE ORGANIZATIONAL STRUCTURE Staff authority — The right to provide counsel, advice, support, and service in a person’s area of expertise. Line department — Department whose responsibilities are directly related to making, selling, or distributing the company’s product or service. Staff authority — The right to provide counsel, advice, support, and service in a person’s area of expertise. Line department — Department whose responsibilities are directly related to making, selling, or distributing the company’s product or service. 6

25. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-25 LINE AND STAFF TYPE ORGANIZATIONAL STRUCTURE Staff department — Specialized department responsible for supporting line departments and providing specialized advice and services. Line-and-staff-type organizational structure — Structure that combines line and staff departments. Staff department — Specialized department responsible for supporting line departments and providing specialized advice and services. Line-and-staff-type organizational structure — Structure that combines line and staff departments. 6

26. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-26 LINE-AND-STAFF TYPE ORGANIZATIONAL STRUCTURE 6

27. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-27 SUPERVISORS AND THE HUMAN RESOURCES DEPARTMENT Human resources management (HRM) —Organizational philosophies, policies, and practices that strive for the effective use of employees. Human resources department —Staff department which provides advice and service to other departments on human resources matters. Human resources management (HRM) —Organizational philosophies, policies, and practices that strive for the effective use of employees. Human resources department —Staff department which provides advice and service to other departments on human resources matters. 6

28. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-28 SUPERVISORS AND THE HUMAN RESOURCES DEPARTMENT In most organizations, the director of human resources and the human resources operate in a staff capacity. Human resources departments are becoming more strategic within an organization. Effectiveness depends on how clearly top-level managers have defined their activities and authority. 6

29. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-29 FUNCTIONAL AUTHORITY Principle of compulsory staff advice (service) —Situation in which supervisors are required to consult with specialized staff before making certain decisions. Functional authority —Granted to specialized staff people to give directives concerning matters within their expertise. Principle of compulsory staff advice (service) —Situation in which supervisors are required to consult with specialized staff before making certain decisions. Functional authority —Granted to specialized staff people to give directives concerning matters within their expertise. 7

30. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-30 MATRIX-TYPE ORGANIZATIONAL STRUCTURE A hybrid structure in which regular functional departments co-exist with project teams from different departments. Many high-tech firms employ project (matrix) structures to focus special talents from different departments on specific projects for certain periods. A hybrid structure in which regular functional departments co-exist with project teams from different departments. Many high-tech firms employ project (matrix) structures to focus special talents from different departments on specific projects for certain periods. 8

31. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-31 MATRIX-TYPE ORGANIZATIONAL STRUCTURE 8

32. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-32 MATRIX-TYPE ORGANIZATIONAL STRUCTURE Problems associated with matrix organization structure include: Direct accountability—violates the principle of unit of command Direct accountability—violates the principle of unit of command Priorities of scheduling for individuals assigned to work on several projects Priorities of scheduling for individuals assigned to work on several projects Direct accountability—violates the principle of unit of command Direct accountability—violates the principle of unit of command Priorities of scheduling for individuals assigned to work on several projects Priorities of scheduling for individuals assigned to work on several projects 8

33. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-33 DOWNSIZING AND ITS IMPLICATIONS Large-scale reduction and elimination of jobs that usually results in reduction of middle-level managers, removal of organizational levels, and a widened span of management for remaining supervisors. Also called Restructuring or Right-sizing 9

34. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-34 DOWNSIZING AND ITS IMPLICATIONS Some middle-level management and staff positions have been eliminated because information technology has made it possible for higher-level managers to acquire data quickly and keep in close touch with operations. Organizations that downsized most effectively are those that have planned for it and have tried to harmonize the new structure with the old. Some middle-level management and staff positions have been eliminated because information technology has made it possible for higher-level managers to acquire data quickly and keep in close touch with operations. Organizations that downsized most effectively are those that have planned for it and have tried to harmonize the new structure with the old. 9

35. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-35 DOWNSIZING AND ITS IMPLICATIONS Re-engineering —Restructuring on the basis of processes and customer needs and services, rather than by department and functions. Horizontal corporation —A firm restructured by customer process and organizational structure is very flattened. Virtual corporation —Companies linking together on a temporary basis to take advantage of marketplace opportunities. Re-engineering —Restructuring on the basis of processes and customer needs and services, rather than by department and functions. Horizontal corporation —A firm restructured by customer process and organizational structure is very flattened. Virtual corporation —Companies linking together on a temporary basis to take advantage of marketplace opportunities. 9

36. Chapter 8/Concepts of Organizing Hilgert & Leonard © 2001 8-36 END