The Organizing Function

What is Organizing? Organizing is the deployment of organizational resources to achieve strategic goals.

Organizing the Vertical Structure Organization Structure it is defined as; (1) a set of formal tasks assigned to individuals and departments, (2) formal reporting relationships, including lines of authority, decision responsibility, number of hierarchical levels and span of manager’s control; and (3) and the design of systems to ensure effective coordination of employees across departments.

Organization Chart : The characteristics of vertical structure are portrayed in the organization structure. It is the visual representation of an organization’s structure. A sample organization chart of a company is illustrated in the next slide.

Organization Chart General manager Marketing manager production manager Personnel manager finance manager R & D manager Creativity Advertising sales purchasing Plant Supervisor Maintain ance Quality control

Work Specialization: Also called division of labor, is the degree to which organizational tasks are sub-divided in separate jobs. For instance, the production tasks are divided into bottling, quality control and maintenance. When work specialization is extensive, employees specialize in a single task. Jobs are small, but they can be performed efficiently.

Chain of Command: The chain of command is an unbroken line of authority that links all persons in an organization and shows who reports to whom. There are two underlying principles. Unity of Command which means that each employee is held accountable to only one supervisor. The scalar principle refers to a clearly defined line of authority in the organization which includes all employees.

Authority, Responsibility, Accountability and Delegation: 1.Authority Is a formal and legitimate right of a manager to make decisions, issue orders and allocate resources to achieve organizationally desired outcomes. Characteristics of Authority: a.Authority is vested in organizational positions not people. b.Authority is accepted by employees. c.Authority flows down the vertical hierarchy

2.Responsibility: is the duty/obligation to perform the task or activity an employee has been assigned. Managers must be assigned authority commensurate with responsibility. When managers have responsibility for task outcomes but little authority, the job is possible but difficult.

3. Accountability: The fact that the people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command.

4. Delegation: Is the process that managers use to transfer authority and responsibility to positions below them in the hierarchy. Line authority: means that people in the management positions have formal authority to direct and control immediate employees Staff Authority: is the right to advise, recommend and counsel in the staff specialist's areas of expert.

Span of Management: Also called the span of control, is the number of employees reporting to one supervisor. It determines how closely a supervisor can monitor employees. Traditional view 7 employees per manager. Today 30, 40 or even higher.

Wide Span of Management: – when a large number of employees is reporting to the same manager or supervisor (Less no. of managers) – The organization is called a Flat organization Narrow Span of Management: – when a small number of employees is reporting to the same manager or supervisor (Large no. of managers) – The organization is called a Tall organization

Tall Versus Flat Structure: The span of control used in an organization determines whether the structure is tall or flat. A tall structure has an overall narrow span and more hierarchical levels. A flat structure has a wide span, is horizontally dispersed and has fewer hierarchical levels.

Narrow span Chief Executive Tall hierarchy

Wide span Chief Executive Flat hierarchy

Narrow and Wide Span of Control  TALL ORGANIZATION  Close control  Superiors tend to get involved in subordinates’ work.  Many levels of management  Excessive distance between lowest and top level.  FLAT ORGANOZATION  More load on superior level of management,  Not many levels of management  Danger of superiors loss of control  Requires exceptional qualities of managers.

Centralization and Decentralization: Centralization means that the decision authority is located near the top of the organization. Decentralization means decision authority is pushed downward to lower organization levels.

Departmentalization Departmentalization is the process of grouping positions into departments and departments into total organization.

Methods of Departmentalization Functional Departmentalization: Grouped by skills & work; Product Departmentalization: Grouped by products; Process Departmentalization: Grouped by equipments ; Customer Departmentalization: Grouped by customers; Geographic Departmentalization: Grouped by Geographic Area;

Functional Departmentalization This is the most formal division of business activities, based on the different functions it performs. A = Production department B = Purchase department C = Marketing department D = Accounts department E = Sales Department

Functional Departmentation

Customer Departmentation In this type of departmentation, activities are grouped according to the types of customer. Example: A large readymade store may have separate departments  Women  Men  Children

Customer Departmentation

Product Departmentation When a firm produces a large number of products then internal organization can be divided on the basis of different products it produces.

Product departmentation

Process Departmentation The activities of a department may be divided into sub activities. Example: the production department of a textile mill may be divided on the basis of processes like  Designing deptt  Spinning deptt  Weaving deptt

Process Departmentation

Geographical Departmentation Managing Director/ Country Manager Manager North Zone Manager Central Zone Manager South Zone

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