1. Fundamentals of Organizing
hapter
Ten
Fundamentals of Organizing
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2. Organizing
The deployment of organizational resources to achieve strategic goals
The deployment of resources is reflected in the organization
Division of labor
Formal lines of authority and mechanisms

3. Organization Structure
Defines how tasks are divided, resources are deployed, and departments are coordinated
The set of formal tasks
Formal reporting relationships
The design of systems to ensure effective coordination of employees across departments
Organizing process leads to the creation of organization structure

4. Four Points About The Organization Chart
Visual representation
Set of formal tasks
The Home Depot
Formal
reporting relationships
Framework
for vertical control

5. Work Specialization Tasks are subdivided into individual jobs
Division of labor concept
Employees perform only the tasks relevant to their specialized function
Jobs tend to be small, but they can be performed efficiently

6. Chain of Command
Unbroken line of authority that links all persons in an organization
Shows who reports to whom
Associated with two underlying principles
Unity of Command
Scalar Principle

7. Authority
Formal and legitimate right of a manager to make decisions and issue orders
Allocate resources to achieve organizationally desired outcomes
Authority is distinguished by three characteristics
Authority is vested in organizational positions, not people
Authority is accepted by subordinates
Authority flows down the vertical hierarchy

8. Responsibility
The duty to perform the task or activity an employee has been assigned
Managers are assigned authority commensurate with responsibility

9. Accountability
Mechanism through which authority and responsibility are brought into alignment
People are subject to reporting and justifying task outcomes to those above them in the chain of command
Can be built into the organization structure

10. Process managers use to transfer authority and responsibility
Delegation 1
Process managers use to transfer authority and responsibility 2
Organization encourage managers to delegate authority to lowest possible level

11. Techniques for Delegation
Give thorough instructions
Maintain feedback
Evaluate and reward performance
Techniques for Delegation
Delegate the whole task
Ensure that authority equals responsibility
Select the right person

12. Centralization versus Decentralization
Greater change and uncertainty in the environment are usually associated with decentralization
The amount of centralization or decentralization should fit the firm’s strategy
In times of crisis or risk of company failure, authority may be centralized at the top

13. Span of Management/ Span of Control
Number of employees who report to a supervisor
Traditional view, about seven subordinates per manager
Many lean organizations today have 30, 40, or even higher subordinates
When supervisors must be closely involved with subordinates, the span should be small
Supervisors need little involvement with subordinates, it can be large

14. Factors Associated With Less Supervisor Involvement
Work is stable and routine
Subordinates perform similar work tasks
Subordinates are concentrated in a single location
Subordinates are highly trained
Rules and procedure defining task activities are available
Support systems and personnel are available for the manager
Little time is required in nonsupervisory activities
Managers’ preferences and styles favor a large span

15. Tall versus Flat Structure
Span of Control used in an organization determines whether the structure is tall or flat
Tall structure has a narrow span and more hierarchical levels
Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels
The trend has been toward wider spans of control

16. Centralization and Decentralization
The hierarchical level at which decisions are made
NASA

17. Centralization All facilities at one location
Decision authority is located near the top of the organization 17

18. Decentralization Facilities at different locations
Decision authority is pushed down the chain of command to lower levels 18

19. Decentralization Tends To---
Make greater use of human resources
Reduce burdens of top managers
Cause decisions to be made close to the action
Permit rapid response to changes 19

20. Factors that Influence Centralization/Decentralization
Amount of change and uncertainty
Corporate culture
Size of organization
Cost and risk of failure
Efficiency of communication and control systems 20

21. Departmentalization The basis on which individuals are grouped into departments
Five structural alternatives
Vertical functional approach. People are grouped together in departments by common skills.
Divisional approach. Grouped together based on a common product, program, or geographical region.
Horizontal matrix approach. Functional and divisional chains of command. Some employees report to two bosses
Team-based approach. Created to accomplish specific tasks
Network approach. Small, central hub electronically connected to their other organizations that perform vital functions. Departments are independent, and can be located anywhere.

22. Advantages of Functional Approach
Efficient use of resources
In-depth skill specialization
Career progress within the department
Top manager has direction and control
Excellent coordination
High-quality problem solving
Simplifies training 24

23. Disadvantages of Functional Approach
Poor communication among functional departments
Slow response to external changes
Centralized decision making
Responsibility for problems difficult to identify
Employees have limited view
Limited general management training 25

24. Divisional Approach
Departments are grouped together based on organizational outputs
Diverse departments are brought together to produce a single organizational output
Encourages decentralization 26

25. Advantages of Geographic Divisions
Responsive in an unstable environment
Shows concern for customer
Coordinates across functional departments
Identifies responsibility for product
Emphasizes overall product and division goals
Develops general management skills
Minimizes travel costs 28

26. Disadvantages of Geographic Divisions
Duplication of resources across divisions
Less specialization in divisions
Poor coordination across divisions
Less top management control
Competition for resources among divisions
More managers needed 29

27. Matrix Approach
General Electric
Functional and divisional chains of command simultaneously
Dual lines of authority
Functional hierarchy of authority runs vertically
Divisional hierarchy runs laterally
Violates the unity of command concept 31

28. Advantages of Matrix
More efficient use of resources than single hierarchy
Adaptable to changing environment
Development of both general and specialists management skills
Expertise available to all divisions
Enlarged tasks for employees 32

29. Disadvantages of Matrix
Dual chain of command
High conflict between two sides of matrix
Many meetings to coordinate activities
Need for human relations training
Power domination by one side of matrix 33

30. Team Approach
Cross-functional teams consist of employees from various functional departments
Interdisciplinary approach to management
Permanent team solve ongoing problems
Reengineering radical redesign for improvements in cost, quality, service and speed 34

31. Advantages of Teams Same advantages as functional structure
Reduced barriers among departments
Quicker response time
Better morale
Reduced administrative overhead 35

32. Disadvantages of Teams
Dual loyalties and conflict
Time and resources spent on meetings
Unplanned decentralization 36

33. Network Approach
Organization divides major functions into separate companies brokered by a small headquarters organization
"Where is the organization?"
Especially appropriate for international operations
Held together with phones, faxes, and other electronic technology 37

34. Advantages of Network Approach
Global competitiveness
Work force flexibility
Reduced administrative overhead 38

35. Disadvantages of Network Approach
No hands-on control
Loss of part of the organization severely impacts remainder of organization
Employee loyalty weakened 39