1. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-1 5

2. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-2 Definitions of Organizing And Organizing Skills Organizing: is the process of establishing orderly uses for resources within the management system Organizing skill: is the ability to establish orderly uses for resources within the management system A primary focus of organizing is determining:  What individual employees will do in an organization  How their individual efforts should best be combined

3. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-3 Definitions of Organizing And Organizing Skills

4. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-4 The Importance of Organizing The organizing function is very important to the management system because:  It is used to activate plans  It creates and maintains relationships between all organizational resources by indicating which resources are to be used for specific activities and when, where, how to use them.  It minimizes costly weaknesses (e.g. duplication of efforts, idle organizational resources)

5. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-5 The Importance of Organizing Responsibilities of an “Organizing Department” would include: 1. Reorganization plans to make management system more effective and efficient 2. Plans to improve managerial skills to fit current management system needs 3. An advantageous organizational climate within the management system

6. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-6 The Organizing Process The Organizing Process: (see figure 11.2) 1. Reflect 2. Establish 3. Divide 4. Allocate 5. Evaluate As shown in the figure, managers should continually repeat these steps, to obtain feedback that will help them improve the existing organization. (see page 272 for the restaurant example to understand the steps)

7. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-7 The Organizing Process

8. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-8 Classical Organizing Theory - Structure Structure: is the designated relationships among resources of the management system Purpose: to facilitate the use of each resources, individually or collectively, while attaining objectives Two basic types of structures: 1. Formal structure : the relationships among organizational resources as outlined by management (represented by the Organizational Chart) 2. Informal structure : the patterns of relationships that develop because of the informal activities of organization members. (it is the system or network of organizational relationships that exists within, but not usually identical to, the organization’s formal structure).(molded by individual norms and values).

9. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-9 Classical Organizing Theory - Structure Organizational Chart : a graphic illustration that represents organization structure. It is constructed in pyramid form. Individuals on top have more authority and responsibility than those on the bottom. Advantage: it helps individuals from inside and outside the organization to understand the complexity and professionalism of the company. Structure involves two primary dimensions: 1. Vertical Dimension 2. Horizontal Dimension

10. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-10 Vertical Dimensioning Vertical Dimensioning : the extent to which an organization uses vertical levels to separate job responsibilities. Scalar relationships : the chain of command (people on top have the most authority, and those on the bottom have the least authority) Unity of Command : is the management principle that recommends that an individual have only one boss. Too many bosses give orders → confusion, contradiction, frustration, ineffectiveness, inefficiency

11. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-11 Vertical Dimensioning Span of Management : the number of individuals a manager supervises. = Span of Control = Span of Authority = Span of Supervision = Span of Responsibility  More individuals a manager supervises → greater span of management  Fewer individuals a manager supervises → smaller span of management How many individuals a manager can supervise effectively?  Too few? → waste of capacity!  Too many? → not effective!

12. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-12 Vertical Dimensioning Designing Span of Management: The following are situational factors that influence appropriateness of the size of an individual’s span of management: Similarity of functions: the degree to… Geographic continuity: … Complexity of functions: … Coordination: … Planning: …

13. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-13 Vertical Dimensioning

14. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-14 Vertical Dimensioning Height of Organization Chart:  The greater the height of organization chart “ Tall ”, the smaller the span of management  The lower the height of organization chart “ Flat ”, the greater the span of management (see figure 11.3, Chart A is flatter than Chart B, and Chart B is taller than Chart A) ↑Span → ↓positions, ↓salary expenses, ↑speed of decisions, ↑flexible, ↑employees satisfaction

15. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-15 Vertical Dimensioning Span=6 Span=3 Span=2

16. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-16 Horizontal Dimensioning Horizontal Dimensioning: the extent to which firms use lateral subdivisions or specialties within an organization Department: a unique group of resources established by management to perform some organizational task Departmentalization : is the process of establishing departments within the management system.

17. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-17 Horizontal Dimensioning Departmentalization can be by: 1. Functional 2. Product or Service 3. Geographic 4. Customer 5. Matrix

18. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-18DepartmentalizationDepartmentalization 1. Functional Departmentalization: By type of work functions or activities Most widely used Major categories: marketing, production, finance…etc. Advantages & disadvantages: (see the table 11.2)

19. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-19DepartmentalizationDepartmentalization

20. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-20DepartmentalizationDepartmentalization 2. Product or Service Departmentalization: Based on products or services being offered Advantages & disadvantages: (see the table 11.2)

21. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-21DepartmentalizationDepartmentalization

22. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-22DepartmentalizationDepartmentalization 3. Geographic Departmentalization: Based on territory or places where the work is being done or the geographic markets on which the management system is focusing Advantages & disadvantages: (see the table 11.2)

23. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-23DepartmentalizationDepartmentalization

24. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-24DepartmentalizationDepartmentalization 4. Customer Departmentalization: Based on the organization’s major customers, that can be identified and divided into logical categories. Advantages & disadvantages: (see the table 11.2)

25. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-25DepartmentalizationDepartmentalization

26. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-26DepartmentalizationDepartmentalization 5. Matrix Departmentalization: Designed by first a more traditional form of organization (e.g. functional), then add a series of projects and a project manager for each, to form a matrix. It is created to overcome disadvantages of other forms A project manager borrows workers from various parts of the organization to complete some specific project (long term or short term projects). Once the project is finished, the borrowed employees are returned to their original jobs.(employees here are responsible for their original activities + project activities) Matrix Organizations = Project Organizations Advantages & disadvantages: (see the table 11.2)

27. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-27DepartmentalizationDepartmentalization

28. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-28DepartmentalizationDepartmentalization

29. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-29 Classical Organizing Theory Forces Influencing Formal Structure: (why to choose a specific structure over the other) 1. Manager: (e.g. background, knowledge, experience, values) 2. Task: (e.g. degree of technology) 3. Environment: (e.g. customers, suppliers, political, social) 4. Subordinates: (e.g. needs, skill levels)

30. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-30 Classical Organizing Theory Fayol’s Advice on Using Formal Structure: Strict adherence to a particular chain of command is not always advisable/not recommended/not always good (→long process, time consuming, expensive). In some situation, a bridge or “Gangplank” is used to allow direct communication (e.g. allow F to go directly to G for information in Figure 11.9) This bridge should be used carefully and all the time.

31. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11-31 Classical Organizing Theory Gangplank