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ORGANIZINGChapter Four
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1.1 Meaning of organization
1.2 Process of Organization
1.3 Principles of Organization
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DEFINITION OF ORGANIZING
Activities: Identification of
activities Grouping of Activities Assignment of jobs
to formal groups Establishing a
network of authority and responsibility
Providing framework for measurement, evaluation and control
Resources:Determining the
specific need of resources
Allocation of resources into specific groups
Evaluation and control of use of the resources
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ORGANIZING
Organizing is the process of arranging and allocating work, authority, and resources among an organization’s members so that they can achieve organizational goal.
Stoner, Freeman and Gilbert
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PROCESS OF ORGANIZING
Division of Work Grouping of Work Delegation of Authority Coordination of Work
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PROCESS OF ORGANIZING SIMPLIFIED
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1.Unity of Objective2.Specialization3.Coordination4.Authority and Responsibility5.Unity of Command6.Scalar Chain7.Span of Control
8.Exception
9.Efficiency
10.Balance
11.Homogeneity
12.Continuity
13.Simplicity
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PART TWO: ORGANIZATIONAL ARCHITECTURE
2.1 Vertical differentiationTall versus Flat Structure
2.2 Horizontal differentiationFunctional StructureMultidivisional StructureGeographic StructureMatrix Structure
TALL VERSUS FLAT ORGANIZATIONS
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President
President
Tall Organization
Flat Organization
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ORGANIZATIONAL ARCHITECTURE - VERTICAL INTEGRATION
Flat organization:
This type of organizational architecture has few layers and wide span of control.
Tall Organization:
This type of organizational architecture has many layers and narrow span of control.
ESTABLISHING REPORTING RELATIONSHIPS: TALL VERSUS FLAT ORGANIZATIONS
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Flat OrganizationsLead to higher levels of
employee morale and productivity.
Create more administrative responsibility for the relatively few managers.
Create more supervisory responsibility for managers due to wider spans of control.
Tall OrganizationsAre more expensive
because of the number of managers involved.
Foster more communication problems because of the number of people through whom information must pass.
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1. FUNCTIONAL STRUCTURE:General Manager
Production Dept
Finance Dept
Marketing Dept
HR Deprtment
Structure is created based on the various functions of an organization.
ORGANIZATIONAL ARCHITECTURE – HORIZONTAL DIFFERENTIATION
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2. MULTI-DIVISION STRUCTURE
Multiple divisions are created in a related industry.
General Manager
Division I Division II Division III
ORGANIZATIONAL ARCHITECTURE – HORIZONTAL DIFFERENTIATION
ORGANIZATIONAL ARCHITECTURE – HORIZONTAL DIFFERENTIATION
Divisional or M-form (Multidivisional) DesignAn organizational arrangement based on
multiple businesses in related areas operating within a larger organizational framework; following a strategy of related diversification.
Activities are decentralized down to the divisional level; others are centralized at the corporate level.
The largest advantages of the M-form design are the opportunities for coordination and sharing of resources.
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3. GEOGRAPHIC STRUCTURE:
General Manager
Eastern Region
Central Region
Western
Region
Departments are created based on geographic regions.
All the activities in one geographic region is categorized into one unit.
ORGANIZATIONAL ARCHITECTURE – HORIZONTAL DIFFERENTIATION
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4. MATRIX ORGANIZATION
Employees
CEO
Projectmanager B
Projectmanager C
Vice president,engineering
Vice president,production
Vice president,finance
Vice president,marketing
Projectmanager A
ORGANIZATIONAL ARCHITECTURE – HORIZONTAL DIFFERENTIATION
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MATRIX STRUCTURE: Advantages: Enhances organizational
flexibility. Team members have the
opportunity to learn new skills.
Provides an efficient way for the organization to use its human resources.
Team members serve as bridges to their departments for the team.
Disadvantages: Employees are
uncertain about reporting relationships.
The dynamics of group behavior may lead to slower decision making, one-person domination, compromise decisions, or a loss of focus.
More time may be required for coordinating task-related activities.
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gPART THREE: RESPONSIBILITY3.1 Meaning of Responsibility
3.2 Establishing Task and Reporting Relationships
3.3 Creating Accountability
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RESPONSIBILITY:Responsibility is the
obligation to perform
or duty to carryout certain
activities
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ESTABLISHING TASK AND REPORTING RELATIONSHIP:
Task Relationship:How activities related to each other in an
organization.How the basic units of an organization are
formed.Establishment of job description and job
specification Job Specification: Prerequisites of job. Various
skills and experiences needed to perform certain job.
Job Description: The activities that have to be carried out at certain position in a job. It describes the job.
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ESTABLISHING TASK AND REPORTING RELATIONSHIP:
Establishing Reporting Relationship: It is finding out
Chain of command Span of control or span of management
1. Who reports to whom?
2. How many subordinates will a supervisor have?
(Relate it to tall vs flat organizational architecture.)
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ACCOUNTABILITY:Accountability:
the state of being accountable, liable, or answerable
Requirement to report
It creates a mechanism of control.
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PART FOUR: AUTHORITY
4.1 Line and Staff Authority
4.2 Delegation of Authority
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AUTHORITY: Right to take decisions that arises due to
position in organizational structure.
Authority is the right to perform or command. It allows its holder to act in certain designated ways and to directly influence the actions of others through orders.
Types of Authority: Line Authority Staff Authority
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LINE AUTHORITYThe chain of command in the organizational structure that flows major decision making power.
The officially sanctioned ability to issue orders to subordinate employees within an organization.
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STAFF AUTHORITYStaff authority consists of the
right to advise or assist those who possess line authority as well as other staff personnel.
The Advisory or Counseling Role :
The Service Role The Control Role
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Simple terms, GRANTING AUTHORITY TO SUBORDINATES
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FEATURES OF DELEGATION OF AUTHORITY:
No delegation of total authorityDelegation of only that authority a
manager hasRepresentation of the superiorDelegation for organizational
purposeRestoration of delegated authorityBalance of authority and
responsibilityNo delegation of responsibility
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CONFLICT BETWEEN LINE – STAFF EMPLOYEES
Assume Line AuthorityDo not give Sound AdviceSteal Credit for SuccessFail to Keep line personnel informed of their activities
Do not see the whole picture.
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PART FIVE: CENTRALIZATION AND DECENTRALIZATION
Meaning : Centralization and Decentralization
Reasons: In which case which is needed
Advantages and Disadvantages: of both
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CENTRALIZATIONSystematically retaining power and authority in the hands of higher level managers.
Not dividing authority to lower level employees.
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ADVANTAGES V/S DISADVANTAGES:
Advantages:Facilitates unified decision.Simplifies structureFacilitates quicker decisionEconomy in operationIntegrate operationSuitable for small firms
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ADVANTAGES V/S DISADVANTAGES:
Disadvantages:Unsuitable for large organizationManager is overburdenedPossibility of power misuseLow morale and motivationLack of environmental adaptationIn appropriate for routine
decisions.
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DECENTRALIZATION:Delegation of authority to the
lower levels.
Decentralization is tendency to disperse decision making authority in an organized structure.
• Koontz and Weihrich
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ADVANTAGES V/S DISADVANTAGES
Advantages:Relief to top managementFacilitates managers’
developmentPossibility if better decisionsEffective controlHigh morale and motivationFacilitates diversificationEnvironment adaptation
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ADVANTAGES V/S DISADVANTAGES
Disadvantages:Increase in expenditureConflictUnsuitable for emergency
situationsMaximizes riskDifficulty in communicationUnsuitable for specialized
services
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EMERGING ISSUES IN ORGANIZATION DESIGN
Re-engineering processTeam workNetwork organization structure
Downsizing organizationBoundary-less organization
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STAFFING:CONCEPT AND IMPORTANCE It is the process of obtaining and maintaining
competent employees to fill all positions.
Recruitment: Encouraging people to apply Selection: Finding the right person for
the job Training: Teaching the employees certain
skill Development: Progress/advancement of
career Motivation: Encouraging the employees
to work harder.
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IMPORTANCE OF STAFFING:
Managing effective staffUtilization of physical resources
Increase in productivityFocus on goal achievementHelps to solve problemsJob satisfactionSelf-development of workers
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