OrganizingOrganizing

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Fundamentals of OrganizingFundamentals of OrganizingStudease.in

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What Is Organizing?

• Organizing

Arranging the activities of the enterprise in such a way that they systematically contribute to the enterprise’s goals.

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Depicting the Organization

• Organization Chart

A chart that shows the structure of the organization including the title of each manager’s position and, by means of connecting lines, who is accountable to whom and who has authority for each area.

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Authority and the Chain of Command

• Chain of CommandThe path that a directive and/or answer or request

should take through each level of an organization; also called a scalar chain or the line of authority.

• AuthorityThe right to take action, to make decisions, and to

direct the work of others.

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Line and Staff Authority

• Line ManagerA manager who is (1) in charge of essential activities

such as sales and (2) authorized to issue orders to subordinates down the chain of command.

• Staff ManagerA manager without the authority to give orders down

the chain of command (except in his or her own department); generally can only assist and advise line managers in specialized areas such as human resources management.

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Line and Staff Authority

• Functional AuthorityNarrowly limited power to issue orders down the

chain of command in a specific functional area such as personnel testing.

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The Informal Organization

• Informal Organization

The informal contacts, communications, and habitual ways of doing things that employees develop.

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Departmentalization:Creating Departments

• Departmentalization

The process through which an organization’s activities are grouped together and assigned to managers; the organizationwide division of work.

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Organizing Departments by Function

• Functional DepartmentalizationA form of organization that groups a company’s

activities around essential functions such as manufacturing, sales, or finance.

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Functional Departmentalization

FIGURE 6–1

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Organizing Departments by Self-Contained Divisions/Purposes

• Product DepartmentalizationGrouping departments around a firm’s products or

services, or each family of products or services; also referred to as a “divisional” organization.

• Customer DepartmentalizationSelf-contained departments are organized to serve

the needs of specific groups of customers.

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FIGURE 6–3

Customer Departmentalization,Grayson Steel Company

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Organizing Departments by Self-Contained Divisions/Purposes (cont’d)

• Marketing-channel DepartmentalizationDepartments focus on particular marketing channels,

such as drugstores or grocery stores.

• Geographic (Territorial) DepartmentalizationSeparate departments are established for each of the

territories in which the enterprise does business.

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Checklist 6.1Functional vs. Divisional Organizations

Functional Organization Advantages1. It is simple, obvious, and logical.2. It fosters efficiency.3. It can simplify executive hiring and training.4. It can facilitate the top manager’s control.

Functional Organization Disadvantages1. It increases the workload on the executive to

whom the functional department heads report.2. It may reduce the firm’s sensitivity to and

service to the customer.3. It produces fewer general managers.

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Checklist 6.1 (cont’d)Functional vs. Divisional Organizations

Divisional Organization Advantages1. The product or service gets the single-minded

attention of its own general manager and unit, and its customers may get better, more responsive service.

2. It’s easier to judge performance.3. It develops general managers.4. It reduces the burden for the company’s CEO.

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Checklist 6.1 (cont’d)Functional vs. Divisional Organizations

Divisional Organization Disadvantages1. It creates duplication of effort.2. It may diminish top management’s control.3. It requires more managers with general

management abilities.4. It can breed compartmentalization.

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Tall And Flat Organizations, And The Span Of Control

• Span of ControlThe number of subordinates reporting directly to a

supervisor. Wide spans: larger number of direct reports. Narrow spans: fewer number of direct reports.

• Tall vs. Flat OrganizationsTall organizations: more management layers and

more hierarchical controls.Flat organizations: fewer management layer and

decision making closer to the customer.

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Network-based Organizations

• Organizational NetworkA system of interconnected or cooperating individuals.

• Informal NetworksCommunication pathways and relationships between

individuals in an organization that do not necessarily conform to the formal chain of command and communication networks of an organization.

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Network-based Organizations (cont’d)

• Formal Organizational NetworkA recognized group of managers or other employees

assembled by the CEO and the other senior executive team, drawn from across the company’s functions, business units, geography, and levels.

• Electronic Organizational NetworksNetworking through technology-supported devices

such as e-mail, video-conferencing, and collaborative computing software like Lotus Notes.

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Network-based Organizations (cont’d)

• Team-Based OrganizationsTeam

A group of people committed to a common purpose, set of performance goals, and approach for which they hold themselves mutually accountable.

• Horizontal CorporationsA structure that is organized around customer-

oriented processes performed by multidisciplinary cross-functional teams rather than by formal functional departments.