organizing principles

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Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Cha

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Organizing Principles

MANAGEMENTMeeting and Exceeding Customer Expectations

EIGHTH EDITION

Prepared byDeborah Baker

Texas Christian University

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learning objectives

1. Explain the relationship between planning and organizing

2. Explain the importance of the organizing process

3. List and discuss the five steps in the organizing process

4. Describe and give an example of the four approaches to departmentalization

5. Define authority, and explain how line, staff, and functional authority differ

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learning objectives (continued)

6. Explain the concept of power and its sources

7. Discuss the following major organizing concepts and how they influence organizing decisions

8. Explain the term “informal organization”

9. Compare the informal organization to the formal organization

• Unity of direction• Chain of command• Line and staff departments• Unity of command• Delegation

• Responsibility• Accountability• Span of control• Centralization and decentralization

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Organizing Process11

OrganizingOrganizingThe management function that establishes relationships between activity and authority

Governed by plans that state where the organization is going

Organization must be built or modified to ensure those plans are executed

Resources must be concentrated in a unified way

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Downsizing11

DownsizingDownsizingAlso known as rightsizing, it calls for shrinking both the size of the company and the number of employees

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Benefits of Organizing22

1. It clarifies the work environment1. It clarifies the work environment

2. It creates a coordinated environment2. It creates a coordinated environment

4. It establishes the chain of command4. It establishes the chain of command

3. It achieves the principles of unity of direction3. It achieves the principles of unity of direction

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Organizing Concepts77

Unity of Direction

Unity of Direction

The establishment of one authority figure for each designated task of the organization

Chain ofCommand

Chain ofCommand

The unbroken line of reporting relationships from the bottom to the top of the organization

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Five-Step Organizing Process33

1. Reviewing plans and goals1. Reviewing plans and goals

2. Determining work activities2. Determining work activities

4. Assigning work and delegating authority4. Assigning work and delegating authority

3. Classifying and grouping activities3. Classifying and grouping activities

5. Designing a hierarchy of relationships 5. Designing a hierarchy of relationships

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Specialization of Labor33

Specializationof Labor

Specializationof Labor

Division of labor

Breaks a potentially complex job down into simpler tasks or activities

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Specialization of Labor33

Sp

ecia

liza

tio

n

Low

High

Job SatisfactionLow High

EfficiencyHigh Low

Each employee completes a few basic

operations, such as assembling the VCR

frame.

Each employee assembles one

component of a VCR.

Each employee assembles a

complete VCR.

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Advantages of Work Specialization33

Work can be performed more efficiently

Employees gain skill and expertise

Facilitates the process of employee selection

Decreases training requirements

Allows managers to supervise more employees

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Specialization33

Jobs can become too simplified

Employees become bored and tired

– safety problems and accident rates increase

– absenteeism rises

– quality of work may suffer

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Classifying and Grouping Activities44

The Principle of Functional SimilarityThe Principle of Functional SimilarityThe Principle of Functional SimilarityThe Principle of Functional Similarity

1. Examine each activity to determine its general nature

1. Examine each activity to determine its general nature

3. Establish the basic department design for the organizational structure

3. Establish the basic department design for the organizational structure

2. Group the activities into these related areas2. Group the activities into these related areasSim

ult

aneo

us

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Departmentalization44

FunctionalFunctional

GeographicalGeographical

CustomerCustomer

ProductProduct

Based on specialized activities of the business

Based on specialized activities of the business

Based on territoryBased on territory

Based on the needs of specific customer groupsBased on the needs of

specific customer groups

Based on product activitiesBased on product activities

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Departmentalization Examples44

FunctionalFunctional

GeographicalGeographical

CustomerCustomer

ProductProduct

• Finance• Production• Marketing• Human Resources

• Southern Region• Northern Region

• Helicopter Division• Power Systems Division• Aircraft Engine Division• Elevator Products Division

• Pharmaceutical• Professional• Final customer

}

}

}

}

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Horizontal Structuring44

1. It defines the working relationships between operating departments

2. It makes the final decision on the span of control of each manager

Important EffectsImportant Effects

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Horizontal Structuring44

Span of Control

Span of Control

The number of subordinates under the direction of a manager

OrganizationChart

OrganizationChart

The complete organizational structure shown visually

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Organization Chart44

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Organization Chart44

1. Who reports to whom

2. How many subordinates work for each manager

3. The channels of official communication

4. How the company is departmentalized

5. The work being done in each position

6. The hierarchy of decision making

7. The types of authority relationships

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Major Organizational Concepts55

Centralization / Decentralization

Centralization / Decentralization

Span ofControl

Span ofControl

DelegationDelegationPowerPower

AuthorityAuthority

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Formal and Legitimate Right of a Manager to:Formal and Legitimate Right of a Manager to:

Authority55

Make decisions

Give orders

Allocate resources

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Types of Authority55

FunctionalAuthority

FunctionalAuthority

StaffAuthority

StaffAuthority

LineAuthority

LineAuthority

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Line Authority55

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Staff Authority55

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Functional Authority55

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LineDepartments

LineDepartments

The departments established to meet the major objectives of the business and directly influence the success (profitability) of a business

StaffDepartments

StaffDepartments

The departments that provide assistance to the line departments and to each other, making money indirectly for the company through advice, service, and assistance

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Unity of Command

Unity of Command

The organizing principle that states that each person within an organization should take orders from and report to only one person

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Power66

LegitimatePower

LegitimatePower

RewardPower

RewardPower

CoercivePower

CoercivePower

ReferentPower

ReferentPower

ExpertPowerExpertPower

The power possessed by managers and derived from the positions they occupy

in the formal organization

The power possessed by managers and derived from the positions they occupy

in the formal organization

The power that comes from the ability to promise or grant rewards

The power that comes from the ability to promise or grant rewards

The power dependent on fear of the negative results that may happen if one

fails to comply

The power dependent on fear of the negative results that may happen if one

fails to comply

The power that is based on the kind of personality or charisma an individual

has and how others perceive it

The power that is based on the kind of personality or charisma an individual

has and how others perceive it

Influence due to abilities, skills, knowledge, or experience

Influence due to abilities, skills, knowledge, or experience

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Power66

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Delegation DelegationThe downward transfer of formal authority from one person to another

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Delegation Process77

Assignment of tasksAssignment of tasks

Delegation of authorityDelegation of authority

Acceptance of responsibilityAcceptance of responsibility

Creation of accountabilityCreation of accountability

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Successful Delegation of Authority77

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Responsibility ResponsibilityThe obligation to carry out one’s assigned duties to the best of one’s ability

Accountability AccountabilityThe need to answer to someone for your actions; it means accepting the consequences—either credit or blame—for these actions

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Spans of Control77

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Proper Spans of Control77

The complexity and variety of the subordinates’ work

The ability of the manager

The ability and training of the subordinates

The supervisor’s willingness to delegate authority

The company’s philosophy for centralization or decentralization of decision making

The number of subordinates depends on…The number of subordinates depends on…

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CentralizationCentralizationFocuses on systematically retaining authority in the hands of higher-level managers

DecentralizationDecentralizationFocuses on systematically delegating authority throughout the organization to middle- and lower-level managers

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9Guidelines for Judging

Decentralization77

1. The greater number of decisions made at the lower levels of management, the more the company is decentralized

2. The more important the decisions made at lower levels, the greater the decentralization

3. The more flexible the interpretation of company policy at lower levels, the greater the degree of decentralization

4. The more widely dispersed the operations of the company geographically, the greater the degree of decentralization

5. The less a subordinate has to refer to his/her manager prior to making a decision, the greater the decentralization

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9Centralized and Decentralized

Organizations77

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The Informal Organization88

InformalOrganization

InformalOrganization

A network of personal and social relationships that arise spontaneously as people associate with one another in a work environment

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Informal OrganizationInformal Organization Formal OrganizationFormal Organization

Informal and Formal Organizations99

Unofficial organization created by relationships

Primary area of emphasis is on people and their relationship

Leverage is provided by power

Source of power: given by group

Functions with power and politics

Behavior guidelines provided by group norms

Sources of control over the individual are positive or negative sanctions

Official organization created by management

Primary area of emphasis is official organization positions

Leverage is provided by authority

Sources of authority: delegated by management

Functions with authority and responsibility

Behavior guidelines provided by rules, policies, and procedures

Sources of control over the individual are rewards and penalties

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9Emergence of the Informal

Organization99

1. Employees sometimes act differently than anticipated

2. Employees often interact with people other than those the formal organization specifies

3. Workers may adopt a whole set of beliefs and attitudes that differ from those expected by the organization

4. The groups of workers that form begin to display cohesion

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9Structure of the Informal

Organization99

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Composition of an Informal Group99

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9Working with the Informal

Organization99

1. Recognize that informal groups exist

2. Identify the roles members play within those groups

3. Use that information to work with the informal groups

Steps a manager must take are:Steps a manager must take are:

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9Impact of the Informal

Organization99

organizing principles

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