Report module 6

ORGANIZING
 Is the process of grouping together men and
establishing relationship among them, defining the
authority and responsibility of personnel by using
the company’s other basic sources to attain
predetermined goals and objectives.
 It aims to determine that tasks are to be done, who is
to do them, how the tasks are to be grouped, who
reports to whom and where decisions are to be made.
 It is also the process of dividing work into
manageable sections and coordinating the results to
serve a purpose. It follows planning as an essential
management responsibility, and mobilizes
organizational resources for action.
 It ensures that there are the necessary human and
physical resources to carry out plans to achieve
organizational goals.

IMPORTANCE OF ORGANIZING
 It provides a clarified work environment
 It creates a coordinated environment

 Everyone knows where to get orders

 formal decision – making structure is
established.

TYPES OF ORGANIZATION

A. Formal Organization
 is the “structure that details lines of
responsibility, authority and position”
 it is the planned structure and it represents
the deliberate attempt to establish patterned
relationships among components that will
meet the objectives effectively

B. Informal Organization
 is based on the needs, sentiments and
interests of the people composing it. It is
vulnerable to expediency, manipulation and
opportunism
 its low visibility makes it difficult for
management to detect perversions and
considerable harm can be done to the
company

ORGANIZING STRUCTURE
 a way of subdividing work.
 a framework of task and authority relationships
among different units of the firm.
 it is similar to the framework of a building or the
skeleton of a body.

TYPES OF ORGANIZATIONAL
STRUCTURE
1. Line Organizational Structure
Advantages:
2. Directness
3. Fixed Responsibility
4. Simplicity
5. Flexibility
6. Discipline
7. Development of an all-round executive
8. Expeditious decision- making

Disadvantages:
2. It becomes too difficult for secure executives,
supervisors and workers who have an all- round
knowledge and with the ability required.
3. Specialization is not taken advantage of.
4. Executives are to be overload with duties and
responsibilities.
5. Too much reliance is placed on the chief and other
executives
6. Spirit of teamwork is lacking.
7. Not suitable for big organizations.

2. Line and Staff Organizational Structure
Advantages:
2. Combination of line and staff
3. Working relationships between the staff and the line
are well defined to avoid friction among various units
4. Ability of line officials when the staff officers
constantly feed them with specialized assistance.

Disadvantages:
2. Staff men are liable to overstep the bounds of their
authority and impose their advice or plan.
3. Line officers will depend on the staff men to do all the
thinking about the problems in respective
departments.

3. Functional Organizational Structure
Advantages:
2. The grouping of employees who perform a common task
permit economies of scale and efficient resource use.
3. Since the chain of command converges at the top of the
organization, decision-making is centralized, providing a
unified direction from the top.
4. Communication and coordination among employees within
each department are excellent.
5. The structure promotes high- quality technical problem-
solving.
6. The organization is provided with in- depth skill
specialization and development.
7. Employees are provided with career progress within
functional departments.

4. Product or Market Organizational Structure
Advantages:
2. The organization is flexible and responsive to change.

3. The organization provides a high concern for customers’

needs.
4. The organization provides excellent coordination across

functional departments,
5. There is easy pinpointing of responsibility for product

problems.
6. There is emphasis on overall product and division goals.

7. The opportunity for the development of general

management skills is provided.

5. Committee Type of Organizational Structure
 Advantages:
2. Fosters cooperation

3. Provides balanced viewpoint

Disadvantages:
5. Divided responsibility

6. Time- consuming

7. No clear-cut decision

6. Matrix Organizational Structure

BASIC ORGANIZATIONAL CONCEPTS
1. Division of Labor
 Division of labor happens when the entire job is
broken down into a number of steps, each step being
completed by a separate individual. With this, it
permits specialization thereby, successful
performance of tasks increases.
 In the present view, human diseconomies (brought by
division of labor) exceed the economic advantages like
boredom, fatigue, stress, low productivity, poor
quality, increased absenteeism and high turnover.

2. Unity of Command
- a concern of all managers in the application of
both staff and functional authority is violation of
the principle of unity of command: this principle
means that each person within that organization
should take orders from and report to only one
person.

3. Chain of Command
 is an unbroken line authority that links all persons
in an organization and shows who reports to whom.
 the organizing principle concerned with the number
of management positions in and organization and
their unbroken connection to its position.
 It illustrates the following:

A.) Authority
- is a tool of a manager.
- it can be described as the right to commit
resources (to make decisions that commit an
organization’s resources), or the legal (legitimate)
right to give orders ( to tell someone to do or not to
do something).
- it is a “glue” that holds the organization together.
It provides the means of command.
- it has been said that “ authority comes with the
territory”, this means that authority is vested in a
manager because of the position he or she occupies
in the organization.

CHARACTERISTICS OF AUTHORITY:
 1.) Authority is vested in organizational
positions, not people.
 2.) Authority is accepted by subordinates.

 3.) Authority flows down the vertical hierarchy.

TYPES OF AUTHORITY
a.) Line authority
 This is the authority to direct the work of a
subordinate. Every manager has line authority over
his/ her subordinates.
 b.) Staff authority
- A staff specialist’s right to give advice to a superior.
Include positions that support, assist and advise line
managers- whose organizational function
contributes to the achievement of the organizational
objectives. The head of a staff position has line
authority over his/ her subordinates.

 c.) Functional authority refers to a specialist’s
right to oversee lower level personnel involved in
that specialty, regardless of where the personnel
are in the organization.

B.) Responsibility
 is the flip side of the authority coin.
 it refers to the duty to perform the task or activity
an employee has been assigned. Managers must
consider the following to perform their job well:
 Responsibility = Authority
 Responsibility > Authority
 Authority < Responsibility

C.) Accountability
 Is the mechanism through which authority and
responsibility are brought into alignment.
 It means people with authority and responsibility are
subject to reporting and justifying task outcomes to
those above them in the chain of command.
 For organizations to function well, everyone needs to
know what they are accountable for and accept the
responsibility and authority for performing it.

D.) Delegation
 is a concept describing the passing of formal
authority to another person. Superior delegate, or
pass authority down, to subordinates in order to
facilitate work being accomplished.
o The following approach can help each manager
delegate more effectively:
 Delegate the whole task
 Select the right person
 Ensure the authority equals responsibility
 Give thorough instruction
 Maintain feedback
 Evaluate and reward performance

4. Span of Control
 also referred to as span of management.
 Refers to the number of reporting to a supervisor.
5. Centralization and Decentralization
- Pertain to the hierarchical level at which decisions are
made.
o Centralization- means that decision authority is
located near the top of the organization.
o Decentralization- decision authority is pushed down
to lower organization levels.

6. Departmentalization
 Putting specialist’s together in one department under
the direction of a manager.
o Departmentation : the process of setting up and
establishing departments within an organization.

DEPARTMENTATION BY TIME
One of the oldest form of
departmentation, generally used at lower
levels of the organization, is grouping
activities on the basis of time. The use of
shifts is common in many enterprises where
for economic, technological, or other reasons
the normal workday will not suffice.

ADVANTAGES:
 Services can be rendered that go beyond the
typical 8-hour day often extending to 24 hours a
day
 It is possible to use 4 processes that cannot be
interrupted, those that require a continuing cycle
 Expensive capital equipment can be used more
the 8 hours a day when workers in several shifts
use the same machine

DISADVANTAGES:
 Supervision may be lacking during the night
shift
 There is the fatigue factor; it is difficult for most
people to switch, for instance, from a day shift to
a night shift and vice versa
 Having several shifts may cause problems in
coordination and communication.
 The payment of overtime rates can increase cost
of the product or service.

PROCESS OR EQUIPMENT
DEPARTMENTATION
Manufacturing firms often group activities around
a process or a type of equipment. In this kind of
departmentation, people and materials are brought
together in order to carry out a particular operation.

ADVANTAGES:
 Achieves economic advantage
 Uses specialized technology

 Utilizes special skills

DISADVANTAGES:

 Coordination of departments is difficult
 Responsibility for profit is at the top

 Is unsuitable for developing general managers

DEPARTMENTATION BY PRODUCT
Grouping activities on the basis of
product or product lines has long been
growing in importance in multiline, large
scale enterprises. Typically, companies and
other enterprises adopting this form of
departmentation were organized by
enterprise functions.

presiden
t

Vice-
presiden Vice-
t presiden
industri t home
al products
products

Huma
manuf Huma
marke financ n manuf
acturi market n
ting e resour acturin finance
ng ing resourc
ces g
es

ADVANTAGES:
 Places attention and effort on product line
 Facilities use of specialized capital, facilities,
skills and knowledge
 Permits growth and diversity of products and
services
 Improves coordination of functional activities

 Places responsibility for profit at the division
level
 Furnishes measurable training ground for
general managers.

DISADVANTAGES:
 Requires more persons with general managerial
abilities
 Increased costs through duplication of central
service and staff activities.

DEPARTMENTATION BY
ENTERPRISE FUNCTION
 Grouping activities in accordance with the
functions of an enterprises functional
departmentation- embodies what enterprises
typically do. Since all enterprises undertake the
creation of something useful and desired by
others, the basic enterprise functions are
production/marketing ( creating utility that will
meet the expectations of customers), financing
(raising and collecting, safeguarding, and
expending the funds of the enterprises) and
human resources (selecting, training and
compensating workers.)

president

Vice-President Vice- President Vice- President Vice- President
marketing human resources manufacturing Finance

ADVANTAGES:
 The grouping of employees who perform a common
task permit economies of scales and efficient
resources use.
 Since the chain of command converges, providing at
the top of the organization, decision-making is
centralized, providing a unified direction from the top.
 Communication and coordination among employees
within each department are excellent
 The structure promotes high quality technical
problem solving
 The organization is provided with career progress
within functional department.
 Employees are provided with career progress within
functional departments.

DISADVANTAGES:
 Communication and coordination between the
departments are often poor.
 Decisions involving more than one department piles
up at the top management level and are often
delayed.
 Work specialization and division of labor, which is
stressed in a functional organization; produce routine,
nonmotivating employee tasks.
 It is difficult to identify which section or group is
responsible for certain problems.
 There is limited view organizational goals by
employees
 There is limited general management training for
employees.

DEPARTMENTATION BY TERRITORY
OR GEOGRAPHY
 Department based on territory is rather common
in enterprises that operate over wide geographic
areas. In this case, it may be important that
activities in a given are of territory be grouped ad
assigned to a manager.

Chairman

Power system Industry and
group defense group

Electric Constrction
company(Belgiu Motor company Elevator company
( Belgium) products
o (Argentina
(Italy)

ADVANTAGES
 Places responsibility at a lower level
 Places emphasis on local markets and problems

 Improves coordination in a region

 Takes advantage of economies of local operations

 Better face to face communication with local
interests
 Furnishes measurable training ground for
general managers

DISADVANTAGES
 Requires more persons with general manager
abilities
 Leads to duplication of services

 Increase problem of top management control

CUSTOMER DEPARTMENTATION
 Grouping activities so that they reflec5 a primary
interest in customers is common in a variety of
enterprise. Customers are the key to the way
activities are grouped when each of the different
things an enterprise does for them is managed by
ne department.

Director of sales

Manager retail Manager Manager
wholesale government

ADVANTAGES
 The organization is a flexible and responsive to
change
 The organization provides a high concern for
customer’s needs
 The organization provides excellent coordination
across functional departments
 There is easy pinponting of responsibility for
product problems
 There is emphasis on overall prodduc6t and
division goals
 The opportunity for the development of general
management skills is provided

DISADVANTAGES
 There is a high possibility of duplication of
resources across divisions
 There is less technical depth and specialization
in division
 There is less top management control

 There is competition for corporate resources

TH E O RGAN IZIN G PRO C ESSES:
STE PS: E xamples:

STEP 1:  To manufacture and market new
C onsid er plans and goals. brands of clothes at a 10% return
on investment.

STEP 2:
D eterm ine activities.  Compensating, record keeping,
cutting, printing, pricing,
recruiting, advertising, selling,
machining, inspecting, storing,
training, hiring, shipping.

STEP 4: M arketing- Bob
Assign the work and
d elegate authority.
Accounting- L oren

Personnel- Ian Prod uction- M arie

 Step 3:
C lassify and group
activities.

ST E P 5: H IER AR C H
Y
DE SIGN A

IM PO RTAN C E O F TH E O RGAN IZIN G
PRO C ESS
1 . A C L ARIFIED WO RK EN VIRO N M EN T.

2. A C O O RD IN ATED EN VIRO N M EN T

3. A FO RM AL D EC ISIO N -M AK IN G STRU C TU RE

COMMON ELEMENTS IN
ORGANIZATION
According to Henry Mintzberg, all organizations have five(5) common
elements:
2. Operating core
- this consists the employees who perform the basic work related to
the production of goods and/or services.
2. Strategic Apex
- these are the top level managers, who are charged with the
overall responsibility for the organization
3. The middle line
- compose the managers who connect the operating core to the
strategic apex.
4. The technostructure
- they are the analysts who have the responsibility for effecting
certain forms of standardization in the organization like time and motion
engineers, job description designer, and systems and procedures analysts.
5. The support staff
- people who fill the staff units, who provide indirect support
services for the organization

DESIGN CONFIGURATIONS
1. Professional bureaucracy
—Control lies with the operating core.
Decisions are decentralized.

2. Simple structure
—When the strategic apex is dominant.
Control is centralized and follows chain of
command.

3. Divisional structure
—Middle management is in control.

4. Machine bureaucracy
—Technostructure are dominant. Control is
through standardization.

5. Adhocracy.
—The support staff rules. This is a structure
characterized as low in complexity, formalization and
centralization. Unwritten rules and regulations exist.

THE COMPANY’S STRUCTURE.

The result of organizing process is
the structure. This is the manner in
which an organization is
constructed, including such aspects
as hierarchy, lines of
communication and span of control.

PURPOSES OF THE STRUCTURE
 It
defines the relationship
between tasks and authority of
individuals and departments.

 It
defines formal reporting
relationship, the number of
levels in the hierarchy of the
organization and the span of
control.

Itdefines the grouping
together of individual
departments.

Itdefines the systems to
affect coordination of effort
in both vertical (authority)
and horizontal (task
directions)

Dimensions of an Organizational
Chart

1. Vertical Dimension
establishes the chain of command
or who reports to whom

2. Horizontal Dimension
establishes the division of labor

Vertical
Dimension

Horizontal Dimension

ORGANIZATIONAL CHARTS
=
STRUCTURE
CHARTS

TYPES OF ORGANIZATIONAL CHARTS

Master chart or chart of
authority.

 A master plan of the principal
departments with lines of
authority and responsibility. It
shows the entire
organizational structure.

 Functional chart.

 It
shows the functions and
activities of the positions
and/or departments. Listed
below each job title are brief
statements of the
responsibilities.

Personnel chart.

 Instead of listing functions, the
titles of the positions and the
names of the persons are
indicated.

Organization Chart Defined
 the visual representation of an organization’s
structure
 it shows the relationship among positions as
to authority, responsibility and accountability
and the people who occupy them (Inigo)
 a diagrammatical form that shows important
aspects of an organization including the major
functions and their respective relationships, the
channels of supervision, and the relative
authority of each employee who is in charge of
each function

Types of an
Organizational
Chart

shows the entire organizational structure. It
is a master plan of the principal
departments, with lines of authority and
responsibility and the mutual relationships
of all departments.

shows at a glance the functions and
activities of each department/ positions.

shows the departments in the same relative
manner as the functional chart
instead of listing the functions, the names
of the persons are indicated.

Report module 6

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