Chapter 10: Basic Elements of Organizing

Organizing

Deciding how to best group organizational activities and resources

Organization Structure

The set of building blocks that can be used to configure an organization

Building Blocks for Organizational Structure

Designing Jobs, Grouping Jobs, Reporting Relationships, Distributing Authority, Coordinating Activities, Differentiating between Positions

Job Design

The determination of an individual's work-related responsibilities

Job Specialization (Division of Labor)

The degree to which the overall task of the organization is broken down and divided into smaller component parts. Opposite: Generalization

Benefits of Job Specialization

- Workers can become proficient at a task

- Transfer time between tasks is decreased

- Specialized equipment can be more easily developed

- Employee replacement becomes easier

Limitations of Specialization

- Boredom and dissatisfaction with mundane tasks

- Anticipation benefits causing slower workers, higher training, and low proficiency

Alternatives to Specialization

- Job Rotation

- Job Enlargement

- Job Enrichment (Job Characteristics Approach)

- Work Teams

Job Rotation

Systematically moving employees from one job to another in an attempt to reduce employee boredom

Job Enlargement

An increase in the total number of tasks workers performs. Job increases, not compensation.

Job Enrichment

Increasing both the number of tasks the workers does and the control the worker has over the job. An application of the jobs characteristic theory.

Job Characteristics Approach Core Dimensions

- Skills variety

- Task identity

- Task significance

- Autonomy

- Feedback

Skills Variety

The number of tasks a person does in a job

Task Identity

The extent to which the worker does a complete or identifiable portion of the total job

Task Significance

The perceived importance of the task

Autonomy

The degree of control the worker has over how the work is performed

Feedback

The extent to which the worker knows how well the job is being performed. Not from person, but from completion of jobs

Growth-Need Strength

Moderator. The desire for some people to grow, develop, and expand their capabilities that is their response to the core dimensions. The second moderator would be knowledge and skill.

Work Teams

An alternative to job specialization that allows the entire group to design the work system it will use to perform an interrelated set of tasks.

Designing Jobs

Includes Job Design, Job Specialization, and Job Characteristic Approach

Grouping Jobs

Includes Departmentalization

Departmentalization

The process of grouping jobs according to some logical arrangement. Allows us to group jobs together so one person doesn't have to lead everyone.

Rationale for Departmentalization

- Organizational growth exceeds the owner-manager's capacity to personally supervise all of the organization.

- Additional managers are employed and assigned

specific employees to supervise.

Functional Departmentalization

Grouping jobs involving the same or similar activities

Advantages of Functional Departmentalization

- Each department can be staffed by functional-area experts.

- Supervision is facilitated in that managers only need be familiar with a narrow set of skills.

- Coordination inside each department is easier.

Disadvantages of Functional Departmentalization

- Decision making becomes slow and bureaucratic.

- Employees narrow their focus to their department and lose sight of broader goals and issues.

- Accountability and performance are difficult to monitor.

Product Departmentalization

Grouping activities around products or product groups

Advantages of Product Departmentalization

- All activities associated with one product are integrated and coordinated.

- Speed and effectiveness of decision making are enhanced.

- Performance of individual products or product groups can be assessed.

Disadvantages of Product Departmentalization

- Managers may focus on their product to the exclusion of the rest of the organization.

- Administrative costs may increase due to each department having its own functional-area experts.

Customer Departmentalization

Grouping activities to respond to and interact with specific

customers and customer groups.

Advantages of Customer Departmentalization

Skilled specialists can deal with unique customers or customer groups.

Disadvantages of Customer Departmentalization

A large administrative staff is needed to integrate activities of various departments

Location Departmentalization

The grouping of jobs on the basis of defined geographic sites

or areas. Must have multiple locations/different demographics to work with.

Advantages of Location Departmentalization

Enables the organization to respond easily to unique customer and environmental characteristics.

Disadvantages of Location Departmentalization

Large administrative staff may need to keep track of units in scattered locations

Alternative Groupings to Departmentalization

- By specific units of time

- By sequence

- By customer characteristics, products, or services

Other Considerations for Departmentalization

- Departments are often called by other names: Divisions, units, sections, and bureaus

- Organizations are likely to employ multiple bases of departmentalization, depending on level

Reporting Relationships

Includes Chain of Command, Span of Control, and Tall vs Flat Organizations

Chain of Command

A clear and distinct line of authority among the positions in an organization.

Unity of Command

Each person within an organization must have a clear reporting relationship to one and only one boss.

Scalar Principle

(Think "Scale"). A dear and unbroken line of authority must extend from the bottom to the top of the organization. You know who reports to who.

Imitation Game Video

- Shows why chain of command is important

- Cumberbatch went over his bosses head to the main boss

Span of Control

- The number of people reporting to a manager

- A. V. Graicunas

A. V. Graicunas

Direct- Manager's relationship with each subordinate

Cross- Among the subordinates themselves

Group- Between groups of subordinates

Ralph Davis

- Operation span for lower-level managers of up to 30 workers

- Executive span for middle and top managers set at 3 to 9

- Span depends on mangers' job, company growth rate, and similar factors

Lyndall Urwick and General Ian Hamilton

Executive span should never exceed six persons.

Factors Influencing the Span of Management

- Competence of supervisor and subordinates (the greater the competence, the wider the potential span)

- Physical dispersion of subordinates (the greater the dispersion, the narrower the potential span)

- Extent of nonsupervisory work in manager's job (the more nonsupervisory work, the narrower the potential span)

- Degree of required interaction (the less required interaction, the wider the potential span)

- Extent of standardized procedures (the more procedures, the wider the potential span)

- Similarity of tasks being supervised (the more similar the tasks, the wider the potential span)

- Frequency of new problems (the higher the frequency, the narrower the potential span)

- Preferences of supervisors and subordinates

Tall Organizations

- Are more expensive because of the number of managers involved.

- Foster more communication problems because of the number of people through whom information must pass.

Flat Organizations

- Lead 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

Distributing Authority

Includes Authority, Delegation, Decentralization, and Centralization

Authority

Power that has been legitimized by the organization

Delegation

The process by which managers assign a portion of their total

workload to others.

Reasons for Delegation

- To enable the manager to get more work done by utilizing the skills and talents of subordinates.

- To foster development of subordinates by having them

participate in decision making and problem.

Manager Problems in Delegation

- Reluctant to delegate

- Disorganization prevents planning work in advance.

- Subordinate's success threatens superior's advancement.

- Lack of Trust in the subordinate to do well

Subordinate Problems in Delegation

- Reluctant to accept delegation for fear of failure.

- Perceives no rewards for accepting additional responsibility.

- Prefers to avoid any risk and responsibility.

Decentralization

Multidomestic, Transactional. Systematically delegating power and authority throughout the organization to middle- and lower- level managers.

Centralization

All power is held at the top. Systemically retaining the power and authority in the hands of higher-level managers.

Factors Determining Choice of Centralization

- External environment's complexity and uncertainty

- History of the organization

- Nature (cost and risk) of the decisions to be made

Coordinating Activites

Includes Coordination, Interdependence, Rules/Procedures, Managerial Hierarchy

Coordination

The process of linking the activities of the various departments of the organization.

The Need for Coordination

Where departments and work groups are interdependent; the greater the interdependence, the greater the need for coordination.

Pooled Interdependence

Operate independently, calculated at the top. When units operate with little interaction; their output is simply pooled at the organizational level.

Sequential Interdependence

One persons output becomes another person's input. You are only as fast as your slowest person. When the output of one unit becomes the input of another unit in sequential fashion.

Reciprocal Interdependence

When activities flow both ways between units

Ocean's 11 Video

- Trying to rob a casino

- Sequential interdependence example

The Managerial Hierarchy

Placing one manager in charge of interdependent departments or units.

Structural Coordination Techniques

The Managerial Hierarchy, Rules and Procedures, and Managerial Liaison Roles

Rules and Procedures

Routine coordination of activities using rules and procedures that set priorities and guidelines for actions.

Managerial Liaison Roles

A manager coordinates interdependent units by acting as a common point of contact, facilitating the flow of information.

Task Forces

- Used with multiple units when coordination is complex, requiring more than one individual and the need for coordination is acute.

- Disbanded when need for coordination has been

met.

Integrating Departments

- Permanent organizational units that maintain internal integration and coordination on an ongoing basis.

- May have authority and budgetary controls

Electronic Coordination

Email, electronic scheduling, PDAs, cell phones

Line Positions

Positions in the direct chain of command responsible for the achievement of an organization's goals. Have formal (legitimate) authority.

Staff Positions

Positions intended to provide expertise, advice, and support to line positions.

- Have advisory authority; can give compulsory advice.

- Have functional authority to enforce compliance with organizational policies and procedures.

Administrative Intensity

The degree to which managerial positions are concentrated in staff positions.