MGT | Lesson 9

The process of deploying organizational resources to achieve strategic goals.

organizing

What are the three main activities involved in organizing?

• identifying activities

• grouping into meaningful units

• assigning authority and responsibility

What is the difference between strategy and organizing?

• (Strategy) Defines what to do and why

• (Organizing) Defines how to do and who

What does strategy vs organizing primarily establish?

• (strategy) goals, objectives, plans

• (organizing) resources, tasks, responsibilities, communication

Importance of organizing.

1. Establishes authority (formal lines).

2. Assigns tasks & responsibility (associated with individual jobs).

3. Coordinates activities.

4. Clusters jobs into units.

5. Establishes working relationships → individuals, groups, departments.

6. Allocates resources.

7. Divides work to be done into specific jobs and departments.

The formal framework detailing how an organization's activities are divided, organized, and coordinated.

organizational structure

It specifies formal tasks assigned to individuals and departments.

organizational structure

It establishes formal patterns of interaction and coordination between employees.

organizational structure

What are the advantages of having an organizational structure?

• Efficiency gains from specialization

• Order arising from the clarity of job definitions

• Error reduction: Prevents unintended gaps (missed tasks) or overlaps (duplicated work)

What are the 3 key dimensions of an organizational structure?

1. Grouping: The basis for grouping activities together

2. Authority: The type of authority relationships among units

3. Coordination mechanism used

It is the broad outline & visual representation of an org structure.

organizational chart

It shows the following:

• Positions and title

• Level of reporting relationship

• Formal levels of communication

organizational chart

What do the boxes and titles indicate in an organizational chart?

types of work performed

What do the solid lines indicate in an organizational chart?

reporting relationships

What do the horizontal layers indicate in an organizational chart?

levels of management

It is the process of making decisions about creating or changing an org’s structure.

organizational design

What are the 6 elements of an organizational design?

1. Work specialization/Division of labor

2. Departmentalization

3. Chain of command

4. Span of control

5. Centralization and decentralization

6. Formalization

Work specialization is also known as __.

division of labor

It is the degree to which organizational tasks are subdivided into separate jobs.

work specialization

The specification of task activities associated with a particular job.

job designing

What is the main advantage of work specialization?

Efficiency (jobs tend to be small but can be performed efficiently)

What are the main disadvantages of work specialization?

• Employees are isolated to do a single, boring job

• Creates separation and hinders coordination

The basis for grouping positions into departments and organizing departments within the total organization to facilitate the achievement of organizational goals.

departmentalization

What are the two general approaches to departmentalization?

• traditional (simple, functional, divisional)

• innovative (team, matrix, virtual networks)

What are the 3 traditional organizational structures?

• simple

• functional

• divisional

This approach to departmentalization uses established organizational hierarchies and departmental arrangements.

traditional

What are examples of innovative organizational designs?

• team

• matrix

• virtual networks

This approach to departmentalization uses flexible organizational arrangements to adapt to changing needs.

innovative

A traditional organizational structure with little departmentalization and formalization, wide spans of control, and centralized authority.

simple

T/F: Small businesses commonly use a simple structure.

True

A traditional organizational structure that groups positions into departments based on similar skills, expertise, job functions, or resource use.

functional

Marketing, finance, human resources, and operations are examples of departments in what type of traditional structure?

functional

A traditional organizational structure that groups positions into departments based on organizational outputs, such as products, processes, markets, customers, or geographical areas.

divisional

What are the 5 common forms of departmentalization?

1. functional

2. product

3. process

4. geographical

5. customer

(2-5 are divisional)

T/F: A simple structure typically has narrow spans of control and highly decentralized authority.

False (wide spans of control, centralized authority)

The unbroken line of authority that links all people in an organization and shows who reports to whom.

chain of command

What are the three main principles associated with the chain of command?

1. authority

2. responsibility

3. unity of command

The rights inherent in a managerial position to give orders and expect them to be followed.

authority

What does the Parity of Authority and Responsibility state?

A person must have sufficient authority to accomplish the task they are responsible for.

It states that a must have sufficient authority to accomplish the task they are responsible for.

Parity of Authority and Responsibility

What does the Absoluteness of Responsibility state?

A manager may delegate authority to subordinates but it does not eliminate the manager's accountability for the work under their jurisdiction.

It states that a manager may delegate authority to subordinates but it does not eliminate the manager's accountability for the work under their jurisdiction.

Absoluteness of Responsibility

It states that a person should command to only 1 manager.

unity of command

A position with authority and responsibility for achieving the organization's major goals.

line

A position that primarily provides specialized expertise and support to line positions.

staff

A department that performs activities directly related to the organization's primary goals and mission, such as producing and selling products.

line

A department that provides specialized skills, knowledge, or services to support line departments.

staff

This type of authority follows the formal chain of command to supervise, direct, and evaluate subordinates.

line

Authority over other units in matters directly related to a staff department's specialized function.

functional

It refers to the number of employees a manager can effectively and efficiently supervise.

span of control

What are the two types of organizational structures based on span of control?

• tall

• flat

A structure with a narrow span of control and many hierarchical levels.

tall

A structure with a broad span of control and few hierarchical levels.

flat

This span of control allows for close supervision and directed control.

narrow (tall)

This span of control may lead to overloaded supervisors and loss of control.

broad (flat)

Narrow (tall) vs broad (tall) span of control in terms of cost.

• narrow: higher management cost due to many hierarchical levels

• broad: better operational cost efficiency; low management overhead

Narrow (tall) vs broad (tall) span of control in terms of employee autonomy.

• narrow: less independence and decision authority

• broad: encourages empowerment through authority delegation & decision-making

Narrow (tall) vs broad (tall) span of control in terms of communication.

• narrow: poor executive communication and visibility; large distance between top management and bottom staff

• broad: better communication

What factors influence the appropriate span of control?

1. Manager & employee skills

2. Nature of work

3. Similarity & complexity of tasks

4. Manager’s preferred style

5. Experience level

6. Physical proximity of subordinates

7. Standardized procedures (degree to which SPs are in place)

8. Information system (sophistication)

9. Strength of org culture

10. Budget constraints

11. Environmental stability

It refers to the reduction of the size of workforce and often involves eliminating layers of middle management, resulting in a broader span of control.

downsizing

It refers to making major changes to an organization’s structure through divestiture and acquisition and reducing management levels.

restructuring

T/F: A tall organizational structure has a broad span of control and few hierarchical levels.

False (A tall structure has a narrow span of control and many hierarchical levels.)

T/F: A flat organizational structure generally has fewer management levels.

True

T/F: A narrow span of control usually reduces management costs because fewer managers are needed.

False (It often requires more managers and hierarchical levels, increasing management costs.)

T/F: A broad span of control always guarantees effective supervision.

False (Managers may become overloaded if they supervise too many employees.)

T/F: Experienced employees and standardized procedures can make a broad span of control more effective.

True

T/F: Restructuring may involve reducing management levels, but it can also involve other major organizational changes.

True

An organizational arrangement in which decision-making authority is concentrated near the top of the organization.

centralization

An organizational arrangement in which decision-making authority is pushed down to lower organizational levels.

decentralization

It means giving employees greater authority and power to make decisions related to their work.

employee empowerment

T/F: Centralization is more appropriate when the business environment is stable and predictable.

True

T/F: Decentralization is more appropriate when the business environment is complex and uncertain.

True

T/F: An organization with inexperienced and less capable lower-level managers should generally favor decentralization.

False (Centralization is generally preferred because top managers retain decision-making authority.)

T/F: Decentralization is more appropriate when lower-level managers are experienced and capable of making sound decisions.

True

T/F: Centralization is preferred when lower-level managers do not want to participate in decision-making.

True

T/F: An organizational culture that encourages employee participation and autonomy supports centralization.

False (It supports decentralization.)

T/F: Centralization may be appropriate when top management needs strict control over strategy implementation.

True

T/F: A company facing a crisis should always decentralize decision-making to lower-level managers.

False (Centralization may be preferred to ensure coordinated action and tighter control during a crisis.)

T/F: A geographically dispersed organization may benefit from decentralization because local managers can respond to local conditions.

True

T/F: Decentralization is generally suitable when local conditions differ and require different responses.

True

T/F: Decentralization can improve responsiveness when quick decisions are needed close to the point of operation.

True

The degree to which jobs are standardized through rules, procedures, and explicit job descriptions.

formalization

T/F: High formalization is characterized by few rules and flexible job descriptions.

False (These are characteristics of low formalization.)

T/F: High formalization promotes consistency and uniformity in how tasks are performed.

True

T/F: Low formalization allows employees greater discretion in how they perform their jobs.

True

T/F: Employees in highly formalized jobs generally have greater freedom to decide how tasks are performed.

False (High formalization generally limits discretion through explicit rules and procedures.)

T/F: A company that uses detailed standard operating procedures (SOPs) for most tasks generally has high formalization.

True

Characteristics of low vs. high formalization.

High

• explicit job descriptions

• numerous org rules

• clearly defined work procedures

• less freedom in tasks

Low

• flexible job descriptions

• few formal rules

• greater discretion in how they work

• more autonomy and flexibility

This organization is also known as bureaucracy.

mechanistic

A mechanistic organization is also known as __.

bureaucracy

Mechanistic vs. Organic Organization in terms of specialization, chain of command, span of control, and degree of centralization and formalization.

Mechanistic

• rigid and tightly controlled

• high specialization

• rigid departmentalization

• clear chain of command

• narrow span of control

• centralized

• high formalization

Organic

• highly adaptive, loose, flexible

• uses cross-functional teams instead of strict departments

• cross-hierarchical teams

• wide span of control

• decentralized

• low formalization (free flow of info)

This organization uses cross-functional or cross-hierarchical teams.

organic

Natural result of combining the 6 elements of organizational design (work specialization/division of labor, departmentalization, chain of command, span of control, de/centralization, formalization)

organizational form

What are the 2 organizational forms?

• mechanistic

• organic

What are the different contingency factors affecting structural choice?

1. strategy

2. size

3. technology

4. degree of environmental uncertainty

What are the 3 strategic dimensions that influence organizational structure?

1. innovation

2. cost minimization

3. imitation

What are the 2 broad types of organizational structures commonly used to explain contingency factors?

• mechanistic

• organic

What type of organizational structure generally supports a cost-minimization strategy?

mechanistic

What type of organizational structure generally supports an innovation strategy?

organic

A strategy in which an organization adopts and adapts successful ideas or products developed by other organizations.

imitation