Organizing - BIT Foodtech Group 4

UNIT 5: Organizing

Learning Objectives:

Discuss the process of organizing.
Explain the different principles related to the process of organizing.
Differentiate the levels of authority.
Prepare an organizational chart.
Identify and discuss approaches to departmentalization.

Organizing

Organizing is the second managerial function.
Involves delegating tasks and coordinating tasks and resources to achieve organizational objectives.

Organizing Process: Four Distinct Steps

Determine the activities and resources:
- Identify all activities and their respective resource requirements to implement chosen strategies and accomplish objectives.
Classify and group the activities and resources:
- Examine each activity to determine its general nature (marketing, production, finance, personnel, etc.).
- Classify activities into related areas; this applies the principle of division of labor and specialization.
- Establish the basic department design for the organization structure; where departmentalization is done
Assign responsibility and delegate appropriate authority:
- Individuals assigned responsibility over activities and resources must be given the appropriate authority to accomplish their assignments.
- The amount and type of authority given depends on the nature and purpose of the activities and the expectations from them.
Design the hierarchy of relationships:
- Determine both vertical and horizontal operating relationships of the organization.
- Vertical structuring results in a decision-making hierarchy – the chain of command.
- Horizontal structuring determines the integration, coordination, and working relationships among operating departments; it also determines the span of control.

Span of Management

The span of management represents the number of employees reporting to a manager.
This is also called span of control, the number of employees a manager can efficiently and effectively manage.

Division of Labor

Management breaks the organization into several divisions or departments (Differentiation) and coordinates the departmental activities (Integration) to avoid overlapping of work.
With division of labor, there are specialized jobs available for employees grouped together and headed by a single person in each functional area.

Coordination

Coordination is the process of integrating tasks and resources to meet the organizational objectives.

Techniques Used In Coordination

Boundary Roles: Each department has its own limit, responsibility, and accountability.
Committees: Each department has its own people to be contacted by the other department to effect coordination.
Direct Contact: Each department expresses information among people within and among departments.
Integrators: A manager who does not work in any department is assigned to coordinate departmental activities to reach an objective.
Liaisons: Anyone who works in a department is assigned to coordinate information and activities with one or more departments.

Responsibility and Accountability

Responsibility is the obligation to carry out required activities to accomplish objectives.
When strategic and operational objectives are made, the people in charge of achieving them should be clearly defined.
Accountability is the assessment of how well individuals meet their responsibilities. All members of the organization should be evaluated periodically and held answerable for achieving their objectives.

Authority and Power

Authority is the power or right to make decisions, issue orders, and use resources. A manager should be given authority to get the job done.
Power is the ability to influence or control others, decisions, and resources to get the job done.

Levels of Authority

The levels of authority may be different from one job to another. A worker needs to know the level of authority for the job assigned to him to protect his rights from potential risks.
The levels of authority are as follows:
1. Full authority: Authority is given to make decisions free from the superior's knowledge.
2. Report authority: Authority is given to make a decision, but after the action has been made, such must be reported to the superior.
3. Recommend authority: Authority is given to list alternative actions, evaluate them, and recommend one. The action does not take place without the approval of the superior, who may change the recommended action if he does not agree with it.
4. Inform authority: Authority to inform the superior of the alternative actions. The superior has the sole decision to make decision.

Formal and Informal Authority

Formal authority is the official pattern of organizational power as embodied in the organizational chart. It defines the specified relationships among working employees and approval in getting the job done. It also shows the line of authority observed within the organization.
Informal authority is the unofficial pattern of relationships and communication that develops as employees interact and communicate. It is the unsanctioned way of getting the job done.

Line and Staff Authority

Line authority is the duty to make decisions and issue orders down personnel within the organization.
Staff authority is the responsibility to advise and support other personnel within the organization.

Organizational Structure

Positions/works in the organization must be arranged to achieve maximum efficiency and smooth operation.
Management uses an organizational design or structure to classify and arrange similar jobs into work units/departments and establish organizational interrelationships among them within the organization to accomplish organizational goals.

Organization Chart

An organization chart is a diagram that defines to illustrate the organization's management hierarchy and departments including the organization's members and their jobs and their working relationships.

Features of Organizational Chart

Level of management hierarchy:
- The organization chart gives a detailed view of the positions composing the rank of management within an organization and who are the persons assigned to the given position.
Unity of command:
- It is a principle requiring each subordinate to report to only one superior. Unity of direction is made if all activities are designed and directed toward the achievement of common objectives.
Chain of command:
- The downward and upward vertical lines give a graphic illustration of the stages of authority whereby each level of management reports.
Division and type of work:
- The organization chart gives someone an idea about the overall distribution of the different functions and works available within an organization.
Departmentalization:
- An organization chart reflects the manner in which the organization is divided into permanent work.

Classification of Departmentalization

Departmentalization is the grouping of related activities into units reflecting the internal and external focus of an organization to achieve organizational objectives.

Functional Departmentalization:
- The organization is arranged based on its internal operation. Functions of employees, and resources needed to accomplish the unit's work.
- It involves organizing departments around essential input activities, such as production, sales, and finance that are managerial or technological functions.
- Advantages:
  - Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations
  - Coordination within functional area
  - In-depth specialization
- Disadvantages:
  - Poor communication across functional areas
  - Limited view of organizational goals
Output Departmentalization:
- It is commonly used by large organizations with extensive diversity of products, types of customers, or geographical territory because they cannot departmentalize effectively around functions.
  a. Product or Service Departmentalization:
  * The organization is organized based on the several products or services it produces. Each department exists independently from each other producing and selling its own goods or services.
  * Advantages:
  * Allows specialization in particular products and services
  * Managers can become experts in their industry
  * Closer to customers
  * Disadvantages:
  * Duplication of functions
  * Limited view of organizational goals
  b. Customer Departmentalization:
  * The organization is organized based on the needs of different types of customers. The products or services provided by the organization may be identical or slightly different, but the needs of the various customers demand dissimilar marketing approaches.
  * Advantages:
  * Customers' needs and problems can be met by specialists
  * Disadvantages:
  * Duplication of functions
  c. Geographic Departmentalization:
  * The organization is organized based on the territory or area in which it conducts business. This departmentalization is commonly used by nonprofit organizations.
  * Advantages:
  * More effective and efficient handling of specific regional issues that arise
  * Serve needs of unique geographic markets better
  * Disadvantages:
  * Duplication of functions
  * Can feel isolated from other organizational areas
Multiple Departmentalization:
- It is used by large and complex organizations.
  a. Matrix Departmentalization:
  * It is a combination of functional and product departmental structures whereby an employee works for a functional department and is also assigned to one or more products or projects.
  * This approach to departmentalization provides flexibility because it allows the firms to temporarily organize for a project.
  b. Divisional Departmentalization:
  * This is common for large, complex global businesses with related goods and services to aid in portfolio management.
  * It is based on semiautonomous strategic business units whereby the departmentalization is made of companies within a company.
  * This conglomerate structure departmentalizes based on autonomous profit centers and is most useful when top management focuses on portfolio management to buy and sell businesses without great concern for coordinating divisions. Thank You