Management Fifteenth Edition Global Edition Chapter 3: Organizing Notes
Definition and Purpose of Organizing
Definition of Organizing: Organizing is a core management function that involves arranging and structuring work to accomplish the organization’s goals.
Organizational Structure: This refers to the formal arrangement of jobs within an organization.
Organizational Chart: This is the visual representation of an organization’s structure, serving as a map of the hierarchy and reporting relationships.
Organizational Design: This is the process of creating or changing an organization’s structure. It involves making deliberate decisions about six key elements:
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization
Purposes of Organizing:
Dividing work to be done into specific jobs and departments.
Assigning tasks and responsibilities associated with individual jobs.
Coordinating diverse organizational tasks.
Clustering jobs into units.
Establishing relationships among individuals, groups, and departments.
Establishing formal lines of authority.
Allocating and deploying organizational resources.
Key Elements: Work Specialization and Departmentalization
Work Specialization:
Also known as the division of labor.
It involves dividing work activities into separate job tasks rather than having one individual do the entire job.
A job is broken down into several steps, with each step completed by a different individual.
Departmentalization:
The basis by which jobs are grouped together after tasks have been divided via specialization.
Common work activities are grouped back together so work can be performed in a coordinated and integrated way.
Example (General Electric): GE organizes its corporate staff along functional lines, including legal, public relations, global research, human resources, and finance.
Today’s View on Departmentalization:
Cross-functional teams: This represents a trend where work teams are composed of individuals from various functional specialties (e.g., system analysts, developers, and testers within a development team). This approach is increasingly popular as tasks become more complex.
Customer departmentalization: This trend emphasizes monitoring and responding to specific customers' needs by grouping jobs based on customer types.
Key Elements: Chain of Command, Authority, and Responsibility
Chain of Command:
The continuous line of authority that extends from upper organizational levels to the lowest levels.
It clarifies reporting relationships (i.e., "Who reports to whom?") and helps employees know who to go to if they have a problem.
Authority:
Line Authority: This entitles a manager to direct the work of an employee and make certain decisions without consulting others. It is the authority that follows the chain of command from the top down.
Staff Authority: These are positions created to support, assist, and advise those holding line authority.
Example of Staff Authority: A hospital administrator who cannot handle the purchasing of all supplies creates a dedicated purchasing department. This department serves a staff function, providing expertise to the line managers.
Responsibility:
The obligation or expectation to perform any assigned duties.
Assigning authority without corresponding responsibility and accountability can lead to an abuse of power.
Accountability: Employees must be held accountable for their performance and the outcomes of their assigned tasks.
Unity of Command:
A management principle stating that each person should report to only one manager.
This prevents the problem of conflicting demands that arise when an individual has multiple bosses.
Key Elements: Span of Control
Span of Control: The number of employees a manager can efficiently and effectively manage.
Traditional View: Managers could not—and should not—directly supervise more than or subordinates.
Contemporary View: There is no "magic number" for the ideal span of control. The number depends on various factors, including:
The skills and abilities of both the manager and the employees.
The characteristics and complexity of the work being performed.
Impact of Span Width:
As illustrated in Exhibit 11.4, increasing the span of control (e.g., from a span of to a span of ) can significantly flatten an organization.
An organization with a wider span of would have two fewer hierarchical levels and approximately fewer managers than an organization with a span of .
Key Elements: Centralization, Decentralization, and Formalization
Centralization: The degree to which decision-making is concentrated at the upper levels of the organization.
Decentralization: The degree to which lower-level employees provide input or actually make decisions.
Factors Favoring More Centralization:
The environment is stable.
Lower-level managers are not as capable or experienced as upper-level managers.
Lower-level managers do not want a say in decisions.
Decisions are relatively minor.
The organization is facing a crisis or risk of failure.
The company is large.
Effective implementation of strategies depends on managers retaining say over what happens.
Factors Favoring More Decentralization:
The environment is complex and uncertain.
Lower-level managers are capable and experienced.
Lower-level managers want a voice in decisions.
Decisions are significant.
Corporate culture is open to allowing managers a say.
The company is geographically dispersed.
Effective implementation of strategies depends on managers having involvement and flexibility.
Employee Empowerment: The act of giving employees more authority (power) to make decisions on their own.
Formalization:
Refers to how standardized an organization's jobs are and the extent to which employee behavior is guided by rules and procedures.
High Formalization: Explicit job descriptions, numerous rules, and clearly defined procedures. Employees have little discretion over what, when, and how work is done.
Low Formalization: Employees have more discretion and flexibility in how they perform their work.
Contingency Factors Affecting Structural Choice
Strategy and Structure:
Structure should facilitate the achievement of organizational goals. Since goals are part of strategy, the two are closely linked.
Organic Structure: Characterized by flexibility and free-flowing information; works best for organizations pursuing meaningful and unique innovations.
Mechanistic Organization: Characterized by efficiency, stability, and tight controls; works best for companies focused on tightly controlling costs.
Size and Structure:
Size significantly affects structure up to a certain point.
Large organizations (typically those with more than employees) tend to have more specialization, departmentalization, centralization, and rules/regulations than small organizations.
Once a company grows past a certain size, the influence of size on structure diminishes.
Technology and Structure:
Organizations adapt structures based on how routine their technology is for transforming inputs into outputs.
Routine Technology: Leads to mechanistic structures (e.g., assembly line production).
Non-routine Technology: Leads to organic structures (e.g., Research and Development work).
Environmental Uncertainty and Structure:
In stable and simple environments, mechanistic designs are typically more effective.
Greater environmental uncertainty requires the flexibility of an organic design.
Contemporary dynamic forces necessitating organic designs include global competition, accelerated product innovation, and increased customer demands for high quality and fast delivery.