Professor Jayashree Sadri and Dr. SorabSadriORGANIZING
Introduction to Organization Organization is viewed as a group of persons comingtogether to achieve common goals and objectives. As a function of management, organization is aprocess of integrating and coordinating the efforts ofhuman, financial, technological and other resourcesfor the accomplishment of certain objectives. Organization involves identification and grouping ofactivities to be performed and dividing them amongthe individuals and creating authority andresponsibility for the accomplishment oforganizational objectives.
Introduction to Organizing Organizing can be viewed as the activities tocollect and configure resources in order toimplement plans in a highly effective and efficientfashion. Organizing is a broader set of activities and oftenconsidered one of the major functions ofmanagement. Organizing is about how can the necessaryactivities be divided so that individuals or groupscan be assigned responsibility for performingthem.
Purpose of organizing Divides work to be done into specific jobs anddepartments. Assign tasks and responsibilities associated withindividual jobs. Coordinates diverse organizational tasks. Cluster jobs into units. Establishes relationships among individuals,groups and departments. Establishes formal lines of authority. Allocates and deploys organizational resources
Organizational design and structure An organization is a pattern of relationships throughwhich people, under the direction of managers,pursue their common goals. Managers want toensure that their organizations can endure for a longtime. Members of an organization need a stable,understandable framework within which they can worktogether toward organizational goals. The managerial process of organizing involvesmaking decisions about creating this kind offramework so that organizations can last from thepresent into the future.
What is OrganizationalSTRUCTURE? The framework, typically hierarchical, withinwhich an organization arrangesIts lines of authority and communications,and allocates rights and duties.Organizational structure determines themanner and extent to which roles, power,and responsibilities are delegated, controlled,and coordinated, and how information flowsbetween levels of management.
STRUCTURE Cont’d An organizational structure depends entirelyon the organizations objectives andthe strategy chosen to achieve them.
Organizational Design Organizational Design is the decision makingprocess by which managers choose anorganizational structure appropriate to thestrategy of the organization and the environmentin which members of the organization carry outthat strategy. Organizational design thus has managers lookinginto two directions simultaneously: inside theirorganization and outside their organization.
Organization design can be definednarrowly, as the process of reshapingorganization structure and roles, or itcan more effectively be defined as thealignment of structure, process,rewards, metrics and talent with thestrategy of the business.DESIGN
Defining organizationalstructure/design Organizational structure is the formalarrangement of jobs within an organization. When managers develop or change thestructure, they are engaged in organizationaldesign, a process that involves decisions aboutkey elements: workspecialization, departmentalization, chain ofcommand, span of control, centralization anddecentralization and formalization
Four Building Blocks1. Divide the total workload into tasks that can logicallyand comfortably be performed by individuals or groups.This is referred to as the division of work.2. Combine tasks in a logical and efficient manner. Thegrouping of employees and tasks is generally referredto as departmentalization.3. Specify who reports to whom in the organization. Thislinking of departments results in an organizationalhierarchy.4. Set up mechanisms for integrating departmentalactivities in to a coherent whole and monitoring theeffectiveness of that integration. This process is calledcoordination.
Departmentalization The basis by which jobs are grouped together iscalled departmentalization. Every organizationwill have its own specific way of classifying andgrouping jobs, viz:1. Functional departmentalization2. Product departmentalization3. Geographical departmentalization4. Process departmentalization5. Customer departmentalization
Chain of command The chain of command is the line of authorityextending from upper organizational levels to thelowest levels , which clarifies who reports towhom. It helps employees answer questions such as“Who do I go to if I have a problem? Or “ to whomam I responsible?
Span of control How many employees can a manager efficientlyand effectively manage? The traditional view was that managers could not-and should not – directly supervise more than fiveor six subordinates. The question of span of control is importantbecause to a large degree, it determines thenumber of levels and managers an organizationhas.
Centralization and Decentralization In some organizations, top managers make allthe decisions and lower level managers andemployees simply carry out their orders. At the other extreme are organizations in whichdecision making is pushed down to the managerswho are closest to the action. The former organization is centralized and thelatter are decentralized.
In a decentralized organization, considerableauthority and accountability are passed down theorganizational hierarchy. In a centralized organization considerableauthority and accountability remain at the top ofthe hierarchy.
More Centralization Environment is stable Incapable lower level managers or inexperiencedat making decisions as upper level managers Lower level managers do not want to have a sayin decisions Company is large
More Decentralization Environment is complex , uncertain Lower level managers are capable andexperienced at making decisions. Lower level managers want a voice in decisions. Corporate culture is open to allowing managers tohave a say in what happens.
Highly CentralizedAuthority Authority given to a few topmanagers, allowing decisions to bemade by those with the “big picture” Facilitates development of a few“masters of knowledge” Provides non-decision makers thefreedom to perform technical taskswith fewer distractions
Decentralized Authority Authority distributed throughout theorganization Allows leaner organizations and fewer levels Allows those closest to problems andopportunities to make decisions Is received favorably by many organizationalmembers
FORMALIZATION Formalization refers to how standardized anorganizations jobs are and the extent to whichemployee behavior is guided by rules andprocedures. If a job is highly formalized, then the person doing thatjob has little discretion over what is to be done, whenit is to be done, and how he or she does it. In a highly formalized organizations, there are explicitjob descriptions, numerous organizational rules, andclearly defined procedures. On the other hand , where formalization is low, jobbehaviors are relatively unstructured and employeeshave a great deal of freedom in how they do theirwork.
Three Main Organizational Structures Tall Structure Flat Structure Matrix Structure
Hierarchy of Authority Tallorganizationshave manylevels Flatorganizationshave few levels
Tall structures and flat organizationalstructures Tall structures are often viewed negatively in modernorganizational analysis. But tall structures offer morepersonal contact between managers andsubordinates. There is more communication. But in tall structures there can be lot of bureaucraticdelay and red tapism which are not present in flatstructure. But increased equality that exists betweenemployees in a flat structure may lead tocommunication problems. In flat structures managers cannot possibly keepclosed control over many subordinates. So there ismore delegation
Matrix Structure The Matrix structure, sometimes referred to asa “Multiple Command System” is a hybrid thatattempts to combine the benefits of both typesof designs while avoiding their drawbacks. An organization with a matrix structure hastwo types of structure existing simultaneously.Employees have two bosses- that is they workin two chains of command- one vertical andthe other horizontal.
matrix – project structure Matrix is a structure that assigns specialists fromdifferent functional areas to work on projects butwho return to their areas when the project iscompleted . As one project is completed,employees move on to the next project. Advantage is that it has fluid and flexible designthat can respond to environmental changes.There is faster decision making. Disadvantages are complexity of assigningpeople to projects. There is also conflicts ofpersonality and tasks.
As organizations have become more globalmany use a type of matrix form in theirinternational operations.
Mechanistic and organic organizations A mechanistic organization is a rigid and tightlycontrolled structure. It is characterized by highspecialization, rigid departmentalization, narrowspans of control, high formalization, a limitedinformation net work (mostly downwardcommunication), and little participation in decisionmaking by lower level employers. Mechanistic organizations structures tend to relyheavily on rules, regulations and other controls. Although there is no totally mechanisticorganization, almost all large corporations andgovernmental agencies have some of thesemechanistic characteristics.
Organic organizations In direct contrast to the mechanistic form oforganization is the organic organization, which ishighly adaptive and flexible . Employees are highly trained and empowered tohandle diverse job activities and problems. Employees in organic type organizations requireminimal formal rules and little direct supervision
Traditional organizational designs Most organizations start as entrepreneurialventures with a simple structure consisting ofowners and employees. A simple structure is an organizational designwith low departmentalization, wide spans ofcontrol, authority centralized in a singleperson, and little formalization. This structure ismot commonly used by small business in whichthe owner and manager are one and the same.
Most organizations do not remain simplestructures, especially as they grow and addemployees. As the number of employeesincreases, the structure tends to becomemore specialized and formalized. Rules andregulations are introduced, work becomesspecialized, departments are created, levelsof management are added, and theorganization becomes increasinglybureaucratic. At this point a manager mightchoose to organize using a functionalstructure or a divisional structure
Contemporary organizational designs Managers in contemporary organizations arefinding that these traditional hierarchical designsoften are not appropriate for the increasinglydynamic and complex environments they face. In response to marketplace demands for beinglean, flexible and innovative, managers arefinding creative ways to structure and organizework and to make their organizations moreresponsive to the needs of customers, employeesand other organizational constituents.
Team structure A structure in which the entire organization ismade of work groups or teams. Advantages of this kind of structure is thatemployees are more involved and empoweredwhich reduces barriers among functionalareas. Disadvantage is that there is not clear chain ofcommand and there is lot of pressure onteams to perform.
Virtual organizations A virtual organization is an organization thatconsists of a small core of full time employeesand that hires outside specialists temporarily asneeded to work on projects. Work gets donethrough networking. By relying on webfreelancers around the globe, the companyenjoys a network of talent without all theunnecessary overhead and structural complexity.
Power and Authority Power can be defined as an ability to influence Power when legitimized becomes Authority.Authority is a form of Power. Formal authority is the type of power that weassociate with organizational structure. It isbased on the recognition of the legitimacy ofmanager’s attempts to exert influence.
The sources of Power1. Reward Power is based on one persons having the ability toreward another person for carrying out orders for meetingperformance requirements.2. Coercive Power based on the influencers’ ability to punish theinfluence for not meeting requirements.3. Legitimate Power is the power granted by the virtue of one’sposition in the organization.4. Expert Power is the extent to which a person controls informationthat is valuable to someone else. Control over information is asource of power by itself.5. Referent power is basically power through identification. Referentpower may not always correlate with formal organization authority.
Delegation How to distribute formal authority throughout theorganizational structure is a key organizingdecision. Delegation is the assignment to another person offormal authority (legitimate power) andaccountability for carrying our specific activities. The delegation of authority by managers toemployees is necessary for the efficientfunctioning of any organization, because nomanager can personally accomplish orcompletely supervise all of what happened in anorganization.
Advantages of Delegation1. More time at managers’ disposal.2. Improves the self confidence of the employees.3. Better decision making and also faster decisionmaking.
Barriers to Delegation Fear of losing control Feeling of being threatened Inefficient subordinates
Guidelines for Effective Delegation Define assignments and delegate authority in light ofresults expected. Select the person in light of the job to be done. Maintain open lines of communication. Establish proper controls. Reward effective delegation and successfulassumption of authority.