Management Theory & Practice(Robbins, S. Coulter M.)

Computer People 2000Computer People 2000 11
Lecture # 5Lecture # 5
OrganizingOrganizing

OrganizingOrganizing
OrganizingOrganizing
– The identification and classification ofThe identification and classification of
required activities.required activities.
– The grouping of activities necessary toThe grouping of activities necessary to
attain objectives.attain objectives.
– The assignment of each grouping to aThe assignment of each grouping to a
manager with authority necessary tomanager with authority necessary to
supervise.supervise.
– The provision for coordinate horizontallyThe provision for coordinate horizontally
and verticallyand vertically

Organizational Structure & DesignOrganizational Structure & Design
 Organizing:Organizing: The Process of creating anThe Process of creating an
organization structure.organization structure.
 Organization Structure:Organization Structure: is the frameworkis the framework
by which job tasks are divided, group andby which job tasks are divided, group and
coordinated.coordinated.
 Manager has to design an org. structure thatManager has to design an org. structure that
allows employees to work effectively andallows employees to work effectively and
efficiently.efficiently.
 Organizational Design:Organizational Design: The determinationThe determination
of the org. structure that is most appropriateof the org. structure that is most appropriate
for strategy, people, technology and tasksfor strategy, people, technology and tasks
of the org.of the org.

 A process that involves decision about sixA process that involves decision about six
key elements.key elements.
1) Work Specialization:1) Work Specialization: The degree to whichThe degree to which
tasks in an org. are divided into separatetasks in an org. are divided into separate
jobs also known as division of labor.jobs also known as division of labor.
– In this entire job is not done by anIn this entire job is not done by an
individual.individual.
– Job is broken down into steps and eachJob is broken down into steps and each
step is completed by different person.step is completed by different person.
– Individual employees specializes inIndividual employees specializes in
doing parts of an activity rather than thedoing parts of an activity rather than the
entire activity.entire activity.

2) Departmentalization:2) Departmentalization: The basis by whichThe basis by which
jobs are grouped together.jobs are grouped together.
– Once the jobs have been divided upOnce the jobs have been divided up
through work specialization, they havethrough work specialization, they have
to be grouped backed together.to be grouped backed together.
– So that the common tasks can beSo that the common tasks can be
coordinated.coordinated.
– Every org. has its own way of classifyingEvery org. has its own way of classifying
and grouping work activities.and grouping work activities.

 Functional Dept.: Groups jobs by functions
performed.
 Geographic Dept.: Groups jobs on the
basis of territory or geography.
 Product Dept.: Groups job by product.
 Process Dept: Groups jobs on the basis of
product or customer flow.
 Customer Dept.: Groups jobs on the basis
of common customers who have common
needs or problems.

3) Chain of Command:3) Chain of Command: The continuousThe continuous
line of authority that extends fromline of authority that extends from upperupper
org. level to the lowest levelsorg. level to the lowest levels and clarifiesand clarifies
who reports to whomwho reports to whom..
 Authority:Authority: refers to the rights inherent in anrefers to the rights inherent in an
managerial position to tell people what tomanagerial position to tell people what to
do and to expect them to do it.do and to expect them to do it.
 Responsibility:Responsibility: The obligation orThe obligation or
expectation to perform any assigned duties.expectation to perform any assigned duties.
 Unity of Command:Unity of Command: The managementThe management
principle each person should report to onlyprinciple each person should report to only
one manager.one manager.

4) Span of Control:4) Span of Control: The number of employeesThe number of employees
a manager can efficiently and effectivelya manager can efficiently and effectively
manage.manage.
 It determines the numbers of level andIt determines the numbers of level and
managers in an org.managers in an org.
 Wider spans reduce effectiveness.Wider spans reduce effectiveness.
 Wider span of control are consistent withWider span of control are consistent with
managers effortmanagers effort
 To reduce costs,To reduce costs,
 speed up decision making,speed up decision making,
 increase flexibility,increase flexibility,
 get closer to customers and empowerget closer to customers and empower
employees.employees.

5) Centralization & Decentralization:5) Centralization & Decentralization:
 Centralization:Centralization: The degree to whichThe degree to which
decision making is concentrated at adecision making is concentrated at a
single point in the org.single point in the org.
 De-centralization:De-centralization: The degree toThe degree to
which lower-level employees providewhich lower-level employees provide
input or actually make decisions.input or actually make decisions.

6) Formalization:6) Formalization: The degree to whichThe degree to which
– Jobs within the organization areJobs within the organization are
standardizedstandardized
– and the extend to which employeeand the extend to which employee
behavior is guided by rules andbehavior is guided by rules and
procedures.procedures.
 If a job is highly formalized, then theIf a job is highly formalized, then the
person doing the job has a minimumperson doing the job has a minimum
amount of discretion overamount of discretion over
What is to be done?
When it is to be done?
And how he or she could do it?

 Differentiation:Differentiation: Differences inDifferences in attributesattributes
and working styleand working style, arising naturally among, arising naturally among
members of different departments, thatmembers of different departments, that
can complicate thecan complicate the coordination of ancoordination of an
org.’s activities.org.’s activities.
 There are four types of differentiation.There are four types of differentiation.
– First, people in different work unit tendFirst, people in different work unit tend
to develop their own perspective on theto develop their own perspective on the
org’s goals and how to purse them.org’s goals and how to purse them.
– Second, people in work unit often differSecond, people in work unit often differ
in their time orientationin their time orientation..

– Time orientation affects a third type ofTime orientation affects a third type of
differentiation-interpersonal styles.differentiation-interpersonal styles.
– Finally department may differ in theirFinally department may differ in their
formality.formality.
 Integration:Integration: is extend to which membersis extend to which members
of various departments work together in aof various departments work together in a
unified manner.unified manner.

Organizational Design DecisionsOrganizational Design Decisions
 All the org. are not structured in the sameAll the org. are not structured in the same
way.way.
 A company with 30 employees will beA company with 30 employees will be
different from the company of 3000different from the company of 3000
 Organizational design depends uponOrganizational design depends upon
certain contingency factors.certain contingency factors.
 Beside that there are three two genericBeside that there are three two generic
models of the org. exist.models of the org. exist.

 Mechanistic OrganizationMechanistic Organization:: An org. thatAn org. that
is rigid and tightly controlled structure.is rigid and tightly controlled structure.
 Organic organization:Organic organization: AAn org. designn org. design
that is highly adaptive and flexiblethat is highly adaptive and flexible..

Mechanistic & Organic OrganizationMechanistic & Organic Organization
Mechanistic Org.Mechanistic Org.
 High specialization.High specialization.
 RigidRigid
departmentalizationdepartmentalization
 Clear chain ofClear chain of
command.command.
 Narrow spans ofNarrow spans of
controlcontrol
 CentralizationCentralization
 High FormalizationHigh Formalization
Organic Org.Organic Org.
 Cross FunctionalCross Functional
TeamTeam
 Cross HierarchicalCross Hierarchical
Teams.Teams.
 Free flow ofFree flow of
informationinformation
 Wide span of controlWide span of control
 DecentralizationDecentralization
 Low Formalization.Low Formalization.

Contingency FactorsContingency Factors
 Top managers of most org. put great dealTop managers of most org. put great deal
of thought into designing appropriateof thought into designing appropriate
structure.structure.
 Appropriate structure is depends on fourAppropriate structure is depends on four
contingency variables.contingency variables.
1) Strategy & Structure:1) Strategy & Structure:
In any org. strategy & structure areIn any org. strategy & structure are
closely linked.closely linked.
More specifically structure should followMore specifically structure should follow
strategy.strategy.

Changing org. strategy will lead toChanging org. strategy will lead to
change org. structure.change org. structure.
Strategy frameworks lead to focus onStrategy frameworks lead to focus on
three dimensions.three dimensions.
Innovation, Cost Minimizatmion,Innovation, Cost Minimizatmion,
Imitation:Imitation: seeking to minimize risk andseeking to minimize risk and
maximize profit opportunities by copyingmaximize profit opportunities by copying
the market leaders.the market leaders.
InnovationInnovation leads toleads to Organic structure.Organic structure.
Cost Mini.Cost Mini. Leads toLeads to MechanisticMechanistic
structure.structure.

2) Size & Structure:2) Size & Structure:
Org. with 2000 or more tend to haveOrg. with 2000 or more tend to have
more specialization, departmentalization,more specialization, departmentalization,
centralization and rules & regulationscentralization and rules & regulations
than do small org.than do small org.
3) Technology & Structure:3) Technology & Structure:
Each org. has at least one form ofEach org. has at least one form of
technology to convert its inputs intotechnology to convert its inputs into
outputs.outputs.
Org. adapt their structure according toOrg. adapt their structure according to
their technology.their technology.

The process or method that transformedThe process or method that transformed
input to output are differs by their degreeinput to output are differs by their degree
of routineness.of routineness.
More routine the technology structureMore routine the technology structure
would be Mechanistic.would be Mechanistic.
On the other hand nonroutine technologyOn the other hand nonroutine technology
will have organic structure.will have organic structure.
4) Environmental Uncertainty & Structure:4) Environmental Uncertainty & Structure:
Greater Uncertainty-- Organic StructureGreater Uncertainty-- Organic Structure
Lower Uncertainty-- Mechanistic structureLower Uncertainty-- Mechanistic structure

Traditional Org. Design structureTraditional Org. Design structure
 In designing a structure to support theIn designing a structure to support the
efficient & effective accomplishment of org.efficient & effective accomplishment of org.
goals, may choose to follow more traditionalgoals, may choose to follow more traditional
org. design.org. design.
Simple Structure:Simple Structure: Most org. starts asMost org. starts as
entrepreneurial ventures.entrepreneurial ventures.
With a structure consisting of owners andWith a structure consisting of owners and
A simple structure is org. design with lowA simple structure is org. design with low
departmentalization, wide spans ofdepartmentalization, wide spans of
control, centralized authority and littlecontrol, centralized authority and little
formation.formation.

Traditional Org. Design StructureTraditional Org. Design Structure
As Org. grows, it generally reaches aAs Org. grows, it generally reaches a
point where to add employees to help topoint where to add employees to help to
cope with additional duties.cope with additional duties.
As number of employee increases,As number of employee increases,
structure tends to become morestructure tends to become more
specialize and formalized.specialize and formalized.
At this stage the org. becomeAt this stage the org. become
increasingly Bureaucratic.increasingly Bureaucratic.

Functional Structure:Functional Structure: An org. design thatAn org. design that
group similar or related occupationalgroup similar or related occupational
specialties together.specialties together.
Divisional Structure:Divisional Structure: An org. structure madeAn org. structure made
up of separate, semiautonomous units orup of separate, semiautonomous units or
divisions that resemble a separatedivisions that resemble a separate
business.business.
Each Unit and division has relativelyEach Unit and division has relatively
limited autonomy with a divisionlimited autonomy with a division
manager responsibly for performance.manager responsibly for performance.

The manager also has operational &The manager also has operational &
strategic authority of unit.strategic authority of unit.
Parent corporation typically act as anParent corporation typically act as an
external overseas to coordinate andexternal overseas to coordinate and
control various division.control various division.

 Product Structure:Product Structure: The organization ofThe organization of
company into divisions that bring togethercompany into divisions that bring together
those involved with certain type ofthose involved with certain type of
product.product.
 Customer Structure:Customer Structure: The organization ofThe organization of
company into division that bring togethercompany into division that bring together
customer in market.customer in market.
 Geographic StructureGeographic Structure: The organization of: The organization of
company into division that bring togethercompany into division that bring together
Geographical areas.Geographical areas.

Matrix Structure:Matrix Structure:
 An org. structure that assigns specialistsAn org. structure that assigns specialists
fromfrom different functional departmentsdifferent functional departments toto
work on one or morework on one or more projectsprojects being heldbeing held
byby project manager.project manager.
– A primary advantage of this structure isA primary advantage of this structure is
that it facilities the use of specializedthat it facilities the use of specialized
personal, equipment and facilities.personal, equipment and facilities.
– Such resources sharing andSuch resources sharing and
collaboration enable a firm to use itscollaboration enable a firm to use its
resources more efficiently.resources more efficiently.

– This structure creates dual chain ofThis structure creates dual chain of
command.command.
– The dual reporting structures can resultThe dual reporting structures can result
in uncertainly and lead to intense powerin uncertainly and lead to intense power
struggle and conflict over resourcestruggle and conflict over resource
allocation.allocation.

Contemporary Org. DesignsContemporary Org. Designs
Team Based Structure:Team Based Structure: An org. Structure inAn org. Structure in
which the entire org. is made up of workwhich the entire org. is made up of work
group or teams.group or teams.
In a team based structure employeeIn a team based structure employee
empowerment is crucial because there isempowerment is crucial because there is
no line of managerial authority from top tono line of managerial authority from top to
bottom.bottom.
Employee teams are free to design theirEmployee teams are free to design their
work in the way they think is best.work in the way they think is best.
The team also held responsible for all theThe team also held responsible for all the
work activity and performance results inwork activity and performance results in
their respective areas.their respective areas.

DownsizingDownsizing
 A version of organizational restructuringA version of organizational restructuring
which results in decreasing in the size ofwhich results in decreasing in the size of
the organization.the organization.
 Org. convert into leaner, more flexibleOrg. convert into leaner, more flexible
structure that can respond more rapidly tostructure that can respond more rapidly to
the pace of change in global market.the pace of change in global market.
 Before this structure American companiesBefore this structure American companies
adopted Bureaucratic org. structure, timesadopted Bureaucratic org. structure, times
were more stable when companieswere more stable when companies
dominate their environment and economicdominate their environment and economic
growth.growth.
– IBM, GM, Xeror, ExxonIBM, GM, Xeror, Exxon

Organising the activity ofOrganising the activity of
IndividualsIndividuals
 Responsibility:Responsibility: As manager assignAs manager assign
work to employees, those employeeswork to employees, those employees
assume an obligation to perform anyassume an obligation to perform any
assigned duties.assigned duties.
 This obligation or expectation toThis obligation or expectation to
perform is known as responsibility.perform is known as responsibility.

Organising the activity of IndividualsOrganising the activity of Individuals
Types of AuthorityTypes of Authority
 There are three types of Authority.There are three types of Authority.
 Line Authority:Line Authority: The authority of thoseThe authority of those
managers directly responsible throughoutmanagers directly responsible throughout
the org. chain of command, for achievingthe org. chain of command, for achieving
org. goal.org. goal.
– This authority starts with the board ofThis authority starts with the board of
directors and extended to the variousdirectors and extended to the various
levels in the hierarchy to the pointlevels in the hierarchy to the point
where the basic activities of the org. arewhere the basic activities of the org. are
carried out.carried out.

Types of AuthorityTypes of Authority
 Staff Authority:Staff Authority: The authority of thoseThe authority of those
groups of individuals who provide linegroups of individuals who provide line
managers with advice and service.managers with advice and service.
 Functional Authority:Functional Authority: The authority ofThe authority of
members of staff departments to controlmembers of staff departments to control
the activities of other departments as theythe activities of other departments as they
relate to specific staff responsibility.relate to specific staff responsibility.

DelegationDelegation
 The act of assigning formal authority andThe act of assigning formal authority and
responsibility for completion of specificresponsibility for completion of specific
activities to a subordinate.activities to a subordinate.
Prerequisites of Delegation:Prerequisites of Delegation:
– Managers ‘s willingness to giveManagers ‘s willingness to give
employees freedom to accomplishemployees freedom to accomplish
delegated task.delegated task.
– Open communication between managersOpen communication between managers
and employees.and employees.
– Managers ability to analyze org. GoalManagers ability to analyze org. Goal
the task requirements and employeesthe task requirements and employees
capacity.capacity.

 Steps in Effective Delegation:Steps in Effective Delegation:
1.1. Decide which tasks can be delegated.Decide which tasks can be delegated.
2.2. Decide who should get theDecide who should get the
assignment.assignment.
3.3. Provide sufficient resource forProvide sufficient resource for
carrying out delegated task.carrying out delegated task.
4.4. Delegate the assignment.Delegate the assignment.
5.5. Be prepared to run interference, ifBe prepared to run interference, if
necessary.necessary.
6.6. Establish a feedback system.Establish a feedback system.

 Obstacle in the Delegation Process:Obstacle in the Delegation Process:
Managers can be reluctant to delegateManagers can be reluctant to delegate
authority.authority.
Insecurity and confusion about who isInsecurity and confusion about who is
ultimately responsible for a specificultimately responsible for a specific
task.task.
Delegating authority reduce their ownDelegating authority reduce their own
authority.authority.

Organization ChangeOrganization Change
 Any Alteration of people, structure,Any Alteration of people, structure,
or technology in an organization.or technology in an organization.
 Organization changes often needOrganization changes often need
someone act as catalyst and assumesomeone act as catalyst and assume
the responsibility for managing thethe responsibility for managing the
change process-change process-Change Agent.Change Agent.
 There are three types of changesThere are three types of changes
exist in an organization.exist in an organization.

Organization ChangeOrganization Change
Work Specialization, Departmentalization,
Chain of Command, Span of control,
Centralization, Formalization, job redesign
Structure
Work Processes, Methods
And equipment
Technology
Attitudes, Expectations, Perceptions,
And Behavior-Individuals and Group.
People

SummarySummary
 OrganizingOrganizing
 Org. StructureOrg. Structure
 Org. DesignOrg. Design
Work SpecializationWork Specialization
DepartmentalizationDepartmentalization
Chain of CommandsChain of Commands
Span of ControlSpan of Control
Centralization & DecentralizationCentralization & Decentralization
FormalizationFormalization
 Mechanistic & Organic Org.Mechanistic & Organic Org.

SummarySummary
 Contingency Factors to Org. DesignContingency Factors to Org. Design
Strategy & StructureStrategy & Structure
Size & StructureSize & Structure
Technology & StructureTechnology & Structure
Environment & StructureEnvironment & Structure
 Traditional Org. StructureTraditional Org. Structure
Simple StructureSimple Structure
Functional StructureFunctional Structure
Division structureDivision structure
 Team Based StructureTeam Based Structure

SummarySummary
 DownsizingDownsizing
 Types of AuthorityTypes of Authority
 DelegationDelegation
Prerequisites of DelegationPrerequisites of Delegation
Steps in Effective DelegationSteps in Effective Delegation
Obstacles in the delegation ProcessObstacles in the delegation Process

Management Theory & Practice(Robbins, S. Coulter M.)

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