Introduction to Management

1. Management: the New Workplace. South-western Cengage Learning. 8th ed.ition
INTRODUCTION TO MANAGEMENT
MAN1006
UNIT 8
STRUCTURE AND FUNDAMENTALS OF
ORGANIZING

2. UNIT
OBJECTIVES
• At the end of this unit, students should be
able to:
• Define organizing and organization
structure.
• Outline the main features of the
organization chart – Work Specialization,
Chain of Command, Span of Management
• Differentiate between tall and flat structures;
centralization and decentralization.
• Relate the concepts of departmentalization
and functional structure.
• Explain, by way of illustration, the various
approaches to structure.
• Determine the advantages and
disadvantages of the structural approaches.
• Relate how structure can be used to achieve
an organization’s strategic goals.

3. ORGANIZING
• A manager’s work is influenced by how the company is
organized.
• Organizing is a deployment of organizational resources to
achieve strategic goals.
• The deployment of resources is reflected in the organization’s
division of labour into specific jobs, formal lines of authority,
and mechanisms for coordinating diverse organization tasks.
Prepared by: C. Hisby Aug. 2022

4. STRUCTURE
What is
organization
structure?

5. ORGANIZATION STRUCTURE
• Organization structure is
defined as the framework in
which the organization
defines how tasks are divided,
resources are deployed, and
departments are coordinated.

6. ORGANIZATION CHART
The characteristics of vertical structure are
portrayed in the organization chart.
The organization chart is the visual representation
of an organization’s structure.
It provides a framework for vertical control of the
organization.

7. ORGANIZATION CHART
• It defines:
• the set of formal tasks and formal
reporting relationships, including
lines of authority, decision
responsibility, number of hierarchical
levels and span of managers’ control

8. SAMPLE OF ORGANIZATION CHART,
SHOWING DIVISION OF LABOUR
President
Director of HR
Benefits
Administrator
Industrial
Relations
Manager
Director of
Production
Maintenance
Supervisor

9. WORK SPECIALIZATION
• A fundamental principle is that work can be
performed more efficiently if employees are allowed
to specialize.
• Work specialization, sometimes called division of
labour, is the degree to which organizational tasks
are subdivided into separate jobs.
• Work specialization can be seen in having different
departments, and each department is further
subdivided into separate functions/roles.

10. FEATURES OF WORK SPECIALIZATION
• Tasks are subdivided into individual jobs
• Employees perform only the tasks relevant to their
specialized function
• Jobs tend to be small, but they can be performed
efficiently
Division of labor concept

11. ADVANTAGES OF WORK
SPECIALIZATION
GREATER
EFFICIENCY
LESS TIME IN
COMPLETING
TASKS
MORE ACCURACY. DECREASE
PRODUCTION
COST.

12. DISADVANTAGES OF
SPECIALIZATION
Work independence.
Employee gets bored of doing same
job everyday.
More vulnerable to redundancy

13. CHAIN OF COMMAND
• Unbroken line of authority that links all persons in an
organization
• Shows who reports to whom
• Associated with two underlying principles
• Unity of Command – where each employee is held accountable to
only one supervisor.
• Scalar Principle – where there is a clearly defined line of authority in
the organization that includes all employees.

14. AUTHORITY
It involves the allocation resources
to achieve organizationally desired
outcomes
Authority is defined as the formal
and legitimate right of a manager to
make decisions and issue orders
Definition:

15. R E S P O N S I B I L I T Y
• Responsibility is the duty to
perform a task or activity an
employee has been assigned.
Usually, managers are assigned
authority commensurate with
responsibility.
• With insufficient authority, the task
may be possible but difficult to
accomplish
• With too much authority, they may
become tyrants

16. ACCOUNTABILITY
• Accountability is the mechanism through
which authority and responsibility are
brought into alignment.
• Accountability means that people with
authority and responsibility are subject to
reporting and justifying task outcomes to
those above them in the chain of command.
• Employees need to know what they are
accountable for and accept the responsibility
and authority for performing it.
Accountability can be built into the
organization structure.

17. DELEGATION
• Delegation is the process
managers use to transfer
authority and responsibility to
positions below them in the
hierarchy.
• Managers are encouraged to
delegate authority to the lowest
possible level to provide
maximum flexibility to meet
customer needs and adapt to the
environment.

19. SPAN OF MANAGEMENT
• The span of management is the
number of employees reporting to a
supervisor.
• Sometimes called the span of control,
this characteristic of structure
determines how closely supervisor can
monitor subordinates.
• Generally, when supervisors need to
work closely with subordinates, the
span should be small. When there is
little involvement with subordinates, it
is large.

20. TYPES OF
STRUCTURE
Flat structure – characterised by an
broad span of control and relatively few
hierarchical levels.
Tall Structure – characterised by an
narrow span of management and a
relatively large number of hierarchical
levels.
The average span of control used in an
organization determines whether the
structure is tall or flat.

21. CENTRALIZATION
AND
DECENTRALIZATION
Centralization and
Decentralization relate to the
hierarchical level at which
decisions are made.
Centralization means that
decision authority is located
near the top of the
organization.
With Decentralization,
decision authority is pushed
downward to lower
organization levels.

22. BENEFITS OF CENTRALIZATION
Reduced cost— The standardised procedure and method helps in considerably
reduction of office cost. Office cost is reduced as it does not emphasize on more
specialists, and more departmental machines and equipment.
Uniformity in action — Uniformity in action is established throughout the
organisation because of central administrative control. The same executive
supervises the work and same type of office equipment are used which ensure
uniform performance of activities.
Flexibility — Centralisation permits flexibility and adaptability of the
organisation to the changed circumstances. Occasional pressure of
extra clerical work is handled with the existing staff.
Improved quality of work —Improved quality of work is possible
because of standardised procedure, better supervision and use of
improved- machinery.

23. DISADVANTAGES OF
CENTRALIZATION
Delay in work —Centralisation creates loss of man-hours and delay in
performance of work because of transmission of records from and to the central
control room. Quick decision is not possible which also results delay in office
work.
Remote control —Better supervision is not possible as the executives are under
heavy pressure of work. Slackness in work is developed in the absence of better
control and supervision.
No loyalty — In centralisation there is no subordinate's initiative in work because they
are required to do such works which they were asked for. Workers work like machine
which results in no involvement in work and absence of zeal. All these factors stand as
barrier in the development of loyalty to work.
No Secrecy —Secrecy is not possible in centralised set up organisation because here
orders and decisions flow from one place and are conveyed to all.

24. ADVANTAGES OF
DECENTRALIZATION
• Decentralization is believed to:
relieve the burden on top managers,
make greater use of employee’ skills and
abilities,
Ensure that decisions are made close to the
action by well-informed people
Permit more rapid response to external changes

25. DISADVANTAGES OF
DECENTRALIZATION
The success of decentralization will depend upon
the quality of personnel manning the
decentralized units.
When an organisation expands through internal
growth, decentralisation is not necessary and may
be harmful.
In situations of emergency or trouble,
decentralised administration is ineffective.
In the absence of adequate information,
decentralised administration tends to become
weak.

26. FACTORS THAT
INFLUENCE
CENTRALIZATION VS
DECENTRALIZATION
1. Greater change and
uncertainty in the
environment are usually
associated with
decentralization.
2. The amount of
centralization and
decentralization should fit
the firm’s strategy.
3. In times of crisis or risk of
company failure, authority
may be centralized at the
top.

27. DEPARTMENTALIZATION
• Departmentalization is the basis for
grouping positions into departments and
departments into the total organization.
• Managers make choices about how to use
the chain of command to group people
together to perform their work.
• There are five (5) approaches to structural
design that reflect different uses of the
chain of command in departmentalization.

28. FIVE APPROACHES TO
STRUCTURAL DESIGN
Traditional
• Vertical Functional
• Divisional
Contemporary
• Matrix
• Team-Based
• Network

29. APPROACHES TO STRUCTURAL DESIGN

30. APPROACHES TO STRUCTURAL
DESIGN

31. VERTICAL FUNCTIONAL
APPROACH
• Functional structure is the grouping
of positions into departments based on
similar skills, expertise, work activities
and resource use.

32. VERTICAL FUNCTIONAL APPROACH –
HOW IT WORKS
• Information flows up and down the vertical
hierarchy, and the chain of command converges at
the top of the organization.
• People communicate primarily with others in the
same department to coordinate work and
accomplish tasks or implement decisions that are
passed down the hierarchy.
• Managers and employees are compatible because of
similar training and expertise.

33. VERTICAL FUNCTIONAL
APPROACH
Advantages
• Economies of scale and efficient use of
resources
• In-depth skill specialization and development
• Centralized decision making and provide
unified direction from top management.
Prepared by: C. Hisby Aug. 2022

34. VERTICAL FUNCTIONAL
APPROACH
Disadvantages
• Poor communication across functional
departments
• Slow response to external changes; lagging
innovation
• Decisions concentrated at top of hierarchy,
creating delay
Prepared by: C. Hisby Aug. 2022

35. DIVISIONAL
APPROACH
• Divisional structure occurs
when departments are
grouped together based on
organizational outputs.
• It is sometimes called:
product structure; program
structure or self-contained
unit structure.
• Diverse departments are
brought together to produce
a single organizational
output, whether it be a
product, a program or a
service to a single customer.

36. DIVISIONAL
APPROACH –
HOW IT WORKS
In the divisional
structure, divisions are
self-contained units with
separate functional
departments for each
division.
For example, each
functional dept. resource
needed to produce a
product is assigned to
each division.

37. CHARACTERISTICS OF THE
DIVISIONAL APPROACH
• Whereas in a vertical functional structure, all
engineers are grouped together and work on
all products, in a divisional structure, separate
engineering depts. are created within each
division.
• Each department is smaller and focuses on a
single product line or customer segment.
• Departments are duplicated across product
lines.
Prepared by: C. Hisby Aug. 2022

38. DIVISIONAL
APPROACH
Advantages
• Fast response, flexibility in
unstable environment
• Fosters concern for customer
needs
• Excellent coordination across
functional departments

39. DIVISIONAL
APPROACH
Disadvantages
• Duplication of resources across
divisions, high cost of running
separate divisions
• Less technical depth and
specialization
• Poor coordination across
divisions

40. MATRIX
APPROACH
A unique feature is that it has dual lines of
authority, where the functional hierarchy of
authority runs vertically, and the
divisional hierarchy runs horizontally.
It has evolved as a way to improve
horizontal coordination and information
sharing.
The matrix approach combines aspects of
both functional and divisional structures
simultaneously in the same part of the
organization.

41. MATRIX
APPROACH
– HOW IT
WORKS
• Dual lines of authority (two boss
employees) – violates the unity of
command concept, where
employees report to two
supervisors simultaneously. It can
be confusing, but after managers
learn to use this structure, the
matrix provides excellent
coordination simultaneously for
each geographic region and each
product line.
• The functional hierarchy of
authority runs vertically, and the
divisional hierarchy of authority
runs horizontally.

42. MATRIX
APPROACH
Advantages
• More efficient use of resources
than single hierarchy
• Adaptable to changing
environment
• Development of both general
and specialist management
skills
• Expertise available to all
divisions
• Enlarged tasks for employees

43. MATRIX
APPROACH
Disadvantages
• Dual chain of command
• High conflict between two sides
of matrix
• Many meetings to coordinate
activities
• Need for human relations
training
• Power domination by one side of
matrix

44. DUAL AUTHORITY STRUCTURE IN A MATRIX
ORGANIZATION

45. TEAM
APPROACH
• Team approach gives
managers a way to
delegate authority, push
responsibility to lower
levels, and be more
flexible and responsive in
the competitive global
environment.

46. TEAM
APPROACH
– HOW IT
WORKS
• With a team-based structure the
entire organization is made up of
horizontal teams that coordinate
their work and work directly with
customers to accomplish the
organization’s goals.

47. TEAM
APPROACH
Advantages
• Reduced barriers among
departments
• Quicker response time
• Better morale
• Reduced administrative
overhead

48. TEAM
APPROACH
Disadvantages
• Dual loyalties and conflict
• Time and resources spent on
meetings
• Unplanned decentralization

49. VIRTUAL NETWORK
APPROACH
• The Virtual Network
structure means that
the firm subcontracts
most of its major
functions to separate
companies and
coordinates their
activities from a small
HQ organization.

50. NETWORK
APPROACH
Advantages
• Global competitiveness
• Work force flexibility
• Reduced administrative
overhead

51. NETWORK
APPROACH
Disadvantages
• No hands-on control
• Loss of part of the
organization severely
impacts remainder of
organization
• Employee loyalty
weakened

52. STRUCTURE
FOLLOWS
STRATEGY
• The vertical structure is still
prominent today, since it
provides so many benefits.
However, firms with horizontal
designs tend to perform better.
• The decision as to which
structure is appropriate for an
organization is dependent on
the organization’s strategic
goals.
• The right structure is
designed to fit the
organization’s strategy.

53. END OF
LECTURE
Any
Questions?