Administrative Office Management BAB 1

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CHAPTER 1
THE PRINCIPLES OF
ADMINISTRATIVE
OFFICE
MANAGEMENT

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In this chapter several topics will
be discussed. The topics include:
The Administrative Office Management
(AOM)Function
The Responsibilities and Challenges of
AOM
The Roles and skills of Administrative
Office Manager
Evolution of the Management Theory The
Organizing Principles
1.1
1.2
1.3
1.4

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TOPIC 1.1
THE ADMINISTRATIVE
OFFICEMANAGEMENT(AOM) FUNCTION

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At the end of this topic, the students will be able to:
Understand the functions of Administrative Office
Management
Describe the importance of Administrative Office
Management to the organization
1.
2.
Learning Outcomes

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1.1 The Administrative Office Management Functions
Good Morning class. Welcome to your first class of Administrative Office Management I. In this first
class we will begin by looking at the Principles of Administrative Office Management, and you will be
introduce to the first topic which is the function of the administrative office management)
The Administrative Office Management is the process of planning, organizing, and controlling all the
information related activities and of leading or directing people to attain the objectives of the orga-
nization.
Traditionally, the administrative office management functions were limited to basic clerical services
and to office personnel. However the beginning of the Information Revolution brought changes to the
function of the administrative office manager. The information revolution brought an increased de-
mand for more information in order to make intelligent decisions at a greatly accelerated rate. Thus
management began to place more reliance upon office personnel and well-designed work systems
as the new technology created greater information-processing power.
The nature of the background and role of the administrative office management makes it the most
logical of all organizational area to have responsibility for the management of the organization’s
information. Increasingly, the function of the administrative office management and administrative
office managers are being recognized and credited for their contribution to the organizational suc-
cess.
Administrative office management has a significant impact on employees throughout the organiza-
tion. One way it impacts on employees – and perhaps the most significant way – is that it enables
them to enhance their productivity. In addition to relieving employees of responsibility for certain
tasks, this position helps them maximize the efficiently of other designated tasks. Also, administrative
office management helps provide employees with the information they need, when they need it, and
in the format they desire. This explains
why the administrative office management
area in most organizations transcends all
functions, units, and departments.
The possible job titles given to the indi-
vidual who heads up the company-wide
administrative office management func-
tion may include:
Administrative Office Manager
Office Manager
Manager, Administrative Services
Information Manager
Administrative Manager

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TOPIC 1.2
THE RESPONSIBILITIES
CHALLENGES OF
ADMINSTRATIVEO F F I C E M A N A G E R
&

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At the end of this topic, the students will be able to:
List and define the management functions.
List the responsibilities of the administrative office
manager in each of the management functions.
List and explain the challenges face by the ad-
ministrative office manager.
Discuss the qualifications required for the adminis-
trative office manager.
1.
2.
3.
4.
Learning Outcomes

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1.2 Responsibilities of the Administrative Office Manager
The Administrative Office Manager (AOM) is the person responsible for planning, organizing, and
controlling information-processing activities and for leading people in attaining the organization’s
objectives.
The responsibilities of the Administrative Office Manager (AOM) are broad, and creates consider-
able diversity in their positions. In fact, finding two administrative office managers with identical job
responsibilities is virtually impossible.
For example, in a small firm, often the AOM is an accountant who has been assigned the added
supervision of correspondence, mailing, filing and other general administrative services.
In another firm, the AOM assumes the additional responsibility of human resources manager or
credit manager with miscellaneous supervisory activities.
In still another firm, the AOM is an office services executive who supervises support services, which
meet the needs of users in all office activities. Such support services include mailing, records man-
agement, word processing, messenger service, communications, copying, office security, and main-
tenance.
Differences in responsibility assigned to OAMs is due to the size of the organization.
EExxaammpp ee OOnneeExample One
In large organizations, such as large banks with large
number of employees, the AOM is needed to direct the
bank’s volume of services where the collection and
production of information are the main responsibilities of
the
EExxaammpp ee TTwwooExample Two
In small organization, where the factory workers may be
the primary source of business activities; the office force
is not so great in number. In such firms, the office service
activities may be supervised directly by an aaccountant,
the controller, the treasure, the credit manager, or the
human resource manager/personnel manager

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Figure 1.2.1: Typical responsibilities assigned to Administrative
Services Manager in large and medium-size organizations
Example of Responsibilies of Adminstrative Serices Manager
The Administrative Office Managers have great responsibilities in carrying out the functions of man-
agement. These functions of management include:

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Figure 1.2.2 Definitions of the Functions of Management
Definitions of the Functions of Management
Planning: analyzing relevant information from both the past and present, and assessing
probable developments of the future so a course of action/plan may be determined that
will enable the firm to meet its goals.
Organizing: bring together all economic resources (the work, the workplace,
the information, and the workers) to form a controllable (manageable) unit – the
organization – to accomplish specific objectives
Staffing: selecting and training individuals for specific job functions, and
charging them with associated responsibilities.
Controlling: ensuring that operating results conform as closely as possible to
the plans made for the organization.
Directing: motivating and directing the workers so the objectives of the organization
will be successfully achieved.

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Figure 1.2.3 Responsibilities of the administrative office
manager in each of the management functions.
Definitions of the Functions of Management
Planning
Developing goals and objectives for each of
the office functions and services. Including
layout, environment, telecommunications,
word processing, automaton, electronic data
processing, records management, forms
design, reprographics and mail.
Keeping abreast of new developments in
the field and determining what changes
should be made in existing functions and
services to maintain a state-of-the-art
position.
Assessing the need for designing and
implementing totally new functions and
services.
Developing policies that will help assure
the attainment of goals and objectives.
Determining the most effective means of
implementing desired changes.
Developing the unit’s budget.
Determining personnel requirements.
Determining space and equipment needs.
Designing new operating systems
1.
2.
3.
4.
5.
6.
7.
8.
9.
Controlling
Developing efficient procedures for control-
ling the quantity and quality of work
processed in areas for which the adminis-
trative office manager is responsible.
Developing efficient procedures for
scheduling work.
Developing efficient procedures for use
readily determining the status of unfinished
Work.
Maintaining the unit’s budget.
Assuring that methods and procedures are
cost effective.
Motivating employees to be cost-
conscious.
Developing effective assessment
procedures for use in determining why
actual results fail to conform with
anticipated results.
Developing effective procedures for dealing
with employees who fail to comply with the
organization’s rules and policies.
Developing effective strategies for taking
corrective action when and where necesary
1.
2.
3.
4.
5.
6.
7.
8.
9.
Directing
Using effective techniques to supervise
employees.
Using effective techniques to motivate
employees
Designing effective lines of communication
within the unit.
Assuring employee compliance with
organizational policies and procedures.
Assuring the employee performance meets
expectations.
Helping employees solve work-related
problems.
Using a fair, objective approach for
adjusting employees’ salaries
1.
2.
3.
5.
4.
6.
7.
Designing new operating systems9.
Organizing
Function
Determining the most effective means of
organizing resources to achieve goals and
objectives.
Determining the most effective way for
employees to perform specific tasks.
Designing efficient work methods and
procedures.
Assuring the maximum utilization of the
organization’s office equipment.
Developing techniques for maximizing
organizational and individual productivity.
Developing effective methods and
techniques when implementing changes.
Developing effective procedures for
evaluating equipment being considered
for acquisition.
1.
2.
3.
5.
4.
6.
7.

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Challenges Faced by Administrative Office Manager
The Administrative Office Manager is currently faced with a number of challenges. One of
these challenges is the role of the Administrative Office Manager as a change agent within
the organization in which he or she works. Among the responsibilities of the administrative
office manager is the implementing of new systems and helping employees to overcome
their resistance to change. Ability to cope with change and to help others to accept change
will continue to be a challenge for the administrative office manager.
The vast increase in new technology used in the offices especially in areas such as data pro-
cessing, information processing, word processing, reprographics, and telecommunication will
be another significant challenge to be faced by the administrative office manager.
A variety of government regulations will create challenge for administrative office managers. In
many organizations, this manager is responsible for creating the data needed to complete a variety
of required compliance reports as well as for maintaining the data banks in which this information is
stored.
Organizational productivity is another challenge faced by the administrative manager. The administrative
office manager need to consistently developed efficient systems that enables employees to maximize their
productivity and for designing strategies to motivate office employees to want to be productive.
To discover newly implemented systems that failed to perform is another challenge of the
administrative office manager. Upon this discovery, the administrative office manager has to
make modification to the systems.
Change Agent
Technology
New Office Systems
Government Regulations
Productivity
Culturally Diverse Workforce
Globalization
CHALLENGES
OF AOM

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The administrative office manager is challenge to accommodate to culturally diverse work-
force. The administrative office manager needs to be familiar with customs, beliefs, habits, and
the attitudes of the individuals making it managerial acceptance. Accommodation of diversity is
now more important than ever before.
Finally, the globalization taking place in many organizations is presenting another challenge for the
administrative office manager. Making sure that operating systems and technology in all locations
work well is critical, as is assuring compliance with governmental regulations in remote sites.
Qualifications for the Administrative Office Manager
To be in the job an administrative office manager needs to have the following qualifications:
Administrative office manager must possess a thorough understanding of business fundamen-•
tals
A solid background in such areas as accounting, marketing, management, human resource•
management, statistics, economics, and psychological is desirable.
A specialized knowledge in the areas of work simplification, work measurement, work stan-•
dards, records management, forms designs, data processing, job analysis, job evaluation,
office layout, office equipment, cost control, performance appraisal, employee selection, pro-
ductivity improvement, and word processing is important.
Leadership is another important qualification. As supervision responsibilities increase, so does•
the need for well-developed leadership skills. Effective leadership skills will bring about several
benefits, such as
Able to inspire and motivate employee1.
Able to instil in subordinates the desire to act in the best interest of the organization,2.
to be loyal to the organization and to be cooperative.
Good interpersonal behaviour and human relations skills are important for the administrative•
office manager.
Another qualification required for the administrative office manager is commitment to ethical•
behaviour. Organizations are increasingly concerned about ethics and the display of ethical
behaviours among employees. Poor ethical behaviour among employees can incur costs to
the organization in terms of dollars and reputation.
NNootteeNote
Globalization is defined as the tendency for many
organizations to have operations located in many
countries throughout the world

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Knowing how to delegate is also an important qualification for the administrative office man-•
ager. Effective decision-making and communications are also essentials skills of the adminis-
trative manager.
The ability to accept the view point of others and to exercise good judgments is a must for the•
administrative office manager.
An effective administrative office manager must have the initiative and desire to continue to•
learn and develop professional
Professionalism for the Administrative Office Manager
To increase the professionalism of the administrative office manager is by participating in profes-
sional organizations and associations and to earn certificates. The Certified Administrative Manager
(C.A.M) is a certification program for administrative managers. Some other professional organiza-
tions that may be of interest to the administrative office managers include:
Association of Records Managers and Administrators
Association of Systems Management
International Facility Management Association
International Association of Administrative Professionals
Educational Background of an Administrative Office Manager
To be successful as an administrative office manager, one needs a minimal educational requirement
coupled with an appropriate work experience.
Profile of Administrative Office Manager
The typical profile of administrative office manager include the following characteristics: male, be-
tween forty to fifty years of age, salary ranging between RM4000 to RM5000. Has a bachelor degree,
supervising three to fourteen employees, with ten to fifteen years of work experience.

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TOPIC 1.3
THE ROLES AND SKILLS
OF ADMINISTRATIVEO F F I C E M A N A G E R

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At the end of this topic, the students will be able to:
Define the term roles and skills.
Differentiation between roles and skills.
Describe the different roles for the Administrative
Office Manager.
List the skills required of an Administrative Office
Manager
Explain of the skills of an Administrative Office
Manager
1.
2.
3.
4.
5.
Learning Outcomes

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1.3 The Roles and Skills of the Administrative Office
Manager
Among the important roles for which the administrative office managers have are:
Decision-making roles•
Information management roles•
nterpersonal roles•
An effective administrative office manager is able to make effective decisions regarding employees,
operations, and resources.
The nature of the administrative office manager’s position makes him or her responsible for main-
taining and using effectively the information needed to carry out important job functions, as well as
for effectively managing information on an organization-wide basis.
ROLES
Set of behaviours and job tasks that administrative office
managers are expected to perform.
SKILLS
Abilities administrative office manager possess that
enable them to competently carry out their specified
roles.

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Lastly, the effective administrative office manager will also deal professional with his or her subordi-
nates, peers, and supervisors.
Among the important skills that an administrative office manager needs to possess are:
Conceptual skills1.
Human skills2.
Technical skills3.
Refer to skills that enable the
administrative office manager to
analyze a wide variety of situations,
both technical and nontechnical as
a prelude to solving problems
Conceptual
Skills

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Possessing conceptual skills enable the manager to perceive quickly how one event may im-•
pact on another.
It helps the manager to determine the full impact of a change or a variety of changes.•
Having such skills can help manager to prevent or eliminate situations that later develop into•
problems.
Possessing conceptual skills is seen as “fifth” sense in dealing with organizational matters.•
As the manager mover higher in the organization hierarchy, the use of and the need for a well-•
conceptual skills increases.
Some conceptual skills are learned; others are intuitive. •
Human skills give the manager greater insight into working effectively with each subordinate•
in each situation.
Possessing the skill will enable the manager to maximize cooperation of subordinates.•
Skills can be learned either through on-the-job training or through courses.•
One of the most important criteria to be considered when selecting an individual for his or her•
managerial position.
Refer to the skills that enable the
administrative office manager to
work through and with others,
including subordinates, peers, and
superiors.
Human skills
Refer to skills that enable the
administrative office manager to
better understand the nature of
various operations and tasks for
which he/she has responsibility.
Technical skills

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Nature of skills needed is determined by the manager’s areas of responsibility.•
The increasing of technological nature of office functions increases the technical skills needed•
by administrative office manager.
Lack of technical skills among office manager is likely to reduce the amount of influence a•
manager has over his or her subordinates.
Lack of technical competence increase the difficulty a supervisor has in assessing subordi-•
nates performance.
Skills are typically acquired through training.•
(You have completed the first section of the Principles of Administrative Office Management. Before
going further please attempt the review questions below.)
REVIEW QUESTIONS (1.1)
Students are encouraged to review the following questions before proceeding to the next topic.
What factor is primarily responsible for the increasing number of career opportunities in admin-1.
istrative office management.
What kind of challenges will administrative office managers likely to confront in the future?2.
Explain the difference between roles and skills.3.
List two (2) office activities related to each of the management functions.4.
NNootteeNote
The combination of technical skills, conceptual skills,
and human skills used by an administrative office
manger varies from situations to situations.
Functions Office Activities

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TOPIC 1.4
E V O L U T I O N O F
THE MANAGEMENTT H E O R Y

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At the end of this topic, the students will be able to:
List the different types of management theory
Describe each types of management theory
Differentiate the management theory
List the proponent for each management principles
Describe the proponent for each management
principles
Identify management theory practice applied to a
given case
1.
2.
3.
4.
5.
6.
Learning Outcomes

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Figure 1.4.1: The Evolution of the Management Theory
1.4 THE EVOLUTION OF THE MANAGEMENT THEORY
Management is defined as an art of knowing when, how and why to apply a given principle in a par-
ticular situation. The Management principles divided into four phases. The principle in each phase
emphasizes a different approach to management and draws a separate conclusion to the significant
factors in the management principles.
The theory of management started with The Scientific Movement, followed by the Administrative
Movement, then by the Human Relations Movement and lastly the Modern Movement.
Scientific Management Movement
The Scientific Management Movement (also known as the Classical School) stressed the need to
integrate technology, materials, and employees in order to maximize output and to increase operat-
ing efficiency. During this time, a sustained effort was undertaken to discover the various techniques
that would solve a variety of problems dealing with organizational efficiency.
Scientific Management Movement
(started in late 1800s and early 1900s)n late 1800s and early 1900s)
Administrative Movement
(started in 1930s)(started in 1930s)
Human Relations Movement
(started in 1940s and 1950s)(started in 1940s and 1950s)
Modern Movement
(started since 1950s)

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Proponents of Scientific Management Movement
The following are supporters of the Scientific Management Movement
1. Frederick W. Taylor was looked upon as the father of scientific management movement. Taylor:
saw workers as an economic entity whose motivation to work stemmed from their financial•
needs.
believed workers had to produce more at a lower cost and they should be paid on a piece-•
work basis, which would enable them to increase their earnings.
stressed the need to identify “one best way” to perform the task and to select and train•
employees carefully and thoroughly to perform their tasks.
stressed a need for management and employees to cooperate with one another as a mean•
of maximizing production.
2. Frank and Lillian Gilbreth was the husband-and-wife team who furthered develop the scientific

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management movement.
They:
invented devices and introduced techniques to help workers in developing their fullest po-•
tential through training, tools, environment, and work methods.
were responsible for the developing of time and motion studies.•
The scientific management movement emphasized on the mechanical and psychological aspects on
work, however neglected on the workers’ psychological and social needs.
Administrative Movement (emerged in 1930s)
The Administrative Movement (also known as the Total Entity Management) focused on the organi-
zation as a whole or total entity rather than on specific isolated functions and promoted the develop-
ment of rules designed to guide managerial action. Scientific management focused on employee
productivity and efficiency. The Administrative movement focused on coordinating and managing
various organizational endeavours.
During this movement the following specific management functions were identified:
Proponents for Administrative Movement
Time study is concerned with the
amount time it takes to complete a
task.
Motion study is concerned with
efficiency of the motion involved in
performing a task.
PlanningPlanning
OrganizingOrganizing
Commandingommanding
CoordinatingCoordinating
Controlling

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The following are supporters for the Administrative Movement,
1. Henri Fayol is the most prominent supporter of the administrative movement. Fayol:
believed that management, regardless of the specialized area, was comprised of the fol-•
lowing universal principles: division of labor, authority, discipline, unity of command, unity
of direction, subordination of the individual interest to the general interest, remuneration,
centralization, line of authority, order, equity, stability o tenure of personnel, initiative, and
esprit de corps
developed the first comprehensive theory of management•
stressed the need for teaching management in schools and colleges.•
became the first author to state a series of management principles. A number of his prin-•
ciples continue to be found today.
2. Max Weber was a German sociologist was another supporter of the administrative movement.

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Weber:
belief resulted in the development of the bureaucracy concept, were centred around hav-•
ing well-defined hierarchies, employee ask specialization, written policies and procedures,
technical competence among employees, and the separation of ownership and manage-
ment
3. William H. Leffingwell is looked upon as the Father of Office Management. Leffingwell:
was credited with applying the principles of scientific management to office work•
was the author of Scientific Office Management (1917)•
developed the Five Principles of Effective Work which were:•
Plan the work: Manager must plan what work must be done; how, when and where1.
it must done and how fast it can be done.
Schedule the work. By recognizing the total office plan of organization and product2.
development, a Manager is able to formulate work schedule to agree with the plan,
by coordinating the efforts of all workers, machines, and information.
Execute the work. Proper operating systems and procedures, record-keeping prac-3.
tices, and methods for executing the work must be developed.
Measure the work. Measurements, standards, and layouts for getting work done4.
must be developed. This is used to measure quantity, quality, the workers’ potential,
and past records.
Reward the worker. An organization must select, train, motivate, compensate and5.
promote workers so as to keep their interest at an optimum level

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Human Relations Movement (emerged between 1930s and 1950s)
The Human Relations Movement (also known as the Behavioral School of Thought) stressed on the
need for managers to show greater concern for employee working conditions. Rather than focusing
on the whole organization, which was the philosophy of the administrative movement, the human
relations era was primarily concerned with individuals and groups and providing employees with
growth opportunities and challenges. This greater concern would generate higher levels of satisfac-
tion, thus enabling employees to become more productive.
Proponents of Human Relations Movement
The following are supporters of the Human Relations Movement.
1. Elton Mayo was one of the main supporters of the human relations movement. Mayo:
studied the effect of the physical environment upon worker productivity•
conducted the Hawthorne Study which studied the effect of factors such as lighting, heat-•
ing, fatigue and layout had on productivity. This study concluded that treating employee in
a humane manner had a greater effect on operating efficiency and output than any of the
technical factors.
The Hawthorne study showed that treating employees in a humane manner had a greater•
effect on operating efficiency and output than did any of the technical factors
NNootteeNote
Hawthorne study was conducted at an Electric’s
plant in Hawthorne. One phase of the study involve
determining the relationship between the illumination
level of the employees’ work area and their output.
As predicted, as the illumination level was increased,
the output also predictably increased. Unexpectedly,
the output continued to increase even when the
illumination level was decreased

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1. Abraham Maslow, a psychologist developed the theory of human motivation.
According to Maslow:
human are motivated by fulfilling a hierarchy of needs•
managers must recognize the needs pattern of each worker is different and should not•
assume that a single approach can be used to motivate all workers toward achieving orga-
nization’s goals
2. Douglas McGregor introduced the dual nature of people into the management theory which he
labelled as Theory X and Theory Y.

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3. Frederick Herzberg discovered the motivation-hygiene theory. According to Herzberg thoery:
employee worked in an environment where the two kinds of factors are present: These fac-•
tors are called Motivators and Hygiene factor.
Modern Movement (began in 1950s until today)
The Modern Movement (which is also known as the Management Science School) consists of two
approaches: (i) the quantitative and (ii) the non-quantitative approach.
The quantitative approach is also known as the operations approach, while the non-quantitative ap-
proach is frequently called the behavioral sciences approach.
The Operations Approach Is a management concept primarily concerned with the making of deci-
sions, especially decisions about which operations should be undertaken and about how they should
be carried out.
The Behavioral Sciences approach is a management concept primarily concerned with the scientific
study of observable and verifiable human behaviour. The effects of behavioral sciences can be ob-
served at the individual, group and organizational levels.
The individual level: is concerned with such factors as motivation, attitudes, and personality.
The group level: involves interactions, interrelationships, group norms, and group leadership.
The organizational level: is concerned with areas such as bureaucracy and the effect of the system’s

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design on employee behaviour.
Differences between Operations Approach and Behavioral Sciences Approach
The modern movement is heading towards a systems approach which is a management concept in
which the organization is thought to be comprised of a number of systems with interdependent parts.
A change in one department can affect other departments.
During the modern movement, several theories emerged:
1. Contingency Management
A management practice which recognizes that no single best way exists in all situations. Rather,
managers need to examine the facts of a given situation and choose a tool, method, or process
that will best handle the situation.
Therefore, how one company solves a problem will differ from how another company solves a
problem when the situations surrounding the problem differ.
2. Total Quality Management (TQM)
A management concept that put emphasize on teamwork, empowerment of employees and orga-
Behavioral Sciences Approach Operations Approach
Behavioral sciences approach is concerned with
the manner in which decisions are made.
Operations approach is concerned with the
way they ought to be made.
Behavioral sciences approach uses psychology,
sociology, and anthropology as its base.
Operations approach involves mathematics,
computer science, andstatistical applications
Theory Z
TQM
Contingency
Management
Modern Movement Theories

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nization-wide recognition and acceptance as the critical need to serve its customer. TQM results
in a spirit of cooperation and total commitment of the employees to total quality at all times.
A TQM program possesses the following elements:
Focus on customer satisfaction1.
Ongoing improvement of the organization’s products and/or services2.
Work teams based on trust, empowerment, and cooperation3.
Statistical measurement techniques designed to identify causes of production problems as4.
well as to provide benchmark data that helps assess performance.
3. Theory Z
Theory Z management was developed by William G. Ouchi. This theory is based heavily on
the Japanese style of management which stresses the need to hire employees for their specific
talents, that uses consensus in decision making, and that is based on management-employee
trust.
The concepts of Theory Z are:
Employees are assumed to have lifetime employment. They need not be concerned about1.
layoff.
Employees are hired for their specific talent. The nature of an employee’s job will be de-2.
termined by his or her specific talents NOT by using a job to determine what talents an
employee should have.
Decision making uses a consensus process which eventually results in widespread agree-3.
ment on all decisions.
Managers and workers trust one another and are loyal to one another.4.
Managers are genuinely concerned about their subordinate well-being.’5.
(You have completed
another section of
Chapter 1. Do the
review questions before
proceeding to the
following topics).

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REVIEW QUESTIONS (1.2)
Students are encouraged to review the following questions before proceeding to the next
topic.
Instructions: Circle the correct answer
1. This individual is generally credited with having founded Scientific Management.
A. William H. Leffingwell
B. Henry Fayol
C. Elton Mayo
D. Frederick W. Taylor
2. The Hawthorne studies have important implications for the
A. interaction between employees and their co-workers.
B. way decisions are made in the workplace.
C. use of technology in the workplace.
D. way employees are treated by their employer.
3. Which of the following individuals was primarily instrumental in developing the administrative
movement?
A. Elton Mayo
B. Charles Babbage
C. Frederick Taylor
D. Henri Fayol
4. Name three (3) common elements of TQM
5. List four (4) phases of the evolution of management theory
6. Write brief notes on Elton Mayo.
1.5 THE ORGANIZING PROCESS

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TOPIC 1.5
THE ORGANIZING
P R O C E S S

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At the end of this topic, the students will be able to:
Define the term organization principles
List and describe the basic organizational prin-
ciples
Describe the different organizational structure
List the advantages and disadvantages of each
organizational structure
Describe the purpose of organization chart
Explain the difference between formal and infor-
mal organization
Distinguish between centralization and decentral-
ization of managerial authority
1.
2.
3.
4.
5.
6.
7.
Learning Outcomes

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Figure 1.5.1 The Organizational Principles
Organizational Principles
Organizational principles are also called management principles are guidelines used by administra-
tive office managers when designing and restructuring the various organization activities. These
principles will guide the managers to achieve the organization’s objectives. Following strictly to
these principles results more efficient use of the firm’s resources, especially human and financial
resources.
1. Definition of Objectives
Objective is a desired outcome an organization wants to achieve. Objective range from broad,
general statements about an organization to specific, narrow statements about a department or
an employee’s activities.
Objectives tend to be more meaningful when they are:
Are written in context of outcome (goal)•
Must be understood and accepted by workers•
Stated in numerical form•
Contain a time of reference•
Are challenging but attainable•
2. Span of Control (also known as Span of Management)
1. Definition of Objectives
2. Span of Control
3. Interrelated Functions
4. Chain of Command
5. Unity of Command
6. Authority and Responsibility
7. Work Assignment
8. Employee Empowerment
Organizational
Principles
The word processing centre will increase its output
5% between January 1 and June 30.
Example of a well-developed objective

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Span of control refers to the number of subordinates an individual is able so supervise effec-
tively.
Several factors should be considered to determine the appropriate span. These factors in-
clude.
The nature of work being performed. Some office activities require a greater amount of1.
supervision than others.
The capability of the supervisors. Skilled supervisors generally are more able to work with2.
greater number of subordinate than are supervisors whose skills are less developed.
The capability of the subordinates. If the subordinates are well trained, the supervisors can3.
increase their span of control because less time will be consumed in helping them.
Leadership style adopted can determine the span of control.4.
The latitude extended to the subordinates in decision making can reduce the number of5.
direct control supervisor has on the subordinates.
The nature of relationships inherent in each situation.6.
The nature of the responsibilities of the supervisor can determine the appropriate span of7.
control. If the supervisor has numerous responsibilities, the span of control will likely to be
smaller.
The higher level supervisor tends to supervise fewer employees than lower level supervi-8.
sor.
The use of Total Quality Management, increase the span of control.9.
3. Interrelated Functions
“All organizations are composed of various functions that must be effectively integrated so they
can work together as a unit to achieve their major objectives’
Most organizations are no longer composed of mutually functional areas. Rather , such areas
as sales, production, finance, marketing, and human resources are becoming more interrelated
– functional areas to be extensively interrelated, this characteristic of the organization is called
systems approach.
In the systems approach, problems that emerge in one functional area will often be expand to or
influence the other areas. For example, if the marketing function is experiencing difficulties, the
sales functions will likely experience problems too.
The interrelated nature of the functional areas requires that the objectives of area be consistent
with those of other areas. Furthermore related activities should be grouped together in one func-
tional area, otherwise coordination of activities cannot be maximized.
4. Chain of Command

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Chain of command refers to the formal identification of who reports to whom in an organization.
The chain is a series of superior-subordinate relationship, from the highest position in the orga-
nization to the lowest. Each employee in the organization must be familiar with the chain as if
affects him or her. Failure to adhere to the chain can cause communication process to break
down.
A simple chain of command is generally more effective because they are easily more understood
and because communication moves through a simple chain more rapidly than through a complex
one. Furthermore a simple chain provide the benefit of being more clear-cut and definitive than
complex chain
5. Unity of Command
Each employee should receive orders from,
and be responsible to, only one supervisor
Unity of command refers to the organizational principle which indicates that an employee should
be directly responsible to only one supervisor.
When employee receives orders from more than one supervisor, often they do not from whom
they should receive orders, or what work should be done first. This may result to confusion, job-
related frustration, job dissatisfaction, and loss of morale among workers.
6. Authority and Responsibility
Functional Areas: operational
areas that comprise an organiza-
tion including accounting, finance,
production, sales, and so forth.
Systems Approach: Tendency for
an organization’s functional areas
to be extensively interrelated.

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One of the basic organizational principles states that individuals who are made responsible for
undertaking a task must also have delegated to them an appropriate amount of authority to as-
sure task completion or else they cannot be held accountable for the outcome.
Failure of supervisors to delegate authority to subordinates results supervisors to doing more
duties that could be effectively assigned to subordinates, prevent supervisors from performing at
the optimum level. Subordinates, on the hand, will experience loss of morale because they are
unable to exercise full authority over those situations for which they are responsible.
Failure of Supervisor to Delegate Authority
Lack confidence in their subordinates.1.
Fail to understand the nature of the role of the supervisor.2.
Believe that unless they do the work, they cannot “stay on top” of the situation.3.
Lack technical competence4.
7. Work Assignment
Each individual’s special strengths and talents should be considered when making work assign-
ments. This helps assure that each person’s work assignment is consistent with his or her ability
and interest.
An individual’s work assignment should be determined before he or she is hired not otherwise.
Management must develop clearly defined job duties and responsibilities for failure to do so will
make it difficult to hold employee accountable for unsatisfactory performance.
8. Employee Empowerment
Encouraging subordinates to participate as much possible in making decisions that affect all as-
pects of their job tasks is employee empowerment.
Refers to the ability of an individual to inform others of what he or
she expects to them to do and to expect they will do as asked.
Is an obligation that those who have been asked by a manager or
supervisor to do something will in fact do as they have been
asked.
Is the process of entrusting work to employees who are qualified
to accept responsibility assigned them so that they can be held
accountable for performing their duties properly
Authority
Responsibility
Delegation

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Empowerment benefited managers because employees are often more familiar with a given situ-
ation than a manager or supervisor, their insight and suggestions are invaluable in the decision
making process. The recognition employees received from their empowerment has a positive
impact on their motivation.
ORGANIZATIONAL STRUCTURES
The organization’s internal structure determines the authority relationships among its employees.
1. Line Structure
Is structure in which direct authority flows vertically form the top hierarchical levels, through•
the middle levels, and on to the bottom levels.
The direct authority characteristic makes each employee directly responsible for the per-•
formance of designated duties. As well as allowing supervisor the right to take disciplinary
action against subordinate who fails to carry out reasonable orders and directions.
Also known as scalar or military type.•
It is the oldest and simplest of structure.•
Is generally found in small organization because support staff is needed once they begin to•
grow.
It is recommended in organization that is newly setup.•
Advantages of Line Structure
Because of direct authority and clearly defined areas of responsibility, employees are fully1.
aware of the boundaries of their jobs.
Decision making is expedited because bureaucratic buck passing is virtually eliminated.2.
Employees understand the simplicity of the line structure.3.
Since employees are familiar with their duties and responsibilities they can be held directly4.
accountable when their performance is less than expected.
1. Line
2. Line and Staff
3. Functional
4. Product
5. Committee
6. Matrix
Types of
Organizational
Structure

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Figure 1.5.2 Line Structure Organization
Disadvantages of Line Structure
Fail to provide the specialization needed by the organizations, when they become larger1.
and more complex.
Line managers have to perform certain specialized activities themselves because staff as-2.
sistance is not available.
Line structure fails to provide adequate replacement of key managerial personnel because,3.
in some cases, the limited nature of the employees’ duties prevents them from getting the
broad experience they need for moving into managerial positions.
2. Line and Staff Structure
Structures that contains both line and staff structure, with the latter providing specialized•
staff activities that support line activities
Has line authority similar to the line structure.•
Specialized staff activities are added that support the line activities.•
Staff employees assist the line function.•
Advantages of Line and Staff Structure
Line employees are free from having to perform specialized activities.1.
Line employees have time to focus on those activities directly related to the organization’s2.
primary objectives.
Staff employees can lend their specialized support.3.
Flexibility of staff units facilitates the undertaking completing of new projects within a mini-4.
mum amount of time.
Controller
Assistant
Controller
Cost
Accounting
Taxes Budgeting
Ganeral
Accounting
Auditing
Data
Processing
Systems
NNootteeNote
Line Authority is related to line structure where the
supervisor has the right to take disciplinary action
against subordinates who fail to carry out reasonable
orders and directions.

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Figure 1.5.3 Line and Staff Organization Chart
Disadvantages of Line and Staff Structure
Arise conflict between line and staff employee•
Staff employees usurping (take over) line authority•
Line managers continually suppress the talents of capable staff employees, which hamper•
the development of an effective line-staff working relationship.
3. Functional Structure
Structure built around specialized areas that tend to parallel the departments in many orga-•
nizations.
Commonly found in small and medium sized organizations.•
Centralize decision making at top level..•
Line managers have both line and functional authority.•
President
Legal Advisor
Vice President
Sales
Vice President
Production
Production
Supervisor
nProduction
n
r
Production
Supervisor
Vice President
Finance
Department
Head
Department
Head
Line Authority
Self Authority
NNootteeNote
The following are types of employees found in the
line and staff structure
Line Employees : Line employees are directly concerned
with the organization’s primary objectives
Staff Employees : Staff employees support the line
employees.

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Advantages of Functional Structure
Functional expertise is provided when using the functional organizational structure.1.
Prevents employees from slighting certain specialized areas in the organization.2.
Disadvantages of Functional Structure
With functional structure, an employee may have two or more supervisors which violated1.
the unity of command.
Tendency for some managers to evade those areas for which they have functional authority2.
and focusing more intently on the area for which they have line authority
4. Product Structure
Type of structure based on the products manufactured by the organization.•
Each major product is given division status, and a top-level official – perhaps a vice presi-•
dent or general manager – heads the unit.
Incorporates line and staff structure into these divisions.•
This structure functions well when the various divisions of an organization are separated•
geographically from one another.
Advantages of Product Structure
Enables divisions to develop processes that best meet their needs.1.
Divisions can coordinate their own activities without constraint from headquarters.2.
Disadvantages of Product Structrure
Divisions can “go their own way” to the extent that they don’t work toward common goals.1.
Problems experienced by certain divisions may eventually be felt throughout the entire or-2.
ganization.
NNootteeNote
The following are related to the functional structure
Functional Authority: type of authority which gives a
manager or supervisor authority over activities in other
departments that relate to his or her own specialized
areas.
Line Managers: can take disciplinary action against
those for whom they have line authority.
Line Managers: cannot take disciplinary action against
those for whom

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Figure 1.5.4. Committee Structure
5. Committee Structure
Use of a structured group to perform important managerial functions.•
Some committees perform important managerial functions, whereas others are simply ad-•
visory in nature.
Some committees within an organization have a perpetual existence, others dissolved after•
they have fulfilled their designated functions
Advantages of Committee Structure
Recommendations made by a committee are often accepted more readily than those made1.
by one individual.
The widely varying views of the committee members broaden the nature of their recom-2.
mendations
Reduce the risk of making wrong decisions.3.
Disadvantages of Committee Structure
Committees are often criticized for requiring considerable time to function properly.1.
Not all committees are equally productive, especially those dominated by certain individuals.2.
BOARD OF GOVERNORS
EMPLOYMENT
COMMITTEE
FINANCE
COMMITTEE
NOMINATIONS
COMMITTEE
REMUNERATION
COMMITTEE
ACADEMIC
BOARD
AUDIT
COMMITTEE

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Figure 1.5.5 Matrix Structure
6. Matrix Structure
Type of structure which integrates vertical and horizontal relationships into a temporary•
new unit that functions until the task for which it was organized is completed.
Is often used by organizations undertaking complex projects.•
Involves temporarily borrowing employees from other areas of the organization and assign-•
ing them to the new temporary unit.
Also called project structure.•
Advantages of Matrix Structure
Allows companies to assign employees on the basis of their expertise, resulting to efficient1.
use of human resources.
Facilitates involvement of employees from several functional areas2.
Helps companies avoid having to hire new employees for a project.3.
Enables companies to adapt quickly to new situation.4.
Disadvantages of Matrix Structure
Employees often have two supervisors, violates the unity of command.1.
Employees may experience job-related pressures.2.
Supervisors may have difficulties coordinating employee activities.3.
President
R&D Manufacturing Marketing HR Finance Procurement
Manager
Product X
Manager
Product Y
Manager
Product Z

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(Take a break and do the activity below.)
Centralizing/Decentralizing Managerial Authority
One of the basic organization decisions managers need to make is to determine whether to central-
ize or decentralize the activities in the organization.
Factors the Determine the Feasibility of Centralization
AACCTT VV TTYYACTIVITY
Can you recall the answer to following questions?
1. What are the advantages and disadvantages of line structure?
2. What are the benefits of using matrix structure in your organization?
3. If you are setting up a new organization what type of organization
structure would you adopt? Why?
Centralization
Refers to the type of structure that places
office related activities under the authority
of one person.
n
Refe
offic
of o
Decentralization
Refers to the type of structure that places
office related activities under the authority
of several persons in the organization.
ion
Refe
offic
of s
Nature of the OrganizationNature of the Organization
Size of the OrganizationSize of the Organization
Diversification of the
Organizations
Conformity to
Standardized Process
Conformity to
Standardized Process
yy
Quality of PersonnelQuality of Personnel
Distribution of OperationDistribution of Operation
Attitude of Personnel

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Benefits of Centralization
Work methods and procedures are carried out more uniformly.1.
Duplication of effort and equipment occurs less frequently.2.
Duplicate copies of document are less likely to be stored.3.
Employees’ skills are better used.4.
Work processes are standardized.5.
Peak loads can be handled efficiently.6.
Absence of employee does not disrupt the performance of task.7.
Salaries are more equitable.8.
Disadvantages of Centralization
Centrally locating an activity may result in more employee time of being consumed in transport-1.
ing work to and from the unit.
May not be easily accessible to all personnel.2.
The technical nature of some work cannot be efficiently accommodated in a centralized unit.3.
Cannot maintained confidential status of materials.4.
Do not permit the assigning and completing of work according to priority.5.
Nature of the
Organization
Size of the
Organization
Diversification of
the Organizations
The greater the volume of office work and paper
processing found in the organization, the more
desirable for the centralization of office activities.
E.g. Financial Institutions and Insurance companies
T
pr
de
E
As the organization becomes larger, the need for
centralized control over certain operations
increases.
E
AA
ce
in
Organizations that widely diversified in their prod-
ucts, processes, and personnel will find centraliza-
tion difficult.
of
ns
OO
uc
tio
Conformity to
Standardized
Process
Standardized procedures tend to be used in central-
ized factors.
tio
SS
iz
Quality of
Personnel
Centralization is feasible the need for specialized
employees increases.
iz
C
Distribution of
Operation
When operations of an organization are distributed
over a wide geographical area, centralization is less
feasible.
em
W
ov
Attitude of
Personnel
If employee resists the change to centralization,
nothing will be gained to centralization.
efe
IfIf
no

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Advantages of Decentralization
Decisions are more speedily made.1.
Actions can be taken on the spot, without consulting higher level management.2.
Decisions can be adapted to local conditions.3.
Employees delegated with authority and responsibility shows greater interest and enthusiasms4.
in their work.
Top-level management can better use of their time by planning and organizing the organiza-5.
tion’s goals.
Organization Chart
An organization chart is a graphic picture that shows how the functional units of a firm are tied to-
gether along the principles of authority. The organization chart:
Shows formal relationships between various individuals and the organizational structure.•
Identifies who reports to whom•
Identifies flow of work between individuals•
Shows span of control•
Does not show informal relationships between individuals•
Benefits of an Organization Chart
Identifies lines of authority.1.
Gives employees a better understanding of the formal structure of the organizations.2.
Helps identify areas of overlapping responsibility that should be eliminated.3.
Identifies promotional opportunities for job applicants and new employees.4.
Identifies areas suitable for training and orientation.5.
Disadvantages of Organization Chart
Fail to show the informal interaction that is necessary between employees as they carry out1.
their day-to-day activities.
Gives the impression that all departments or units can be well defined and are distinguishable2.
from one another, which many not always be the case.
Guidelines for Preparing Organizational Chart
Place individuals/departments of similar hierarchical level on the same horizontal level.1.
Identify vertical and horizontal authority by solid lines.2.
Identify functional authority by dotted lines.3.
Use complete titles on the chart.4.
Include on the chart the name of organization and the date the chart was prepared.5.

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Informal Organization
Refers to spontaneous personal and social relationships that exist within an organization.•
Informal groups and informal communication patterns are two important elements of informal•
organization.
Informal group
Informal groups tend to have a powerful influence on their members•
Often, standards of conduct or performance are imposed to individuals by the work group to•
which employees belong.
The behaviour of the informal groups can be either be a help or hindrance to the administrative•
office manager.
Managers would get the help of informal ‘leaders’ of to accept new procedure that are not popu-•
lar among employees as to convince others to accept the new procedure.
(Let’s take a break and recall what you
have learned.)
(I would like to encourage you to answer
the following review questions to test your
understanding.)

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REVIEW QUESTIONS (1.3)
List the eight (8) organizational principles.1.
List two (2) benefits of an organization chart.2.
Define Functional Authority.3.
Explain the benefits of centralizing office activities.4. MINI CASE
(Well, can you answer the questions?.
Good! Now you ready to do a case on
the above topic. Turn to the next page.
Do the mini cases provided. Discuss the
answers in the seminar class.)

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CASE ONE
Iryani works in one of the consultancy firms in Kuantan. She has been working for three years. She
enjoys working in the firm. Lately she feels stress because she has to work on two different projects
at the same time besides working in her functional area. She was temporarily borrowed to work part
time in a new project. This means she has to work for three different supervisors at the same time.
She has to report everything she does to all her supervisors and at the same time she has to ask for
their approval on everything she has to do. The company assigned Izwan to assist Iryani in complet-
ing her task. Izwan is a fresh graduate and has no knowledge and experience in administrative work
to help Iryani.
A new supervisor, Muthu, was transferred to the same department two weeks ago. His main problem
was he did not fully understand the tasks performed by his subordinates. At times he was having
problem in assessing his subordinates’ performance. He did not understand certain operations or
tasks for which he has responsibility.
QUESTIONS
List and explain two (2) principles of management that has been violated by the company.1.
Identify and explain the organizational structure the firm practices when Iryani was temporarily2.
borrowed to work part time in a new project besides working in her functional area.
State the skill that Muthu is lacking in the above situation.3.
CASE TWO
Lestari Syarikat is a small service company that was set up Tuan Hj. Ismail Haron and his son Abdullah
and daughter Cahaya Haron. Tuan Hj acts as the Chairman of the company while his son is the General
Manager, and Cahaya the Finance Manager. The company started by providing cleaning services to
government agencies. Business in the cleaning service was good that the company decided to venture
into marketing and insurance. As the work of company increases Abdullah employed a fresh graduate,
Encik Khamis bin Isnin to assists him. Khamis was the new Supervisor and has to manage three senior
workers and four newly employed typists. All employees report to the management and performed all
work as given by the management.
One morning, Puan Cahaya called in Khamis into her office and said “Encik Abdullah has been hos-
pitalized for a heart attack” therefore it has been decided that Encik Khamis have to take over Encik
Abdullah’s work. Khamis felt that he was going to faint!
QUESTIONS
Write brief note on the organizational structure appropriate to the company.1.
Explain three (3) management principles not followed by Syarikat LestarI.2.
Give one (1) example how each of the management principle stated in (b) was violated by the3.
company.

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