This document discusses organizing as a managerial function and different organization structures. It covers traditional structures like functional, divisional, and matrix structures. It also discusses trends like team structures, network structures, and boundaryless structures. Key aspects of organizing covered include departmentalization, chain of command, span of control, and delegation. Traditional and informal organization structures are defined and compared.
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There are a number of factors that differentiate small-business operations from large-business operations, one of which is the implementation of a formal organizational structure. Organizational structure is important for any growing company to provide guidance and clarity on specific human resources issues, such as managerial authority. Small-business owners should begin thinking about a formal structure early in the growth stage of their business.
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Strategic Management: Organizational DesignTriune Global
There are a number of factors that differentiate small-business operations from large-business operations, one of which is the implementation of a formal organizational structure. Organizational structure is important for any growing company to provide guidance and clarity on specific human resources issues, such as managerial authority. Small-business owners should begin thinking about a formal structure early in the growth stage of their business.
No doubt management is very important thing in any organization. Organization can never achieve its Objectives without proper management. Management is art of getting thing done with the help of other People. There is jungle of management theories which are categorized as classical, behavioral and Situational management theories. Three well known classical management theories (scientific, Administrative and bureaucratic) were reviewed in this article.
What is Transformational Leadership?
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A complete Overview Of Organizing in Principles Of Management.
A good Reference for people who are doing this topic presentation and also for the exams. I have covered almost every topic in organizing.
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Nature and purpose of organization, principles of organization, types of organization, formal and informal organization, types of organization structure, departmentation, importance and bases of departmentaion, committees, meaning and types, centralization vs decentralization of authority and responsibility, span of control, MBO and MBE (meaning only), nature and importance of staffing, process of recruitment & selection (in brief)
A complete Overview Of Organizing in Principles Of Management.
A good Reference for people who are doing this topic presentation and also for the exams. I have covered almost every topic in organizing.
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Nature and purpose of organization, principles of organization, types of organization, formal and informal organization, types of organization structure, departmentation, importance and bases of departmentaion, committees, meaning and types, centralization vs decentralization of authority and responsibility, span of control, MBO and MBE (meaning only), nature and importance of staffing, process of recruitment & selection (in brief)
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2. Syllabus
Organizing: Organizing as managerial function –
organization structure, formal and informal
organization.
Traditional Organization Structures – Functional,
Divisional and Matrix Structure
Directions in organizational Structures– Team
structure, network structure , boundary less
structure
Organizing Trends and Practices – Chain of
command, unity of command, span of control
delegation and empowerment, decentralization
and use of staff
2 organizational design and organizational
vikas vadakara
configuration
3. Organizing - Meaning
The process of defining and grouping the
activities of the enterprise and establishing
authority relationship amongst them.
Process of determining the activities to be
performed, arranging these activities to
administrative units, as well as assigning
managerial authority and responsibilities to
people employed in the organization.
Deciding how best to group organizational
activities and resources
3 vikas vadakara
4. Organizing involves:
The identification and classification of required
activities
The Grouping of activities necessary to attain
objectives
The assignment of each group to a manager with
the authority necessary to supervise it
The provision for coordination horizontally [on the
same or a similar organizational level] and
vertically [ between various departments which
are not on a similar organizational level] in the
organization structure
4 vikas vadakara
5. Definition
Heney, “ Organization is a harmonious
adjustment of specialized parts for the
accomplishment of some common purpose or
purposes”
Mc Farland, “ An identified group of people
contributing their efforts towards the attainment of
goals is called an organization”
George Terry, “ Organizing is the establishing of
effective behavioural relationships among
persons so that they may work together
effectively and gain personal satisfaction in doing
selected tasks under given environmental
conditions for the purpose of achieving some goal
5 or objective”
vikas vadakara
6. Nature/ Characteristics of
organizing
exists to achieve some common objectives
Involves division of labour to facilitate
specialization which improves organizational
efficiency
People constitute a critical, dynamic element of
an organization
Involves authority or chain of command
6 vikas vadakara
7. Importance of organizing
Focus on and facilitate the attaining of
objectives.
Arrangement of positions and jobs within the
hierarchy.
Define responsibilities and line of authority of
all levels.
Creating relationships that will minimize
friction.
7 vikas vadakara
8. Organization Structure
Set of elements that can be used to configure or
construct an organization.
Six building blocks that managers can use in
constructing an organization;
Designing jobs-job specialization
Grouping jobs- Departmentalization
Establishing reporting relationships between jobs-
chain of command
Distributing authority among jobs-delegation
Coordinating activities among jobs
Differentiating among positions-line and staff
8 vikas vadakara
9. Formal Organization
According to Bernard, “Formal Organization is a
system of consciously coordinated activities of two or
more persons towards a common objective”
Nature of Formal Organization
Deliberately created by top management
Based on division of labour or specialization
Defines clearly authority and responsibility of every
individual
Has written rules and regulations
Specifies communication channels
Depicted on the organization chart of the company
9 vikas vadakara
Focuses on the jobs and not the individuals who
10. Formal Organization Structure
CEO
VP VP
VP HR VP Maktg
Production Finance
Productio HR Marketing Finance
n Manager Manager Manager
Manager
Quality Training Sales Cost
Manager Manager Manager Manager
10 vikas vadakara
11. Demerit
Merits s
As definite boundaries May reduce spirit of
of each worker are initiative
clearly defined, it
reduces the conflict Does not consider
among the employees sentiments and values
Overlapping of
responsibility is avoided of social groups
Motivates employees as Does not consider
standards of individual goals
performance are well
established May create
Sense of job coordination problem
satisfaction, security
arises from the
classification of the task
Favouritism in
11
evaluation and
vikas vadakara
appraisal is avoided
12. Informal Organization
A network of personal and social relationships
that arise spontaneously as people associate in a
work environment. Consists of all the informal
groupings of people within a formal organization
Nature of informal organization:
Unplanned and arises spontaneously
Reflects human and social relationships among
people
Based on common taste, language, religion,
culture etc
The membership of informal organization is
12 vikas vadakara
voluntary
13. Informal Organization Structure
CEO
VP VP
VP HR VP Maktg
Production Finance
Productio HR Marketing Finance
n Manager Manager Manager
Manager
Quality Training Sales Cost
Manager Manager Manager Manager
Quality Manager, HR Manager, Sales Manager and Cost Manager form a group
13
for vikas vadakara
Cricket as they have common interest in Cricket
14. Demerit
Merits s
Helps to satisfy
Resistance to
social and
change
psychological
needs of Rumor- grapevine
employees to
inspire them to
work efficiently
and effectively
Improves sense of
belongingness,
security and
loyalty among
14 employees
vikas vadakara
15. Characteristics Formal Organization Structure Informal Organization Structure
Emerges spontaneously as a result
Deliberately formed, planned
Formation of social interaction among
and created by Top Management
organizational members
To achieve planned goals of To provide social satisfaction to
Purpose
organization0 members
Well defined tasks and No clear cut structure, complex
Structure
relationships network of relations
Flexible, unstable and
Flexibility Rigid, stable and predictable
unpredictable
Standards of behaviour and Standards of behaviour and
Standards of
performance are prescribed by performance are evolved by
behaviour
management mutual consent among members
Managers act as leaders as they Members voluntarily select their
Leadership
have authority leader
Formally established line of
Communicate according to
Communication communication, official
convenience
communication
Organization Official structure can be shown in
Can not be shown
Chart the form of chart
Rules and
vikas vadakara Written and fixed
15 regulations
Oral norms
17. Functional Structure
Also known as U Form- U means UNITARY
Grouping resources, organizational activities &
individuals by skills, knowledge & action
An organizational structure composed of all the
departments that an organization requires to produce
its goods or services
Grouping of activities according to the functions of an
organization
Whole task of the organization is divided into
specialized functions and each function is performed
by a specialist in charge
Example: organizing around function like
17
Manufacturing, Marketing, Finance, HR, R&D etc
vikas vadakara
19. Merits Demerits
Promotes Reduces coordination
between functions
specialization
Responsibility for profit
Work load reduction is at the top only
Better control Expensive
Delay in decision
Higher efficiency making
Encourages learning Slow adaptation to
from others doing environmental charges
Specialists become
similar job rigid and can not
Easy monitoring and understand what other
units do
evaluating
Difficult for
performance departments to
vikas vadakara
communicate with
19
others
20. Divisional Structure
Also known as M Form- M means Multidivisional
It’s a structure made up of separate, semi autonomous
units or multiple divisions in related industry
Ex: 1] HP: computers, scanners, printers, electronic
medical equipments. Ex 2] Walt Disney: Theme parks,
Movies
A structure composed of separate business units within
which are the functions that work together to produce a
specific product for a specific customer
Create smaller, manageable teams
Develop a business unit level strategy to compete
Divisions have marketing, finance, HR and other functions
Functional managers report to divisional managers who
report to corporate heads
20 vikas vadakara
22. Merits Demerits
Focuses on results; Duplication of
divisional managers activities and
are responsible for resources which
what happens to increases costs and
their products and reduces efficiency
services
22 vikas vadakara
23. Conglomerate Structure or H
Form
H stands for HOLDING
It’s a structure made up of multiple divisions in unrelated
businesses/industry
Ex: Samsung Electrics Co uses H Form or conglomerate
structure. – Semiconductors, Telecommunications,
Appliances, Media
Ex: General Electric- aircraft engines, appliances,
broadcasting, financial services, lighting products,
plastics, etc]
It is essentially a holding company that results from
unrelated diversification
This design which results from a strategy of unrelated
diversification, is a complex to manage
Managers find that comparing & integrating activities
among the dissimilar operations are difficlut
23 vikas vadakara
24. Matrix or Grid Structure
Combines two organization structures; functional
and project structures [based on projects
organizational activities are grouped]
Functional departments create vertical chain of
command
Project or product types form horizontal chain
This type used to efficiently execute multiple
project operations of enterprise
Project managers coordinate teams of employees
drawn from different functional departments
Matrix organization relies on multiple command
structure
24 Ex: General Motors, Prudential, American
vikas vadakara
Cyanamid, NCR
26. Merits Demerits
Where large number Violates principle of
of small projects unity of command
have to be executed Costly and
or completed, matrix expensive
organization works Delay in decision
out better making
Suitable to industries
like building and
construction, highly
technology oriented
industries etc
26 vikas vadakara
27. Some organizations like Philips and Citibank
adopted matrix structure but later dropped it.
Matrix structure is not always appropriate to
organizations.
When matrix structure is appropriate to
companies?
When there is an environmental pressure
When huge information processing is existing
When sharing scarce resources is necessary
27 vikas vadakara
28. Directions in Organizational
Structure
Team Structure
Network Structure
Boundary Less Structure
28 vikas vadakara
29. Team Structure
When management uses teams as its coordination
device, you have a team structure
Members are assigned to a team for a specific
task/project
Once the task is done, members disburse and join
another team
It breaks down departmental barriers and
decentralizes decision making to the level of work
teams
It requires employees to be specialists and also
generalists
In small companies team structure can define entire
organization.
29 In large companies one can see team structure
vikas vadakara
integrated with project structure
30. Team Structure
CEO
Project Project
Project Project
Manager Manager
Manager 1 Manager 2
3 4
Development Marketing
Testing Team HR Team
Team Team
Junior Senior
Software Software
Engineer Engineer
30 vikas vadakara
31. Merits Demerits
Flexibility Loss of productive
Employee participation time in team
in decision making meeting
which leads to high Work specialization
morale, efficiency wont workout
Quick decision making
Interpersonal
Easy communication relations issues
Barriers between
functional departments
are broken
Synergy effect
Employees
31
empowerment
vikas vadakara
32. Network Structure
Company keeps core business and through
contacts with external agencies runs business
[outsourcing]
Also known as modular organization-
especially in manufacturing firms
Companies like NIKE & REEBOK, concentrate
on their core strengths in product development
and marketing and contracted all their
footwear manufacturing to outside suppliers
Sweden's Ericsson contracts its manufacturing
and even some of its R&D to more cost
effective contractors in New Delhi, Singapore,
California and other global locations
32 vikas vadakara
33. Network Structure
Manpower
Distribution Consultancy
Agency
Accounting Firm
Core
Business
:
Manufact
uring
Supplier Agency shoes Promotion/ Ad
Firm
Marketing Firm
33 vikas vadakara
34. Merits Demerits
Focus on core No control over
business external agencies
Cost saving Failure in one
network may affect
entire network
34 vikas vadakara
35. Boundary Less Structure
Boundaries that divide employees such as hierarchy,
job function and geography as well as those that
distance companies from suppliers and customers
broken down
Seeks to remove vertical, horizontal and external
barriers so that employees, managers, customers and
suppliers can work together, share ideas and identify
best ideas for organization.
Works without any chain of command
Instead of having many hierarchical levels, it is made
up of less layers, flattened or horizontal.
Uses technology/intranet for better communication
process
It replaces functional departments with cross
functional teams and organization around processes;
uses lateral transfers, rotate people into and out of
35 different functional areas
vikas vadakara
Replaces departments with empowered teams
36. What are boundaries?
Vertical Boundaries: Boundaries between layers
within the organization. VP Marketing ->Marketing
manager - > Marketing executive. Problem: Lower
layer employee has ideas, but thinks in terms of chain
of command, and does not inform to boss
Horizontal: boundaries that exist between
organizational functional units. Each unit has a
singular function. Problem: each unit maximizes its
own goals, but not overall goals of the organization.
External: barriers between organization and outside
world like customers, suppliers, government
agencies, public etc. Problem: lack of awareness of
customers needs and suppliers requirements
Geographical: Barriers among organization units
Refer: wikipedia.com, www.scribd.com/doc/23027675/semester-2-Assign-2-Bureaucra
36 -Vs-Matrix-structure different countries. Problem: no
vikas vadakara in
located
37. Boundary Less Structure
suppliers
Prodn
HR society
Top
Mgt
Mktg R&D
customers
Fin Governm
ent
Agencies
37 vikas vadakara
38. Virtual organizations
Essential feature of this organization is connectivity
Ability to network a large number of service
providers, contractors whom it outsources its burden
of getting infrastructural support, retaining for itself
only a few areas of core competence.
Organization has no office as such because its
executives will work with mobile phones and laptops
at any place and at any time.
Key attributes; technology, opportunism- companies
often work temporarily to meet specific demands of
the customers and fall apart once need is over, no
borders, trust, excellence
Examples of companies who have virtual teams:
38 IBM, vadakara
vikas Motorola, Oracle, Honey well, HP, GE
39. Organization Structure elements
Organizing means how best to group
organizational activities and resources
Organization Structure means set of elements
that can be used to configure or construct an
organization
Organization Design means overall set of
structural elements and the relationships among
those elements used to manage the total
organization.
There are 6 elements that can be used to
construct an organization;
39 vikas vadakara
40. 6 elements:
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization
40 vikas vadakara
41. 1. Work specialization
Involves designing the jobs/ job design
Job design means determination of an individual’s
work related responsibilities.
First step in designing jobs is determining level of
the desired job specialization.
Job specialization is the degree to which overall
task of the organization is broken down and
divided into smaller component parts.
The concept of job specialization is evolved from
the concept of division of labour.
41 vikas vadakara
42. Work specialization contd…
Adam Smith, 18th Century economist, described
how a Pin manufacturing Factory used division of
labour concept to improve productivity.
One worker will drew the wire, another
straightened it, a third cut it, fourth grounded the
point and so on.
Ten men were able to produce 48000 pins in a
day, whereas each man working alone could
produce 20 pins per day.
Henry Ford implemented this concept in
automobile assembly line
Work specialization is the extension of the
growth, as growth continues, specialization too
42
continues.
vikas vadakara
When Walt Disney started his company, he
43. 2. Departmentalization
Process of grouping jobs according to some
logical arrangement.
Organization can create departments on the
basis of its
Functions
Products
Geographical areas
Process
Customers
43 vikas vadakara
45. Departmentalization contd..
Geographical Departmentalization
CEO
North
South Region West Region
Region
Based on Process Departmentalization
CEO
Developmen
Testing Marketing
t
Based on Customer Departmentalization
CEO
45 Government
vikas vadakara Institutional Consumer
46. 3. Chain of command/ Scalar
Chain
Clear and distinct line of authority among the
positions in an organization
The line of authority extending from the upper
organizational levels to lowest levels, which
clarifies who reports to whom
Helps employees answer questions as “who
do I go, if I have a problem?” or “to whom am I
responsible?”
Scalar principle suggests that there should be
a clear line of authority from top to bottom
linking managers at all levels
46 vikas vadakara
47. Gangplank principle
In certain special situations the scalar chain/ chain of
command should be avoided [ Fayol]
To facilitate speed and efficiency in administrative matters,
communication through the formal chain can be avoided
and lateral communication permitted
A If D has to communicate
B E with G, the message has
to travel through formal
C F chain CBAEFG. This
involves delay and hence,
D
G D may be permitted to
communicate directly to G
[which forms lateral
communication] on
important matters.
47 vikas vadakara
48. 3 concepts in Chain of Command/ scalar
chain:
Authority: right to tell people what to do and
to expect them to do it
Responsibility: obligation or expectation to
perform any assigned duty
Unity of Command: a management principle
that each person should report to only one
manager
48 vikas vadakara
49. 4. Span of Control
Determining how many people will report to each
manager
The no of employees a manager can efficiently
and effectively manage
A manager must deal with 3 kinds of interactions
with and among subordinates;
Direct: manager’s one to one relationship with
each subordinate
Cross: among subordinates
Group: between groups of subordinates
49 vikas vadakara
50. Span of Control contd..
No of possible interactions of all types between
manager and subordinates can be determined as
follow: ( 2 N / 2 N 1)
I N
I= total no of possible interactions
N= no of subordinates
Ex: if N [ no of subordinates] = 2, the no of
possible interactions are 6.
If N= 5, I or no of possible interactions are 100.
Manager has to determine optimal span of
control. This is nothing but deciding whether it
50 vikas vadakara be narrow or wide span of management/
should
control
51. Narrow Span of Control
Few subordinates per manager
More managers are required in this type.
This results in Tall structure of the Organization
Merits Demerits
Personal contact Expensive as larger
between managers no of managers are
and subordinates involved
Effective control and Creates
close supervision communication
problems; because of
Develops good increased no of people
51 human relations in
vikas vadakara through whom
organization
52. Wide Span Of Control
Many subordinates per manager
Less supervisors are required
Results in Flat organization structure
This is preferable if workers are well trained and
competitive
Merits Demerits
Reduces cost of More administration and
supervision as few supervisory responsibility
managers are required of managers
Effective control can not
Easy communication
be assured
process
Requires talented
Better coordination managers
52 between manager and
vikas vadakara
Managers won’t have
54. Factors influencing span of control
Width of span is affected by:
Skills and abilities of the manager
Employee characteristics or abilities
Nature of work performed
Availability of time for supervision for
managers
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55. Delegation
Process by which manager assigns a portion of
his or her total workload to others
The downward pushing of authority to make
decisions is known as delegation of authority
Reason for delegation: to enable manager to get
more work done
Steps in delegation process:
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56. Merits of
Delegation Guidelines for
effective Delegation
Reduces managers
Provide incentives for
heavy workload accepting responsibility
Development of
Train subordinates
subordinates
Having mutual trust and
By participating in
confidence
decision making and
Make clear with nature
problem solving,
and scope of task
subordinates learn
about operations and Provide necessary
improve their facilities or resources
managerial skills and information to
perform the task
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57. Barriers to effective Delegation
From managers’ side From subordinates
“I can do it better side
myself” fantasy Fear of criticism
Not trusting Lack of confidence,
subordinates adequate resources
Fear of loosing and information
power, fear of May think that no
subordinates reward for accepting
overtaking them additional
Briefing difficulty or responsibility
lack of Prefer to avoid risk
communication
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power
58. Empowerment
It is the term used to express ways in which
employees can make decisions without
consulting a manager
It is self management, employees manage their
Points to remember while empowering
employees:monitor quality of goods and services.
own work,
Sharing vision, goals or objectives with
employees.
Trusting people
Providing necessary information for decision
making
Delegate work as well as authority
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58
Provide feedback
59. 5.Centralization & Decentralization
CENTRALIZATION
Centralization of power to make decision at the higher
levels of management
Hence employees can’t act independently
This results in Tall Structure
Merits Demerits
Taking emergency or No individual initiative
quick decisions Top management will
without any delay be over burdened
Standardized policy Widens gap between
or procedures managers and
employees
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60. Decentralization
Dispersal of decision making authority
Delegating power or authority to middle and lower
level managers
Degree to which lower level employees provide
input increases or actually they make decisions
Results in Flat Structure
Merits Demerits
Reduces burden Increases
Increases flexibility administrative cost
and involvement from Difficult in controlling
employees
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61. Staffing
Process of planning, employing and developing
human resources at different levels of an organization
for carrying out the various functions in the
organization
Includes activities as human resource planning,
recruitment, selection, placement, T&D, remuneration,
performance appraisal, promotion, transfer etc.
Koontz & O'Donnell, “the managerial function of
staffing involves managing the organization structure
through proper and effective selection, appraisal and
development of personnel to fill the roles designed in
to the structure”
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62. Line organizations
All positions in the organization are in the direct
line of authority from top to bottom.
GM
Work
Manager
Foreman
Workers
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63. Staff Organization
Act as advisory function to line organization
Their main task is to provide advice, guidance,
suggestions to line people.
GM
Business Cost
Industrial Legal
Economi Work Accounta
Relations Advisor nt
st Manager
Foreman
Industrial
R&D Engineer
Workers
s
Represents staff
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63 Represents line
function
authority
64. Use of Staff function in Decentralization
In decentralization, decision making power will be
dispersed
Line authority can utilize staff people who can
give better advice, guidance and suggestions.
This will help line authority to take good and
effective decisions.
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65. 6. Formalization
The degree to which jobs within the organization
are standardized and the extent to which
employee behavior is guided by rules and
procedures.
Highly formalized jobs offer little discretion over what is
to be done.
Low formalization means fewer constraints on how
employees do their work.
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66. Organization Design
Following factors influence organization designing
task;
Environment: external or internal
Business strategy – focused, differentiated or low
cost
Technology – complexity of the technology used
Internal contingency factors:
*goals
*organization size
*employees
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67. Organization Configuration
This is nothing but creating departments in the
organization based on some logic arrangement;
based on functions, products, processes,
geography and customers.
[refer slide 43, departmentalization, 2nd element of
organization structure]
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