1. Topic 5
Designing the Contemporary
Organization

2. Organizing Defined
The process of determining the tasks to be
done, who will do them, and how those tasks
will be managed and coordinated.

3. The Process of Organizing
Organizational Mission
Developing the foundation
- Determining tasks and defining jobs
- Defining work relationships
Developing organizational design
- Grouping organizational members
- Developing an integrating system
- Determining the locus of decision making
Goals and Objectives
Control
and
Feedback

4. Steps in organizing
• 1.Detailing of work.-Describing all the work that must be done.
• 2.Division of work-Dividing the total workload.
• 3.Aggregation of work-departmentalization.
• 4.Coordination of work-integration and standardization
• 5.Review of performance-assess managerial and organizational performance.
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Division of work
The process of dividing jobs into smaller
components so that a worker performs only a
small part of the total jobs.
Advantage
1.Increase productivity
2.Allows people to learn skills and become
expert at their job functions.

5. Organizational Design Defined
The way in which the activities of an
organization are arranged and coordinated so
that its mission can be fulfilled and its goals
achieved.

6. Components of Organizational Design
Overall organizational design is
defined by three primary
components:
Organizational StructureOrganizational Structure
Integrating MechanismsIntegrating Mechanisms
Locus of Decision MakingLocus of Decision Making

7. Organizational Structure
• Organizational Structure
– Defines the primary reporting relationships that
exist within an organization.
– The chain of command and hierarchy of
responsibility, authority, and accountability are
established through organizational structure.
– Common forms of organizational structure:
• Functional structure, division structure, matrix
structure, and network structure.

8. Functional Structure
• Functional Structure
– Members of the organization are grouped
according to the particular function that they
perform within the organization.
– Appropriate when an organization’s greatest
source of complexity comes from the diverse tasks
that must be performed rather than from its
products, geographic markets, or consumer
groups.

9. Functional Structure
• Advantages
– Facilitates specialization.
– Cohesive work groups.
– Improved operational efficiency.
• Disadvantages
– Focus on departmental vs. organizational issues.
– Difficult to develop generalists needed for top-
level management.
– Only top-level management held accountable for
profitability.

10. Functional Structure
PGP, Inc.
CEOCEO
MarketingMarketing FinanceFinanceSalesSalesProductionProduction
Human
Resources
Human
Resources

11. Divisional Structure
• Divisional Structure
– Members of the organization are grouped on the
basis of common products, geographic markets,
or customers served.
• Types of Divisional Structures
– Product divisional
• Most appropriate for organizations with
relatively diverse product lines that require
specialized efforts to achieve high product
quality.

12. Divisional Structure
• Types of Divisional Structures
– Geographic divisional
• Most appropriate for organizations with limited
product lines that either have wide geographic
coverage or desire to grow through geographic
expansion.
– Customer divisional
• Most appropriate for organizations that have
separate customer groups with very specific
and distinct needs.

13. Divisional Structure
• Advantages
– Enhanced coordination.
– Better assessment of manager performance
and responsibility.
– Development of generalist managers.
• Disadvantages
– Managers may lack expertise to operate in
wide geographic areas.
– Duplication of resources.
Product Divisional

14. Divisional Structure
• Advantages
– Allows for focus on specific new markets.
– Good structure for growth along geographic
lines.
– Adaptable to local needs.
• Disadvantages
– Duplication of product or product/technology
efforts.
– Coordination and integration are difficult.
Geographic Divisional

15. Matrix Structure
• Matrix Structure
– A structure in which the tasks of the organization
are grouped along two organizational dimensions
simultaneously.
– Examples include product/function,
product/geographic region, etc.

16. Matrix Structure
• Advantages
– Can achieve simultaneous objectives.
– Managers focus on two organizational
dimensions, resulting in more specific job skills.
• Disadvantages
– Complex, leading to difficulties in
implementation.
– Behavioral difficulties from “two bosses.”
– Time consuming from a planning/coordination
perspective.

17. Network Structure
• Network Structure
– A contemporary organizational structure that is
founded on a set of alliances with other
organizations that serve a wide variety of
functions.
• Types of Network Structures
– Internal network
• A network structure that relies on internally
developed units to provide services to a core
organizational unit.

18. Network Structure
• Types of Network Structures
– Stable network
• A network structure that utilizes external
alliances selectively as a mechanism for gaining
strategic flexibility.
– Dynamic network
• A network structure that makes extensive use
of outsourcing through alliances with outside
organizations.

19. Network Structure
• Advantages
– Maximizes the effectiveness of the core unit.
– Do more with less resources.
– Flexibility.
• Disadvantages
– Fragmentation makes it difficult to develop
control systems.
– Success is dependent on ability to locate
sources.
– Difficult to develop employee loyalty.

20. Network Structure
BrokersBrokers
SuppliersSuppliers
DesignersDesigners
DistributorsDistributors
ProducersProducers

21. Managing Complexity Through
Integration
• Interdependence
– The degree to which work groups are interrelated.
• Three primary levels of work group
integration:
– Pooled interdependence.
– Sequential interdependence.
– Reciprocal interdependence.

22. Pooled Interdependence
Occurs when organizational units have a
common resource but no interrelationship
with one another
Head-
quarters
B
C
D
A
F
E

23. Sequential Interdependence
Occurs when organizational units must coordinate
the flow of information, resources, and tasks from
one unit to another
A B C

24. Reciprocal Interdependence
Occurs when information, resources, and tasks must
be passed back and forth between work groups
A
C
E F
D
B

25. Organizational Relationships
• The working relationships that exist within an
organization affect how its activities are
accomplished and coordinated.
• These Relationships are Defined By:
– Chain of command
– Span of control
– Line and staff responsibilities
– Delegation

26. Chain of Command and Unity of
Command
• Chain of Command
– The line of authority and responsibility that flows
throughout the organization.
• Unity of Command
– A principle that each employee in the organization
is accountable to one, and only one, supervisor.

27. Span of management
• Also known as span of control
• Refers to the number of subordinates who
reports directly to a manager.
• Broad span of mgt. – means a manager
supervises many subordinates ( 10 or more).
• Narrow span of mgt.- means a manager
supervises only a few workers (less than 10)
• Span of Control
– The number of employees reporting to a particular manager.
• In theory, when tasks are very complex, span of control should be relatively
narrow.
• In contrast, where jobs are highly standardized and routine (low complexity),
a manager will not need to spend as much time supporting individual
subordinates, and the span of control may be larger
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28. Span of Control
Narrow Span of Control
Manager
Wide Span of Control
Manager

29. Advantages of broad/wide span of
management
Advantage
1.Superiors are forced to delegate
2.Clear policies must be made
3.Subordinates must be carefully selected
Disadvantages
1.Burdening of managers
2.Danger of superior’s loss of control
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30. Advantages of narrow span of management
Advantage
1.Close supervision
2.Close control
3.Rapid com between subordinates and superiors
Disadvantages
1.High costs
2.Excessive distance between the lowest and top levels
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The importance of span of management
• 1.Affect effective utilization of managers e.g
Too broad span means a manager is
burdening himself with too much workload
• Too narrow span means a manager is
underutilizedstructure.

31. Situational determinants of span of
management.
• 1.Similarity of work-e.g Broad span is appropriate for identical
tasks.
• 2.Geographical contiguity e.g broad span is appropriate for
activities located in the same area of work
• 3.Complexity of work e.g Broad span is appropriate for simple
and repetitive tasks
• 4.Direction and control required by subordinates
• 5.Time spent coordinating and planning.
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32. Influence, power and authority
• Influence-Actions or examples that cause a change in behavior or attitude of
another person. E.g a hard working manager may influence his subordinates to
increase their productivity
• Power - The ability to exert influence.French and Raven have identified five
sources of power :
• 1.Reward power : Ability to reward another person. E.g bonus, promotion
• 2.Coercive power :Ability to punish or take disciplinary action
• 3.Expert power : Based on a person’s possession of special knowledge or
expertise
• 4.Legitimate power-power vested in the constitution which acknowledges a
person’s right or lawfulness to exert influence
• 5.Referent power-based on the credibility, attractiveness and trustworthiness of
a person that makes subordinates want to imitate the leader’s behavior
• Authority- A form of legitimate power. There are two views of formal authority
• 1.The classical view
• 2.The acceptance view
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33. The classical view
• Supposes that authority originates at some very high level of
society and then is passed down from level to level.
The acceptance view
• Finds the basis of authority in the influencee (subordinates) and
not the influencer (manager) Subordinates acceptance is vital to
ensure that instructions/ commands could be implemented
successfully.
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34. Line and Staff Responsibilities
• Line Personnel
– Those organizational members that are directly
involved in delivering the products and services of
the organization.
• Staff Personnel
– Those organizational members that are not
directly involved in delivering the products and
services to the organization, but provide support
for line personnel.

35. Line and staff authority
• Line authority – refers to managers
and other employees who are
directly involve in the attainment of
the organization goals.e.g
production managers, operating
workers and marketing manager.
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36. Staff authority
• Include all employees who provide service and advice to the
line authority.e.g counselor, personal assistant and typist.
• Three types of staff authority:
• 1.Personal staff e.g personal assistant
• 2.Specialized staff-e.g legal advisor, Vice president ( finance)
• 3.Functional staff e.g The Audit dept.-staff authority which
has the right to control line activities
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37. Delegation
• The assignment to another person of formal authority and
accountability for carrying out specific activities.However not all
authority and accountability can be delegated.e.g tasks in which
subordinates do not have the required qualifications and skills
The extent of delegation depends on such factors as :
• The organizational culture
• The nature of the tasks
• Subordinates capabilities
• Delegation
– The process of transforming the responsibility for a specific activity or task
to another member of the organization and empowering that individual to
accomplish the task effectively.
– Scalar principle
• A clear line of authority must run throughout the organization
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38. Advantages of delegation
• Unburdening of top managers
• Improve decision making
• Better employees training
• Faster decision making
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39. Barriers to effective delegation
1.Managers reluctance to delegate e.g
Lack of confidence on their
subordinate capabilities
2.Subordinates reluctance to accept
delegation e.g do dot want the
additional burden
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40. Delegation
• Reasons for Failing to Delegate
– The “time crunch.”
– Lack of confidence in the abilities of subordinates.
– Managers try to avoid the potential pitfalls of dual
accountability.
– Managers may be insecure about their own value
to the organization.

41. Delegation
• The Process of Delegation
-Decide which task to delegate
– Assigning responsibility
• Responsibility refers to the employee’s obligation to complete the
activities that he or she has been assigned.
– Granting authority
• Authority is the formal right of an employee to marshal resources
and make decisions necessary to fulfill work responsibility.
– Establishing accountability
• Where there is accountability for performance, employees
understand that they must justify their decisions and actions with
regard to the tasks for which they have assumed responsibility.
– Monitor

42. Classical guidelines to achieve effective
delegation
1.Assign Responsibilities, authority and
accountability
2.The scalar principle – a clear chain of
command.
3.The unity of command principle –
employees report to only one leader.
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43. Delegation: Learning to Delegate
Effectively
• Principle 1:
– Match the employee to the task.
• Principle 2:
– Be organized and communicate clearly.
• Principle 3:
– Transfer authority and accountability with the
task.
• Principle 4:
– Choose the level of delegation carefully.

44. Principles of delegation
1.Match the employee to the task –The selected
employee should possess the skills and capabilities.
2.Be organized and communicate clearly – state
clearly what is to be done, specific deadlines and special skills
required.
3.Transfer Authority and accountability – provide
resource and power
4.Choose the level of delegation carefully.
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45. Steps in delegation
1.Decide which tasks can be delegated
2.Decide who should get the
assignment.
3.Delegate the assignment
4.Establish a feedback system.
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