Chapter 4: Organization and Management

1. Chapter 4
ORGANIZING

2. 4.1 Fundamentals of Organizing
Figure 4.1 Organizational Chart
Chief
Executive
Officer
Human
Resources
Marketing Finance Accounting Manufacturing

3. The organizational chart is a traditional picture of the
position in a firm, how they are arranged, who reports to
whom, and what the specific positions execute in the
enterprise. The boxes represents different roles and the
reporting authority is represented by the levels of the
boxes and the lines connecting them. Although the chart
shows structure, it does not explain its design issues.
Differentiation and Integration
Differentiation means that the enterprise is involved in
many tasks, with diverse kilss and methods. The tasks
have to be divided, and groups specialize in parts of the
larger task.
Integration is achieved with coordination, communication,
and collaboration as it involves linkingg parts of the
enterprise into a whole.

4. 4.2 Organizational Structures
Vertical Structure
The vertical structure, or top to bottom line in an
organization, i s rooted on basic concepts.
Owners of enterprises have definite authority, which is
defined aas the legitimate right to make decisions and to tell
other people what to do.
In a corporate setup, the authority vested to the Board of
Directors in a corporation is assigned to the CEO.
Different management levels and spans of control allow
for authority to be spread in organizations. This is where
delegation is a paramount concept. The assignment of new or
additional responsibilities to a subordinate is called delegation
(Bateman and shell, 2008). This concept allows managers to
get more work done through others-an essential features in
supervision and administration.

5. Delegation permits critical decisions to be made at the
lower levels of the organizational, the terms for which is called
Decentralization.
Horizontal Structure
Line functions are actions related to the principal activities
of a firm, or have ultimate responsibilities for the operational
decisions of the organization. Typical line functions include
manufacturing tasks, such as design, fabrication, assembly,
and distribution. Staff functions are specialized or professional
skills that support the line departments. Some staff functions
have huge responsibility in organizations, e.g., the approving
and monitoring activities of finance groups.

6. The Functional Organization
The business functions shown in figure 4.1-marketing,
finance, accounting, and human resources-are sets of
specialized skills that are grouped together. This type of chart
shows a Functional organization, where the jobs are grouped
together in departments with the specified skills and/or
business function
The Divisional Organization
When the products, customers, and/or geographical
locations of an enterprise grow and continue to diversify, a
functional structure may not serve its development needs. A
divisional organization, where the enterprise is grouped into
products, customers, or geographical locations, maybe a
better structure.

7. Product divisions, where all the business functions are
under a single manager, offer several advantages, as follows:
1. ease in managing the information and communication needs;
2. the product or service has the full commitment of its
personnel;
3. clear responsibilities are communicated; and
4. skills and othe training needs are more profound for the
personnel.
Customer divisions are structured around types of
customer groups, such as institutional/corporate and
retail/consumer buyers, while geographic divisions are built
along district, territories, regions, and countries.

8. The Matrix Organization
The functional and divisional organization advantages and
needs are utilized in a matrix organization. A dual reporting
relationship occurs in matrix organizations, as a manager
reports to both functional head and a product executive.
Although a matrix organization violates the unity-of-command
principle because of the dual reporting relationship, it provides
flexibility and malleability.
Prioritization by the lower executive in a matrix
organization is an essential adjustment. The product and
functional managers of the lower executive should team up to
avoid conflicts. Positive collaboration betwen managers often
result in fast and cost-effective decisions.

9. The Network Organization
A network organization is a collection of independent,
mostly single function enterprises that collaborate on a good
or service. The key to the network organization is electronic
communication, where information is shared with member
enterprises with distict compentencies.

10. 4.3 Forms of Business Organization
An Organization is defined as having two or more
individuals working towards the attainment of a goal or goals.
A business organization may take any of the following forms:
1. Sole Proprietorship, where an individual owns all the assets,
os the simplest business form;
2. Partnership, where an association of two or more persons
carry on as co-owners of a business for profit.
3. Corporation, where a separate body consisting of at least five
individuals is treated by law as a unit.

11. Business Form Advantages Disadvantages
Sole Proprietorship
Easy to form; with less
governmentrequirements
Limited source of capital
Fast decision-making; only one
person decides
Life may be dependent on the
owner's life
Flexibilty of operations
Management may be limited to the
owners capabilities
Suited to small businesses
Partnership
Easy to form; subject to manimal
government requirements
Unlimited liability of the partner for
the debts of the partnership
Suited to the practise of a
profession
Limited terms of existence
Some forms are exempted from
income tax
Limited capital
Flexibilty of operations
Corporation
Capacity as a legal entity
Activities limited by the articles of
incorporation and corporate by
laws
Practically unlimited life
Possibility of abuse of powers by
officers
Limited liability of stockholders for
corporate debts
Subject to more government
requirements
Broader source of capital

12. One of the perspectives in the balanced scorecard, and a
recommended gol in strategy maps, is organizational learning.
Enterprises must encourage advances and innovation.
Relationshipp lines, hierarchies, and levels exist to support
the organizational goal, but must not prevent improvement.
War stories and tales from battlefields serve as inspiring
examples of how the 'chains of command' support bold moves
from soldiers in the conflict areas in the absence of their
commanders. The same is true in the business arena, where
operations personnel in their respective fields with agreed
goals with senior executive perform excellently when a degree
of flexibility is granted.

13. Supplement to Chapter 4: Staffing
The tasks of structuring organizations, staffing it, keeping it
flexible while simultaneously maintaining the levels, are
vested in the human resource (HR) unit, selected tasks of
which include the following:
1. Recruitment, which involves activities related to the
development of a pool of applicants for jobs in the
organization;
2. Selection, which is related to decisions on who to hire from the
pool created by recruitment tasks;
3. Training and Development, which involves the continuous
development of the workforce;
4. Performance appraisal, the measurement of an employee's
performance; and
5. Reward system design, which includes the plans for monetary
and fringe benefits of employees.

14. Recruitment and Selection
A business needs to establish procedures in the hiring of
employees. The criteria as to be considered need to be set,
including a job analysis requirement. Job analysis is the
procedure through which the duties of given job positions and
the charcteristics of people who should fill thm are
determined. As job positions need to be staffed, the job
requirements need to be spelled out and used to develop job
descriptions and specifications. A job description is a list of
what the job entails, while a job specification is a list of the
kind of peopel for the job. Job descriptions and specifications
include the following:
1. work activities, like teaching, encoding, painting, and selling;
2. human behavior, like communicating, writing, and deciding;
3. tools used, such as computers, sewing machines, and power
tools;
4. performance standards, like one hundred sewn dresses per
eight-hour shift and ten cars sold per month;

15. 5. job context, like work at night, teaching on weekends and
holidays, and work from homes; and
6. human requirements, like a masters' degree for college
teachers, board passers for accountants, work experience for
supervisory work, specific physical characteristics for
computers, and computer lteracy for most jobs.
Job analysis information is used to decide or determine:
1. the person to hire;
2. the compensation for the job;
3. job standards as basis for actual performance;
4. training and development programs; and
5 unassigned tasks and duplication of assignments.

16. Figure 4.3. The recruitment process flowchart
Determine the job
positions to be
filled.
Build a pool of
job applicants.
Require the job
applicants to
submit application
forms
Screen the
applicants.
Call selected
applicants for test,
including medical
and drug tests.
Short list applicants
for interview.
Interview applicants;
make final choices.
Hire chosen
applicant.

17. Building a pool of applicants', is done through HELP
WANTED advertisements in newspapers, job recruitment
websites, trade journals, flyers, television advertisements,
employment agencies, business associates, and friends,
Candidates for employment are required to submit application
forms, resume, curriculum vitae (CV), and/or biodata.
Most companies have preprinted application forms.
Preprinted forms are also available in office supplies stores.
The prospective employers screen the applicants from the
pool, and subject them to a battery of tests. The tests may
include some of the following, dependent on the specifications
on the job:

18. 1. Intelligence Quotient (IQ) Test
2. Aptitude Test
3. Motor and Physical Abilities Test
4. Personality Test
5. Achievement Test
6. Work Sampling Test
7. Background and Reference Check
The candidates who pass the tests are made to go
through the requisite medical examinations and drug tests.
The applicants who pass the medical tests re short-listed
for interviews, and subjected to interview session, again
dependent on the job level and/or job specifications, by
supervisors and/or managers.
When the applicant passes all the aforementioned tests,
the recruitment process is completed and the job applicant is
hired.

19. Training and Development
After the applicant is hired, he/she goes through job
orientation. Job orientation is the procedure for providing new
employees with basic bckground information about the
enterprise. This information covers peronnel policies on
working hours, performance review, salaries and
remuneration, vacation leaves and other employee benefits,
and safety rules and regulations. The company's organization
charts and charts of operations are also provided during the
orientation. The new hire is introduced to the persons with
whom he/she will interact. This is considered as the
socialization phase of the orientation.
Many students see on-the-job training (OJT) as a school-
related program. The OJT program is, simultaneously, a
training program where a new hire is tasked to learn a job by
actually doing it. The new hire or trainee is usually assigned to
an experienced supervisor who acts as mentor. The
understudy, trainee or new hire, is 'coached' by the mentor.

20. Job rotation is an OJT form. Under this program, an
employee is moved from one work assignment to another so
that he/she can be trained in new job or work tasks. Job
rotation ensures a pool of employees trained in multiple work
assignements, whereby replacement of tardy, absent, or
resigned employees is possible.
Apprenticeship training involves having a trainee study
under a master craftman. Most vocational school students
divide their time between classroom instruction and
apprenticeship training under a master craftman. Under the
DUALTECH training program for example, a partnership with
a Metro Manila car manufacturer may mean assured
employment with said manufacturer for trainees who complete
the training and acquire its certification. In a subdivision in the
suburbs of Manila, an electronic company, in coordination with
its barangay, conducts on-site recruitment for apprenticeship

21. Geographically separated employees may be trained
through video conferencing. This is called distance learning,
and is usually done by multinational companies and domestic
enterprises with workplaces in different parts of a country, like
the Philippines. Distant group of employees communicate with
their lecturers and with each other through the use of audio-
visual equipment. To enhance interaction, soft and hard
copies of learning manuals are sent to the training
participants. Well-prepared training guides and well-planned
presentations are a must for distance learning programs.
Government and private sector alliances legislate and
issue guidelines for the HR practitioners for most, if not all, of
the HR tasks.
All employer-employee relationships and the conduct of
the same in organizations are covered in the labor codes of
most countries. In the Philippines, the Department of Labor
and Employment (DOLE) is the national agency tasked with
this role, primarily the administration of the labor code.

22. The Labor Code of the Philippines includes guidelines of the
following:
 Pre-employment
 HRD Program
 Conditions of Employment
 Health Safety and Social Welfare
 Labor Relations
 Post-employment
The Pre-employment guidelines of the Philippines Labor
Code include recruitments and placement of workers and the
employment of nonresident aliens. Definitions for the terms
worker, seaman, license, overseas employment, and emigrant
are detailed in the pre-employment guidelines.

23. The National Manpower Development Program and the
Training and Employment of Special Workers are included
under HRD Program. Some details of these programs include
the terms apprenticeship and handicapped workers, inclusive
of working conditions for them.
Working conditions and rest periods, wages, and working
conditions for special groups of employees are covered by the
DOLE's Conditions of Employment. The regular hours of work
of an employee cover eight hours a day. In the health sector,
the working hours have more conditions and details,
dependent on the municipality, and sixe of the health
organization.
Medical, dental and occupational safety, employee's
compensation and state insurance fund, medicare, and adult
education are detailed under Health, Safety, and Social
Welfare. The DOLE may, for instance, prescribe first-aid
medicine and equipment, dependent on the nature and
conditions of the work in a given establishment (DOLE, Book
IV-Health, Safety, and Social Welfare).

24. Labor guidelines include policy and definitions, National
Labor Relations Commission (NLRC), Bureau of Labor
Relations, Labor organizations, coverage, unfair labor
practises, collective bargaining and administration of
agreements, strikes, lockouts, and foreign involvement in
trade union activities and special provisions.
In the Philippines, the National Labor Relations
Commission (NLRC) is an attached agency of the Department
of Labor and Employment, which is tasked with program and
policy coordination.
Post-employment guidelines cover termination from
employment and retirement from service.

25. An employer may terminate an employment for any of the
following causes (DOLE, Book VI-Post Employment):
 serious misconduct or wilful disobedience;
 gross and habitual neglect of duties;
 fraud or wilfulbreach of trust;
 commission of crime or oofense; and
 other cause similar to the aforementioned.
The compulsory retirement age in the Philippines is at
age 65. The law direct a retirement compensation of one-half
month salary for every year of service for an employee who
has served an establishments for at least five years.

26. THAT'S ALL!
THANK YOU!!
Members:
Algo, Vheronica Lhane
Fidel, Kristine Claire
Tolin, Ciara