Chapter11

Basic Elements of Organizing
Organizations are constantly growing in size and
in complexity.
Well-established ways of getting things done
may serve an organization for many years.
However, innovative leadership will find new
approaches to designing work, linking jobs and
coordinating activities to keep up with the
changing environments in which they work and
the new demands made on organizations by
employees, customers, etc.

The Elements of Organizing
Organizing is deciding how best to group
organizational elements (resources).

Organizational Structure is a set of six
basic building blocks (elements) that
managers may use to configure
(construct) an organization.

Six Basic Building Blocks for
Organization Structure
1) Designing jobs
2) Grouping Jobs
3) Establishing reporting
relationships between
jobs
4) Distributing authority
among jobs
5) Coordinating activities
among jobs
6) Differentiating among
positions

1. Designing Jobs
Job design is the determination of an
individual’s work-related responsibilities.

Job specialization is the degree to which
the overall task of the organization is
broken down and divided into smaller
component parts. Sometimes referred to
as the division of labor. [assembly-line tasks, Disney characters drawn
by only one animator, etc.)

Designing Jobs. . . [continued]

Benefits of Job Specialization:

a) Workers performing small, simple tasks will become
very proficient at each task.
b) Transfer time between tasks decreases. [switching from one
task to another]

c) The more narrowly defined a job is, the easier it is
to develop specialized equipment to assist with that
job.
d) When an employee who performs a highly
specialized job is absent or resigns, the manager is
able to train someone new at relatively low cost.


Limitations of Job Specialization:

a) Workers who perform highly specialized jobs may become
bored and dissatisfied.
b) The job may be so specialized that it offers no challenge or
stimulation.
c) If boredom and monotony set in, absenteeism rises and the
quality of work may suffer.
d) The anticipated benefits of job specialization do not always
occur.

Although some degree of specialization is necessary, it should
not be carried to extremes because of the possible negative
consequences


Managers have developed five (5) other
approaches to job design to achieve a
better balance between organizational
demands for efficiency and productivity
and individual needs for creativity and job
control.


Alternatives to Job Specialization:

Job Rotation
Job Enlargement
Job Enrichment
Job Characteristics Approach
Work Teams


Job Rotation involves
systematically moving
employees from one job
to another.
Different part of the job is
done on various days of
the weeks.
Used primarily as a
training practice to
improve workers’ skills
and flexibility.


Job enlargement involves giving the employee
more tasks to perform.
Designed to allow the worker to perform a
variety of tasks to reduce the level of job
boredom or dissatisfaction.
Disadvantages may include: training costs
usually increase; unions have argued that pay
should increase as the worker is doing more
tasks; and in many cases, the work still remains
boring and routine.


Job enrichment involves increasing both the number of
tasks the worker does and the control the worker has
over the job.
To implement job enrichment, managers remove some
controls from the job, delegate more authority to
employees and structure the work in complete, natural
units.
Another part of job enrichment is to continually assign
new and challenging tasks to allow the employee an
opportunity to grow and advance.
Before undertaking job enrichment, work systems should
be analyzed and managers should ask for employee
preferences.


Job Characteristic Approach suggests that jobs should
be diagnosed and improved along five core dimensions,
taking into consideration both the work system and
employee preferences.
The higher a job rates on these dimensions, the more
employees will experience various psychological states.
Five core dimensions include:
Skill variety
Task identify
Task significance
Autonomy
Feedback
See Figure 11.1, page 346.

Figure 11.1

Job
Characteristics
Approach


Work Team allows an
entire group to design the
work system it will use to
perform an interrelated
set of tasks.
The team itself decides
how jobs will be allocated
and assigns specific
tasks to members,
monitors and controls its
own performance and
has autonomy over work
scheduling.

2. Grouping Jobs: Departmentalization

Departmentalization is the process of grouping
jobs according to some logical arrangement.
In smaller organizations, the owner-
manager/partner may be able to personally
oversee everyone who works there.
As an organization grows, new managerial
positions are created to supervise work of others
grouped according to some plan which leads to
the creation of departments.


Functional Departmentalization groups jobs involving
the same or similar activities.
Most common in smaller organizations; has three
primary advantages:
Each department can be staffed by experts in that functional
area.
Supervision is also facilitated because an individual manager
needs to be familiar with only a relatively narrow set of skills.
Coordinating activities inside each department is easier.
Disadvantages emerge as an organization grows
because it becomes increasingly difficult to monitor
accountability and performance. [was product failure due to poor marketing or
production deficiencies?]

Product Departmentalization groups activities around
products or product groups.
Has three major advantages:
All activities associated with one product or product group can be
easily integrated and coordinated.
The speed and effectiveness of decision making are enhanced.
The performance of individual products or product groups can be
assessed more easily and objectively, thereby improving the
accountability of departments for the results of their activities.
Has two major disadvantages:
Managers in each department may focus on their own product or
product group to the exclusion of the rest of the organization.
Administrative costs may rise because each department must have
its own functional specialists for areas such as market research and
financial analysis.


Customer Departmentalization occurs when the
organization structures its activities to respond to and
interact with specific customers or customer groups.
Major advantage is that the organization is able to use
skilled specialists to deal with unique customers or
customer groups. [different skill sets required to read a balance sheet and approve a
BD500,000 loan to a business vs evaluating an individual’s creditworthiness to receive a BD20,000 loan to buy a
car]

A disadvantage is that a fairly large administrative staff is
required to integrate various departments’ activities to
make sure the organization does not overcommit itself in
any one area.


Location Departmentalization groups jobs on
the basis of defined geographic sites or areas.
Primary advantage is that it enables the
organization to respond easily to unique
customer and/or environmental characteristics in
the various regions.
A disadvantage is that a larger administrative
staff may be required if the organization must
keep track of units in various locations.


Other Forms of Departmentalization
may include:
Departmentalization by Time: grouping certain
activities by time – shift system in which each shift
has its own superintendent, who reports to the
plant manager, and functional departments.
Hospitals and airlines use time as well to
departmentalize.
Departmentalization by Sequence: university
registration by senior, junior, etc; credit checks by
employees according to customer name; insurance
company claim division by policy number.

Other Considerations for Departmentalization:
In some large organization, departments may be
referred to as Divisions, Units, Sections and
Bureaus.
Regardless of the label used, they represent
groups of jobs that have been tied together
according to some unifying principle.
Almost all organizations are likely to use multiple
bases of departmentalization, depending on level.
It is quite common that organizations use a
variety of bases of departmentalization for
different levels and different sets of activities.

Figure 11.2: Departmentalization

3. Establishing Reporting Relationships

Chain of Command is a clear and distinct
line of authority among the positions in an
organization that has two components:
Unity of command – each person within an
organization must have a clear reporting
relationship to one and only one boss.
Scalar principle – there must be a clear and
unbroken line of authority that extends from the
lowest to the highest position in the organization.
Someone in the organization must ultimately be
responsible for every decision. [President Harry Truman’s
saying that ‘the buck stops here.’]


Span of Management,
sometimes called the span of
control, is the number of
people who report to a
particular manager.


Narrow versus Wide Span Theories:
A V Graicunas developed a formula for measuring the
possible number of interactions between a manager and
subordinates. I = N(2N/2 + N – 1)
He stated that managers must deal with three kinds of
interactions with and among subordinates:
Direct – one-to-one with each subordinate
Cross – among the subordinate themselves
Group – between groups of subordinates
Ralph C Davis described an operational span for lower-level
managers [maximum 30] and an executive span [maximum
3-9] for middle and top managers.
Lyndall F Urwick and General Ian Hamilton believe executive
span should never exceed 6 subordinates.


Tall versus Flat Organizations:
Flat structures seem to lead to higher levels of employee
morale and productivity.
A wider span of management in a flat structure may
result in a manager’s having more administrative and
supervisory responsibilities. If these responsibilities
become excessive, the flat organization may suffer.
A tall structure is more expensive because of the larger
number of managers.
Communication in a tall structure seems to suffer due to
the increased number of people through whom
information must pass.

Figure 11.3
Tall Versus Flat Organizations


Determining the Appropriate Span:

• The relative importance of each factor varies in
different settings.
• Managers must determine the importance of
each factor or set of factors when deciding the
optimal span of management for their unique
situation.

4. Distributing Authority
Authority is the power that has been
legitimized (approved) by the organization.
Organizations must determine how authority is to
be distributed among positions.
An employee must have the power to make some
decisions on his/her own, some in consultation
with coworkers and must defer some decisions to
his/her boss.
Two issues that managers must address when
distributing authority are delegation and
decentralization.

Delegation is the process by which managers
assign a portion of their total workload to others.
Managers generally delegate to:
enable themselves to get more work done.
allow employees with more expertise than they
have to handle a particular problem.
develop subordinates’ managerial skills by
participating in decision making and problem
solving.
allow subordinates to learn more about overall
operations.


Steps in the Delegation Process:
Manager should assign responsibility or give
the subordinate a job to do.
Manager must give the subordinate the
authority to do the job.
Manager must establish the subordinate’s
accountability – ‘willingness to accept an
obligation to carry out the task assigned’.

Steps in the Delegation Process

Problems in Delegation:
Some managers may be too disorganized to plan in
advance and therefore cannot delegate to others.
Some managers are afraid the subordinate may do a
better job and pose a threat to their own advancement.
Managers may not trust their subordinates to be
accountable.
Some subordinates may be afraid to fail at a task and be
reprimanded as a result.
Some subordinates may see no reward for accepting
additional responsibility.
However, the ultimate responsibility for the outcome of any
delegated task still rests with the manager.


Decentralization:

The process of systematically
delegating power and authority
throughout the organization to
middle and lower-level managers.


Centralization:

The process of systematically
retaining power and authority in the
hands of higher-level managers.

Which Way to Go?
No organization is ever completely decentralized
or centralized; some firms tend toward one or the
other.
Usually, the greater the complexity and uncertainty of
the external environment, the greater the tendency to
decentralize.
An organization’s history will play a role – firms tend
to do what they have done in the past.
The costlier and riskier the decisions, the more
pressure there is to centralize.
If lower-level managers are well qualified, there is a
tendency to decentralize and vice versa.

5. Coordinating Activities

Coordination is the process of
linking the activities of the various
departments of the organization.
Primary reason for coordination is that departments
and work groups are interdependent – they depend
on each other for information and resources to
perform their respective activities.
The greater the interdependence between
departments, the more coordination the organization
requires so departments are able to perform
effectively.


Pooled interdependence exists
when units operate with little
interaction; their output is simply
pooled.
Each unit has its own budget, staff, etc., and
their profits/losses are added together at the
organizational level. They do not interact on a
day-to-day basis. [Debenham's, Marks & Spenser, etc.]


Sequential interdependence occurs
when the output of one unit becomes
the input for another in sequential
fashion.
Level of interdependence is generally
one way.
Nissan has one plant which assembles
engines and then ships them to another
plant where the cars are completed.

Reciprocal interdependence occurs when
activities flow both ways between units.

This form of interdependence is the most complex.
Within any hotel, the reservations department, front-
desk check-in and housekeeping are all ‘reciprocally
interdependent’.
Reservations has to provide front-desk employees
with information about how many guests to expect
each day, and housekeeping needs to know which
rooms need ‘priority cleaning’. If any of the three
units does not do its job properly, all will be
affected.

Structural Coordination Techniques
These techniques were designed to
achieve and maintain coordination among
interdependent units. They include:
The managerial hierarchy
Rules and procedures
Liaison roles
Task forces
Integrating departments


The Managerial Hierarchy
One manager is placed in charge of
interdependent departments or units.
Wal-Mart’s distribution center places one
manager in charge of both receiving and
unloading shipments from railroad cards and
loading other shipments onto trucks for
distribution to retail outlets.
Both departments are interdependent because
they share the same loading docks.


Rules and Procedures
Routine coordination activities may be
handled by rules and standard procedures.
However, complex or unusual problems
may have to be handled independently.
Wal-Mart has a rule that an outgoing truck has
priority over an incoming rail shipment. So all
forklifts and related equipment are available to
loading outgoing trucks first.


Liaison Roles
A manager acts as a common point of
contact but has no formal authority over the
interdependent groups.
He/she simply serves as a facilitator of
information flow between the units.
He/she maintains familiarity with each unit
and can answer questions and otherwise
serve to integrate the activities. [engineering groups
working on a large project may interact through a liaison]

Task Forces
A task force may be needed when
interdependence is complex and several
interdependent units are involved.
It is created by drawing one representative from
each unit.
Coordination function is then spread across
several individuals, each of whom has special
information about one of the units involved.
When coordination of project is completed, the
task force is dissolved.

Integrated Departments
• Similar to a task force but is more permanent.
• Usually has more authority than a task force and
may even be given some budgetary control.
• Generally has some permanent members as well
as members who are assigned temporarily from
units that are particularly in need of coordination.
• Firms characterized by complex and dynamic
environments tend to use integrated departments
to maintain internal integration and coordination.

Electronic Coordination
E-mail makes it easier for people to communicate
at all levels.
Electronic scheduling is used and makes it easier
for individuals’ schedules to be coordinated to set
meetings and know when individuals are otherwise
available.
Some organizations require project contractors,
subcontractors and suppliers to use a common
web-based communication/reporting system to
make coordination easier among the units.

6. Differentiating Between Positions

Line position is in the direct
chain of command that is
responsible for achieving an
organization’s goals.
Staff position is one intended
to provide expertise, advice
and support for line positions.

Differences between Line and Staff
Line managers work toward organizational goals; staff
managers advise and assist.
Line managers have formal and legitimate authority;
staff authority is less concrete and may take a variety
of forms:
Compulsory authority – line manager must listen to advice
of staff manager, but can choose to take it or ignore it. [Finance
Manager must listen to advice of auditor, but may take it or leave it]

Functional authority – formal or legitimate authority given to
staff managers over activities related to their specialties. [HR
specialist who is expert in discrimination or Labor Law]

Administrative Intensity
Administrative intensity is the degree to which managerial
positions are concentrated in staff positions.
An organization with ‘high’ administrative intensity is one with
many staff positions relative to the number of line positions.
Relative ‘low’ administrative intensity reflects more line
positions relative to staff positions.
Organizations would generally like to devote most of their HR
investment to line managers because they contribute directly
to the organization’s basic goals.
Practice today is leading toward reducing staff positions.

Chapter11

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