Organizing

•Organizing –key concepts and purpose

•Determinants of structure
•Steps in designing the organizational structure
•Grouping tasks into jobs: job design and job description
•Grouping jobs into functions and divisions and allocating authority
•Integrating mechanisms
•How to organize for performance

Organizing –Key Concepts

Organizing
The process by which managers establish tasks and working relationships among employees to achieve
goals.
Organizational Structure
Formal system of task and reporting relationships showing how workers use resources.
Organizational design
The process by which managers make specific choices that result in a particular kind of organizational
structure.

Work specialization - the degree to which organizational tasks are subdivided into individual jobs; also
called division of labor.
Organization chart – the visual representation of an organization’s structure.
Job analysis-an assessment that defines jobs and the behaviors necessary to perform them
Job description-a written statement that describes a job
Job specification-a written statement of the minimum qualifications that a person must possess to
perform a given job successfully

Purposes of Organizing
Divides work to be done into specific jobs and departments.
Assigns tasks and responsibilities associated with individual jobs.
Coordinates diverse organizational tasks.
Clusters jobs into units.
Establishes relationships among individuals, groups, and departments.
Establishes formal lines of authority.
Allocates and deploys organizational resources.
Determinants of Structure
1.The Organizational Environment
◦The quicker the environment changes, the more problems face managers.
◦Structure must be more flexible (i.e., decentralized authority) when environmental change is rapid.
2.Strategy
◦Different strategies require the use of different structures.
A differentiation strategy needs a flexible structure, low cost may need a more formal structure.
Increased vertical integration or diversification also requires a more flexible structure.

Technology
◦The combination of skills, knowledge, tools, equipment, computers and machines used in the
organization.
◦More complex technology makes it harder for managers to regulate the organization.
Organizations utilizing complex technology require a flexible structure to be managed efficiently.
Organizations utilizing routine technology can be more readily managed using a formal structure.
Organizations with high employee interaction requirements need a flexible structure.

Types of Technology
Small Batch Technology
◦Small quantities of one-of-a-kind products are produced by the skills of the workers who work together
in small groups.
◦Appropriate structure is decentralized and flexible.

Mass Production Technology

◦Automated machines that are programmed to make high volumes of standard products.
◦Formalstructure is the best choice for workers who must perform repetitive tasks.
Human Resources
◦Highly skilled workers whose jobs require working in teams usually need a more flexible structure.
◦Higher skilled workers (such as researchers and doctors) often have internalized professional norms.
Managers must take into account all four factors (environment, strategy, technology and human
resources) when designing the structure of the organization.

Formal structures
Based on rules, procedures and standards
Documented in job descriptions and organizational charts
Key words: authority, hierarchy, span of control, chain of command

Informal structures/groups
Groups that perform any type of activity, without an explicit common goal
Networks of people and relationships, based on spontaneous individual affiliations in the work
environment
May include both managers and ICs

Steps in Designing Organizational Structure

1.Documenting organizational goals and objectives
2.Acknowledging the amount of work needed for achieving the goals and objectives and turning it into
tasks
3.Grouping tasks into jobs and jobs into functions and divisions
4.Allocating authority and evaluating chains of command
5.Reviewing and updating organizational charts and job descriptions as often as necessary

Grouping Tasks Into Jobs: Job Design

Job Design
◦The process by which managers decide how to divide tasks into specific jobs.
Division of Labor
◦Splitting the work to be performed into particularly impersonal tasks and assigning tasks to individual
workers.
◦The appropriate division of labor results in an effective and efficient workforce.
Job Simplification
◦Reducing the tasks each worker performs: too much simplification results in boredom.

Job Design
Job Enlargement–increase the widthof task
◦Increasing the number of tasks for a given job by changing the division of labor.
◦The intention is to reduce boredom and fatigue by increasing variety of tasks performed.
 Job Enrichment-increase the depthof task
◦Increasing the degree of responsibility a worker has over a job.
◦Intended to increase worker involvement and self-discretion.
◦Requires a flexible organizational structure to allow employees to act flexibly and creatively.

Job Description
Job descriptions are written statements that describe the:
◦Duties,
◦Responsibilities,
◦Most important contributions and outcomes needed from a position,
◦Required qualifications of candidates,
◦Reporting relationship and coworkers of a particular job.
are based on objective information obtained throughjob analysis
Job analysis -an understanding of the competencies and skills required to accomplish needed tasks, and
the needs of the organization to produce work
Listing Duties and Responsibilities
Identify between three and eight primary duties and responsibilities for the position
List the primary duties and responsibilities in order of importance
Begin each statement with an action verb
Use the present tense of verbs
Use gender neutral language such as s/he
Use generic language such a photocopy instead of Xerox
Where appropriate use qualifiers to clarify the task –where, when, why or how often
Avoid words that are open to interpretation

Types of Structures
Functional Structure
•An organizational structure composed of all the departmentsthat an organization requires to produce
its goods or services.
•Advantages
Encourages learning from others doing similarjobs.
Easy for managers to monitor and evaluateworkers.
•Disadvantages
Difficult for departments to communicatewith others.
Preoccupation with own department and losing sight of organizational goals.
Divisional Structure
An organizational structure composed of separate business unitswithin which are the functions that work
together to produce a specific productfor a specific customer.
•Divisions create smaller, manageable parts of a firm.
•Divisions develop a business-levelstrategy to compete.
•Divisions have marketing, finance, and other functions.
•Functionalmanagers report to divisionalmanagers who then report to corporateupper management.

Types of Divisional Structures

ProductStructure
◦Customers are served by self-contained divisions that handle a specific type of product or service.
◦Allows functional managers to specializein one product area.
◦Division managers become experts in their area.
◦Removes need for direct supervision of division by corporate managers.
◦Divisional management improves the use of resources.

GeographicStructure
◦Each regional or a country or area with customers with differing needs is served by a local self-contained
division producing products that best meet those needs.
◦Global geographic structure
Different divisions serve each world region when managers find different problems or demands across
the globe.
Generally, this structure is adopted when managers are pursuing a multidomestic strategy.

Market (Customer) Structure

◦Each kind of customeris served by a self-contained division
◦Global market (customer) structure
Customers in different regions buy similarproducts so firms can locatemanufacturing facilities and
product distribution networks where they decide is best.
Firms pursuing a global strategywill use this type of structure.

MatrixStructure
An organizational structure that simultaneously groups people and resources by function and product.
•Results in a complex network of superior-subordinate reporting relationships.
•The structure is very flexible and can respond rapidly to the need for change.
•Each employee has two bosses(functional manager and product manager) and possibly cannot satisfy
both.
Product Team Structure
◦The members are permanentlyassigned to the team and empowered to bring a product to market.
◦Avoids problems of two-way communication and the conflicting demands of functional and product
team bosses.
◦Cross-functional team is composed of a group of managers from different departments working
together to perform organizational tasks.

Allocating Authority
Authority-The power to hold people accountable for their actions and to make decisions concerning
the use of organizational resources.
Hierarchy of Authority-An organization’s chain of command, specifying the relative authority of each
manager.
Span of Control-The number of subordinateswho report directly to a manager.
Line Manager
◦Managers in the direct chain of commandwho have authority over people and resources lower down.
◦Primarily responsible for the production of goods or services.
Staff Manager
◦Managers who are functional-area specialists that give adviceto line managers.

Tall and Flat Organizations

Tall structures have of many levels authority and narrow spans of control.
◦As hierarchy levels increase, communication gets difficult, creating delays in the time being taken to
implement decisions.
◦Communications can also become garbled as it is repeated through the firm.
Flat structures have fewer levelsand wide spans of control.
◦Structure results in quick communications but can lead to overworked managers.

The Minimum Chain of Command

Managers should carefully evaluate:
◦Do the organization have the right number of middle managers?
◦Can the structure be altered to reduce levels?

Centralized and Decentralized of Authority

◦Decentralization puts more authority at lower levels and leads to flatter organizations.
◦Decentralizationworks best in dynamic, highly competitive environments.
◦Stableenvironments favor centralization of authority.
Strategic Alliances and Network Structures
Strategic Alliance
◦An agreement in which managers pool or share firm’s resources and know-how with a foreign company
and the two firms share in the rewards and risks of starting a new venture.
Network Structure:
◦A series of strategic alliances that an organization creates with suppliers, manufacturers, and
distributors to produce and market a product.
◦Network structures allow firms to bring resources together in a boundary-less organization

ORGANIZING PERFORMACE
Do
Always start with the objectives
Keep the chain of command to its minimum
Have potential replacements for all managerial positions
Keep structures simple for a faster information flow
The more dynamic the environment, the more flexible the structure

Don’t
Positions reporting to more than one manager
High dependencybetween a job’s duties and another’s outcome (replace with collaboration)
Burdening some of the jobs with too many responsibilities, or duties unrelated to the job purpose
Organizational charts or jobs descriptions kept unchanged for years