Organizing

What is an organization?
An organization in general can be defined as the rational coordination of the activities of a number of people for the achievement of some common explicit purpose or goal, through division of labour and function and through a hierarchy of authority and responsibility.

Importance of Organization

Facility of administration Specialization Growth Creativity

Organizing

Determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made. Organization implies a formalized intentional structure of roles or positions (Heinz Weihrich and Harold Koontz) An Organization Defined

A deliberate arrangement of people to accomplish some specific purpose

This is the identification and classification of the required activities, the grouping of activities necessary to attain objectives, the assignment of each grouping to a manager with authority and the provision of coordination. In organizing, structures are created, relationships established and resources are allocated for the accomplishment of activities In organizing, plans are reviewed, tasks to be performed are listed, tasks are grouped into jobs that can be done by an individual, departments are created, work is assigned to individuals and authority is delegated.

PURPOSES OF ORGANIZING

Implementation of plans, Strategies. The plans are just intentions without the implementation. To implement the plans, the organizing is required. The well designed organization will have different functions which will work towards attaining the goals

To increase efficiency of work. Properly designed Organization assures that the work is done in most efficient and effective manner. The Work division, proper authority, and the persons with different skills are placed in most efferent manner which will work efficiently.

Personal Identity The Organization structure defines the role of each member of the enterprise. Thus every member knows where he and his department stands in the enterprise and in relation to other departments. Determination of responsibility Organization structure fixes definite responsibility of each department and that of each member.

Determination of Authority Organization structure defines the authority of each member of organization who can delegate his responsibility but remains responsible for himself for the act of subordinates.

Coordination. Organization structure defines the activities and their sequences to be performed. This establishes the different stages through work will pass, person responsible and channel of communication. The management hierarchy, Rules and regulations, plans and goals provide the path for coordination.

Optimum staff use. Organization structure defines the activities and sequence to perform with the responsibility of the person. Due to this way it makes possible to secure the maximum output with the minimum effort. Specialization. The clear picture of the work to be done at each work point, it becomes easy to find persons with the specialization in the concerned field to do it. To study human behavior. Organization provide ideal setting for the study of human behavior. Research and study of organization leads to many important discoveries vital for continues well-being of our society.

FORMAL & INFORMAL ORGANISATION

FORMAL

INFORMAL

Formal organization is a fixed set of rules of intraorganization procedures and structures. As such, it is usually set out in writing, with a language of rules that ostensibly leave little discretion for interpretation. In some societies and in some organization, such rules may be strictly followed; in others, they may be little more than an empty formalism. A group of people work towards a common objective/goal The formal groups are a typical part of every organisation The groups are given official status and need o operate within the rules and regulations The job responsibilities and positions are well defined giving clarity on work to be done by every member of the group

Informal organization is the interlocking social structure that governs how people work together in practice. It is the aggregate of behaviors, interactions, norms, personal and professional connections through which work gets done and relationships are built among people who share a common organizational affiliation or cluster of affiliations. It consists of a dynamic set of personal relationships, social networks, communities of common interest, and emotional sources of motivation. The informal organization evolves organically and spontaneously in response to changes in the work environment, the flux of people through its porous boundaries, and the complex social dynamics of its members.

It is a network of personal and social relations which arise when people associate with each other It does not take a conscious effort to build an informal organisation It is not governed by any rules and can exist within the formal organisation It is formed due to common interests of the members of the group

Disadvantage of informal Groups: 1. Resistance to change. 2. Role conflict 3. Rumor 4. Conformity Benefits to the Formal Organization: 1. Blend with formal system 2. Lighten management workload 3. Fill gaps in management abilities 4. Act as a safety value 5. Encourage improved management practice

Organisation chart

This organisational chart gives a brief description of the levels of management in the organisation The organisation chart gives the full description of top level management to low management.

Organisation level & span of Management

SPAN OF MANAGEMENT Span of management control is the number of people who report to one manager. If ten subordinates reports to one manager then ;the span of control of that manager is ten. The span of management is also called as Span of Supervision and the Span of Control. In simple words, it is the jurisdiction over which a person has control. When an executive is expected to govern or control the activities of individuals in a group ,the number of persons in a group indicates the span of control.

Narrow Span

Advantages of Narrow span management

Close control Close supervision Fast communication with subordinates and superiors Managers have more time to devote for their future plans

Disadvantages- Narrow Span

Higher executive pay role Many levels of management Supervisors tend to get more involved in subordinates work Excessive distance between lowest level and top level

Wide Span

Advantages of wide span

Superiors are forced to delegate Clear policies must be made Subordinate must be carefully selected

Disadvantages- Wide span

Requires exceptional quality of Managers The superiors may not have sufficient control Due to paucity of time, the superiors may become decision bottlenecks.

Factors affecting the span of control

Capacity of the manager and efficiency of the sub ordinates Nature of work to be carried out Clarity of responsibility for each sub ordinate Degree of decentralisation Training provided to the employees Communication methods employed Leader- sub ordinate relationship (Level of trust, faith etc)

What is an Organizational structure?

Organizational structure refers to the differentiation and integration of activities and authority roles and relationships. Differentiation means analysis and division of activities and functions in a logical manner into compact and homogeneous jobs. Integration means trying together and grouping the diverse and differentiated jobs in a meaningful manner into sections, departments, divisions and so on. The concept of organization structure :
Structure as an influence on behaviour Structure as recurring activities

Organizational Structure
Each organization has an organizational structure. Ideally, in developing an organizational structure and distributing authority, managers' decisions reflect the mission, objectives, goals and tactics that grew out of the planning function.
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Specifically, they include: 1. Division of labor 2. Delegation of authority 3. Departmentation 4. Span of control

5. Coordination

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Ways to Structure a Business

By customer: where different customer groups have different needs By process: where products have to go through stages as they are made What are the advantages/disadvantages of different types of business structure?

Departmentalization

Functional

Product

Customer

Geographic

Matrix

Pros and Cons of Different Structures

This depends on the business type, size and structure used Lets look at a functional structure:
Chief Executive Board of Directors

Production

Marketing

Accounts

Personnel

IT

Functional Structure

Advantages Specialisation each department focuses on its own work Accountability someone is responsible for the section Clarity know your and others roles

Disadvantages Closed communication could lead to lack of focus Departments can become resistant to change Coordination may take too long Gap between top and bottom

An Example of Organisation by Product/Activity

Hewlett Packard

Imaging and Printing Group

Personal Systems Group

Enterprise Systems Group

HP Services

HP Financial Services

Organisation by Product/Activity

Advantages Clear focus on market segment helps meet customers needs Positive competition between divisions Better control as each division can act as separate profit centre

Disadvantages Duplication of functions (e.g. different sales force for each division) Negative effects of competition Lack of central control over each separate division

Organisation by Product/Activity

Advantages Clear focus on market segment helps meet customers needs Positive competition between divisions Better control as each division can act as separate profit centre

Disadvantages Duplication of functions (e.g. different sales force for each division) Negative effects of competition Lack of central control over each separate division

Organisation by Area
Hewlett-Packards Headquarters Worldwide
Hewlett Packard

Americas Houston, Texas

Europe, Middle East, Africa Geneva, Switzerland

Asia Pacific Hong Kong

Organisation by Area
Advantages

Disadvantages

Serve local needs better Positive competition More effective communication between firm and local customers

Conflict between local and central management Duplication of resources and functions

Other Organisational Structures

By Customer: Similar effects to structuring by product By Process: Similar to structuring by function

Organisational Structures

Now go to the Activity for more

KEY ORGANIZATIONAL DESIGN PROCESS:

Differentiation and integration are the keys to successful organizational design . Differentiation is a process of deciding how to divide the work in as organization. Differentiation ensures that all essential organizational tasks are assigned to one or more jobs and that the tasks receive the attention they need. Three different forms of differentiation are horizontal, vertical and spatial. Integration is a process of coordination the different parts of an organization. Integration mechanism are designed to achieve unity among individual and groups in various jobs, departments, and divisions in the accomplishment of organizational goals and tasks. Integration helps keep the organization in a state of dynamic equilibrium, a condition in which all the parts of organization are interrelated and balanced.

Clarify, in writing, the over-all objectives desired for the organisation Determine what major activities are necessary Group these activities into closely related major functions Systematically unite the major functions into a sound, simple framework Complete the basic organisation structure and get the necessary approvals Observation of techniques

DESIGNING THE ORGANISATION STRUCTURE

MEASURES OF STRUCTURE
Structure concerns more than the division of labour or the boxes on the organization chart. It is also about the reporting relationships between organizational members. Complexity refers to the number of separate parts in an organizations structure Formalization refers to the extent to which job activity is defined and controlled by rules. Centralization concerns where in the organization decisions are made.

KEY ELEMENTS WHILE DESIGNING AN ORG. STRUCTURE

Specialization Departmentalization Chain of Control Span of Control Centralization and Decentralization Formalization

FUNCTIONAL STRUCTURE
PRESIDENT

VICE PRESIDENT MARKETING

VICE PRESIDENT ENGG.

VICE PRESIDENT FINANCE

VICE PRESIDENT MANUF.

VICE PRESIDENT PERSONNEL

VICE PRESIDENT LEGAL AFF

MARKETING RESEARCH

SALES

RECORDS

SHIPPING & RECIEVING

PRODUCTION

QUALTIY ASSURANCE

PLANT1 RESEARCH GROUPS SALES FORCE RECORD CLERKS

PLANT2

PLANT3

FUNCTIONAL STRUCTURE

Coordination: Standardization Groups clustered according to functions they perform Centralization Strengths

Economic Efficiency Minimized long term goals Insufficient flexibility

Drawbacks

DIVISIONAL STRUCTURE
PRODUCTION STRUCTURE

DIVISIONAL STRUCTURE

Coordination: standardization Moderately decentralized Strengths

Flexibility: higher as compared to prev Increased costs due duplication of efforts among divisions

Drawbacks

MATRIX STRUCTURE
PRESIDENT

VP PERSON AL

VP MARKETI NG

VP ENGINEE RING

VP MANUFA CTURIN G

VP FINANC E

VP LEGAL AFFAIRS

VP CONSUMER ELECTRONO CS VP AUTOMAT IVE COMPS VP HOUSEHOLD FURNISHING

MATRIX STRUCTURE

Both divisional and functional departmentalization is used Coordination: Mutual Adjustment, Decision making, Standardization Strengths

Extreme flexibility
Duplication of effort, more no of manager

Drawbacks

MATRIX STRUCTURE

Virtual Organizations

An organization that has few on-site employees and does most if its interactions online.

Virtual Organizations
Advantages

Disadvantages

let companies share costs fast and flexible being the best should provide better products

difficult to control the quality of partners requires tremendous management skills

Organizational Authority

Chain of Command

Line versus Staff Authority

Delegation of Authority

Degree of Centralization

Authority

Formal and legitimate right of a manager to make decisions, issue orders, and to allocate resources to achieve organizationally desired outcomes. Authority is distinguished by three characteristics: Authority is vested in organizational positions, not people. Authority is accepted by subordinates. Authority flows down the vertical hierarchy.

What are the sources of authority???

(Why do others allow you to exercise power over them?)

Traditional Its always been that way. Example: the King, the Queen Legitimate It comes with the position. Example: the CEO, President or Vice President. Knowledge You know more than they do. Example: theres a bomb in the building. You may be the CEO but you will probably do what the bomb diffusion expert tells you to do. Charisma Its amazing how much others will allow you to influence them if they like you.

The Types of Power

Coercive power: power on fear. Reward power: power based on the ability to distribute something that others value. Legitimate power: power based on ones position in the formal hierarchy. Expert power: power based on ones expertise, special skills, or knowledge. Reference power: power based on identification with a person who has desirable resources or personal traits.

Empowerment
Empowerment means that employees ,manager, or all levels in the organization have the power to make decision without asking their superior for permission. Illustration as follows: Power = responsibility (P=R) If P>R, then results in autocratic behaviour of superior. if P<R, it results in frustration of subordinate.

Empowerment
Empowering Workers Permanently passing decision-making authority and responsibilities from managers to workers by giving them the information and resources they need to make good decisions

A feeling of intrinsic motivation Workers perceive meaning in their work Employees are capable of self-determination

Line Organization
In a Line Organization all managers have direct authority over their respective subordinates, through Scalar chain of command.
Managing Director

Scalar chain of command

Production Manager

A direct relationship between superior and subordinate works as: As a chain of command As a channel of communication As a carrier of responsibility

Production Superintendent

Foreman

Line Authority and Staff Authority

Line authority entitles a manger to direct the work of an employee.

A manager with line authority has the right to direct the work of employees and to make certain decisions without consulting anyone

Staff authority is used to support, assist, and advise the holders of line authority. Whether a managers function is classified as line or staff depends on the organizations objectives.

Line /Staff concepts and functional authority

The vertical line of authority in an organization Clarifies who reports to whom

Line versus Staff Authority

Line authority

the right to command immediate subordinates in the chain of command

Staff authority

the right to advise but not command others

Line and Staff Authority

Line Manager A manager who is in the revenue generating chain and is authorized to issue orders to subordinates down the chain of command. Staff Manager A manager without the authority to give orders down the chain of command (except in his or her own department); generally can only assist and advise line managers in specialized areas such as human resources management.

Organizing

Line and Staff Authority

Line functions

Staff functions

Manufacturing Engineering Sales Marketing Purchasing Customer support General Management

Finance & accounting Human resources Legal Corporate communications Training

Organizing

Line and Staff Authority

Functional Authority (of Staff managers)

Narrowly limited power to issue orders down the chain of command in a specific functional area such as personnel testing.

Line & Staff Conflict

View point of Line Managers: Lack of Responsibility Encroachment of Line Authority Dilution of Authority Theoretical Authority

Line & Staff Conflict

View point of Staff Managers: Lack of Proper use of staff Resistance to New Ideas Lack of Proper Authority

Functional Authority
Functional Authority is the power which an individual or department may have delegated over specific processes, practices, policies or other matters relating to activities undertaken by personnel in departments other than its own.

Functional Authority
Advantages: Specialization Mass Production Efficiency Flexibility Disadvantages: Conflict among Superiors Lack of Co-ordination Lack of Speed Expensive

Summary of Line/Staff/Functional Organization

Sr. No. 1. 2. Feature Line Line and Staff Organization Organization High For small enterprises Low High Not So High For medium and large enterprises Moderate Moderate Functional Organization Low For large enterprises High Uneven Simplicity Suitability

3. Specialization 4. Work load of managers Unity of Command Economy

5. 6.

Strictly observed High

Observed to great extent Moderate

Not observed in general Low

Line and staff Organization

The line and staff organization refers to an organization in which two types of authority relationships co-exists. They are Direct or Line authority and Advisory Authority. Staff managers advice ,support and serve line managers.

Line & Staff Organization Structure Chief

Executive Asst. to Chief Executive
Personnel Manager R&D Manager Mfg. Manager Mktg. Manager

Qty. Ctrl. Manager Industrial Relations Manager Training manager Employ service manager

Plant Manager

Plant Manager Industrial. Product manager Consumer Product manager Marketing Research manager

Centralization Versus Decentralization

Centralization is a function of how much decisionmaking authority is pushed down to lower levels in an organization; the more centralized an organization is, the higher is the level at which decisions are made. Decentralization refers to the pushing down of decision-making authority to lowest levels of an organization. Centralization-decentralization is not an either-or concept. Its a degree phenomenon.

Cont

Greater change and uncertainty in the environment are usually associated with decentralization. The amount of centralization or decentralization should fit the firms strategy. In times of crisis or risk of company failure, authority may be centralized at the top.

Dispersion of Authority in Organization

Decentralization of power: Systematic delegation of authority at the lower level with operation authority for decision. Centralization of power: Concentration of authority to higher level of management is centralization. Fayol said Increase in subordinates role is decentralization, and everything which goes to decrease it is centralization.

Decentralization
Advantages: Relieve top management of some burden of making decision. Make comparison of performance of different organizations unit possible. Facilitate product diversification. Aid in adaptation to fast-changing environment. Limitations: Makes uniform policy difficult. Increase complexity of coordination of organization . May be limited by inadequate planning and control system.

Delegation
Process managers use to transfer authority and responsibility. Organizations encourage managers to delegate authority to lowest possible level.

The lowest possible level is usually where the most knowledge exists.

DELEGATION
Give thorough instructions Maintain feedback Evaluate and reward performance

Effective Delegation Techniques

Delegate the whole task

Ensure that authority equals responsibility

Select the right person

Delegation of Authority
Process of Delegation: Determining the results expected from position Assigning task to the position Delegating authority for accomplishing these tasks Holding the person in that position responsible for the accomplishment of the task.

Art of Delegation
Personal Attitudes towards Delegation Receptiveness Willing to let go Willingness to let others make mistakes Willingness to trust subordinates Willingness to establish and use Broad Controls

Guidelines for overcoming Weak Delegation 1.Define Assignments and Delegate

Authority in light of Results Expected. 2.Select the person in light of the job to be done 3.Maintain open Lines of Communication 4.Establish Proper Controls 5.Reward Effective Delegation and Successful Assumption of Authority

Delegation of Authority

2.3

How to be a More Effective Delegator

1. 2. 3. 4. 5. 6. 7. 8. 9.

Trust your staff to be a good job Avoid seeing perfection Give effective job instructions Know your true interests Follow up on progress. Praise the efforts of your staff. Dont wait to the last minute to delegate. Ask questions, expect answers, assist employees. Provide the resources you would provide if doing the assignment yourself. Delegate to the lowest possible level.

10.

2.3

Degree of Centralization

Centralization of authority

primary authority is held by upper management significant authority is found in lower levels of the organization solving problems by applying rules, procedures, and processes

Decentralization

Standardization

2.4

Organizational Structure Chain of Command

Bus. Plan & Annual Operating Plan

Staff Funcional Plans

Mid. Mgr. Tactical Plans

FIGURE 11

STAFFING

Organizations are only as good as the people in them. Staffing consists of recruiting, training, and developing people who can contribute to the organized effort. Staffing involves filling and keeping filled, the positions in the organization structure.

STAFFING

Staffing involves manning the organizational structure through proper and effective appraisal ,selection and development of people to fill the roles designed into the structure. Staffing is also known as Human Resource Management. In other words, it is the management function devoted to acquiring, training, appraising, and compensating employees.
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Staffing process involves: 1) -Development of organizational structure. 2) -Assessment of manpower required and available. 3) -Assessment of their quality, qualification and skills for the job. 4)- Appraisal Strength and shortcomings 5) -Conduct development programs.

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Analysis of the need for managers : External and Internal Information sources

Situational factors affecting staffing

External factors educational, socio cultutral, legal political and economic constraints - Equal employement opporutnity - Women in management - Diversity in the workplace - Staffing in the international environment

Internal factors - Promotion from within - Promotion from within in large companies - the policy of open competition - responsibility for staffing

Selection : matching the person with the job

Selection is the process of choosing amongst all the candidates, from within the organization or from the outside, the most suitable person for the current position or for future position.

The systems approach to selection : an overview

Position requirement and Job Design - Identifying Job Requirements - Appropriate scope of the job - Meeting managerial skills required by job design Job Design - Design job for individuals and work teams - factors influencing job design

Skills and Personal Characteristics needed in managers: - Analytical and Problem Solving Abilities - Desire to manage - communication skills and empathy - integrity and honesty - Past performance as manager

Matching qualifications with position requirements

Recruitment of Managers - Recruiting Selection, placement and promotion The Peter Principle

Selection Process, techniques and instruments

The Selection process: - Interviews - Tests : intelligence test, proficiency and aptitude test, vocational test, personality test - Assessment centers - Limitations of the selection process

Orienting and socializing new employees Managing human resources while moving toward 2020.

HRD Managerial effectiveness

Thank