organization final

8/3/2019 Organization Final

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ORGANIZATION

A group of people united by a commonpurpose

A process by which employees, facilities and

tasks are related to each other, with a view toachieve specific goal.


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Nature of Organization

1) Division of Labor 2) Coordination

3) Social System

4) Objectives 5) Co-operative Relationship

6) Well Defined Hierarchy

7) Communication


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PURPOSES OF ORGANIZING

Divide work to be done into specific jobs & departments

Assign tasks and responsibilities associated with individual jobs

Coordinate diverse organizational tasks

Clusters jobs into units

Establish relationships among individuals , groups anddepartments

Establish formal lines of authority

Allocate and deploys organizational resources.


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Formal Organization

A formal organization is deliberately designedto achieve some particular activity.

It refers to the structure of well defined-jobs,each bearing a definite measure of authority,

responsibility and accountability. It is designed by Top Management

It is based on the principle of division of labor

Coordination among members and theircontrols are well specified through processes,procedures, rules, etc.


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Advantages of Formal Organization

1)Facilitating Management Action : When a largenumber of people work together, some sort of formalstructuring is required to place them according to theneeds of organization.

2)Encouraging Efficiency : Organizational memberstry to maximize the output of goods from a givenamount of input.

3) Communication

4) Optimum use of Organizational Resources

5) Stimulating Creativity

6) Job Satisfaction


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Limitation of Formal Organization

Doesnt allow flexibility

Doesnt allow long term planning

Limit the scope of creativity


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Informal Organization

Informal organization refers to therelationship between people in theorganization based on personal attitudes,emotions, prejudices, likes, dislikes etc.

It arises from Social Interaction

Based on informal Authority

Develop from Customs, Contacts and Habits

Valuable Impact


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Advantages of Informal Organization

Influence productivity and Job Satisfaction Easy Flow of Communication

It achieves what Formal Organization cannot

achieve Minimizes the work load of Management

Serve as Safety Valves

Check on Managers Performance


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Limitation

Resistance to Change Role Conflict

Rumor

Clash of Objectives Imposes Self Regulation


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Organization Chart

An organizational chart is a diagram thatshows the structure of an organization andthe relationships and relative ranks of its

parts and positions. It is a graphic illustration of the organization's

management hierarchy and departments and

their working relationships.


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Advantages of Organization Chart

It is the tools that can effectively delineatework responsibilities and reportingrelationship.

It helps to clarify relationship betweendifferent organizational units and sub units.

The process of charting is good test of itssoundness, because any relationship that

cannot be charted is likely to be unsound.

It can be used as a navigational tool whensmall businesses expand their operation


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Disadvantages of Organization Charts

It shows only formal authority relationshipsand omits many significant, informal andinformational relationships.

It excludes such factors as leaders behavior,the impact of the environment, informalrelations, power distribution, etc.


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ORGANIZATION STRUCTURE

A framework of an organization expressed byits degree of complexity, formalization andcentralization


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FORMALIZATIONThe degree to which an organization relies onrules and procedures to direct the behavior of its

employeesRange of formalization degree to which itvaries from lower level to higher level

Why formalization is important


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formalization

McDonald has operating manual of 385pages

No cigarettes, candy or pin ball machines are

allowed hamburger patty to be of 1.6 ounces of beef

with no more than 19 % of fat content

Hamburger bun to have 13.3 % sugar in it

French fries to be kept in warming light fornot more than 7 minutes


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CENTERALIZATION

The concentration of decisionmaking authority in

upper managementAdvantages :

Specialized skills, talent and technology are some timeneither affordable nor practical in multiple locations

Improvement in communication technology facilitatethe movement of money credit information,transportation and data processing from central location


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DECENTERALIZATIONThe handing down of decision making

authority to lower levels in an organization

Advantages : unburdening of top managers,decisions are made closer to the scene of

action, better training, Morales and initiative atlower levels, more flexibility and fasterdecision making


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ORGANIZATION DESIGN

The development or changing of anorganization structure


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ORGANIZATION DIMENTIONS

Vertical differentiation

Horizontal

spatial


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ASPECTS OF VERTICAL

DIMENTIONIt refers to depth in structure

Unity of command

Authority & responsibility


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UNITY OF COMMAND

The principle that subordinate should have

one and only one superior to whom he (orshe) is directly responsible.


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CHAIN OF COMMAND

The flow of authority from the top to thebottom of an organization


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ASPECTS OF HORIZONTAL

DIMENSIONIt refers to the degree of differentiation between

units based on orientation of members, the

nature of tasks they perform, education &training

Departmentalization Specialization ( functional & social)


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Specialization

Functional: The break down of jobs in narrow,repetitive tasks. High substitutability & easyreplacement of employees

social specialization: Individuals are specialized


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spatial

It refers to degree to which the location of theorganizations office, plants, and personnel

are dispersed geographically.


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DEPARTMENTALIZATION

The process of grouping individuals into

separate units or departments to accomplishorganizational objectives. It can be based onnumbers, function, product or service, clients,geography, or process.


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DEPARTMENT

Department designates a distinct area,division or branch of an organization over

which a manager has authority for theperformance of specified activities


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DEPARTMENTATION

By time

By function

By territory

By product

By process of manufacturing

By customers interest


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Departmentation by Time

Grouping activities on the basis of time,generally at lower levels.

Continuous round the clock

Shifts


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Advantages

Service available 24 / 7

Processes work uninterrupted

Utilization of equipment

Helping people utilize available time

Lack of supervision especially at night Problem of coordination & communication

Cost of overtime

Fatigue factor

Disadvantages


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DEPARTMENTATION BY

FUNCTIONMD

MARKETING ENGINEERRING

PRODUCTIONFINANCE

MARKETING`

PLANNING

SALES

ADMIN

DESIGN

QULITYCONTROL

PLANNING

PURCHASING

GEN

PRODUCTION

PLANNING

BUDGETING

ACCOUNTING

d


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Advantages Is Logical reflection of functions

Maintains power and prestige of major functions Follows principle of occupational specialization

Simplifies training

Furnishes means of tight control at top

De-emphasis of overall company objective

Overspecializes and narrows viewpoint of keypersonnel

Reduces coordination between functions

Responsibility for profits is at the top only

Slow adaptation to changes in environment

Limits development of general managers

Disadvantages


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DEPARTMENTATION BY

TERRITORYMD

WESTERNREIGON CENTERAL SOUTHERNNORTHERN ESTERNREGION

(HQ)

Ad


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Advantages

Places responsibility at a lower level

Places emphasis on local markets and problems Improves coordination in a region

Takes advantage of economies of local operations Better face-to-face communication with local interests Furnishes measurable training ground for general managers

Requires more persons with general manager abilities Tend to make maintenance of economical central services

difficult and may require services such as personnel orpurchasing at the regional level

Increases problem of top management control

Disadvantages


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DEPARTMENTATION BY

PRODUCTMD

HEAVYELECTRICAL

TELEPHONE/MOBILE

KITCHENAPPLIANCE

RADIO/TV/VCR

Ad


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Advantages

Places attention and effort on product line

Facilitates use of specialized capital, facilities, skills, andknowledge Permits growth and diversity of products and services Improves coordination of functional activities Places responsibility for profits at the division level Furnishes measurable training ground for general managers

Requires more persons with general managers abilities Tends to make maintenance of economical central services

difficult Presents increased problem of top management control

Disadvantages


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DEPARTMENTATION BY

MANUFACTURING PROCESS

MD

FOUNDRYNICKLE

PLATINGPAINTING

CASTING/FORGING

Ad


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Advantages Achieves economic advantage

Uses specialized technology Utilizes special skills

Simplifies training

Coordination of departments is difficult

Responsibility for profit is at the top Is unsuitable for developing general managers

Disadvantages


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DEPARTMENTATION BY

CUSTOMERSMD

HIRE-PERCHASE HIGH ENDPRODUCTS

BOUTIQUEBUDGET ITEM

Ad


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Advantages

Encourages concentration on customer needs

Gives customers feeling that they have an understandingsupplier Develops expertness in customer area

May be difficult to coordinate operations between competingcustomer demands

Requires managers and staff expert in customers problems Customer groups may not always be clearly defined (For

Example, large corporate firms vs. other corporate businesses)

Disadvantages


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SPAN OF MANAGEMENT

The number of subordinates a manager cansupervise effectively and efficiently

Narrow (or vertical)

Wide (or horizontal)


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NARROW SPAN

No of subordinates four or less than four


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NARROW SPAN

Advantages Close supervision Close control

Fast communication

Disadvantages Many level of management

Excessive distance between the top &lowest level

Superior tend to get too involved in subordinateswork High cost due to many levels


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WIDE SPAN

No of subordinate six or more than six


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WIDE SPAN

Advantages Superiors are obliged to delegate

Clear policies are made

Subordinates are carefully selected

Disadvantages Overloaded superiors become decision

bottlenecks Superiors may lose control

Require exceptional quality of managers


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FACTORS AFFECTING

SPAN Training of subordinates

Clarity of delegation of authority

Clarity of plans

Use of objective standards

Rate of change

Communication techniques

Amount of personal contact needed


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Basic elements of organization

5 main elements are

StrategicApex

Operating core

Middleline


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TYPES OF ORGANIZATIONS

Mechanistic ( or bureaucratic )

Organic ( or adhocracy)

Team-based

Boundary-less

Matrix


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MECHANISTIC ORGANIZATION

(Bureaucracy)

A structure that is high in complexity,formalization and centralization

Permanent

Shared responsibility

Work by the book

Bank, postal department, railway booking

office


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ORGANIC ORGANIZATION(Adhocracy)A structure that is low in complexity ,

formalization and centralization .

Transient

High horizontal differentiation Low vertical differentiation

Low formalization

decentralization Adhocism

creative


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TEAM-BASED ORGANIZATION

An organization made of work groups or teamsthat perform organizations work


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MECHANISTIC Vrs ORGANIC

ORGANIZATION

Rigid hierarchical

relationship

Fixed duties

High formalization

Formalizedcommunicationchannels

centralized

Collaborative/flexible

(both verticalhorizontal)

Adaptable duties

low formalization

Informal communication

decentralized

MECHANISTIC Organic


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MATRIX ORGANIZATION

An organization that assigns specialists fromdifferent functional departments to work onone or more projects that are led by a project

manager


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MATRIX ORGANIZATION

WORKING Define objectives of the project or task

Clarify roles , authority and responsibility ofmanagers and team members based on

knowledge &experience rather than rank Balance power of functional and project

managers

Install appropriate cost , time and quality

control

h


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When to use Matrix

Environmental pressure from two or morecritical sectors

Interdependence between department

Economy in scale in the use of internalresources

Two types of matrix organizations permanent

& temporary

S h k


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Strength & weakness


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STRATEGIC BUSINESS UNIT


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STRATEGIC BUSINESS UNIT(SBU)

A single business that is independent of mainorganization and formulates its own strategy.

It will have its own:

Unique mission

Competitors

Plans

Organization/setup

recourses

Li & S ff h i


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Line & Staff authority

Line Authority : The authority of thosemanagers who are directly responsible,through out the organizations chain of

command, for achieving organizational goals. Staff authority : The authority of those groups

of individuals who provide line managers withadvice and services

D l i


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Delegation

The act of assigning formal authority andresponsibility for completion of specificactivities to a subordinate.

Advantage & disadvantage

H


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Human resource management

The management function that deals withrecruitment, placement, training anddevelopment of organization

R i


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Recruitment

Job description : A written description of amanagement position, covering title, duties,and responsibilities and including location on

organization chart Hiring specifications : A written description of

education experience and skill needed toperform a job or a fill a position effectively

S l i


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Selection

Completed job application

Initial screening interview

Testing

Background investigation

In-depth selection interview

Physical examination

Job offer


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T i i & D l


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Training & Development

How to determine the need

Performance appraisal

Analysis of job requirement

Organizational analysis

Employee survey

MDP


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MDP

On job methods : Coaching, Job rotation,training position & planned worked activities

Off the job methods : University sponsored

programs

organization final

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