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PRINCIPLES OF MANAGEMENT

UNITIII

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ORGANIZING

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After studying this chapter, you should understand:

1. The purpose of an organization structure

2. The meaning of "organizing" and "organization."3. The distinction between formal and informal organization.4. How organization structures and their levels are due to the

limitations of the span of management.

5. The exact number of people a manager can effectivelysupervise depends on a number of underlying variables and

situations.6. The logic of organizing and its relationship to other managerial

functions.7. That organizing requires taking situations into account.

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Organizational Roles

For an organizational role to exist and bemeaningful, it must incorporate

(1) verifiable objectives, which, are a major partof planning

(2) a clear idea of the major duties or activitiesinvolved and

(3) an understood area of discretion or authorityso that the person filling the role knows whathe or she can do to accomplish goals

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Organizing involves:

(1) the identification and classification of requiredactivities,

(2) the grouping of activities necessary to attain

objectives,

(3) the assignment of each grouping to a managerwith the authority (delegation) necessary to

supervise it, and

(4) the provision for coordination horizontally (on the

same or a similar organizational level) andvertically (for example, corporate headquarters,

division, and department) in the organization

structure

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Definition of Organization

Organization implies a formalized

intentional structure of roles or positions

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Formal and Informal Organization

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Formal and Informal Organization

Formal organization pertains to the

intentional structure of roles in a

formally organized enterprise

The informal organization is a network

of interpersonal relationships that arisewhen people associate with each other

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What is a Department?

The department designates a distinct

area, division, or branch of an

organization over which a manager hasauthority for the performance of

specified activities

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Organization with Narrow Spans

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Organization with Wide Spans

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What is the Principle of the

Span of Management? The principle of the span of

management states that there is a limit

to the number of subordinates a

manager can effectively supervise, but

the exact number will depend on the

impact of underlying factors

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What Determines an Effective Span of

Management?

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The Steps in the Organizing Process:

1. Establishing enterprise objectives

2. Formulating supporting objectives, policies, and plans

3. Identifying, analyzing, and classifying the activities

necessary to accomplish these

4. Grouping these activities in light of the human andmaterial resources available and the best way,

under the circumstances, of using them

5. Delegating to the head of each group the authority

necessary to perform the activities

6. Tying the groups together horizontally and vertically,

through authority relationships and information flows

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ORGANIZATIONAL STRUCTURE:

DEPARTMENTATION

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After studying this chapter, you should understand:

1. The basic patterns of traditionaldepartmentation, their advantages anddisadvantages

2. Matrix organizations

3. Strategic business units (SBUs)

4.The virtual organization

5. That there is no single best pattern of

departmentation.

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Departmentation

By Enterprise

Function

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Departmentation by Enterprise

Function There is no generally accepted terminology: A

manufacturing enterprise employs the terms

"production," "sales," and "finance"; a wholesaler is

concerned with such activities as "buying," "selling,"and "finance"; and a railroad is involved with

"operations," "traffic," and "finance"

Functional departmentation is the most widely

employed basis for organizing activities and ispresent in almost every enterprise at some level in

the organization structure

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Departmentation by Territory or Geography

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Departmentation by Territory or

Geography Departmentation based by territory is

rather common in enterprises that

operate over wide geographic areas The advantages and disadvantages of

departmentation by territory

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Departmentation by Customer Group

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Departmentation

by Product

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Matrix Organization

Matrix Organization is the combining

of functional and project or product

patterns of departmentation in the sameorganization structure

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Matrix Organization

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Guidelines for Making Matrix

Management Effective

1. Define the objectives of the project or task

2. Clarify the roles, authority, and responsibilities of managersand team members

3. Ensure that influence is based on knowledge and

information, rather than on rank4. Balance the power of functional and project managers.

5. Select an experienced manager for the project who canprovide leadership

6. Undertake organization and team development

7. Install appropriate cost, time, and quality controls that reportdeviations from standards in a timely manner

8. Reward project managers and team members fairly

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Strategic Business Units (SBUs)

Strategic Business Units are distinct

little businesses set up as units in a

larger company to ensure that a certainproduct or product line is promoted and

handled as though it were an

independent business

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Strategic Business Units (SBUs)

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Choosing The Pattern Of Departmentation

There is no one best way of departmentizingthat is applicable to all organizations and allsituations

Managers must determine what is best by

looking at the situation they face the jobs to be done and the way they should be

done,

the people involved and their personalities,

the technology employed in the department, the users being served, and

other internal and external environmental factorsin the situation

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Line/Staff Authority,

Empowerment, andDecentralization

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After studying this chapter, you should understand:

1. The nature of authority, power, and empowerment.2. The differences between line and staff, realizing

their nature as relationships rather than positions or

people

3. The nature and use of functional authority as amixture of line and staff.

3. Centralization, decentralization, and delegation of

authority.4. The importance of obtaining balance in the

centralization and decentralization of authority.

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Authority and Power

Poweris the ability of individuals or

groups to induce or influence the beliefs

or actions of other persons or groups

Authority is the right in a position to

exercise discretion in making decisionsaffecting others

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Different Bases of Power

Legitimate power normally arises from

position and derives from our cultural system

of rights, obligations, and duties whereby a

"position" is accepted by people as being"legitimate"

Expert power is the power of knowledge

Referent power is influence that people or

groups may exercise because people believe

in them and their ideas

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Different Bases of Power- continued

Reward power is the power to grant or

withhold rewards such as high grades

by a university professorCoercive power is closely related to

reward power and normally arising from

legitimate power, it is the power topunish

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What is Empowerment?

Empowerment means that employees,

managers, or teams at all levels in the

organization have the power to makedecisions without asking their superiors

for permission

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Scalar Principle in Organization

The clearer the line of authority from the

ultimate management position in an

enterprise to every subordinate position,the clearer will be the responsibility for

decision making and the more effective

will be organization communication

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Line, Staff, and Functional Authority

Line authority is the relationship in which a

superior exercises direct supervision over a

subordinate

Staff relationship is advisory Functional authority is the right that is

delegated to an individual or a department to

control specified processes, practices,

policies, or other matters relating to activities

undertaken by persons in other departments

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Decentralization of Authority

Decentralization is the tendency to

disperse decision-making authority in an

organized structure

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Different Kinds of Centralization

The term "centralization" has several meanings:1. Centralization of performance pertains to geographic

concentration; it characterizes, for example, acompany operating in a single location

2 Departmental centralization refers to concentration ofspecialized activities, generally in one department.For example, maintenance for a whole plant may becarried out by a single department

3. Centralization as an aspect of management is the

tendency to restrict delegation of decision making. Ahigh degree of authority is held at or near the top bymanagers in the organizational hierarchy

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The process of delegation involves:

determining the results expected from aposition,

assigning tasks to the position,

delegating authority for accomplishingthese tasks, and

holding the person in that positionresponsible for the accomplishment ofthe tasks

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Guides for Overcoming Weak Delegation

1. Define assignments and delegateauthority in light of results expected

2. Select the person in light of the job tobe done

3. Maintain open lines of communication

4. situations

4. Establish proper controls

5. Reward effective delegation andsuccessful assumption of authority

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Organization chart

Indicates how departments are tied

together along principle lines of

authority Advantages & limitations

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