MANAGEMENT THEORIES

& PRACTICE
(MBA 631)
3
re
tuc
Le

Organizing

Mekuria Abera (Asst. Pro)

January 2021
 Organizing
Organizing is the process of allocating and arranging the
resources of the company such as employee, facilities and
equipment, finance, to achieve the goals of the company.

5. Evaluate the
1. Determine the 3. Assign work to 4. Coordinate the results or
2. Group these
specific activities specific employees work of different organizing process
activities into a
needed to and provide groups and and make
logical sequence
implement resources required employees appropriate
adjustment

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 Organizing

Organizations, except for very small ones, are structured

into departments by:
• work groups, product lines,
• geographic location,
• customer groups, or
• the goods or services being produced.
 Organizational Structure
Organizational Structure
• Good management should be able to design an
organizational structure to ensure employees can
carry out the work assigned to them effectively.
• The use of an organization chart can also help to
visualize the relationships between levels of the
organizational structure.
Implications
• Show the activities of the organization by level.
• Highlight subdivisions of the organization.
• Identify different types of the work performed.
• Provide information on different management levels.
• Show the lines of authority in the organization and
the flow of communications within an organization.

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 Importance of Organizing

The organizing function is important because:

• Specialization is achieved through division of work.
E.g. by separating the works amongst cooking,
serving and janitorial etc.
• It clarifies the authority of each manager.
E.g. the restaurant manager report to the operation
manager of the company.
• It clarifies the duties and responsibilities of every job
position.
E.g. who take the orders, who cleans the tables.
• It facilitates effective administration through a clear
clarification of job positions and specification.

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 Organization Structure

Organizational structures are developed around the

following or combinations of the following:
• Functional structure (type of work)
• Product/service structure
• Geographic structure (location or territory)
• Customer structure ( Food items, clothing, etc.)
 Organizational Structure by Level
• The organizational structure is based on the level of
management.
• The line of authority moves directly from the top level
to the lowest level in a step-by-step manner i.e. Lower
level managers follow the orders from higher level
managers.
• The authority and responsibility at each level is
clearly defined.
Top-
management
Example: The general manager issues Middle-
order to various departmental management

managers. Thereafter, the departmental First-line

management

manager gives instructions to front line

managers.

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Organizational Structure …cont’d
The way that a company’s structure develops often falls
into a tall structure or a flat structure.
Tall structure
A structure that has more hierarchical levels of
management.
Flat structure
A structure that has fewer hierarchical levels of
management.
Tall Structure CEO
Flat Structure
CEO
Manager Manager

Manager Manager
Staff Staff Staff

Staff Staff Staff Staff Staff Staff Staff Staff Staff Staff

Staff Staff Staff

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Organizational Structure …cont’d
Large company requires taller organizational structure.
Because, as company grows, the number of management
levels increases and the structure grows taller since a
manager cannot supervise many immediate subordinates
at one time.
• It is not practical and feasible for a large company to
have a flat structure.
• Small company often requires a flat organizational
structure. It is because a tall structure will make a
small company to deal with greater bureaucracy and
salaries for middle management.

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Organizational Structure …cont’d
Organizational Authority
• The right to perform a task or give orders to
someone else.
• The organization authorizes the supervisor to carry
out certain tasks.
• The supervisor has the authority to act on the behalf
of the organization in matters of directing work and
hiring and disciplining employees.
Organizational Structure …cont’d
Organizational Authority
Authority is the right to perform or command. Staff with
authority is allowed to perform certain tasks and direct
subordinates to perform by delegating the authority.
• The position of individuals on an organization chart
indicates their relative amount of authority.
• The higher the position, the more the authority.
• Authority of the supervisor is legitimized by the
organization implying that the organization stands
behind the supervisor in his or her decisions.
• There are two main types of authority
can exist within an organization:
 Line authority
 Staff authority

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Organizational Structure …cont’d
• Line authority – consists of the right to make decisions
and to give orders to subordinates. It is the most
fundamental authority with an organization and it reflects
existing superior-subordinate relationships.
• Staff authority – consists of the right to advise or assist
those who possess line authority.
Example: Legal Counsel of a company.
• Functional Authority Right given by higher management
to specific staff personnel to give orders concerning an
area in which the staff personnel have expertise.
CEO
Line authority
Legal
Staff authority Counsel
Functional authority
CIO CFO COO

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 Power and Responsibility

Power:
• The ability to get others to act in a certain way.
• Power is the ability, as opposed to the right, to get
others to act in a certain way.
• Power may or may not include authority.
• Informal leaders often have the ability to influence
behavior in the absence of formal authority.
Responsibility
• The obligation to perform assigned tasks.
• The authority granted supervisors gives them a
certain amount of power.
 Power and Responsibility …cont’d

Supervisors:
• Supervisors may have authority, but may have
trouble getting others to act in the desired way.
• By accepting the position, supervisors are accepting
the responsibility to achieve the goals of the
organization.
• A supervisor’s success is dependent on his or her
ability to meet the organization’s objectives.
• The supervisor has the authority and responsibility
to accomplish the tasks and is held accountable for
the outcome.
 Departmentalization

A department is a work unit. It is a unique group of

resources that management has assigned to carry out a
particular task.

Thus, it is a group of:

• Resources
• Personnel
• Methods
• Equipment that carry out a particular task.
 Departmentalization by Function
To divide an organization into separate units according
to their key function performed in the firm.
E.g. Production, Marketing, Finance, etc.
Advantages
Easier to lead and control, Resources can be
allocated by departments
Disadvantages
Lack of communication between departments
Employees become narrow specialists

CEO

Production Marketing Finance Logistic Administration

department department department department department

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Departmentalization by Function

Advantages Disadvantages
Resource allocation Overspecialization
Better communication Departmental Barriers
within department

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 Departmentalization by Product

• Departments are formed according to the goods and

services a company offers.
Examples: fashion, leather, jewellery, accessories

CEO

Fashion Leather Jewellery Accessories

division division division division

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 Departmentalization by Location

Departments are formed according to geographic regions.

Examples:
Addis Ababa, Nazareth, Baherdar, Awassa, …

CEO/
National
Operation

Addis
Nazareth Baherdar Awassa
Ababa

1
 Departmentalization by
Product & Location

Advantages Disadvantages
Management Focus Wasting Resources
Better Service Competition

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 Steps for Organizing

1. Determine the objective

If you don’t know what you are trying to achieve, it
is difficult to plan steps to get there and measure
your success.
2. Determine the needed resources
An action plan requires the formation of a chart of
what, when, where, who, and how.
3. Group activities and assign duties
 Principles of Organization

The four principles of organization are:

1. Parity principle
2. Unity of command
3. Chain of command
4. Span of control
 Principles of Organization …Cont’d
1. Parity Principle
The principle that personnel who are given responsibility
must also be given enough authority to carry out that
responsibility.
• Unequal parity will result in ineffective supervision
2. Unity of Command
The principle that each employee should have only one
supervisor.

• When more than one person makes requests using

the same time frame, employees are unable to
determine what commands to follow.
 Principles of Organization …Cont’d
3. Chain of Command
The flow of authority in an organization from one level
of management to the next.
• Similar to unity of command in that each person
communicates with the person above or below
without skipping a link in the chain.
• Skipping a link going up the chain is referred to as
going over someone’s head.
4. Span of Control

The number of people the manager supervises.

• The greater the number, the greater the span of
control
 Delegating & Empowerment
1. Delegating
• Giving another person the authority and responsibility
to carry out a task.
• Since supervisor cannot accomplish all department’s
work, others must be assigned duties with the
authority and responsibility to accomplish the task.
2. Empowerment
• Delegation of broad decision-making authority and
responsibility.
3. Delegating Process
1. Decide what work to delegate
2. Assign the work
3. Create an obligation
4. Grant authority
5. Follow-up
Management Functions

Directing

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 Directing/ Leading

Directing/Leading involves how manager directs and

motivates employees to perform tasks in order to
achieve the company goals.

Leadership Styles

Autocratic
Democratic
Bureaucratic
Laissez-faire

2
 Autocratic Leadership
Classical style
• Manager retains power and decision-making authority.
• Make unilateral decision, dictate work methods.
• Orders are issued to be carried out, with no questions
allowed and no explanations given.
• It is best applied to situations where there is little time
for decision-making or where the leader is the most
knowledgeable person of the team.

2
 Democratic Leadership
Participative style
• Encourage employees to involve in decision making.
• Let employees determine the work methods and use
feedback as an opportunity for helpful coaching.
• Employees feel engaged in the process and are more
motivated and creative.
• It is best applied where staff require a great deal of
flexibility to complete the task or where the staff know
the job well and do not require too much instruction.

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 Bureaucratic Leadership

Procedure or Policy
• Everything must be done according to procedure or
policy.
• The company operates in a rational manner rather
than relying on the feelings of the managers.
• It is best applied to situation where employees are
working in dangerous environment that requires a
definite set of procedures to operate.

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 Laissez-faire Leadership

“Hands-off” Style

• Manager provides little direction and gives employees

freedom to make their own decision at work.
• This style can be effective where employees are highly
qualified in an area of expertise.

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 Directing/ Leading
Style Reason

Autocratic The employee knows little about the task

assigned but the manager is the most
knowledgeable person.
Democratic The team knows the job well and they can
complete their works automatically with
limited instruction given. Manager can allow
the team to participate in decision-making.
Laissez- Employees are highly qualified in an area of
faire expertise and manager can simply provide
little direction and gives employees freedom
to make their own decision at work.

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THANK YOU SO MUCH

Q&A
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