ORGANIZING FUNCTION

Introduction – It is concerned with activities

where managers define the roles, positions,
authority and responsibility relationships.
Such activities are driven by the goals
identified during the planning process.
The focus is on creating a structure for the
efficient execution of tasks to achieve goals.
Decisions on creating a structure is known as
organizational design.
CONT……
Structure as depicted through an
organizational chart, which specify:
– Reporting relationships
– Formal communication channels,
– How actions of individuals are linked
together.
Without a structure there will be confusion,
loss of efficiency and limited effectiveness
CONT…….
Structure is one of the most important
components of a company
Adopting the right structure reflects the
company’s values, and offers stability.
Organizations must be designed to reflect
their strategy to achieve a competitive
advantage in the future.
 DEFINITION
A process of:
– Arranging work relationships to accomplish
organizational goals
– Establishing authority relationships among jobs,
persons and groups to work together efficiently.
– Dividing work into sections and departments
– Assigning people, resources, and authority to
achieve organizational goals
 IMPORTANCE OF ORGANIZING
– Divides work to be done into specific jobs and
departments
– Assigns tasks and responsibilities
– Coordinates diverse organizational tasks by
grouping jobs into departments/units
– Establishes relationships among individuals,
groups, and departments
– Establishes clear formal lines of authority
– Facilitates allocation and deployment of
resources
 DETERMINANTS OF STRUCTURE
 Before engaging in the organizing process, managers must
first evaluate the following factors:
– The environment: Rapid environmental changes calls for
a more flexible structure
– Strategy: Different strategies require the use of different
structures
– Technology: The more complex the technology the more
flexible the structure. Complexity is measured through:
– Task analyzability – The extent of procedures in a
job
– Task variety – The rate of changes in the a job
– Human Resources: Highly skilled workers need to work in
teams and they need a more flexible structure
 Managers must take into account all these factors when
designing the structure of the organization.
 PROCESS OF ORGANIZING
 It involves making decisions on six key elements
– Job design/Work Specialization
– Departmentalization
– Authority and responsibility
– Span of Control
– Line and staff Relations
– Coordination
 JOB DESIGN
 Process of identifying jobs and procedures to be
performed by employees in each position:
– It involves clarifying roles and procedures;
– Eliminating repetitive elements within and between
jobs
– Optimizing the workers' productivity.
 Main aim - optimize work processes, ensure the
right value is created and improve productivity.
 The basis of all job design is work specialization
that enhances effectiveness and efficiency.
 DEPARTMENTALIZATION
Once jobs have been designed, they have to
be classified or grouped into manageable and
coordinated units i.e.
– Grouping similar and related activities into units
or departments.
This process of dividing jobs into units and
departments is called departmentation.
The following bases/methods can be used to
group Jobs for effective coordination:
CONT..
 Functional department: used where people
working using similar skills, tools or techniques
to perform their specialized similar functions are
grouped together into departments such as
marketing, production, and finance.
 Product structure: Jobs are grouped according
to the type of product or service and a manager
is allocated. Extensively used in many retail and
manufacturing firms e.g. KBL, Unilever
CONT….
 Geographic structure: Jobs grouped based on
the area of a country or world served i.e.
– Jobs in one or nearby locations are grouped together
and allocated a manager e.g. Bank branches
Market/Customer structure: Jobs grouped
based on the type of customers served.
– Used where customers have heterogeneous
characteristics e.g. Retail and Corporate customers
 PRODUCT STRUCTURE
CE O
Corporation

Corporate
M anagers

W ashing M achine Lighting T elevision

Division Division Division
 GEOGRAPHIC STRUCTURE

CE O
Corporation

Corporate
M anagers

Northern W estern S outhern E astern

Region Region Region Region
 MARKET STRUCTURE

CE O
Corporation

Corporate
M anagers

Large Business S m all Business E ducational Individual

Custom ers Custom ers Institutions Custom ers
CONT….
Matrix structure: A temporary arrangement
based on grouping people by function and
product teams simultaneously i.e. employees
are simultaneously members of a functional
department and a project team
– Very flexible and can respond rapidly to change.
– Improves collaboration and flexibility.
– Encourages open communication.
– Helps companies (and teams) stay nimble.
CONT…..
– However each employee has two
bosses which can cause problems
• Lack of clarity around roles and
responsibilities.
• Potential for conflict between
functional and project managers.
• Slower decision-making process.
CONT…
Product Team Structure: There is no 2-
way reporting by employees.
– They are permanently assigned to the
team and empowered to bring a
product to market
– It’s designed to avoid the potential
problems of a matrix structure
 Matrix Structure
CEO

Functional
Managers

Sales Design Production

Product
Team Managers

team A

Product
team B
Product Team
Product
team C

= two boss employee

Product Team Structure
CEO
Functional
Managers

Sales Design Production

Manufacturing Manufacturing Manufacturing

= Product Team Manager = Team member

CONT….
Hybrid Structures: This is where
organizations can have structures
that may consist of functional,
product, geographic, Market
structures etc.
AUTHORITY AND RESPONSIBILITY

Process of giving employees appropriate

authority to accomplish the job tasks i.e.
management of authority and responsibility
Authority: Power vested in the manager to
make decisions and use resources
– At the level of individual manager and his
subordinates it refers to delegation.
– At the level of the total organization it
refers to centralization or
decentralization
CONT…
Delegation - The act of managers
assigning formal authority and granting
the necessary responsibility for
completion of specific activities to
subordinates
– Delegation of authority is not abdication of
responsibility by the delegating manager.
Responsibility is never delegated as it
remains with the delegating manager.
CONT……
 Delegation Process
– Assign tasks/duties: Manager assigns the
subordinate, then instructs him/her with those
tasks
– Delegation of authority: For subordinate to
complete the tasks, the manager needs to
delegate authority
– Acceptance of responsibility/obligation: For
subordinate to carry the assigned duties to the
best of his ability, but the manager is still
responsible
– Creation of accountability; A subordinate
accepting the consequences of his/her actions
CONT……
Barriers to effective delegation
– Perceived threat
– Organization culture – A conservative culture
restricts delegation
– Poor employee relationships
– Fear of making mistakes by subordinates
– Unwillingness by managers to give out authority
– Lack of skills by the manager
– Manager’s negative attitude towards employees
CONT…..
Guidelines towards effective delegation
– Define the results expected
– Clearly state the person in charge
– Develop a willingness to delegate
– Authority and responsibility to be
commensurate i.e. parity of authority and
responsibility
– A supportive climate
CONT..
– Modify the authority due to environmental
constraints
– Follow the chain of command
– Free communication between superiors and
subordinates
– Provide control mechanisms so that authority is
not compromised
– Consider the capabilities of the subordinate in
terms of experience, background and intelligence
CONT…..
Importance of delegation
– Enables managers to perform higher strategic
decisions
– Develops subordinate skills
– Prompt action as no consultation is required
– Decisions are likely to be better as they are made
at close to where the problems are
– Improves morale among subordinates
 SPAN OF CONTROL
Refers to the number of subordinates
one manager can supervise directly.
Managers face certain limitations like:
– Time
– Personal capability
– Can only give attention to and concentrate
on a limited number of subjects at a time.
These limitations support the concept of
span of control
However, the optimum span varies
among individuals and organizations
CONT……

Factors affecting the span of control

– Ability of both subordinate and the boss
– Level of the superior in the organization
hierarchy
– Faith in the subordinate
– Nature and type of work
– Physical dispersion of employees
– Other non-supervisory duties of the manager
– The organization culture and management style
– Number of standardized procedures in place
CONT…..

 Impact of Span of Control

– It affects both group and overall
organization effectiveness.
– A manager supervising large number
of subordinates has a wide span of
control.
– Thus such an organization has few
levels of management, leading to a
flat structure.
CONT…
A manager supervising few subordinates
has a narrow span of control
Thus more layers of management are
added leading to a tall structure
Flat organizations are characterized by:
 Greater communication between lower and higher
management,
 Quick response to environmental changes
 Being closer to customers,
 Highly empowered employees
 Lower total managerial costs.
 LINE AND STAFF RELATIONS
 Line authority – It’s the direct relationship
between superiors and subordinates i.e.
managers who supervise operating
employees or other managers have line
authority.
– They give direct orders to subordinates, evaluate
their actions, and reward or punish them
 Line departments - Established to meet major
objectives of the business and directly
influence the success (profitability) of a
business e.g. Production, Marketing, Finance
e.t.c.
CONT..
 Staff authority - Authority to serve in an
advisory capacity i.e. managers who provide
advice or technical assistance
 This authority provides no basis for direct control
over subordinates or activities of other
departments
 They provide assistance to the line departments
 However, such managers hold line authority
within their departments e.g. legal, human
resource, computer services, and public relations.
 COORDINATION
 Integration of activities of separate departments for
people not to lose sight of their roles within the total
organization
 Level of coordination depends on the nature of the tasks
performed and degree of interdependence of people in
the various units performing them
 A high degree of coordination is beneficial for work
where:
– It’s non routine and unpredictable,
– Environmental factors keep changing and
– There is high level of interdependence
CONT…..
 Problems in Coordination
– Different units having their own views on goals
and how to pursue them (Accountants versus
Marketers)
– Differences in Time Orientation – (Production
Versus Marketing)
– Differences in Interpersonal Styles - Making fast
decisions versus group decisions
– Differences in Formality – e.g. Production
departments may need very specific standards of
performance, more general standards may be
required in the HRM departments
CONT……
 Achieving effective coordination - Communication
as an information processing task is key to effective
coordination. This can be done using various
approaches/integrators:
– Use of basic management techniques like the chain of
command, rules and procedures
– Boundary Spanning - A permanent liaison between
departments
– Reducing the need for coordination like providing
additional resources
– Use of other integrating mechanisms e.g. Direct
Contact, Task Forces, Cross Functional Teams, Matrix
structures e.t.c.
 PRINCIPLES OF AN
ORGANIZATION STRUCTURE
 Unity of Objectives – Structure is effective if it
facilitates the contribution of individuals in the
attainment of organizational objectives
 Efficiency – Structure is effective if it facilitates
accomplishment of objectives by people with
minimum possible costs
 Scalar Chain – Best results are obtained when a
structure has a clear chain of command
 Adequacy of Authority – An effective structure is
where each manager is given sufficient authority in
the organization to achieve desired results
CONT....
 Responsibility for Results – Even if a superior
delegates adequate authority, structure should
show the level of his responsibility for their
results
 Accountability – Structure should indicate the
level of accountability to their superiors for
their results
 Division of Work – An effective structure shows
how work is divided and grouped in a logical
manner to eliminate duplication of effort
 CONCLUSION
An effective structure enables an
organization to be responsive to
changes in its environments.
Thus, managers must decide on
the best way to organize to create
an organizational architecture that
will allow them to make the best
use of organizational resources