PGPM Organisng

8/3/2019 PGPM Organisng

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Unit3

Organizing


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Organizing:The process of coordinating and

allocating a firms resources so that

the firm can carry out its plans andachieve its goals

(one of the four activities of management)


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What is Organizing?

Organizing

Theprocess of

determining:

The tasks to be done.

Who will do them.

How those tasks will be

managed and coordinated.


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The Process of Organizing


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Purposes of Organizing

Divides work to be done into specific jobs and

departments.

Assigns tasks and responsibilities associated with

individual jobs.

Coordinates diverse organizational tasks.

Clusters jobs into units.

Establishes relationships among individuals, groups, and

departments.

Establishes formal lines of authority.

Allocates and deploys organizational resources.


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Levels in Organisation


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Managerial Hierarchy:

the levels of management within

an organization; typically includes

top, middle, and supervisory levels.


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Managerial Pyramid

Top Management

Middle Management

Supervisory

Management

Power

Numb

erofEmploye

es


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Organization Types

1.Formal Org

2.Informal Org

3.Matrix Org4.Project Org

5.Virtual Org.


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Forms of Juridical Organizations

1.Sole trading proprietorship2.Partnerships

3.Joint stock companies with limited

liability4.Co-operatives

5.Societies and Trusts.


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Types of Organisation

Formal Prescribed structure of roles & relationships

Goals oriented towardsproductivity, growthetc

Hierarchical & bureaucratic

Emphasis on status differentials

Prescribed behaviour. Rewards for desired andpunishments for undesired behaviour.


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Advantages ofFormal Organisation:

Reduces conflicts among the workers

No overlapping of responsibilities

No shirking of responsibilities(No passing thebuck )

There is a sense ofsecurity

No scope for favoritism

Less dependent on one man.


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Disadvantage ofFormal Organisation

Formal organization may reduce thespirit ofinitiative

Sometime authority is used for thesake of

convenience of theemployee It does not consider thesentiments and values of

employees

Formal organization reduces thespeed of informal

communication. It can createproblem of communication.


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Informal Organisation

Natural and spontaneousstructure arising

from social tendencies

Goals centred around groupsatisfaction,affiliation etc

Shapeless and uncharitable

Based on friendship, common valuesetc. Unwritten norms of behaviour.


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Benefits of informal organisation

To its members Sense of belonging

Safety valve for emotional problems

Aid on the job

Breeding ground for innovation andoriginality

Important channel of communication

Social control

Check on authority.


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Benefits of informal organisation

ToManagement Selfpolicing

Fills in gaps in managers abilities

Gives the manager feedback about

employees and their work.


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Disadvantages ofInformal Organisation

Resistance to change

Organization objectives may be affected

RumourGroup-thinkphilosophy.


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Difference between formal and

informal organization

Formal It arises due to

delegation of authority

It gives importance toterms of authority andfunction

Rules, Rights, duties aregiven in writing

Authority flows fromupwards to downwards

Formal organisation isstable and permanent

Informal It arises due to social

interaction

It gives importance topeople and relationship

No written code ofconduct

No structured flow ofauthority

It is not permanent.


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Stakeholders in Organization

1.Customers

2.Society

3.Government

4.Owners & Shareholders

5.Employees

6.BusinessPartners.


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Defining Organizational Structure

Organizational Structure

The formal arrangement of jobs within anorganization.

Organizational Design

Aprocess involving decisions about six key elements:

Workspecialization

Departmentalization

Chain of command

Span of control

Centralization and decentralization

Formalization.


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FACTORSINFLUENCING ORGANIZATIONAL

STRUCTURES

1. SIZE OFSIZE OFTHE UNIT

2. JOB DESIGN

3. GROUPING OFACTIVITIES

4. SPAN OFCONTROL

5. DELEGATION OFAUTHORITY

6. UNITY OFCOMMAND.


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Organizational Structure

Work Specialization

The degree to which tasks in the organization aredivided into separate jobs with each step completed bya different person.

Overspecialization can result in human diseconomiesfrom boredom, fatigue, stress, poor quality, increasedabsenteeism, and higher turnover.


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Departmentalization::

the process of grouping jobs

together so that similar orassociated tasks and activities can

be coordinated.


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Departmentalization by Type

Functional

Grouping jobs by

functions performed

Product Grouping jobs by

product line

Geographical

Grouping jobs on the

basis of territory or

geography

Process

Grouping jobs on the

basis of product or

customer flow Customer

Grouping jobs by type of

customer and needs.


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Functional Departmentalization

Advantages

Efficiencies from putting together similar specialties and

people with common skills,knowledge, and orientations

Coordination within functional areaIn-depthspecialization

Disadvantages

Poor communication across functional areas

Limited view of organizational goals.


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Geographical Departmentalization

Advantages

More effective and efficient handling of specific

regional issues that arise

Serve needs of unique geographic markets better

Disadvantages

Duplication of functions

Can feel isolated from other organizational areas.


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Product Departmentalization

+ Allowsspecialization in particular products and services

+ Managers can becomeexperts in their industry

+ Closer to customers

Duplication of functions

Limited view of organizational goals.


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Process Departmentalization

+Moreefficient flow of work activities

Can only be used with certain types ofproducts.


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Customer Departmentalization

+ Customers needs and problems can be met by specialists

- Duplication of functions

- Limited view of organizational goals.


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Organization Structure(contd)

Chain ofCommand

The continuous line of authority that extends

from upper levels of an organization to the

lowest levels of the organization and clarifies

who reports to who.


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Authority

The rights inherent in a managerial position to tell

people what to do and to expect themtodoit.

Responsibility

The obligation or expectation to perform.

Unity ofCommand

The concept that a person should have one boss

and should report only to that person.


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Span ofControl The number ofemployees who can beeffectively

and efficiently supervised by a manager.

Width ofspan is affected by:

Skills and abilities of the manager

Employee characteristics

Characteristics of the work being done

Similarity of tasks

Complexity of tasks

Physical proximity ofsubordinates

Standardization of tasks.


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Contrasting Spans ofControl


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Centralization

The degree to which decision-making is concentrated at a

singlepoint in the organizations.

Organizations in which top managers make all the decisions and

lower-level employeessimply carry out those orders.

Decentralization

Organizations in which decision-making ispushed down

to the managers who are closest to the action.

EmployeeEmpowerment Increasing the decision-making authority (power) of

employees.


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Factors that Influence theAmount ofCentralization

More Centralization

Environment is stable.

Lower-level managers are not as capable or experienced at

making decisions as upper-level managers.

Lower-level managers do not want to have a say in

decisions.

Decisions are relatively minor.

Organization is facing a crisis or the risk of company failure.

Company is large.

Effective implementation of company strategies depends on

managers retaining say over what happens.


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Factors that Influence theAmount ofCentralization

More DecentralizationEnvironment is complex, uncertain.

Lower-level managers are capable and experienced at

making decisions.

Lower-level managers want a voice in decisions.

Decisions are significant.

Corporate culture is open to allowing managers to have a

say in what happens.

Company is geographically dispersed.

Effective implementation of company strategies depends on

managers having involvement and flexibility to make

decisions.


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Formalization

The degree to whichjobs within the organization

are standardized and the extent to which

employee behavior is guided by rules and

procedures.

Highly formalized jobs offer little discretion over what

is to be done.

Low formalization means fewer constraints on how

employees do their work.


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Organizational Design Decisions

Mechanistic Organization

A rigid and tightly

controlled structure

Highspecialization Rigid departmentalization

Narrow spans of control

High formalization

Limited informationnetwork(downward)

Low decision participation

Organic Organization

Highly flexible and adaptable

structure

Non-standardized jobs

Fluid team-based structure

Little direct supervision

Minimal formal rules

Open communication network

Empowered employees.


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Mechanistic versus Organic Organization

Highspecialization

Rigid departmentalization

Clear chain of command

Narrow spans of control

Centralization

High formalization

Cross-functional teams

Cross-hierarchical teams

Free flow of information

Widespans of control

Decentralization

Low formalization.


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Common Organizational Designs

Traditional Designs

Simplestructure

Low departmentalization, widespans of control,

centralized authority, little formalization

Functional structure

Departmentalization by function

Operations, finance,human resources, and product research

and development

Divisional structure

Composed ofseparate business units or divisions with

limited autonomy under the coordination and control

theparent corporation.


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Strengths andWeaknesses ofTraditional Organizational Designs


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Contemporary Organizational Designs

Team Structure

What it is: A structure in which the entire organization is made up of

work groups or teams.

Advantages: Employees are more involved and empowered. Reducedbarriers among functional areas.

Disadvantages: No clear chain of command. Pressure on teams to

perform.Matrix-Project Structure

What it is: A structure that assigns specialists from different

functional areas to work on projects but who return to

their areas when the project is completed. Project is a

structure in which employees continuously work on

projects. As one project is completed, employees moveon to the next project.

Advantages: Fluid and flexible design that can respond toenvironmental changes. Faster decision making.

Disadvantages: Complexity of assigning people to projects. Task and

personality conflicts.


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An Example of aMatrix Organization


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Contemporary Organizational Designs

Boundaryless Structure

What it is: A structure that is not defined by or limited to

artificial horizontal, vertical, or external

boundaries; includes virtual and network types of

organizations.

Advantages: Highly flexible and responsive. Draws on talentwherever its found..

Disadvantages: Lack of control. Communication difficulties.


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Removing External Boundaries

Virtual Organization An organization that consists of a small core of full-time

employees and that temporarily hires specialists to work

on opportunities that arise.

Network Organization

A small core organization that outsources its major

business functions (e.g., manufacturing) in order to

concentrate what it does best.

Modular Organization

A manufacturing organization that uses outside suppliers

to provide product components for its final assembly

operations.


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Organizational Designs (contd)

The Learning Organization

An organization that has developed the capacity to

continuously learn, adapt, and change through the

practice ofknowledge management by employees. Characteristics o f a learning organization:

An open team-based organization design that empowers

employees

Extensive and open information sharing

Leadership that provides a shared vision of the organizations

future, support and encouragement

A strong culture ofshared values, trust, openness, and a sense of

community.


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Delegation

DelegationThe process of transforming the

responsibility for a specific activity

or task to another member of the

organization, and

Empowering that individual to

accomplish the task effectively.


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TheProcess of Delegation

Decide which goals/tasks to delegate

Teach the department or organization mission.

Find a capable person.

Teach/train the person. Assign Responsibility

Refers to the employees obligation to complete theactivities that he or she has been assigned.

Grant Authority Authority is the right to marshal resources and make

decisions necessary to fulfill work responsibilities.


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TheProcess of Delegation (contd)

Establishing Accountability

Where there is accountability for

performance, employees understand that they

must justify their decisions and actions withregard to the tasks for which they have

assumed responsibility.


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Tips for Effective Delegation

Get over fear of losing control.

Set realistic, achievable objectives.

Let go of theeasy stuff and face the toughstuff.

Match theperson to the task.

Do it early.

y Provide training and resources needed.

y Set consistent standards for everyone.

y Give authority with the responsibility.

y Givespecific instructions.

y Identify key review points.

y Focus on results not how it is being done.

y Develop a way to trackprogress on delegated projects.

y P

raise achievement publicly.


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6 Levels of Delegation

1. Investigate and report back, you make thedecision.

2. Investigate and recommend action.

3. Investigate, plan and advise on plan, dont actuntil you say so.

4. Investigate, plan and take action unless you sayno.

5. Investigate, take action, short reporting time-line.

6. Make assignment, doesnt come back to you.


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Benefits of Delegation

Leads to a more involved and empowered workforce.

Improved response time as a result of decisions and

information not needing to be passed up and down the

organization. Leads to better decision making.

Provides opportunity for employee to develop analytical and

problem solving skills.

Provides managers the opportunity to accomplish more

complicated, difficult, or important tasks.


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Reasons for Failing to Delegate

The time crunch.

Lack of confidence in the abilities of

subordinates.

Managers try to avoid the potential pitfalls of

dual accountability.

Managers may be insecure about their own

value to the organization.


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Learning to DelegateEffectively

1. Match the employee to the task.

2. Be organized and communicate clearly.

3. Transfer authority and accountability withthe task.

4. Choose the level o f delegation carefully.


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Degree of Delegation

Source:Adapted from M. E. Haynes, Delegation: Theres More to It Than Letting Someone Else Do It! 915. Reprinted, by permission of publisher,

from Supervisory Management, January 1980. 1980, American Management Association, New York. All rights reserved.

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PGPM Organisng