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MANAGEMENT Meeting and Exceeding Customer Expectations EIGHTH EDITION. Organizing Principles. Prepared by Deborah Baker Texas Christian University. learning objectives. Explain the relationship between planning and organizing Explain the importance of the organizing process
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MANAGEMENT Meeting and Exceeding Customer Expectations EIGHTH EDITION Organizing Principles Prepared by Deborah Baker Texas Christian University
learning objectives • Explain the relationship between planning and organizing • Explain the importance of the organizing process • List and discuss the five steps in the organizing process • Describe and give an example of the four approaches to departmentalization • Define authority, and explain how line, staff, and functional authority differ
learning objectives (continued) • Explain the concept of power and its sources • Discuss the following major organizing concepts and how they influence organizing decisions • Explain the term “informal organization” • Compare the informal organization to the formal organization • Unity of direction • Chain of command • Line and staff departments • Unity of command • Delegation • Responsibility • Accountability • Span of control • Centralization and decentralization
Organizing Process Organizing The management function that establishes relationships between activity and authority • Governed by plans that state where the organization is going • Organization must be built or modified to ensure those plans are executed • Resources must be concentrated in a unified way 1
Downsizing Downsizing Also known as rightsizing, it calls for shrinking both the size of the company and the number of employees 1
Benefits of Organizing 1. It clarifies the work environment 2. It creates a coordinated environment 3. It achieves the principles of unity of direction 4. It establishes the chain of command 2
Organizing Concepts Unity of Direction The establishment of one authority figure for each designated task of the organization The unbroken line of reporting relationships from the bottom to the top of the organization Chain ofCommand 7
Five-Step Organizing Process 1. Reviewing plans and goals 2. Determining work activities 3. Classifying and grouping activities 4. Assigning work and delegating authority 5. Designing a hierarchy of relationships 3
Specialization of Labor Specializationof Labor Division of labor Breaks a potentially complex job down into simpler tasks or activities 3
Specialization of Labor High Specialization Efficiency High Low Job Satisfaction Low High Low 3 Each employee completes a few basic operations, such as assembling the VCR frame. Each employee assembles one component of a VCR. Each employee assembles a complete VCR.
Advantages of Work Specialization 3 • Work can be performed more efficiently • Employees gain skill and expertise • Facilitates the process of employee selection • Decreases training requirements • Allows managers to supervise more employees
Disadvantages of Work Specialization 3 • Jobs can become too simplified • Employees become bored and tired • safety problems and accident rates increase • absenteeism rises • quality of work may suffer
Classifying and Grouping Activities • Examine each activity to determine its general nature • Group the activities into these related areas • Establish the basic department design for the organizational structure 4 The Principle of Functional Similarity Simultaneous
Departmentalization Functional Based on specialized activities of the business Geographical Based on territory Product Based on product activities Customer Based on the needs of specific customer groups 4
Departmentalization Examples • Finance • Production • Marketing • Human Resources } Functional } • Southern Region • Northern Region Geographical • Helicopter Division • Power Systems Division • Aircraft Engine Division • Elevator Products Division } Product } • Pharmaceutical • Professional • Final customer Customer 4
Horizontal Structuring 4 Important Effects • It defines the working relationships between operating departments • It makes the final decision on the span of control of each manager
Horizontal Structuring 4 Span of Control The number of subordinates under the direction of a manager OrganizationChart The complete organizational structure shown visually
Organization Chart 4 • Who reports to whom • How many subordinates work for each manager • The channels of official communication • How the company is departmentalized • The work being done in each position • The hierarchy of decision making • The types of authority relationships
Major Organizational Concepts Authority Centralization / Decentralization Delegation Span ofControl Power 5
Authority 5 Formal and Legitimate Right of a Manager to: • Make decisions • Give orders • Allocate resources
Types of Authority LineAuthority FunctionalAuthority Staff Authority 5
Organizing Concepts LineDepartments The departments established to meet the major objectives of the business and directly influence the success (profitability) of a business The departments that provide assistance to the line departments and to each other, making money indirectly for the company through advice, service, and assistance StaffDepartments 7
Organizing Concepts Unity of Command The organizing principle that states that each person within an organization should take orders from and report to only one person 7
Power Legitimate Power The power possessed by managers and derived from the positions they occupy in the formal organization Reward Power The power that comes from the ability to promise or grant rewards Coercive Power The power dependent on fear of the negative results that may happen if one fails to comply Referent Power The power that is based on the kind of personality or charisma an individual has and how others perceive it Expert Power Influence due to abilities, skills, knowledge, or experience 6
Power 6
Organizing Concepts Delegation The downward transfer of formal authority from one person to another 7
Delegation Process Assignment of tasks Delegation of authority Acceptance of responsibility Creation of accountability 7
Organizing Concepts Responsibility Accountability The obligation to carry out one’s assigned duties to the best of one’s ability The need to answer to someone for your actions; it means accepting the consequences—either credit or blame—for these actions 7
Proper Spans of Control 7 The number of subordinates depends on… • The complexity and variety of the subordinates’ work • The ability of the manager • The ability and training of the subordinates • The supervisor’s willingness to delegate authority • The company’s philosophy for centralization or decentralization of decision making
Organizing Concepts Centralization Decentralization Focuses on systematically retaining authority in the hands of higher-level managers Focuses on systematically delegating authority throughout the organization to middle- and lower-level managers 7
Guidelines for Judging Decentralization 7 • The greater number of decisions made at the lower levels of management, the more the company is decentralized • The more important the decisions made at lower levels, the greater the decentralization • The more flexible the interpretation of company policy at lower levels, the greater the degree of decentralization • The more widely dispersed the operations of the company geographically, the greater the degree of decentralization • The less a subordinate has to refer to his/her manager prior to making a decision, the greater the decentralization
The Informal Organization Informal Organization A network of personal and social relationships that arise spontaneously as people associate with one another in a work environment 8
Informal and Formal Organizations Formal Organization Informal Organization • Official organization created by management • Primary area of emphasis is official organization positions • Leverage is provided by authority • Sources of authority: delegated by management • Functions with authority and responsibility • Behavior guidelines provided by rules, policies, and procedures • Sources of control over the individual are rewards and penalties 9 • Unofficial organization created by relationships • Primary area of emphasis is on people and their relationship • Leverage is provided by power • Source of power: given by group • Functions with power and politics • Behavior guidelines provided by group norms • Sources of control over the individual are positive or negative sanctions
Emergence of the Informal Organization 9 • Employees sometimes act differently than anticipated • Employees often interact with people other than those the formal organization specifies • Workers may adopt a whole set of beliefs and attitudes that differ from those expected by the organization • The groups of workers that form begin to display cohesion
Working with the Informal Organization 9 Steps a manager must take are: • Recognize that informal groups exist • Identify the roles members play within those groups • Use that information to work with the informal groups
