ORGANIZING

INTRODUCTION

• Organizing is a very important managerial function

• If planning focuses on deciding what to do, organizing focuses on how to do.

• Thus after the manager has set goals and worked out a plan to accomplish these goals, the next step is to organize people and allocate resources to carry out goals.

Definitions

• According to Stephen P. Robbins and Marry Coulter-

• Organizing is determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom and where decisions are to be made

• In a nutshell, organizing refers to the grouping of activities and resources in a logical fashion.

Benefits of Organizing

• Helps individual develop a clear picture of the tasks he or she is expected to do

• Supports planning and control activities by establising accountability and an appropriate line of authority.

• Creats channel of communication and supports decision making and control

• Helps maintain logical flow of work activities

• Use of resources efficiently and avoid conflict and duplication of work

• Coordinates activities that are diverse in nature and helps build harmonious relationship among members

Organizational Roles

• Formal and Informal

• Formal Organization –It is a group of people working together cooperatively under authority, towards goals that mutually benefit the participant and the organization.

• Informal organization-

• It is a network of personal and social relations not established or required by the formal organization but arising spontaneously as people associate with one another.

Difference between formal and informal

Formal Orgn Basis of Comparison

Informal Orgn

Official General Nature Unofficial

Authority & Responsibility

Major Concepts Power politics

Position Primary focus Person

Delegated by management

Source of leader power

Given by group

Rules Guidelines for behaviour

Norms

Rewards and penalties

Sources of control sanctions

George Homans Model

• To study the total organization ( which includes formal and informal) George Homans developed a model based on three concepts-

• Activities : includes all that an individual actually does

• Interactions: refers to an individual’s personal and social relationships with others

• sentiments: refers to an individual emotional reaction to various organizational issues

In a formal organization the manager establishes the relationships between his subordinates, asks them to follow orders, directs them to perform tasks in a specifies manner and work as a team.

The subordinates are expected to possess certain sentiments about the organization, manager and work.

• In informal organization, relationship develop spontaneously.

• Example – people having lunch together in the organization

• There is no official chain of command, power is determined not by management but by one’s relations with other members.

DEPARTMENTATION

• Departmentation means group of activities and employees into departments.

• Process of Departmentation:Identification of tasks or dutiesAnalysis of details of each taskDescription of the functionsSeparate specialist heads and providing them with suitable staff

Bases of Departmentation

• BASES OF DEPARTMENTATION

1) DEPARTMENTATION BY SIMPLE NUMBERS

2) DEPARTMENTATION BY TIME

3) DEPARTMENTATION BY ENTERPRISE FUNCTION

4) DEPARTMENTATION BY TERRITORY

5) DEPARTMENTATION BY PRODUCT

• Customer departmentation

• MARKET ORIENTED DEPARTMENTATION

• DEPARTMENTATION BY PROCESS OR EQUIPMENT

• SERVICE DEPARTMENTATION

DEPARTMENTATION BY NUMBERS

• In this method , a certain number of persons who are to perform the same duties are kept in one department under supervision of one person

• Irrespective of what they do, where they do, and what they work with

• It is based only on the number of people involved in it.

Decline of departmentation by simple numbers

1) Technology has become more sohisticated and demands for more specialized and diverse skills have increased.

Ex: in US agriculture was considered to be domain of labourers but due to specialised farming operations use of manual labour is decreasing.

2) The groups comprising of specialized personnel are generally much more efficient than those groups which have been formed on the basis of numbers.

3) The most prominent cause for decline is that it is useful only at the lowest level of the organization structure.

Departmentation by Time

• In some organization that work round the clock (like railways, post &telegraph offices , hospitals etc) departmentation is based on time.

• The use of shifts is common in such organizations as they may be affected by economic, technological or other factors.

• Normal 8 hrs workday may not be sufficient. For ex-Hospitals, fire Department

Departmentation by Time

Vice PresidentProduction

Day Shift Evening shift Night Shift

Advantages

• Helps in efficient utilization of manpower and other resources

• Helps in rendering services to those who needs it at any time

• Facilitates the use of processes without interruption- continuous cycle

• Expensive capital can be efficiently utilized

-same machinery can be used in shifts also

• Convenient for some people to work in nights – ex- students who have classes in the mornings

• DISADVANTAGES

• Can be lack of supervision in the night shifts

• Difficxult for individual to shift from night to day and vice versa

• Coordination and communication may become a problem-ex- employees working in night shift may not clean up or grease the machinery to be used in the day shift.

• Employees may postpone their work to get paid for overtime work.

Departmentation by process or equipment

• This type is seen in manufacturing organizations

• This form of departmentation brings together people and material to carry out a particular operation.

• Ex in paint or electroplating process grouping, oil and textile industry, in electronic data processing department.

• Benefits of specialization and optimum use of the resources and the equipment.

• This is beneficial when the equipment or machinery requires special operating skills.

• The basic purpose of the departmentation is to get economic benefits. Machinery /equipment related to a particular activity may be installed in one department and arranged in such a way that makes the series of operations feasable and economic.

Disadvantages

• Process Departmentation hinders the coordination of various functions due to the limitations that arise from specialisation

• This form of departmentation results in conflicts between different managers at diff levels on matters such as allocation of funds, providing facilities to different processes.

Process or Equipment Departmentation

President

Manager(Engg) Manager(Mktg) Manager(manufactg)

General Foremen

Vice president

Functional Departmentation:

• This is the simplest form of departmentation when grouping of departments is done on the basis of functions such as production finance marketing sales purchase and personnel etc, it is known as functional departmentation. Further sub divisions of the functions may be formed like marketing can be divided in to advertisement sales and after sales service. So we can classify functions into two parts.

•         Basic functions i.e. Production Marketing Finance and Personnel  

•   Secondary Functions: - These are further parts of basic functions according to the organizational needs or operations like Production: - Product planning, R&D, Quality control and material handling

•         Functional departmentation is useful where there is production of single product or similar kind of product, for example TV Computer monitor or TFT.

• Advantages:

• Advantage of specialization

• Easy control over functions

• Pinpointing training needs of manager

• It is very simple process of grouping activities.

• Disadvantages:

• Lack of responsibility for the end result

• Overspecialization or lack of general management

• It leads to increase conflicts and coordination problems among departments.

Departmentation by Product

• When grouping of activities and departments formed are given name on the basis of products manufactured in an organization, it is called products departmentation. It is applied where there is a large range of products are manufactured. When there are several product lines and each product line consists of a variety of items, functional classification fails to give balanced emphasis on each product.

• Apart form this use; product or services may be made the basis of major divisions by a departmental store, a banking concern and an insurance company. Again, manufacturing an marketing departments may subdivide their activities on the basis of products.

• Advantages ·         It ensures better customer service·         Unprofitable products may be easily

determined·         It assists in development of all

around managerial talent·         Makes control effective·         It is flexible and new product line

can be added easily.

• Disadvantages

• ·          It is expensive as duplication of service functions occurs in various product divisions

• ·          Customers and dealers have to deal with different persons for complaint and information of different products.

Departmentation by Territories:

• Like the products basis, geographical regions are adopted for main division as well as for subdivision purposes. When activities of an organization are physically dispersed in different locations territorial departmentation is adopted.

• Units that are located at different areas are made so many self-contained divisions of the organization. Marketing activities are very often subdivided on the basis of geographical areas. This form of departmentation can be useful where business is on national or international level. For eg. Indian railways, insurance company use territorial departmentation .

• For example, Merck, a major pharmaceutical company, has its domestic sales departmentalized by regions such as Northeast, Southeast, Midwest, Southwest, and Northwest

• For example, the organization structure of Coca-Cola has reflected the company's operation in two broad geographic areas - the North American sector and the international sector, which includes the Pacific Rim, the European Community, Northeast Europe, Africa and Latin America groups.

By territories or geography

Geographical Structurefor Apple Computer

CEOSteve Jobs

AppleEurope

ApplePacific

France

AppleMiddle East

Asia

Japan

Australia

AppleAmerica

Canada

Latin America/Caribbean

USA

• Advantages

• ·         Help to cater to the needs of local people more satisfactorily.

• ·         It facilitates effective control

• ·         Assists in development of all-round managerial skills

• Disadvantages• ·          Communication problem between head

office and regional office due to lack of means of communication at some location

• ·          Coordination between various divisions may become difficult.

• ·          Distance between policy framers and executors

• ·          It leads to duplication of activities which may cost higher.

•  

Departmentation by Customers

• When departments are formed to cater different kind of customers it is known as customer departmentation this basis of classification is widely followed in subdividing activities of the marketing department. When the products are offered to market through various channels and outlets, it has the special merit of supplying goods in accordance with the peculiar needs of customers

• Customers may be classified according to buying capacity or nature like whole sale, retail and export or government or general public. Most departmental stores may attempt t reach customers preferring low price or higher price

• Advantages

•       It focused on customers who are ultimate suppliers of money

•       Better service to customer having different needs and tastes

•       Development in general managerial skills

• Disadvantages • ·          Sales being the exclusive field of its

application, co-ordination may appear difficult between sales function and other enterprise functions.

• ·          Specialized sales staff may become idle with the downward movement of sales to any specified group of customers.

•  

By Product

• Departmentalization by product assembles all functions needed to make and market a particular product are placed under one executive. For instance, major department stores are structured around product groups such as home accessories, appliances, women's clothing, men's clothing, and children's clothing.

• Also, Product departmentalization - Grouping activities by product line .

• Tasks can also be grouped according to a specific product or service, thus placing all activities related to the product or the service under one manager. Each major product area in the corporation is under the authority of a senior manager who is specialist in, and is responsible for, everything related to the product line. LA Gear is an example of company that uses product departmentalization. Its structure is based on its varied product lines which include women's footwear, children's footwear and men's footwear.

President

VP (Fuels)VP

(Lubricants & Waxes)VP

(chemicals)

Marketing

Planning

Supply & distribution

Manufacturing

Departmentalization by Product

Product Design

MATRIX ORGANIZATION

• A matrix organization is one where functional leaders are responsible for more than one area. Employees report to both their immediate manager and a cross function leader.

• For example, all engineers may be in one engineering department and report to an engineering manager, but these same engineers may be assigned to different projects and report to a project manager while working on that project. Therefore, each engineer may have to work under several managers to get their job done.

MATRIX ORGANIZATION

The Matrix Structure Under

graduate

Master’s

Ph.D. Research

Executive programs

Community service programs

Accounting

Administrative Studies

Economics

Finance

Marketing

Academic departments

Programs

Matrix Structure for a College of Business Administration

SPAN OF MANAGEMENT

• Also known as span of control, is a very important concept of organizing function of management. It refers to the number of subordinates that can be handled effectively by a superior in an organization. It signifies how the relations are planned between superior and subordinates in an organization.

• Span of management is generally categorized under two heads- Narrow span (tall) and Wide( flat) span. Narrow Span of management means a single manager or supervisor oversees few subordinates. This gives rise to a tall organizational structure.

• A wide span of management means a single manager or supervisor oversees a large number of subordinates. This gives rise to a flat organizational structure.There is an inverse relation between the span of management and the number of hierarchical levels in an organization, i.e., narrow the span of management , greater the number of levels in an ORGANIZATION.

• Narrow span of management is more costly compared to wide span of management as there are larger number of superiors/ managers and thus there is greater communication issues too between various management levels.

• In case of narrow span of management, there are comparatively more growth opportunities for a subordinate as the number of levels is more

• The more efficient and organized the managers are in performing their tasks, the better it is to have wide span of management for such organization .

• The less capable, motivated and confident the employees are, the better it is to have a narrow span of management so that the managers can spend time with them and supervise them well .

• There is more flexibility, quick decision making, effective communication between top level and low level management,and improved customer interaction in case of wide span of management . Technological advancement such as mobile phones, mails, etc. makes it feasible for superiors to widen their span of management as there is more effective communication.

Tall vs. Flat StructureTall vs. Flat Structure

Factors Determining Effective Span• The principle of 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.

• An optimal/ideal span of control according to the modern authors is fifteen to twenty subordinates per manager, while according to the traditional authors the ideal number is six subordinates per manager.

• But actually, an ideal span of control depends upon the nature of an organization, skills and capabilities of manager, the employees skills and abilities, the nature of job, the degree of interaction required between superior and subordinates

Trained Subordinates: Well trained subordiantes perform their tasks efficiently without requiring much guidance from their superior . Thus well trained subordinates reduce the number contacts needed and save the manager’s time. For such employees the manager only needs to provide broad guidelines for a particular task and he can therefore manage a large number of subordinates.

Clarity of delegation of authority: A well trained subordinate can perform a task withou taking much of manager’s time, provided the manager delegates authority clearly. On the other hand , if the task is not clearly defined or if the subordinate does not have sufficient authority to perform the task, the manager may have to spend a considerable time supervising the subordinate’s efforts.

Clarity of plans: Much of what a subordinate is expected to do depends on the plans that are to be implemented. Therefore plans should be well defined, workable and the authority required to implement them should be appropriately delegated.

Use of objective standard: Managers should get adequate feedback from their subordinates to find out if the subordinates have understood the plans and are following them.This feedback may be obtained either by personal observation or through objective standards. Well designed objective standards show if there has been any deviation from plans.

Rate of Change- Changes occur more rapidly in certain organizations than in others. The rate at which change takes place in an organization determines the degree to which policies can be formulated as well as stability can be achieved.

Communication Techniques:The span of management is also influenced by the effectiveness of the communication techniques used. If the managers had to convey every plan, instruction and order personally to subordinates , they would have no time to do their own work. Therefore some managers use administrative staff or assistants to communicate with key subordinate.

Amount of personal contact needed: In many situations, face to face meetings are essential. This type of contact helps clarify the doubts of subordinates, encourages them to share their ideas with their superiors and boosts their morale.

Use of Staff assistance: Managers can manage a larger number of subordinates by delegating a certain amount of work to staff assistants, who gather information and communicate orders and instructions to the subordinates. This process enables managers to save time and allows them to widen their span of control.

• Supervision by others:• Subordinates are often supervised by people

other than their immediate superior. This trend is increasingly gaining importance as it reduces the burden on the immediate superior. This trend is increasingly gaining importance as it reduces the burden on the immediate superior and helps increase the superior’s span of control.

• Other Factors :There are many other factors that influence the span of

management : The more competent a manager, the larger the number

of subordinates that he can manage. Complex tasks comprise a variety of activities and

require close supervision while simple tasks need lesser supervision and hence , allow a wider span of management.

The willingness of subordinates to shoulder responsibility and take reasonable risks facilities a wide span of control.

If the manager has mature subordinates, he may delegate more authority and thus widen the span of management.

• Line-and-Staff Organization