the basic elements of organizing copyright © houghton mifflin company. all rights reserved.11–1

The Basic Elements of Organizing

Copyright © Houghton Mifflin Company. All rights reserved. 11–1


The Elements Organizing• Organizing

– Deciding how to best group organizational activities and resources.

Here are the main elements we will cover:

• Job Design• Departmentalization• Chain of Command• Span of Management• Authority• Centralization vs. Decentralization• Tall vs. Flat Organizations


• Job Specialization (Division of Labor)

The degree to which the overall task of the organization is broken down and divided into smaller component parts.

– Benefits of Specialization• Workers can become proficient at a task.

• Transfer time between tasks is decreased.

• Specialized equipment can be more easily developed.

• Employee replacement becomes easier.

– Limitations of Specialization• boredom and dissatisfaction with mundane tasks.

• Anticipated benefits do not always occur.

Job Design--


Adam Smith’s Exampleof Job Specialization

Making a pin (nail) requires 18 tasks

1 worker doing all 18 tasks might make 20 pins (nails) a day.

20 workers = (20 x 20) = 400 pins______________________________

With specialization:

20 workers make 100,000 pins a day.1 worker = 5,000 pins

20 pins vs. 5,000 pins per worker


Alternatives to Specialization

• Job Rotation– Systematically moving employees from one job to

another in an attempt to reduce employee boredom.

• Job Enlargement– An increase in the total number of tasks workers

perform.

• Job Enrichment– Increasing both the number of tasks the worker

does and the control the worker has over the job.



Job Characteristics Approach: suggests jobs should be diagnosed and improved along 5 core dimensions.– Core Dimensions

• Skill variety—the number of tasks a person does in a job.• Task identity—the extent to which the worker does a

complete or identifiable portion of the total job.• Task significance—the perceived importance of the task.• Autonomy—the degree of control the worker has over

how the work is performed.• Feedback— the extent to which the worker knows how

well the job is being performed.



• Work Teams– An alternative to job specialization that allows the entire group to

design the work system it will use to perform an interrelated set of tasks.


Grouping Jobs: Departmentalization

• Departmentalization

– The process of grouping jobs according to some logical arrangement.

• Rationale for Departmentalization

– Organizational growth exceeds the owner-manager’s capacity to personally supervise all of the organization.

– Additional managers are employed and assigned specific employees to supervise.


Departmentalization (cont’d)• Functional Departmentalization

– Grouping jobs involving the same or similar activities.

• Product Departmentalization– Grouping activities around products or product

groups.

• Customer Departmentalization– Grouping activities to respond to and interact with

specific customers and customer groups.

• Location Departmentalization– The grouping of jobs on the basis of defined

geographic sites or areas.


Bases for Departmentalization


Reporting RelationshipsChain of CommandA clear and distinct line of authority among the positions in

an organization.

Span of Management (Span of Control)

The number of people who report to a particular manager. Determined by many factors:• Competence of manager and subordinate• Extent of Standardized Procedures• Degree of required interaction• Amount of non-supervisory work in manager’s job


Tall Versus Flat Organizations

Wide spans of management result in flat organizations which can improve communication and flexibility.


Distributing Authority

• Authority– Power that has been legitimized by the organization.

• Delegation– The process by which managers assign a portion of

their total workload to others.

• Reasons for Delegation– To enable the manager to get more work done by

utilizing the skills and talents of subordinates.– To foster development of subordinates by having

them participate in decision making and problem.


Decentralization and Centralization

• Decentralization– Systematically delegating power and authority

throughout the organization to middle- and lower-level managers.

• Centralization– Systematically retaining power and authority in the

hands of higher-level managers.

• Factors Determining Choice of Centralization– External environment’s complexity and uncertainty– History of the organization– Nature (cost and risk) of the decisions to be made.


The Nature of Organization Design

• Organization Design– The overall set of structural elements and the

relationships among those elements used to manage the total organization.

– A means to implement strategies and plans to achieve organizational goals.

• Organization Design Concepts– Organizations are not designed and then left intact.

– Organizations are in a continuous state of change.

– Designs for larger organizations are extremely complex and have many nuances and variations.


The Bureaucratic Model of Organization Design

• Bureaucratic Model (Max Weber)– A logical, rational, and efficient organization design

based on a legitimate and formal system of authority.– Characteristics

• A division of labor with each position filled by an expert.

• A consistent set of rules that ensure uniformity in task performance.

• A hierarchy of positions which creates a chain of command.

• Impersonal management; with the appropriate social distance between superiors and subordinates.

• Employment and advancement is based on technical expertise, and employees are protected from arbitrary dismissal.


Situational View of Organization Design

• Assumes that the optimal design depends on a set of relevant situational factors. Four Basic Factors:

1. Technology1. Unit or Small Batch2. Large-Batch or Mass Production3. Continuous-Process Technology

2. Environment1. Stable environments that remain constant over time.

» Mechanistic – similar to bureaucratic, most frequently found in stable environments

2. Unstable environments subject to uncertainty and rapid change» Organic – flexible and informal; usually found in unstable

and unpredictable environments

3. Size4. Organizational Life Cycle


Basic Forms of Organization Design

• Functional or U-form (Unitary) Design

– Organizational members and units are grouped into functional departments such as marketing and production.

– Coordination is required across all departments.

– Design approach resembles functional departmentalization in its advantages and disadvantages.


Functional or U-form Design for a Small Manufacturing Company


Basic Forms of Organization Design (cont’d)

• Conglomerate or H-form (Holding) Design– Organization consists of a set of unrelated

businesses with a general manager for each business.

– Holding-company design is similar to product departmentalization.

– Coordination is based on the allocation of resources across companies in the portfolio.

– Design has produced only average to weak financial performance; has been abandoned for other approaches.


Conglomerate (H-form) Design at Samsung



• Divisional or M-form (Multidivisional) Design– Multiple businesses in related areas operating within a

larger organizational framework.

– Results from a strategy of related diversification.

– Some activities are decentralized down to the divisional level; others are centralized at the corporate level.

– M-form design advantages are the opportunities for coordination and sharing of resources.

– Successful M-form organizations can out perform U-form and H-form organizations.


Multidivisional (M-form) Design at Limited Brands



• Matrix Design– Two overlapping bases of departmentalization:

• A set of product groups or temporary departments are superimposed across the functional departments.

– Employees in the matrix belong to their departments and the project team:

• A multiple command structure in which an employee reports to both departmental and project managers.

– A matrix design is useful when:• There is strong environmental pressure.• There are large amounts of information to be processed.• There is pressure for shared resources.


A Matrix Organization



• Hybrid Designs– Based on two or more common forms of

organization design—may have a mixture of related divisions and a single unrelated division.

– Most organizations use a modified form of organization design that permits them to have sufficient flexibility to make adjustments for strategic purposes.


Emerging Issues in Organization Design

• The Team Organization– Relies almost exclusively on project-type teams, with little

or no underlying functional hierarchy.• The Virtual Organization

– Has little or no format structure with few permanent employees, leased facilities, and outsourced basic support services.

– May conduct its business entirely on-line and exists only to meet for a specific and present need.

• The Learning Organization– Works to facilitate the lifelong learning and development of

its employees while transforming itself to respond to changing demands and needs.

the basic elements of organizing copyright © houghton mifflin company. all rights reserved.11–1

Documents

worker slide

specialization job rotation

total job

job enlargement

job enrichment

mundane tasks

specialization work

total number of tasks