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1. Management – Concept
& Meaning
Organizing -
Designing Adaptive Organizations

2. 1. Assuring more efficient use of the
organization’s resources.
2. Improving employee understanding of
job duties and responsibilities.
3. Improving employee morale.
4. Providing a sense of direction for each of the
organization’s functional areas.
Organizing Function is Helpful By:
2

3. The term Organization can be used in 2 senses:
• Organizing as a process
• Organizational structure
• These are both complementary to each other.
• Betterment of one leads to the betterment other
3

4. Organization – process & structure
• As a process
organizing is the
continuous and
dynamic process
of creating
harmonious
authority &
responsibility
between
specialized units
4
Process
Structure
• Organization is a
network of
horizontal and
vertical authority
relationships
among the
members of a
group designed to
accomplish some
common objectives

5. To be discussed by students
• Nature & Characteristics of organization
• Purpose & Importance of organization
• Principles of organization
5

6. Steps in the process of organizing
6
Identification
of activities
Grouping of
activities
Assignment
of duties
Delegation of
authority
Fayol categorized
business activities into 6
categories : Technical,
commercial, financial,
security, accounting,
managerial
• Necessary for :
specialization,
coordination, control
• Activities may be
clubbed on bases of
functions, products,
territories, customers
etc
• Clear definition of
responsibility
• Avoid duplication of
work or overlapping
efforts
• Chain of command is
established

7. Important terms
7

8. Major Concerns in Organizing
• Division of Labor (Differentiation)
• Coordination (Integration)
In Reference to the Organizational Chart,
Organizing Involves:
• VERTICAL STRUCTURE
Coordination from Top to Bottom
• HORIZONTAL STRUCTURE
Departmentalization (Who works together?)
8

9. Work Specialization
• Degree to which tasks are subdivided into individual jobs
• A highly specialized job is narrow in scope
• Increases efficiency up to a point
• With extreme specialization, workers tend to become bored and
alienated
9

10. Authority
• Managers have authority because of the positions they
hold (not who they are)
• To be effective, it must be accepted by subordinates.
Responsibility
• Duty to perform the task an employee has been
assigned
• Authority should be commensurate with responsibility.
10

11. Delegation
• Process to transfer authority and responsibility to positions below
• Delegation does not reduce responsibility
• Benefits both the organization and the individual employee
11

12. Common Practice is to:
• CENTRALIZE (authority at top)
• Accounting
• Finance
• Human Resources Management
• Information Systems
• DECENTRALIZE (much delegation)
• Production
• Marketing
12

13. Span of Management
• Number of employees reporting to a supervisor
• Tradition has recommended a span of management of four to seven
subordinates
• What is best depends on the situation
13

14. Factors Affecting Span of Control
• Leadership style
• Latitude extended to subordinates in decision making
• Nature of interpersonal relationships inherent in
each situation
14

15. • Self-directed teams and the empowerment of
employees lessen the amount of direct control
supervisors have over their subordinates
15

16. Chain of Command
• The line of authority, shown in the organization chart, that
links all persons and shows who reports to whom.
CEO
VP Marketing VP Production VP Finance
16

17. CONCEPT OF
DEPARTMENTALIZATION
ORGANIZATIONAL STRUCTURE
17

18. Departmentalization
• Definition
• Need and importance
18

19. Departmentalization
Basis for grouping job positions into departments and departments into the total
organization.
• Internal Operations Oriented
• Functional
• Network (Virtual)
• Output Oriented
• Divisional
• Product
• Geographic
• Customer
• Team (Cluster)
• Combinations
• Hybrid (different types at different places in an org.)
• Matrix (different types at simultaneous at the same places in an org.) 19

20. Choosing a bases for Departmentation
• Specialization
• Coordination
• Economy
• Control
• Adequate attention
• Local conditions
• Human considerations
20

21. Functional Approach
Departments based on similar activities, skills and resource
use.
Advantages:
• Efficient use of resources
• Economies of Scale
• In-depth skill specialization
Disadvantages:
• Poor communication among
departments
• Slow response to external changes
• Loyalty more to function than
customer or the whole organization
21

22. Divisional Approach
• Departments are grouped together based on organizational outputs
(e.g., product, geography, customer)
• Functions (e.g., marketing) are split among the divisions
• Its advantages and disadvantages tend to be the opposite of those of
the functional approach
22

23. Divisions
Advantages:
• Quicker changes in an unstable
environment
• More in touch with customers
Disadvantages:
Duplication
• Competition for resources among
divisions
• More managers needed
Less professional specialization
23

24. Forms of Organizational Structures
• Determines the authority relationships among it employees
• Common structures:
• Line
• Line and staff
• Functional
• Product
• Committee
• Matrix
24

25. Is the oldest and simplest of structures.
Has direct authority flowing
vertically from the top.
Is generally found in small organizations
because support staff is needed once they
begin to grow.
Line Structure
25

26. Has line authority similar to line structure.
Staff employees assist the line function.
Specialized staff activities are added that
support line activities.
Line and Staff Structure
26

27. Line and Staff Organization
Purchasing
Supervisors
Foremen
Vice President
Production
Sales Manager Advertising
Vice President
Sales
Human Resources
Office Workers
Office Services
Vice President
Corp.Affairs
President
27

28. Line Employees
Staff Employees
Line employees are
directly
concerned with the
organization’s
primary objectives.
Staff employees support
the line employees.
28

29. Tends to parallel the departments in
many organizations.
Line managers have both line and
functional authority.
Most commonly found in small-and
medium-sized organizations. It tends to
centralize decision making at top levels
of the organization.
Functional Structure
29

30. Each major product is given division status.
Incorporates line and staff structure into
these divisions.
Each product tends to operate independently
of other divisions.
Company’s products provide a basis
for its structure.
Product Structure
30

31. Is often used in conjunction with line,
line and staff, and functional
structures.
Some committees perform
important managerial functions;
others are advisory.
Committee Structure
31

32. Is often used by organizations undertaking
complex projects.
Results in the formation of temporary
new units to accommodate the
undertaking of a new project.
Involves temporarily borrowing employees
from other areas of the organization and
assigning them to the new temporary unit.
Matrix Structure
32

33. Matrix Approach
• Functional and divisional chains of command simultaneously
• Violates the unity of command concept.
33

34. Matrix Structure - Why?
• To get the advantages of both Functional and Divisional Structures
• Sophisticated technology, fast-changing environment
• Diverse products and geographical areas
34

35. Disadvantages of Matrix
• Many meetings to coordinate activities
• High conflict between two sides of matrix
• Need for extensive human relations training
35

36. Team Approach
• Cross-functional teams (Clusters) consist of employees from various
functional departments
• Teams typically have more decision making power than previously
held by workers at their levels.
36

37. Team Approach
• Advantages
• Quicker response time
• Better morale
• Reduced administrative overhead
• Disadvantages
• Conflict
• Time and resources spent on meetings
37

38. Network (Virtual) Approach
• Organization divides major functions among separate companies
brokered by a small headquarters organization
• Somewhat like a functional organization.
38

39. Network Approach
• Advantages
• Increases competitiveness, especially of small firms
• Flexibility
• Reduced Costs
• Disadvantages
• No hands-on control
• Loyalty weakened.
39

40. Mechanistic vs. Organic Organizations
• Vertical vs. Horizontal Structural Dominance
• Rigid vs. Flexible
• Specialized Jobs vs. Unspecialized
• Boss Control vs. Self-Control
• Centralized Decisions vs. Decentralized
• Bureaucratic vs. Non-bureaucratic
40

41. Departmentalization Types
• (From most Mechanistic to most Organic)
• Functional
• Functional with integrators, cross-functional committees, etc.
• Matrix
• Divisional
• Team
41

42. When the Mechanistic (Vertical) Approach is
most Appropriate:
• External Environment is: Stable
• Growth and Innovation Goals are:
Few or Nonexistent (Internal Stability)
• The Organization’s Size is: Large
• The Technology is: Mass Production (or involving low-level
skills)
42

43. When is the Organic Approach most Appropriate:
• External Environment is: Unstable
• Growth and Innovation Goals are: Numerous
• Technology is:
Small Batch
Continuous Process
Flexible Manufacturing (Computer Assisted)
Service, especially professional service jobs.
43

44. Service Technology
• Tends to be more Organic (Horizontal) than manufacturing
• Employees have direct contact with customers
• Output of the firm is intangible
• Production and consumption are simultaneous
44

45. Vice President
Manufacturing
Vice President
Finance
Vice President
Sales
Project A
Manager
Project B
Manager
Matrix Structure
45

46. Centralization
Decentralization
Places related activities under
jurisdiction of one individual.
Places related activities under
jurisdiction of several
individuals throughout the
organization. 46

47. • Nature of Organization
• Greater the volume of work and
paper processing activities, the
more desirable centralization of
office activities becomes
• Two type of organizations have centralized
most of their office activities
• Insurance companies
• Financialcompanies
47
Factors That Determine Feasibility of Centralization

48. 1. Size of the organization.
2. Diversification of the organization
3. Conformity to standardized
processes.
4. Quality of personnel.
5. Distribution of operations.
6. Attitude of personnel.
48
Factors That Determine Feasibility of Centralization