ORGANIZING

PA 203
Anwerah Imam Jamel

I. Introduction

Organizing as the function of management that creates the organization’s structure.

When managers develop or change the organization’s structure, they’re engaging in
organization design. This process involves making decisions about how specialized jobs
should be, the rules to guide employees’ behaviors, and at what level decisions are to be
made. Although organization design decisions are typically made by top-level managers, it’s
important for everyone involved to understand the process. Because each of us works in
some type of organization structure, and we need to know how and why things get done. In
addition, given the changing environment and the need for organizations to adapt, you
should begin understanding what tomorrow’s structures may look like—they will be the
settings you’ll be working in. The basic concepts of organization design formulated by
management writers such as Henri Fayol and Max Weber offered structural principles for
managers to follow. Almost 80 years have passed since many of those principles were
originally proposed. Given that length of time and all the changes that have taken place,
you’d think that those principles would be mostly worthless today.
They still provide valuable insights into designing effective and efficient
organizations. Of course, we’ve also gained a great deal of knowledge over the years as to
their limitations. In the following sections, we discuss the six basic elements of
organizational structure: work specialization, departmentalization, authority and
responsibility, span of control, centralization versus decentralization, and formalization.
6 basic elements of organizational structure
 work specialization,

 departmentalization,

 authority and responsibility,

 span of control,

 centralization versus decentralization,

 and formalization.

1. WHAT IS WORK SPECIALIZATION?

- Dividing work activities into separate job tasks; also called division of labor. Work
specialization allows organizations to efficiently use the diversity of skills that
workers have. In most organizations, some tasks require highly developed
skills; others can be performed by employees with lower skill levels.
- Most managers today see work specialization as an important organizing
mechanism because it helps employees be more efficient.

2. WHAT IS DEPARTMENTALIZATION?
- Early management writers argued that after deciding what job tasks will be done
by whom, common work activities needed to be grouped back together so work
gets done in a coordinated and integrated way. How jobs are grouped together is
called departmentalization.
 2.1. There are five common forms of departmentalization

a. One of the most popular ways to group activities is by functions

performed, or functional departmentalization.
-Functional departmentalization can be used in all types of organizations.
b. Product departmentalization focuses attention on major product areas
in the corporation
c. Customer Departmentalization Grouping activities by customer
d. Geographic Departmentalization Grouping activities on the basis of
geography or territory
e. The final form of departmentalization is called Process
Departmentalization, which groups activities on the basis of work or customer
flow

CROSS-FUNCTIONAL TEAMS - which are teams made up of individuals from various

departments and that cross traditional departmental lines. These teams have been useful
especially as tasks have become more complex and diverse skills are needed to accomplish
those tasks.
3. WHAT ARE AUTHORITY AND RESPONSIBILITY?

- chain of command, the line of authority extending from upper organizational

levels to lower levels
Authority refers to the rights inherent in a managerial position to give orders and expect
the orders to be obeyed. Authority was a major concept discussed by the early management
writers as they viewed it as the glue that held an organization together.5 It was delegated
downward to lower-level managers, giving them certain rights while prescribing certain
limits within which to operate.
Responsibility An obligation to perform assigned duties. when employees are given rights,
they also assume a corresponding obligation to perform. And they should be held
accountable for their performance.
3.1. Two forms of authority:

1. line authority
o Line authority entitles a manager to direct the work of an employee. It is
the employer– employee authority relationship that extends from the top
of the organization to the lowest echelon, according to the chain of
command
2. staff authority
o staff authority functions to support, assist, advise, and generally reduce
some of their informational burdens.

3.2. what is unity of command?

o An employee who has to report to two or more bosses might have to

cope with conflicting demands or priorities.6 Accordingly, the early writers
 believed that each employee should report to only one manager, a term
called unity of command.
o Unity of command was logical when organizations were relatively simple.
Under some circumstances it is still sound advice and organizations
continue to adhere to it. But advances in technology, for instance, allow
access to organizational information that was once accessible only to top
managers.

3.3. HOW DOES TODAY’S VIEW OF AUTHORITY AND RESPONSIBILITY

DIFFER FROM THE HISTORICAL VIEW?
The early management writers were enamored of authority. They assumed
that the rights inherent in one’s formal position in an organization were the sole
source of influence, and they believed that managers were all-powerful. This
assumption might have been true 60 or even 30 years ago. Organizations were
simpler. Staff was less important. Managers were only minimally dependent on
technical specialists. Under such conditions, influence is the same as authority.
And the higher a manager’s position in the organization, the more influence he or
she had. However, those conditions no longer exist. Researchers and
practitioners of management now recognize that you don’t have to be a manager
to have power and that power is not perfectly correlated with one’s level in the
organization.
Authority is an important concept in organizations, but an exclusive focus on
authority produces a narrow, unrealistic view of influence. Today, we recognize
that authority is but one element in the larger concept of power.
3.4. HOW DO AUTHORITY AND POWER DIFFER?

o Authority is a right. Its legitimacy is based on an authority figure’s

position in the organization. Authority goes with the job.
o Authority is part of the larger concept of power.
o Power, on the other hand refers to an individual’s capacity to influence
decisions.
o
3.5. Types of Power

Coercive power Power based on fear.

Reward power Power based on the ability to distribute something that
others value.
Legitimate power Power based on one’s position in the formal
hierarchy.
Expert power Power based on one’s expertise, special skill, or
knowledge.
Referent power Power based on identification with a person who has
desirable resources or personal traits.
4. WHAT IS SPAN OF CONTROL?
 - The number of employees a manager can efficiently and effectively
supervise.
- refers to the number of subordinates under the manager’s direct control. As an
example, a manager with five direct reports has a span of control of five.
- Flat organizations have a ‘wide’ span of control and Tall organizations have
a ‘narrow’ span of control.  

5. HOW DO CENTRALIZATION AND DECENTRALIZATION DIFFER?

- Centralization is the degree to which decision making takes place at upper levels
of the organization.
- Decentralization is the degree to which lower-level managers provide input or
actually make decisions.

Centralization-decentralization is not an either-or concept. Rather, it’s a

matter of degree. What we mean is that no organization is completely centralized or
completely decentralized. Few, if any, organizations could effectively function if all
their decisions were made by a select few people (centralization) or if all decisions
were pushed down to the level closest to the problems (decentralization).

5.1. WHAT IS TODAY’S VIEW OF CENTRALIZATION/

DECENTRALIZATION?

o What works in one organization, however, won’t necessarily work in

another, so managers must determine the amount of decentralization for
each organization and work units within it. When managers empower
employees and delegate to them the authority to make decisions on those
things that affect their work and to change the way that they think about
work, that’s decentralization. Notice, however, that it doesn’t imply that
top-level managers no longer make decisions.

6. WHAT IS FORMALIZATION?

- Formalization refers to how standardized an organization’s jobs are and the

extent to which employee behavior is guided by rules and procedures.
- In highly formalized organizations, there are explicit job descriptions, numerous
organizational rules, and clearly defined procedures covering work processes.
- Employees have little discretion over what’s done when it’s done, and how it’s
done. However, where formalization is low, employees have more discretion in
how they do their work. Early management writers expected organizations to be
fairly formalized, as formalization went hand-in-hand with bureaucratic-style
organizations.

6.1. VIEW OF FORMALIZATION

- many organizations today rely less on strict rules and standardization to guide
and regulate employee behavior.

6.2. WHAT CONTINGENCY VARIABLES AFFECT STRUCTURAL CHOICE?

- The most appropriate structure to use will depend on contingency factors. In this
section, we address two generic organization structure models and then look at
 the more popular contingency variables—strategy, size, technology, and
environment.
-
6.3. Two organizational forms

- The mechanistic organization - A bureaucratic organization; a structure that’s

high in specialization, formalization, and centralization.
- organic organization is a highly adaptive form that is as loose and flexible as
the mechanistic organization is rigid and stable.
How Does Size Affect Structure?
- Large organizations—typically considered to be those with more than 2,000
employees—tend to have more specialization, departmentalization, centralization,
and rules and regulations than do small organizations. However, once an
organization grows past a certain size, size has less influence on structure.
How Does Technology Affect Structure?
- Technology has had positive and negative affects on market structure and real
world competition. Some negative affects are the risk of security breach and
customer personal information and financial information being stolen. Some
positives include easier advertising, less costs, and more customers.
Three distinct technologies
- unit production, described the production of items in units or small
batches.The second category, mass production, described large-batch
manufacturing. Finally, the third and most technically complex group, process
production, included continuous-process production.
Traditional Organization Designs
Simple Structure
• Strengths: Fast; flexible; inexpensive to maintain; clear accountability.
• Weaknesses: Not appropriate as organization grows; reliance on one person
is risky.
Functional Structure
• Strengths: Cost-saving advantages from specialization (economies of scale,
minimal duplication of people and equipment); employees are grouped with others
who have similar tasks.
• Weaknesses: Pursuit of functional goals can cause managers to lose sight of
what’s best for the overall organization; functional specialists become insulated and
have little understanding of what other units are doing.
Divisional Structure
• Strengths: Focuses on results—division managers are responsible for what
happens to their products and services.
• Weaknesses: Duplication of activities and resources increases costs and
reduces efficiency.
 3. Contemporary Organization Designs

a. 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. Reduced barriers
among functional areas.
• Disadvantages: No clear chain of command. Pressure on teams to perform.
b. MATRIX-PROJECT STRUCTURE
• What it is: Matrix 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 move on to the next project.
• Advantages: Fluid and flexible design that can respond to environmental changes.
Faster decision making.
• Disadvantages: Complexity of assigning people to projects. Task and personality
conflicts.
c. 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. Utilizes talent wherever it is found.
• Disadvantages: Lack of control. Communication difficulties.

-project structure A structure in which employee continuously work on projects

TWO TYPES OF BOUNDARIES:

(1) internal—the horizontal ones imposed by work specialization and departmentalization
and the vertical ones that separate employees into organizational levels and hierarchies; and
(2) external—the boundaries that separate the organization from its customers, suppliers,
and other stakeholders.
To minimize or eliminate these boundaries, managers might use virtual or
network structural designs.
-Virtual Organization - An organization that consists of a small core of fulltime employees
and outside specialists temporarily hired as needed to work on projects.
-Network Organization - An organization that uses its own employees to do some work
activities and networks of outside suppliers to provide other needed product components or
work processes

References:
file:///C:/Users/Fs%201/AppData/Local/Temp/Temp2_MPA%20203.zip/MPA
%20203/203.2nd%20book.Robbins%20S.P.,%20Decenzo%20D.A.,%20Coulter%20M.%20-
%20Fundamentals%20of%20Management_%20Essential%20Concepts%20and
%20Applications.pdf
https://www.orgchartpro.com/span-of-control-and-organizational-structure/