Chapter 9 Organizing Work Organizing- grouping of activities necessary to attain common objectives and the assignment of each grouping

to a manager who has the authority required to supervised the people performing the activities. Organization- group of people working together in some concerted or coordinated effort to attain objectives. Informal Organization- the aggregate of the personal contacts and interactions and the associated groupings of people working within the formal organization. Synergism- occurs when individuals or groups work to produce a whole greater than the sum of the parts. Labor can be divided either vertically or horizontally 1. Vertical Division of Labor- based on the establishment of lines of authority and defines the levels that make up the vertical organization structure. 2. Horizontal Division of Labor- based on specialization on work. Horizontal division of labor can result in the following advantages: Fewer skills are required per person. The skills required for selection or training purposes are easier t supply. Practice in the same job develops proficiency. Primarily utilizing each workers best skills promotes efficient use of skills. Concurrent operations are made possible. More conformity in the final product results when each piece is always produced by the same person. Job scope- refers to the number of different types of operations performed on the job. Job depth- refers to the freedom of employees to plan and organize their own work, work at their own pace, and move around and communicate as desired. Power- ability to influence command or apply force. Authority - legitimate exercise of power; the right to issue directives and expend resources; related to power but narrower in scope. Responsibility- accountability for the attainment of objectives, the use of resources, and the adherence to organizational policy. Centralization- little authority is delegated to lower levels of management. Decentralization- a great deal of authority is delegated to lower levels of management.

Empowerment is a form of decentralization that involves giving subordinates substantial authority to make decisions. Under empowerment, Managers express confidence in the ability of employees Employees gain confidence in their ability to perform their jobs. Employees demonstrate more initiative and perseverance in pursuing organizational goals. One method for empowering employees is through the use of Self Managed Work Teams also called self-directed of self-regulated work teams are work units without a frontline manager and empowered to control their own work. Principles Based on Authority Delegation: Parity Principle Parity principle states that authority and responsibility must coincide. Management must delegate sufficient authority to enable subordinates to do their jobs. Subordinates must accept both authority and responsibility before the delegation process has been completed. 1. 2. 3. 4. 5. Reluctance of Managers not to Delegate Fear that subordinates will fail in doing the task. The belief that it is easier to do the task oneself rather than delegate it. Fear that subordinates will look too good. Humans attraction to power. Comfort in doing the tasks of the previous job held. Reasons to Delegate 1. Managers time is freed to pursue other tasks, and the subordinates gain feelings of belonging and being needed. 2. Delegation is one of the best methods for developing subordinates and satisfying customers. The exception principle (also known as management by exception) states that managers should concentrate their efforts on matters that deviate significantly from normal and let subordinates handle routine matters. Unity of Command The unity of command principle states that an employee should have one, and only one, immediate manager Scalar Principle The scalar principle states that authority in the organization flows through the chain of managers one link at a time, ranging form the highest to the lowest ranks. The scalar principle is based on the need for communication and the principle of unity of command

Span of Management The span of management (span of control) refers to the number of subordinates a manager can effectively manage. Sir Ian Hamilton is usually credited for developing the concept of a limited span control. In 1993, V.A Graicunas published a classic paper that analyzed subordinate-superior relationships in terms of a mathematical formula. Lyndall Urwik first stated the concept of span of management as a management principle in 1938, No superior can supervise directly the work of more than five, or at the most, six subordinates whose work interlocks. Workplace changes in Organization Flextime or flexible working hours Telecommuting Job Sharing Chapter 10 Organizing Structure Organization Structure is the framework that defines the boundaries of the formal organization and within which the organization operates. The structure of an organization reflects how groups compete for resources, where responsibilities for profits and other performance measures lie, how information is transmitted, and how decisions are made. An appropriate organization structure certainly helps foster goof performance. Organization Growth Stages The craft or family stage is characterized by the absence of formal policies, objective and structure. The operations of the organization at this stage generally center on one individual and one function area. The entrepreneurial stage- the organization grows first at an increasing and then a decreasing rate. An atmosphere of optimism pervades the entire organization as sales and profits rise rapidly. The first stage of growth- the entrepreneur has been replaced by or evolved into a professional manager who performs the process of planning, organizing, staffing, motivating and controlling. The critical stage for the organization is where the organization moves through the craft stage and into the entrepreneurial stage, an organization structure must be developed. Organization Charts Uses a series of boxes connected with one or more lines to graphically represent the organizations structure. Each box represents a position within the organization and each line indicates the nature of the relationships among the different positions.

Factors Affecting Organization Structure 1. Strategy the major part of an organizations strategy for attaining its objectives deals with how the organization is structured. Alfred D. Chandler described a pattern in the evolution of organizational structures. Chandler concluded that structure follows strategy; in other words, changes in strategy ultimately led to changes in the organizations structures. 2. Size- sales volume and number of employees are the most frequently used factors. Small organizations tend to be less specialized (horizontal division of labors), less standardized, and more centralized. Larger organizations tend to be more specialized, more standardized, and more decentralized. 3. Environment- a landmark study relating organization to environment was conducted by Tom Burns and G.M. Stalker in the United Kingdom. The researchers identified two distinct organizational systems. Mechanistic systems are characterized by a rigid delineation of functional duties, prcised job descriptions, fixed authority and responsibility and a well-developed organizational hierarchy through which information filters up and instructions flow down. Organic systems are characterized by less formal job descriptions, greater emphasis on adaptability, more participation, and less fixed authority. Organization and Technology Numerous studies have also been conducted investigating potential relationships between technology and organization structure. One of the most important studies was conducted by Joan Woodward in late 1950s. Her study was based on an analysis of 100 manufacturing firms in the southeast Essex area of England. Her general approach was to classify firms along a scale of technical complexity with particular emphasis on three modes of production. 1. Unit or small batch production. 2. Large-batch or mass production 3. Continuous flow or process production After classifying each firm into one of the preceding categories, Woodward investigated a number of organizational variables. Some of her findings follow: 1. The number of levels in an organization increased as technical complexity increased. 2. The ratio of managers and supervisors to total personnel increased as technical complexity increased. 3. Using Burns and Stalkers definition of organic and mechanistic systems, organic management systems tended to predominate in firms at both ends of the scale of technical complexity, while mechanistic systems predominated in firms failing in the middle ranges. 4. No significant relationship existed between technical complexity and organizational size. A few years later, Edward Harvey undertook a similar study. The general conclusion reached in the Woodward and Harvey studies was that a relationship clearly exists between organizational technology and a number of aspects of organization structure

Departmentation involves grouping jobs into related work units. The work units may be related on the basis of work functions, product, geography, customer, technique of time. Work Functions Functional departmentation occurs when organization units are defined by the nature of the work. Although different terms may be used, most organization has four basic functions: 1. Production refers to the actual creation of something of value either goods, services or both. 2. Marketing involves product or service planning, pricing the product or services with respect to demand, evaluating how to best distribute the goods or services, and communicating information to the market through sales and advertising the organization whether manufacturing or service. 3. Finance must provide the financial which are necessary for carrying out its activities. 4. Human resource function is responsible for securing and developing the organizations people. The primary advantage of functional departmentation is that is allows for specialization within functions. It also provides for efficient use of equipment and resources, potential economies of scale, and ease of coordination within the function itself. However, functional departmentation can have some negative effects. For example, sub-optimizing of goals occurs when members of a functional group develop more loyalty to the functional groups goal than to the organizations goal. Products Under product departmentation, all activities needed to produce and market a product or service is usually under a single manager. This system allows employees to identify with a particular product and thus develop esprit de corps. Product departmentation provides opportunities for training for executive personnel by letting them experience a broad range of functional activities. Problems can arise if a department becomes overly competitive to the detriment of the overall organization. A second problem is duplication of facilities and equipment. Geographic Geographic departmentation is most likely to occur in organizations that maintain physically dispersed and autonomous operations or offices. Departmentation in geography permits the use of local employees or sales people. This can create customer goodwill and an awareness of local feelings and desires. It can also lead to a high level of service. Customer Customer departmentation is based on division by customers served. A common example is an organization that has one department to handle retail customers and department to handle wholesale or industrial customers. This type of departmentation has the same advantages and disadvantages as product departmentation. Hybrid Departmentation Hybrid Departmentation occurs when an organization simultaneously uses more than one type of departmentation.

Other Types Several other types of departmentation are possible. Departmentation by simple number is practiced when the most important ingredient for success is the number of employees. Departmentation by process or equipment is another possibility. A final type of deparmentation is by time or shift. Organizations that work around the clock may use this type of departmentation. Changes Affecting Organization Structure New practices have affected the structure of many organizations. Outsourcing has resulted from improved communication technology and is having an effect on the structure of many organizations. Outsourcing is the practice of sub-contracting certain work functions to an outside entity. Whether outsourcing is a response to downsizing or natural extensions of downsizing, it is practice that will significantly affect the workplace and organizational chart. Outsourcing has numerous potential benefits, including the following: 1. Allowing the organization to emphasize its core competencies by not spending time routine areas that can be outsourced. 2. Reducing operating cost by utilizing others who can do the job more efficiently. 3. Accessing top talent and state-of-the-art technology without having to own it. 4. Fewer personnel headaches. 5. Improving resource allocation by allowing growth to take place more quickly. There are also disadvantages in outsourcing include: 1. Loss of control and being at the mercy of the vendor. 2. Loss of in-house skill. 3. Threat to the morale of work force if too many areas are dominated by outside vendors. 4. No guarantee that it will save money or provide higher service standards. Contingency Approach The knowledge that there is no one best way to organize has led to a contingency (situational approach) to organizing. The contingency approach should be viewed as a process of assessing relevant variables and then choosing the most appropriate structure for the situation. Types of Organization Structures There are the basic types of structures those organizations may use. Traditionally, these have been the line structure, the line and staff structure, or the matrix structure. Recently, new types of structures and organization have evolved and are evolving to take advantage of the new communication and logistical technology available. These new structures include the horizontal structure and the virtual organization. Line Structure In a line organization, authority originates at the top and moves downward in a line. All managers perform line functions, or functions that contribute directly to company profits. Examples: Production Managers, Sales Representatives, Marketing Managers

Simplified Line Structures President

Vice President Manufacturing

Vice President Sales

Assembly

Fabrication

Sales Personnel

Advertising

Because of its simplicity, line structures exist most frequently in small organizations. The most important aspects of the line structure is that the work of all organizational units is directly involved in producing and marketing the organizations good and services. All members of the organization receive instructions through the scalar chain. It may also cause the organization to become too dependent on one or two key employees who are capable of performing many duties. The Line and Staff Structures The addition of staff specialists to a line-structured organization creates a line and staff structure. Staff functions- are advisory and supportive in nature; they contribute to the efficiency and maintenance of the organization. Line functions- are directly involved in producing and marketing the organizations good and services. Staff people are generally specialist in one field, and their authority is normally limited to making recommendations to line people. Typical staff functions include research and development, personnel management, employee training, and various assistant to positions.

Simplified line and staff structure

President
Finance

Vice President Personnel

Vice President Manufacturing

Vice President Sales

Quality Control

Production Manager

Purchasing

Line and Staff Conflict The line and staff organization allows much more specialization and flexibility than does the simple line organization; however, it sometimes to create conflict. Some staff specialists recent the fact that they may be only advisers to line personnel and have no real authority over the line. At the same time, line managers, knowing they have final responsibility for the product, are often reluctant to listen to staff advice. Matrix Structure The Matrix (sometimes called Project) form of organization is a way of forming a project teams within the traditional line-staff organization. A Project is a combination of human and non-human resources pulled together in a temporary organization to achieve a specified purpose. The marketing of a new product and the construction of a new building are examples of projects because projects have a temporary life, a method of managing and organizing them was sought so that the existing organizations structure would not be totally disrupted and would maintain some efficiency. Simplified Matrix Stucture
CORPORATE LEVEL

Division A

Division B Planners and Analysis

Planners and Analysis

Production

Engineering

Personnel

Finance

Production

Engineering

Personnel

Finance

PROJECT C Project Manager

Production Group Production Group

Engineering Group Engineering Group

Personnel Group Personnel Group

Accounting Group Accounting Group

PROJECT D Project Manager A major advantage of matrix structure is that the mix of people and resources can readily be changed as project needs change. Other advantages include the emphasis placed on the project by use of a project team and the relative ease with which project members can move back into the functional organization once the project has ended. One serious problem with matrix structure is that it can violate the principle of unity of command. A role of conflict can develop if the authority of the project manager is not clearly delineated from that of the functional managers. In such a case, 1. The people assigned to a project may receive conflicting assignments from the project manager and their functional managers. 2. Problem occurs when the personnel assigned to a project are still evaluated by their functional manager. 3. Matrix structures are often costly to implement are only marginally accepted because they defy tradition and put undue stress on communication networks.

Horizontal Structure (also called Team Structure) Two core groups of Horizontal Structure: One group is composed of senior management who are responsible for strategic decisions and policies. Second group is composed of empowered employees working together in different process teams. Characteristics of a Horizontal Organization include the following: 1. The horizontal structure is built around three to five core processes, such as developing new products, including themselves. They are held accountable for performance goals assigned. Each process has an owner or champion. 2. The hierarchy is flattened to reduced supervision. 3. Teams manage everything, including them. They are held accountable performance goal. 4. Customers, not stock appreciation or profitability, drive performance. 5. Team performance, not just the individual is rewarded. Staffers are encouraged to develop multiple skills and are rewarded for it. 6. Customer contact is maximized with employees. 7. Emphasis is on informing and training all employees. Do not just spoon-feed information on a need to know basis. The Virtual Organization A virtual organization is one in which business partners and teams work together across geographical or organizational boundaries by means of information technology. Three common types of virtual organization: One type exists when a group of skilled individuals form a company by communicating via computer, phone, fax and video conference. Second type occurs when a group of companies, each of which specializes in a certain function such as manufacturing or marketing, partner together. Third type occurs when one large company out sources many of its operations by using modern technology to transmit information to its partner companies so that it can focus on its specialty. Trends in Organization Structure 1. Flat Structures- organization with few levels and relatively large spans of management at each level. 2. Tall Structures- organization with many levels and relatively small spans of management.

Benefits and Challenges of Transitioning to a Virtual Organization Benefits Increases productivity. Decreases the cost of doing business. Provides the ability to hire the best talent regardless of location. Allows you to quickly solve problems by forming dynamic teams. Allows you to more leverage both statistic and dynamic staff. Improves the work environment. Provides better balance for professional and personal lives. Provides competitive advantage. Challenges Leaders must move from a control model to a trust method. New forms of communication and collaboration will be required. Management must enable a learning culture and be willing to change. Staff re-education may be required It can be difficult to monitor employee behavior. Committees Committee is an organization structure in which a group f people are formally appointed, organized and super imposed on the line or line and staff structure to consider or decide certain matters. Using Committee Effectively: Define clearly its functions, scope, and authority Careful thought should go into the selection of the committee members and chairperson. Board of Directors A board of directors is really a type of committee that is responsible for re-viewing the major policy and strategy decisions proposed by top management. Two types of Board of Directors Inside Board- a majority of the members hold management positions in the organization. Outside Board- a majority of the members do no hold or have not hold a position with the organization.

Methods of Selecting Committees Method 1. Appointment of chairperson and members. 2. Appointment of chairperson who chooses members 3. Appointment of members who elect chairperson 4. Volunteers Advantages/Disadvantages Promotes sense of responsibility for all may result in most capable members. Members may not work well together. Will probably get along well. Lack of sense of responsibility by members may not be most capable or representative. Lack of sense of responsibility by chairperson for the job. Election of chairperson may lead to split in the committee. Will get those who have greatest interest in the outcome or those who are least busy. Lack of responsibility. Potential for splits among committee members is great.

REPORTERS ARE: Gemini II Bade Banjo Fungot Meriam Grace Bernas Romil Famocol Ruth Grace Torion Paulo Tio COURSE/YEAR: BSC- 2A