ORGANIZING

Prestige Institute of Management

Gwalior
CONCEPT

 The process of ORGANIZING is the second

management functions that explains how an
organization's structure is created.

 Nature of organization structure :

 Managers are seeking structural designs that will best

support and allow employees to effectively and
efficiently do their work.
THEORY OF ORGANIZING

 CLASSIFIED INTO 3 GROUPS:

1. CLASSICAL
2. NEO-CLASSICAL
3. MODERN

 The classification is based on Structure, Process and

interdependence.
1. CLASSICAL THEORY
 Traditional or, long established.

 It’s the beginning of the systematic study of organization.

 Theorist have seen organization as machine and human

resource as different component of that machines.

 Known as Machine/Structural/Physiological theory.

 It maximizes on neatness and control i.e. error detection

and correction.
CLASSICAL THEORY AROUND 4
FACTORS:
 1. Division of labor- Clear cut specialization to
improve performance.

 2. Scalar and Functional Processes- There is a

chain of command. Functional process means
division into specialized part and regrouping into
compatible units.

 3. Structure- The basic structure is the position.

Position holder has been given authority and
functions.
 4. Span of Control- Refers to number of subordinates
effectively supervised by a supervisor. Under classical,
it ranges from 4 to 6.

 It’s a closed system assumptions. Fayol’s 14 principles

is major contribution under Classical approach.
2. NEO CLASSICAL THEORY
 Started its development from the findings of famous
Hawthorne experiments.
 It emphasizes on the needs of human being in
organization.
 Modifications is basic postulates of classical theory in
neoclassical:
 1. Organization is a social system.
 2. Social environment of the job affects people and is
also affected by them.
 2. Informal organization also exists within the formal
organization.
 1. Flat structure : Few or no levels of management between

management and staff level employees. The flat

organization supervises employees less while promoting

their increased involvement in the decision-making

process

 2. Decentralization

 3. Informal Organization

 Thus, neoclassical gave a new dimensions for organizational

design like informal organization, group norms, non-economic

motivation etc…
MODERN MANAGEMENT THEORY
The modern management thought is characterized by the following
features :

1)Management is responsive to environmental changes.

2)Business organizations are dynamic institutions composed of inter-

related divisions and sub divisions.

3)Business firms have multiple objectives. Managers balance

economic and non-economic objectives and maximize the interests
of diverse groups.

4) Management is future oriented. It forecasts environment through

scientific technique of forecasting and discounts it to make decisions
in the present.

5)The organization is multiple commanding and highly decentralized.

ORGANIZATION STRUCTURE
 Organization structure is the formal pattern of interactions
and coordination designed by management to link the tasks of
individuals and groups in achieving organizational goals.
 An organizational structure is the formal framework by
which job tasks are divided, grouped, and coordinated.

 1.This formal pattern designed by management is to be

distinguished from the informal pattern of interactions.
 2.Organization structure consists primarily of four elements:
a. Organizational design
b. Departmentalization
c. Vertical coordination
d. Horizontal coordination
 Organization design is the process of developing an
organization structure.

 It involves decisions about six key elements:

 1. work specialization,
 2. departmentalization,
 3. chain of command,
 4. span of control,
 5. centralization/decentralization, and
 6. formalization.
CONTINGENCY APPROACH TO
ORGANIZATIONAL DESIGN
 Universal approaches to organization design attempt to specify
the one best way to structure organizations for effectiveness.

 Contingency approaches, on the other hand, propose that the best

way to design organization structure depends on a variety of
factors.

 Important contingency approaches to organization design center

on the organizational strategy, the determinants of structure,
and strategic choice.
 Organization designs can take many forms.
 A) A mechanistic structure –
Administrative hierarchy for communication
and directing activities.
 B) An organic design-
Structured like a network; communications and
interactions are horizontal and diagonal across groups.

 C) In the socio technical systems –

Open system structured to integrate two
important subsystems: the technical (task) subsystem and the
social subsystem.
According to this approach, organizations should structure the
task, authority, and reporting relationships around the work
group, delegating to the group decisions on job assignments,
training, inspection, rewards, and punishments. The task of
management is to monitor the environment and coordinate the
structures, rules, and procedures.
TYPES OF ORGANIZATIONAL
STRUCTURE
 1.Functional Structure:

 A form of departmentalization in which individuals

engaged in one activity, such as marketing or, finance
are grouped into one.
 It is used by smaller firms that offer limited number of
products.
 It makes supervision easier , each manager must be
expert in only a narrow range of skills.

 Drawback: Each department may feel isolated. It’s a

difficult setting for manager’s to coordinate.
 2. Product / Market organization: The organization
of a company into divisions that bring together those
involved with a certain type of product or, market.

 Referred as organization by division.

 Can be one of the three:

 Division by product
 Division by geography
 Division by customer
 Drawback: Administration expenses increase because
each division has its own staff members and
specialists, leading to costly duplication of skills.
 3. MATRIX ORGANIZATION:

 Also referred as Multiple Command system.

 It’s a hybrid structure which has two types of structure

simultaneously.

 Employees have two bosses – they work in two chains of command.

 One is vertical and the other is horizontal overlay.

 There may be a product or, division manager , as well as national

manager.
 Thus, a division employee would report to divisional
manager on product issues and to national manager on
political issues.

 Problem of coordination is simplified here.

 Employees are grouped under projects with various

skills, so duplication is avoided.
TWO NEW TYPES OF
ORGANIZATIONAL STRUCTURE
 1. Process structure
 A process structure is a type of departmentalization which groups
positions into process team which are given beginning-to-end
responsibility for that process or that specified work flow.
 The process structure is sometimes called the horizontal
organization.

 2. Networked structure
 The networked structure is a form of organizing in which many
functions are contracted out to other independent firms and
coordinated through the use of information technology networks.
 Sometimes the networked structure is called the virtual
corporation because it performs as virtually one corporation.
FORMAL & INFORMAL
STRUCTURE

 The undocumented and officially unrecognized

relationship between members of an organization that
inevitably emerge out of the personal and group needs
of employees.

 Formal structure indicates the organizational charts

depicting the hierarchy and responsibilities.
 FORMAL GROUPS INFORMAL GROUPS
It is concisiously deliberate in nature It arises spontaneously

It is based on delegation of It arises on account of social

authority interaction or it arises from account of
personal factors like friendship
Rules responsibilities are written Just unwritten rules and regulations
and clearly defined

It shown in organization chart It has no place in organization chart

It provides a definite structure It is structure less because it is social

Formal authority is attached to a Informal authority attaches to a

position person out of social interactions

It flows downwards ( top to lower It flows upwards

level)
It is permanent and stable It is temporary and unstable
It is deliberately impersonal It is personal
COMBINING JOBS

 Jobs are being combined on the basis of shared

characteristics.

 Basis for formation of Departments.

SPAN OF MANAGEMENT
 What is the Span of Control?
 The number of people who report to one
manager in a hierarchy
 The more people under the control of one
manager - the wider the span of control
 Less means a narrower span of control
EXAMPLE BELOW SHOWS A SPAN OF
CONTROL
TYPES OF SPAN OF MANAGEMENT

 NARROW SPAN OF MANAGEMANT:- This

means a single managers or supervisor
oversees few subordinates. This gives a rise
to a tall organizational structure.

 WIDE SPAN OF MANAGEMENT:- This means a

single managers or supervisor oversees a
large number of subordinates. This gives a
rise to a flat structure.
THEORY OF GRAICUNA’S

He was a French
management consultant.

He developed a formula
for analyzing superior
subordinate relationship.
THREE TYPES OF
RELATIONSHIP

Direct relationship (superior has direct link with

subordinates).

Direct group relationship (arises between manager

and group of subordinates ).

Cross relationship (relationship among

subordinates).
DIRECT SINGLE RELATIONSHIP
DIRECT GROUP RELATIONSHIP
CROSS RELATIONSHIP
FACTORS DETERMING SPAN OF
MANAGEMENT
Nature of work
Type of technology
Ability of the manager
Capacity of subordinates
Degree of decentralization
Quality of planning
Staff assistant
Communication techniques
Time available for supervision
Geographical dispersion of subordinates
DEPARTMENTATION
It is a process of grouping
individual jobs into departments.

TYPES:
Departmentation by function.
Departmentation by products.
Departmentation by territory.
Departmentation by customers.
Departmentation by process.
AUTHORITY-RESPONSIBILITY
RELATIONSHIP

 Authority

 Authority is the right to act and the power to make

Decision.
 Authority resides in positions rather than in people.
 Authority is seen as the legitimate right of a person to
exercise influence or to make decisions to carry out
actions.
 Delegated downward
 Responsibility may be defined as the obligation of a
subordinate to whom a duty has been assigned to
perform.
 Responsibility moves upwards.

 Relationships between authority and responsibility:

 1. Parity in authority and responsibility: After giving
the responsibility, requisite authority regarding work
delegated should be granted.
 2. Authority always flows downwards, while
responsibility always flows upwards.

 3. Decentralization of Authority.- The faster

the rate of organizational growth, the
greater the need of decentralization. It is an
expansion of delegation of authority.
DELEGATION OF AUTHORITY
 Delegation is the transfer of authority to
subordinates to enable them to make
decisions and use resources.
 Become responsible for their results but
remain accountable to the boss what the
subordinates do.
 Not merely the downwards transmission of
authority,
 Responsibility & Accountability too.
CHARACTERISTICS OF
DELEGATION OF AUTHORITY
 Enables a manager to function independently
within the broad limits of authority.
 Superior does not delegate total authority.
 A manager cannot delegate
 Delegation does not mean giving away authority .
It is a revocable act.
 The superior, who delegates the authority, Cannot
escape responsibility for the activities delegated.
IMPORTANCE OF DELEGATION
 Effective Management
 Employees Development
 Motivation of employees
 Better coordination
 Reduce workload for manager
 Save time
 Develop team spirit
 Increase productivity
LEARNING ORGANIZATION

 "Organisations where people continually

expand their capacity to create the results
they truly desire, where new and
expansive patterns of thinking are
nurtured, where collective aspiration is set
free, and where people are continually
learning to learn together“
Learning organisations are those that

 have systems, mechanisms & processes in

place,
 are used to continually enhance the
capabilities to achieve sustainable
objectives.
 A learning organization is the term given to a
company that facilitates the learning of its
members and continuously transforms itself.

 Learning organizations develop as a result of

the pressures facing modern organizations.

 Learning organization enables organizations

to remain competitive in the business
environment.
 What systems, mechanisms and processes?

 Requires
 Trust, consistency, attitude of inquiry
 High levels of communication
 Concern for interdependencies &
interrelationships
 Adopt a learning approach to strategy
 Participative policy making
 Good Information Systems
 Formative – valuing, self-responsibility, appraisal,
targeting, resourcing and review
 Internal exchange
 Reward flexibility
 Roles and flexible, matrix structures
 Company-to-company learning
 Learning climate
 Self-development opportunities for all
Thank You