Part 3 Organizing Challenges in the 21st Century

Chapter
7
Organizing for
Effectiveness
and Efficiency

PowerPoint Presentation by Charlie Cook

The University of West Alabama
TOPIC 4

Organizing for Effectiveness

and Efficiency

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What is Organizing?
• Organizing
 The process of determining:
 The tasks to be done.
 Who will do them.
 How those tasks will be
managed and coordinated.

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The Process of Organizing

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• Managers have to organize the activities they want
to perform for the following reasons:
 So that they can divide the work according to the
nature & similarity of tasks

 So that they can pool resources & increase the

efforts which lead to efficiency

 So that they can build continuity & synergy

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• A manager who wants to organize his/her
department must address these issues:
 Determine what is to be done
 Assigning tasks
 Decide how to achieve coordination
 Decide on a span of management
 Decide how much authority you should designate
 Draw an organizational chart

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Organization Chart

Diagram that illustrate the relation of

reporting relationships , functions,
departments, divisions and even
individual position within the organization
– “skeleton” representation of organization
structure

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DIVISION OF WORK/LABOUR

 Dividing duties into simpler, more specialized

task

 Managers and employees are assigned and

perform duties based on specialization and
personal expertise

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ADVANTAGES OF DIVISION OF WORK/LABOUR
-Person-to-fit (based on talents and interests) - the job
given can be fit based on individual’s ability.
-Creates job specialization
-Increase productivity

DISADVANTAGES OF DIVISION OF WORK/LABOUR

-Higher degree of control

-Boredom

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 DEPARTMENTALIZATION/ ORGANIZATIONAL
STRUCTURES
• Departmentalization- Is a process of grouping jobs into separate units
activities or tasks that are proposed.
• There are six (6) types of Departmentalization/Organizational Structure:-

Functional

Network Product

Matrix Customer

Geographic

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 FUNCTIONAL STRUCTURE
• Used mainly by smaller firms that offer a limited line of
products because it makes efficient use of specialize
resources
• This method eliminate overlapping in the execution of
organizational activities
PRESIDENT.

VICE VICE VICE

PRESIDENT PRESIDENT PRESEDENT
PRODUCTION MARKETING FINANCE

PRODUCTION CUSTOMER FINANCIAL

PLANNING SERVICE PLANNING

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 ADVANTAGES:
• Staffed by experts of each functions
• Easier supervision
• Easy to coordinate activities

DISADVANTAGES:
• Difficult to get quick decisions or actions on a
problem or situation
• Difficult to monitor performance, especially among
individual

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 PRODUCT STRUCTURE
• Grouping the activities and functions on a basis of
products manufactured by the company

PRESIDENT

GENERAL GENERAL
MANAGER MANAGER
PHARMACEUTICAL PERSONAL CARE
PRODUCT PRODUCT

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 ADVANTAGES:
• Activities can be easily focuses and coordinated
• Enhance speed and effectiveness of decision making
• Easy to assess performance and identify
accountability/liability

DISADVANTAGE:
• Focus only on own products
• Increase the administrative costs

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 CUSTOMER STRUCTURE

• Is the grouping of activities to reflect the interests of

different customers

PRESIDENT

LOANS
COMMUNITY CORPORATE REAL ESTATE
AGRICULTURAL
BANKING BANKING MORTGAGE
BANKING

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 ADVANTAGES:
• Encourage concentration on customers’ needs
• It gives customers the feeling that they have an
understanding supplier
• It develops expertise in the customer handling

DISADVANTAGE:
 Difficult to coordinate operations between competing
customer demands
 Requires managers & staff expert in customers’ problems

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 GEOGRAPHICAL STRUCTURE

• A company or a part of it is organized around the places where

operations are located.
• It is commonly found in sales or manufacturing operations.

PRESIDENT

WEST SOUTHEAST CENTRAL

EAST REGION
REGION REGION REGION

PRODUCTION MARKETING
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 ADVANTAGES:
• It offers better services at low cost
• It place emphasis on local markets & problems
• It offers better face to face communication with local
interests

DISADVANTAGE:
• It requires more staff with general manager abilities
• Top management has less control of the regional
managers since they are independent

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 MATRIX STRUCTURE
• Also known as Multiple Command System
• Focus on two or more dimensions at the same time

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 ADVANTAGES:
• More efficient use of resources than single hierarchy
• Flexibility, adaptability, to changing environment

DISADVANTAGE:
• Frustration & confusion from dual chain of command
• High conflict between 2 sided of matrix
• More meetings, more discussion than action

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 NETWORK STRUCTURE
 Disaggregates major functions into separate companies
that are brokered by a small headquarter organization
e.g. manufacturing, engineering, sales & accounting is
provided by separate organization which specialized on
that areas
DESIGN DISTRIBUTION
COMPANY COMPANY

COMPA
NY A

TRANSPORTATIO MANUFACTURING
N COMPABY COMPANY

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 ADVANTAGES:
• Global competitiveness
• Workforce challenge
• Reduce administrative cost

DISADVANTAGE:
• No hands-on control
• Can lose organization part
• Employee loyalty weakened

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 SPAN OF MANAGEMENT

 Definition: A number of subordinates who report directly to a

given manager of supervision
 Also called ‘span of control’
◦ In theory, when tasks are very complex, span of control should be
relatively narrow
◦ In contrast, where jobs are highly standardized and routine (low
complexity), a manager will not need to spend as much time
supporting individual subordinates, and the span of control may be
larger

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 MAJOR FACTORS THAT INFLUENCE THE
SPAN OF MANAGEMENT

• The type of work

• The strength of the organization structure

• The ability of the manager

• The amount & type of communication required

among the members

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 TYPES OF ORGANIZATION CHART
TALL & LEAN (FLAT) STRUCTURES
TALL STRUCTURE
FLAT STRUCTURE

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 TALL STRUCTURE
• Increase employee morale and productivity
• More expensive
• More communication problems

LEAN/ FLAT STRUCTURE

 Better communication
 More administrative responsibility
 More supervisory responsibility

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 CHAIN OF COMMAND
• Definition: Separate lines of authority/power among
all position in an organization

• It has 2 components:-
(i) UNITY OF COMMAND
- Suggests that each person within an organization
must have a clear reporting relationship to only one
superior

(ii) SCALAR RELATIONSHIP

- Suggests that there must be a clear and unbroken
line of authority that extends from the lowest to the
highest position in the organization.

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 AUTHORITY
 Definition: “The right to make decisions with respect to work assignments & to require
subordinates to perform assigned tasks in accordance with the decision made”

AUTHORITY
(Line and Staff Authority)
• Line Authority
 Those organizational members that are directly involved
in delivering the products and services of the organization

• Staff Authority
 Those organizational members that are not directly

involved in delivering the products and services to the

organization, but provide support for line personnel

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Job Design
• The set of tasks and activities that are grouped
together to define a particular job.
• Job descriptions detail the responsibilities and
tasks associated with a given job.

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 The Core Dimensions of a Job

Core Job Dimension Effect of Dimension

Skill variety
Task identity Meaningfulness of the work
Task significance

Autonomy Responsibility for outcomes

of the work

Feedback Knowledge of results of the

work activities

Source: Adapted from J. R. Hackman, G. Oldham, R. Janson, and K. Purdy, “A New Strategy for Job Enrichment.” Copyright © 1975 by
the Regents of the University of California. Reprinted from California Management Review 17 (1975): 4. By permission of The Regents.
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Core Job Dimensions
• Skill Variety
 The degree to which a job challenges the job holder
to use various skills and abilities.
• Task Identity
 The degree to which a job requires the completion of
an identifiable piece of work.
• Task Significance
 The degree to which a job contributes to the overall
efforts of the organization.

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Core Job Dimensions (cont’d)
• Autonomy
 The degree to which job holders have freedom,
independence, and decision-making authority.
• Feedback
 The information provided to job holders regarding the
effectiveness of their efforts.

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Classical Perspectives
• Focus on efficiency.
• Born of classical management and scientific
management theories based on the concepts of
division of labor and specialization.
 Jobs are highly structured and rigidly defined.

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Behavioral Perspectives
• Focus on motivation, satisfaction, and
productivity.
 Became popular during the movement toward the
human relations school of thought.
 Led to the development of more innovative
approaches to job design including:
 Job enlargement
 Job enrichment
 Job rotation

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Job Enlargement
• Programs designed to broaden job scope.
 Job scope refers to the number of different activities
required in a job and the frequency with which each
activity is performed.
 While job enlargement programs have typically been
considered as a means of enriching jobs, sometimes
reducing job scope has a positive impact on
productivity and job satisfaction.

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Job Depth and Job Enrichment
• Job Depth
 Refers to the degree of control given to a job holder to
perform their job.
 Closes the gap between planning, doing and
controlling a particular set of activities.
 Jobs that have high job depth typically rate more
favorably on the core job dimensions than jobs with
low job design.
• Job Enrichment
 Can be an effective means of motivating employees
and improving job satisfaction.

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Job Rotation
• Assigning individuals to a variety of job
positions.
 Employees rotate through a number of job positions
that are at approximately the same level and have
similar skill requirements.
 While job rotation has proven particularly beneficial in
manufacturing settings, it can also be used effectively
in service organizations.

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Participatory Perspectives
• Focus on quality.
• Are not intended to replace previous methods of
job design rather to supplement both the
mechanistic and the behavior theories of job
design.
• The most popular approaches are:
 Business process reengineering
 Employee-centered work redesign
 Self-managed teams

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Business Process Reengineering
• A method of enhancing competitiveness through
improved product and service quality and
operational efficiency.
 A process of assessing company’s operations and
rebuilding the organization system with a focus on:
 Improving efficiency.
 Identifying redundancies.
 Eliminating non-value added activities.
 Reducing waste in all possible ways.
 Execution of reengineering has proven difficult for
many companies.

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Employee-Centered Work Redesign
• Links the mission of the organization with the
needs of the individual by allowing employees to
design their work roles to benefit the
organization and themselves.
• Benefits of redesign include:
 Improved productivity and job satisfaction.
 Fosters a climate that supports cooperation between
individuals and work groups.
 Consistent with quality improvement efforts.
 Helps employees achieve work/life balance.

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Self-Managed Teams
• Shifts the focus from the individual to the work
group.
 Responsibility for a substantial portion of the
organization’s activities is assigned to a team of
individuals who must determine the best way to fulfill
those responsibilities.
 Self-managed teams are considered cross-functional
teams.

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Organizational Relationships
• The working relationships that exist within an
organization affect how its activities are
accomplished and coordinated.
• These relationships are defined by:
 Chain of command
 Span of control

 Line and staff responsibilities

 Delegation

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 Alternative Ways to Structure an Organization

Source:: Adapted from The Structuring of Organizations by Mintzberg, © 1991. Reprinted by permission of Prentice-Hall, Inc., Upper Saddle River, NJ.
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Authority and Responsibility
• Authority
 The formal right inherent in an organizational position
to make decisions.
• Formal authority
 Authority inherent in an organizational position.
• Informal authority
 Ability to influence others that is based on personal
characteristics or skills.
• Responsibility
 The obligation to perform the duties assigned.

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 DELEGATION

• Definition: “The process of transferring the authority

for a specific activity or task to another member of the
organization and empowering that individual to
accomplish the task effectively”
• Transforming the responsibility for a specific activity
or task to another member of the organization
• Empowering that individual to accomplish the task
effectively

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The Process of Delegation
• Decide which goals/tasks to delegate.
 Teach the department or organization mission.
 Find a capable person.
 Teach/train the person.
• Assign Responsibility
 Refers to the employee’s obligation to complete the
activities that he or she has been assigned.
• Grant Authority
 Authority is the right to marshal resources and make
decisions necessary to fulfill work responsibilities.

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The Process of Delegation (cont’d)
• Establishing Accountability
 Where there is accountability for performance,
employees understand that they must justify their
decisions and actions with regard to the tasks for
which they have assumed responsibility.

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 Steps in Delegation
Step 1 Step 2 Step 3
Assigning Granting Creating
responsibility authority accountability

Manager Manager
Manager Manager
Manager

Subordinate Subordinate Subordinate

1. Assign Responsibility – Refers to the employee’s obligation to complete the activities that he
or she has been assigned.
2. Granting authority – Authority is the formal right of an employee to marshal resources and
make decisions necessary to fulfill work responsibility.
3. Establishing accountability – Where there is accountability for performance, employees
understand that they must justify their decisions and actions with regard to the tasks for which
they have assumed responsibility.

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 Benefits of Delegation
1. Empowerment
2. Better decision-making
3. Provide an opportunity for the development of
analytical and problem-solving skills
4. Managers magnify their accomplishments

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 Barriers of Delegation
• Managers reluctant to delegate
 Disorganization prevents planning work in advance
 Lack of trust in the subordinate to do well

• Staff’s reluctant to accept delegation

 Reluctant to accept delegation because fear of failure
 Perceive that there is no rewards
 Simply prefer avoid to avoid risk

OVERCOMING BARRIERS TO THE DELEGATION

 Allow subordinates to develop their own solutions & to make mistake
 More support & training
 Improved communication

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 Degree of Delegation

Source: Adapted from M. E. Haynes, “Delegation: There’s More to It Than Letting Someone Else Do It!” 9–15. Reprinted, by permission
of publisher, from Supervisory Management, January 1980. © 1980, American Management Association, New York. All rights reserved.
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Learning to Delegate Effectively
1. Match the employee to the task.
2. Be organized and communicate clearly.
3. Transfer authority and accountability with the
task.
4. Choose the level of delegation carefully.

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CENTRALIZATION & DECENTRALIZATION

Centralization is the process of systematically

maintain the power and authority in the hands of
higher-level managers

Decentralization is the process of systematically

hand over/assign power and authority throughout
to middle and lower manager

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 ADVANTAGES AND DISADVANTAGES
• CENTRALIZATION
Advantage – Gives top level maximum control
Disadvantage – Limit’s the organization’s ability to respond quickly and
effectively to changes in the environment.

• DECENTRALIZATION
Advantage - Unburdening top managers of ordinary task and freeing them for
other activities.
- Flexibility and faster decision making
- Enable subordinates to appreciate their action and activities
- Develop subordinates managers conceptual skills
- Improved decision making because decision are made closer to the scene of
action
Disadvantage – Top level managers lose some control.

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 COORDINATION

• Keeping organization units that interact with or

influence each other in contact with each to share
information & other things in a way that enhances
accomplishment of tasks

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 PROBLEMS IN ACHIEVING EFFECTIVE
COORDINATION
• Differences in orientation towards particular goals –
Organizational departments have different functions and their
orientation towards achieving departmental objectives differ.
• Differences in time orientation
- Organizational departments differ in the speed and urgency in
decision making.
• Differences in interpersonal orientation
- Organizational departments differ in human and task relationship
• Differences in formality of structure
- Organizational departments differ in terms of methods for
evaluation of selection.

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