Organization and Management

Governor Pack Road, Baguio City, Philippines 2600

Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – Org Man Subject Teacher: Kenny Jones A. Amlos

Functions of Management: Organizing

Learning Objectives:
At the end of the lesson, the student should be able to:

a. discuss the nature of organizations and the organizing process;

b. identify the types of organizational design;
c. distinguish the various types of organization structures;
d. apply organization theories in analyzing businesses and other organizations;
e. identify the different elements of delegation;
f. differentiate formal and informal organizations.

“An organization, no matter how well designed, is only as good as the people who live and work in
it.”
– Dee Hock
Definition of Terms
• ORGANIZATION is one with a structure that is designed to accomplish certain objectives.
Certain types of organizations are just right for certain types of environments, while some types
of organizations are not fitted to thrive on certain environment.

• Organizing
o The process of arranging people and other resources to work together to accomplish a
goal.
• Organization structure
o The system of tasks, workflows, reporting relationships, and communication channels
that link together diverse individuals and groups
o Organizational structure refers to the formal pattern of how people and jobs are
grouped in an organization. It is often illustrated by an organizational chart, specifying
who reports to whom.
o Either formal or informal

• Organizational culture
o A firm’s shared values, beliefs, traditions, philosophies, rules, and role models for
behavior.

Organizing viewed in relationship with the other management functions:

Illustration1: Management Functions

Reasons of Developing Organizational Structure:

• Managers can easily assign work/ tasks to individuals & groups
• Coordination of diverse activities to attain objectives

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 Organization and Management
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – Org Man Subject Teacher: Kenny Jones A. Amlos

Informal Structures Vs. Formal Structures

➢ Informal structures
– A “shadow” organization made up of the unofficial, but often critical, working
relationships between organization members.
– Potential advantages of informal structures:
• Helping people accomplish their work.
• Overcoming limits of formal structure.
• Gaining access to interpersonal networks.
• Informal learning.
– Potential disadvantages of informal structures:
• May work against best interests of entire organization.
• Susceptibility to rumor.
• May carry inaccurate information.
• May breed resistance to change.
• Diversion of work efforts from important objectives.
• Feeling of alienation by outsiders.

➢ Formal structures
– The structure of the organization in its official state.
– An organization chart is a diagram describing reporting relationships and the formal
arrangement of work positions within an organization.
– An organization chart identifies the following aspects of formal structure:
• The division of work.
• Supervisory relationships.
• Communication channels.
• Major subunits.
• Levels of management.

Organizational Chart
A diagram describing the basic arrangement of work positions within an organization. It also
provides a representation of the organization's Formal Structure.

What Does an Organization Chart Tell Us?

➢ The Division of Work
➢ The Type of Work Performed
➢ Supervisor - Subordinate Relationships
➢ Formal Communication Channels
➢ Major Subunits
➢ Levels of Management

Six Key Elements of Organizational Structure/ Design:

1. Specialization- Managers divide the labor into small, specific tasks and assign to employees to
accomplish individual tasks.
Overspecialization - When a job is given to the right person but is not given improvement or
additional training that may lead to employees become boredom and job dissatisfaction. It
can also lead to poor quality work, increase injuries, and increased employee turnover.

2. Departmentalization -Grouping of jobs into working units (departments, units, groups, divisions)
It is during this period that the management will put the right person to the right position base
on the FORMS OF ORGANIZATIONAL STRUCTURE:

a. Simple Structure- the most basic structure. It is applicable to small businesses where
majority of power and decision making rests on the owner.

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 Organization and Management
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – Org Man Subject Teacher: Kenny Jones A. Amlos

Illustration 2: Simple Structure

b. Functional Structure- People with similar skills and performing similar tasks are grouped
together into formal work units and the members work in their functional areas of
expertise. It is not limited to businesses and it works well for small organizations
producing few products or services.

Potential advantages of functional structures:

a. Economies of scale.
b. Task assignments consistent with expertise and training.
c. High-quality technical problem solving,
d. In-depth training and skill development.
e. Clear career paths within functions.

Potential disadvantages of functional structures:

a. Difficulties in pinpointing responsibilities.

b. Functional chimneys problem.

c. Sense of cooperation and common purpose break down.

d. Narrow view of performance objectives.

e. Excessive upward referral of decisions.

Illustration 3: Functional Structure

c. Divisional Structure/ departmentalization – this structure is designed to meet pressures

for innovation and change in dynamic environments.

Types of Divisional Structures:

-Product
-Geographical
-Process
-Customer

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 Organization and Management
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – Org Man Subject Teacher: Kenny Jones A. Amlos

Product
•Grouping jobs by product line
• Allows specialization in particular products and services
•Managers can become experts in the industry
•Closer to the customer

Geographical
•Grouping jobs on the basis of region or geography
•More effective and efficient handling of specific regional issues that arise
•serve needs of unique geographic markets better

Process
•Grouping jobs on the basis of product or customer flow
• More efficient flow of work activities

Customer
•Grouping jobs by type of customer and needs
•Customers’ needs and problem can be met by specialists

Illustration 4: Divisional Structure

➢ Potential advantages of divisional structures:

– More flexibility in responding to environmental changes.
– Improved coordination.
– Clear points of responsibility.
– Expertise focused on specific customers, products, and regions.
– Greater ease in restructuring.
➢ Potential disadvantages of divisional structures:
– Duplication of resources and efforts across divisions.
– Competition and poor coordination across divisions.
– Emphasis on divisional goals at expense of organizational goals.

Page 5 of 8
 Organization and Management
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – Org Man Subject Teacher: Kenny Jones A. Amlos

d. Matrix Structure- Combines functional and divisional structures to gain advantages and
minimize disadvantages of each.
Used in:
Manufacturing
Service industries
Professional fields
Non-profit sector
Multi-national corporations

Illustration 5: Matrix Structure

➢ Potential advantages of matrix structures:

– Better cooperation across functions.
– Improved decision making.
– Increased flexibility in restructuring.
– Better customer service.
– Better performance accountability.
– Improved strategic management.

➢ Potential disadvantages of matrix structures:

– Two-boss system is susceptible to power struggles.
– Two-boss system can create task confusion and conflict in work priorities.
– Team meetings are time consuming.
– Team may develop “groupitis.”
– Increased costs due to adding team leers to structure.

3. Chain of command -the continuous line of authority that extends from upper levels of an
organization to the lowest levels of the organization and clarifies who reports to whom.
3 Principles:

• Delegation of authority
o Giving employees tasks and power to make commitments, use resources, and
take action to carry out tasks.

• Assigning responsibility
o Obligation placed on employees to perform assigned tasks and be held
accountable for proper execution.
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 Organization and Management
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – Org Man Subject Teacher: Kenny Jones A. Amlos

• Employee accountability
o Employees are answerable to a superior for work outcomes.

4. Centralization
• Centralization: The degree to which decision making is concentrated at a single point in
the organization. Organizations in which top managers make all the decisions and
lower-level employees simply carry out those orders

• Decentralization: The degree to which lower-level employees provide input or actually

make decisions. It gives employee empowerment, increasing the decision-making
discretion of employees.

• Factors influence the amount of centralization:

o Environment is stable.
o Lower level managers are not as capable or experienced at making decisions as
upper level managers.
o Lower level managers don’t want to have a say in decisions.
o Decisions are significant.

5. Span of Management/Control- the number of subordinates who report to a particular

manager.
• A wide span of management exists when a manager directly supervises a very large
number of employees.
• A narrow span of management exists when a manager directly supervises only a few
subordinates.
• Width of span is affected by:
o Skills and abilities of the manager and the employees
o Characteristics of the work being done
o Similarity of tasks
o Complexity of tasks
o Physical proximity of subordinates
o Standardization of tasks
o Sophistication of the organization’s information system
o Strength of the organization’s culture
o Preferred style of the manager

6. Formalization- the process of standardizing jobs and establishing rules and guidelines.

New developments in organization structures

A. Guidelines for horizontal structures:
 Focus the organization around processes, not functions.
 Put people in charge of core processes.
 Decrease hierarchy and increase the use of teams.
 Empower people to make decisions critical to performance.
 Utilize information technology.
 Emphasize multiskilling and multiple competencies.
 Teach people how to work in partnership with others.
 Build a culture of openness, collaboration, and performance commitment.

B. Team structures:
 Extensively use permanent and temporary teams to solve problems, complete special
projects, and accomplish day-to-day tasks
 Often use cross-functional teams composed of members from different functional
departments
 Project teams are convened for a specific task or project and disbanded once
completed
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 Organization and Management
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – Org Man Subject Teacher: Kenny Jones A. Amlos

REFERENCES

Cabrera, H.M.F. (2015). Organization and Management. Quezon City: Vibal Group, Inc.
De Guzman, R.S. (2018). Introduction to Management. Baguio: University of the Philippines
Stevenson, W.J. (2010). Operations Management. Singapore: McGraw-Hill Companies, Inc.
Kinicki, A. & Wliliams, B.(2009). Management. New York: McGraw-Hill/Irwin.
Schermerhorn, J. (2010). Introduction to Management
Payos, et al( 2016). Organization and Management. Rexetore.
Stevenson, W.J. (2010). Operations Management. Singapore: McGraw-Hill Companies, Inc.

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