Chapter 1] THE NATURE OF ORGANIZATION (aval sj Rela At the end of the lesson, the reader shall be able to: Define organization; Know the importance of organization; Understand the nature of organization; Discuss the nature of organization; Know the changing concepts of organization, Know the importance of specialization; and Know the importance of cooperative managementHOW ORG ANIZATION HAS EVOLVED Many people in the management — as 8 SOUP of people working together fo YY Organs Purpose. In this light, organization ie . People to work effectively together. The gna tha Seat that human beings need to organize i Order for ti® Points happily in this planet. As the decade Benerate non, im to live organization, new needs and want ye i nee : r s come PIS of making organization more complex. ™° ‘Be human tig THE PRIMITIVE STAGE During the primitive set up, human bein; s hi needs in life and living was’ simple. Organizations ee followed in simple passion, Man lived with what he oy athe for food clothing and shelter. Th as simply orgeninet e family w. to meet basic needs. Men organized themselves to protect their ded to invent new Weapons and lives from aggression. Men nee equipment to protect him and his love ones. His needs extended not only to his family but also to the group of people he worked and associated with. Man had to develop specialized activities and expertise to meet the needs of the tribes and the community where he lives. DEVELOPMENTAL STAGE Man learned that more organized efforts could bring improvement in his way of life. Man’s social spheres became larger. The need for more complex organized effort became apparent. It is organization that motivated man to use his brain power to create new things. Man explored the development ot his natural environment with the use of his hands and ce creativity to fashion new things to satisfy not only his bas needs but also his wants. 5 Organization passed a system of development. se ls through a process of trial afd error. Through alae organization developed theofies that resulted in ee production and richness: nd the imagination o! ae The refinement of a system and development f organized behavior created more goods and services to satisfy the quest for modern living, a «4HUMAN BODY AS AN ORGANIZED SYSTEM Organization can be compared with the components of the human body. God is the master of the organizational system when he created man. As an intellectual being man is capable of adapting to the condition of nature and the changing, environmental system. Organization is composed of structures that operate in harmony with one another. The same system operates in the human body. THE VITAL PARTS OF AN ORGANIZED SYSTEM. The brain is the center of human control as the organization has its management system or officers that set the direction. The vital human organs are working on its specialized functions. These supplies the nutrients needed to keep all of the body parts to function properly. The heart supplies the necessary oxygen and keeps the body alive. It balances the human complex structures and meets the standards of life for survival. Any abnormality create imbalance and a heart surgery may be necessary. The same situation could be true to any organization. Diagnoses of any disorder would need changes in the composition of the system before it is too late. The human limbs are the working parts of the body. These supplies the food in order for the other parts to function normally. The food is digested by the stomach. The needed nutrient go to the different parts of the body to sustain its growth and viability. Organizations on the other hand function in similar passion. The workers are the producers of goods and services, The more productive the workers become, the more profit the company earns. The organization becomes healthy. It grows bigger and becomes more complex. As long as the organizational system is balanced properly by its management brain, it shall continue to sustain its growth and development. Workers and producers of goods must be supplied with the necessary motivational perks, just like the human limbs that needed the necessary massage once in a while.ORGANIZATIONAL MANAGEMENT Organizational management is not just putting work together. People need to be given specific tasks. Cooperative undertaking is necessary. The following aspects must be identified: 1. Identification and Grouping of Work Basic to organizational management is the identification of work. It is important to reach the organizational objectives. As it is to any team game, the players must be identified as to their capacity to contribute to the team efforts of winning. The team must be divided into parcels of activities and responsibilities. These parcels will be made up of closely related work that fits the established patterns of skills, expertise, education and training of the individual players. Closely related tasks must be grouped together. The management team has to assign specific tasks, duties and responsibilities. 2. Definition and Delegation of Responsibility and Authority ‘After the organizational team players are grouped according to their specific functions, the definition of responsibility must be established. The duties and responsibilities must be in writing to determine group and_ individual accountability and responsibility. The team managers must be given general functions in the management of their players. Individual organizational ‘workers must be given specific duties and responsibilities. The job descriptions are in written form. These specify the scope of authority and responsibility for a particular position in the organizational set-up. In delegating the work, the team manager needs to decide what part of his tasks shall be given to his subordinates. The manager must establish performance indicators to ensure that the task will be carried out according a» to the established program goals and objectives of the organization. Establishment of Relationships Teamwork is the name of the game when it comes to business. Inestablishing effective | teamwork, harmonious relationships must be established. Teamwork will enable people to work smoothly in making simple and complicated tasks. These relationships can be allowed to develop fortuitously, according to the personalities involved. Training and organizational interventions could-develop permanent and continuing basis for the moral integration of values among the members of the team. These patterns of development rest with the kind of effective team managers who lead and develop team spirit. : Structure and People in Organization The design of the organization must be predicted upon the characteristics of the stockholders, the size of the company and the business environment it will operate. Organization is not merely the grouping of people. It must be planned in such a way that its structure fits not only the needs of people but also the various environments that interplay with it. Various questions as to the design of organization aroused in many classroom discussions. Some of the questions are: a. Is organization simply a structure? b. Shall people be the consideration in designing the organization? c. Shall organization adjust to the needs and culture of people in the organization? d. Will organization change with the changes of people handling the job?Organization and people inextricably link wi one another. There could be no organization ee people. Organization is dependent on people as. they an dependent in the organization. "No manis an island," a, the saying goes. ORGANIZATIONAL DESIGN Organization is designed and developed for people to work in harmony with the environment and with the other we keholders. The design isnot made to fita single person nor o the sole driver that holds the wheels running the organizational unit. It should not be designed to meet individual personalities but around the objectives and goals of the organization. People shape the organization that fits their day to day activities. They mold a culture around its vision and mission. It is the foundation of their existence. People should be put in the work arena where their training and expertise fit for the effective delivery of the required output. It is not a matter of placing the person to a particular job to accommodate a commitment or to give favors. Positions must be so designed towards specific goals and objectives. RATIONAL IN ORGANIZATIONAL DESIGN Designing an organizational structure starts from scratch. It follows through a process of analysis of the existing work. The early growth of organization requires people with dedication and talents, The company’s expansion, needs to organize a more responsive structure to meet the growing demand of its stakeholders and clients. IMPORTANCE OF ORGANIZATION nt of a sound organization can contribute in the continuous growth and success of the business. It is not a chart drawn and symmetrically figured out in blueprint. It must be drawn out from the concerted efforts of specialists from the ranks of operating and staff managers. They must work together in designing an organization that will bring in the desired long-term profitability. The developme wo 4Organizations that are productive and profitable develop a mechanism through which it coordinates and controls the affairs of the business. It develops a strong foundation of cooperative coordination, seeing to it that works are done according to plans and programs. Relative to this concept, it must have logical, clear-cut and streamline systems of work to meet present day requirements. FEATURES OF EFFECTIVE ORGANIZATION Sound organization facilitates effective management systems. The component parts must be encouraged to grow and diversify. It must help develop the business as a whole. The following are the features of an effective organization: 1. Effective Organization Facilitates __Effective Management and Operation Effective management works with certainty and continuity. Appropriate functional groups are provided to help managers. Companies come to realize that managers need the services of staff organization and specialists, They provide assistance to top management and other operating departments. They make guidelines in making intricate decisions related to production and marketing. Relatively important is the cooperation of all operating and staff departments in making decisions. 2. Sound Organization Facilitates Effective Work Delegation As the organization expand its operation, work delegation to lower rank subordinates become necessary. The definition of duties and responsibilities are reflected in the individual job description. It will relieve the line executive of routine tasks. The amount of responsibility and accountability must carry with it an equal authority.3. Effective Organization Facilitates Growth ang Expansion The objective of any organization is growth and expansion. As operation becomes intricate, diversification can proceed. The expansion could create vacuum in other areas. It will need the attention of additional departments to handle its operation. Alert managers must anticipate such need before it is hampered by the shackles of their indecisions. 4. Effective Organization Provides for the Use of New Technology and Advance Information System The advancement in computers and modern technology helps develop new systems and procedures. These new forces need the creation of new departments to handle the intricate operations of modern technology. More advance computer aided machines would be necessary to expand production and increase product quality. These may result in either centralization or decentralization depending on the kind of technology that will be installed. 5. Effective Organization Encouraged Human Creativity and Initiative Organization is people. They are pillars in its growth and prosperity. The arrangement of jobs must be based on human specialization. Individual interest creates greater initiative for better performance. Human performance is static. It needs proper motivation and continuous encouragement. Managers should be alert to diagnose the feeling of boredom, monotony and frustrations. In the final analysis, organization is the mechanics of relationships among people. No organization could develop and prosper without the cooperative efforts of all from the top management to lowest rank-in- file. While control mechanism is vested with top management, lower managers play vital role. Thecooperative efforts of support staff are greatly necessary in the accomplishments of the plans and programs. THE ROLE OF PARTICIPATIVE MANAGEMENT IN ORGANIZATIONAL DESIGN In the modern concepts of organizational development, participative management plays a vital role in the making of more dynamic organizations. Organizational management must develop people to excel in attitude that could flourish and multiply. The dynamics of cooperation and participation must be given due importance by top management. When the organization is properly conceived, the system will demand from its people to participate in all its undertakings towards the multitude of support to its vision and mission. The talents of its professionals and specialists will harvest the fruits in making a dynamic and responsive organization. DESIGNING THE STRUCTURE The management has to decide what kind of structure the organization needs. First, we need to determine the total work environment. Arrange the work according to the most effective system that will deliver the most output and performance. The following procedures are recommended: 1. The Organization Need to Develop a Clear Vision and Mission. The organization exists for its vision and mission. The activities must center on its direction to its stakeholders and clients. People in the organization must know by heart its vision and mission to provide a concerted direction. 2. Determine the Goals and Objectives of the Organization. The organization exists for the purpose of accomplishing predetermined objectives. A sound company objective will identify the major work programs to be performed. It is the primary line of >» 1314 activities of the organization. It is the end activity of every enterprise. Management has to effectively delive the following objectives to its clientele: Effective delivery of products and services. Continual improvement in the quality of products or services for total customer satisfaction. c.. Development of better customer relations. d. Performance of social responsibility. Grouping of Related Work Activities and Programs Together. Grouping related work is the process of building balanced work packages. It is the process of arranging work to form different positions and the functions around it. Closely related work must be grouped together to deliver the most effective performance. The organizational specialists must do the following: Start with conventional planning of the functions of a. the managers or heads of departments. b. Break up the related functions. c. Identify what functions could be delegated to lower structural levels. lities of the ected output d. Determine the duties and responsi positions necessary to deliver the exp and performance. corresponding job descriptions of each e. Write the position. { Develop a sound system of accountability and responsibility. g. Determine the qualification requirements of the different positions. h. Balance the group work program. i. -Arrange supervision and control system in its management position.ee Gh) oot MANAGEMENT CONTROL AND SUPERVISION The span of control refers to the number of people a manager or supervisor can effectively manage and supervise. While it may vary from the ability of the person, the ‘ideal could be established after a careful study of the difficulty of the job. In highly technical positions, the number of people under a'manager or supervisor should not be more than six © Subordinates. On routine jobs, some suggested as much as ten (10) to fifteen (15) subordinates. A ratio of one (1) is to ten (10) subordinates in the organizational structure could be an economical proportion. Nevertheless, the number of people a manager OF supervisor can handle will vary in the type of management and organization. The following, should be considered: The character of work systems. ‘The nature of the staff assistant needed and available. The capabilities of the line staff and subordinates. The available technology placed in the system. The human capacity and values of the staff. Policies and procedures that simplify decision making. pep ao ge The span of control is also affected by the volume of decision making responsibility. When jobs are properly organized, the manager or supervisor is freed of minor decision making. Under this situation, the duties and responsibilities are properly defined. It is a system which defines and decides the what and the how. A clear and comprehensive policy statement minimizes personal decision-making. TECHNOLOGY IN ORGANIZATION The introduction of modern technology greatly enhances the structure of the organization. The links between departments and the outside clienteles reduce the number of people handling different activities. Communications are delivered faster and decision makings are made right away because of available data and information. Secretaries and clerks became obsolete as more and more technical people are needed in the organizational set-up. > 15The presence of a specialized staff frees the manager from routine activities. It is important that the manager has the trust and confidence in the people around him, so that he can delegate fully and effectively the tasks of his department. The use of computer system for storing the information and data can help monitor the effective performance of his staff. ORGANIZATIONAL ENVIRONMENT The environment of an organization is the internal and external sector that affects its design and performance. It is the playing field of an organizational domain. These are the environmental elements that the organization seeks to interact which are necessary to accomplish its vision, mission and goals. The following sectors are the external and internal environments: 1, The Industry The industry includes those organizations operating with the same goals, purposes and products. These organizations are the same business that provides competition. The state of the industry plays a significant role in the survival of an organization. It helps determine the goals of the organization. 2. The Source of Materials and Other Production Inputs. The external environment provides the material inputs either for the production of new products or for internal use in communication. It is important that the organization maintains good relationship with the suppliers of inputs to operate effectively. 3. Human Resources Human resources comprise the internal and external environments. Internal, when the employees are hired to do the job necessary for the effective operation of the company. They are external environment, when they serveas potential manpower in the company’s expansion program. They organized themselves into Unions that ma 4may be favorable or unfavorable to the existence of the organization. In many cases or instances, they create trouble rather than help the organization to expand. The Financial Sector Money is the name of any organization. The financial sectors are the banks and other financial institutions. The availability of money with low interest rates encourages organizations to grow. Organizations need outside sources of funds to grow fast. Financial institutions control the exchange and the interest rates. The Customers and Other Stakeholders The customers buy the goods and services of the organization. The market influences the growth and expansion of organization. It is the determinant of the existence of an organization. Market expansion increases the company’s profitability, but if it shrinks, the company has to cut back its operation. Stakeholder’s patronage is necessary in the growth of an organization. The Advancement of Technology Technology updates help the organizations and diversify into new products and services. It influences the level of skills and the improvement in the quality of products and services. Technology updates and increases organization's competitive advantage. The Country's Economic Condition The general economic condition of the country affects an organization’s health conditions. Unemployment reduces economic activity as there can be an excess supply of goods in the market. High interest rates and inflation reduce the purchasing power of the people, while the excess production capacity affects the organizational health conditions.8. The Government The political system of the country highly affects the organization. The government regulates business operation, flows of inputs; imposes taxes and passes laws. Itimposes conditions on environmental safety, fair trade practices, product subsidies, label statutes, and establishes several guidelines for the organization to follow. Sometimes, the government provides protection to some favored organizations. : 9. The Socio-Cultural Environment This sector refers to the demographic characteristics of the society. Demographic condition refers to age, income distribution, the work force, educational level, and the place where the people live, dither rural or urban. Our value system of love for imported goods affects our local industries. We love education but the levels of our achievements are far below as compared with advanced countries. 10. The International Community The international community provides the greatest competition for quality goods. and services and opportunities to exceed our exports against our imports. The problem is the reverse conditions where we are having more imports than exports. We consume more foreign products due to our value system and our inadequacy to improve our products. We should create a balance of trade with other countries. At present, the backbone of our economy is the export of our own people. THE DYNAMICS OF ORGANIZATION The systems view the organization as an on-going activities of change. Organization changes with the time and the conditions prevailing within the environment. People change in values and human perspectives. In the same manner, an SSS 1 4organization must adapt to the changing conditions prevailing in its present conditions. There are two types of organizational dimensions: 1. Structural Dimensions Provide concrete level to describe the internal organizational characteristics which create a basis for measuring and comparing organizations. The following are the features of the structural dimensions: a. Formalization pertains to the amount of written documents in the organization. These documents are necessary for accreditation in the International Standards Organization. The documents include systems and procedures in doing the work. Workers must have written job descriptions and job specifications. Operating policy manuals are properly documented, periodically updated and audited as to its compliance. b. Specialization is the division of labor into specific functions to carry out the tasks of the organization. Employees have different talents that can be utilized by the organization to its advantage. It creates simplicity in job performance. c. Standardization is the process where procedures, machines, materials and measuring instruments are set to repeatable or attainable level as basis for measurement of performance are performed in uniform manner. The set of standards are established to produce uniform quality of products and services. The work details are described and done uniformly in the same levels of operation. d. The hierarchy of authority refers to the chain of command in the organizational ladder. It identifies the reporting relationships. It specifies who should report to whom. When the span of control is wide, the hierarchy of authority is shorter and when it is narrow, the hierarchy of authority tends to be tall. a >» 19e. Complexity is tl ities or sub-system within the organizational framework, Itcan be measured in three dimensions: «Vertical Complexity refers to the number of levels in the hierarchy or the ladder of authority from highest to the lowest level, that is from the President tothe levels of supervisors and subordinates. ains to the number © Horizontal Complexity pert in the organizational of departments or sections i line of authority which is arranged horizontally. This refers also to the major line department such as. Manufacturing, Finance, Human Resourch, Marketing, Purchasing and other departments depending on the size of the company. © Spatial Complexity is when the organization develops branches or subsidiaries and they are “located in different areas or places in the country or region. This refers to big corporations and control system held by the management team or corporate body. f Centralization is defined of authority in decision-mal authority for decision making are: Centralized is when decision making is done at the highest level and cascaded down to the last subordinates. That is, the President or the General Manager makes the decisions and the subordinates follow. tralized is when the lower level Managers are given the authority to make decisions within the foreview of the policy guidelines approved by the management. Managers are given free-hand in decision-making subject to certain policies and guidelines. g. Professionalism is the level of formal education required of a manager and subordinates for them to function effectively in their line of work. To develop he number of acti as the hierarchical level king. The two levels of e Decent PPE ev re ee Pee OCC Sn Eemanagers and employees, management “conducts training programs specifically designed for effective job performance. h. Personnel Ratio is the proportion of the total number of employees spread in the different functions in the organizational hierarchy. Functional analysis measures one department or section is under staff or over staff. Organizational interventions and job evaluation are required to measure the right proportions. 2. Contextual Dimensions The dimensions provide the basis for measurement and analysis of the characteristics of the organization and reveal significant information. The dimensions under this category are the following: a. Organization Size refers to the statistical number of employees in the total organizational set-up. It refers also to the number of employees under each department or section. b. Organizational Technology pertains to to the use of modern facilities in the production of goods or services. It is measured in terms of how it is applied efficiently and effectively in transforming inputs to quality outputs. c. Organizational Environment includes the government, industry, customers, suppliers and the financial community. Principally, they are the outside elements that affect the operations of the organization which at times is beyond its control. d. Organizational Strategy refers to goals that define its purpose. This includes the competitive techniques employed by the firm that may be different from other organizations. Goals are written statement of vision and mission that set the organizational direction. These cascaded down to strategic plan of actions and describe resource allocations and activities in dealing with customer demands as well as define the scope of operation in dealing with the structural and contextual dimensions. >» 2