Organizing

• The process of arranging people and other resources to work

together to accomplish a goal.
• The identification and classification of required activities

• The grouping of activities necessary to attain objectives

• The assignment of each grouping to a manager with the authority necessary

to supervise it
• The provision for coordination horizontally and vertically in the organisation
structure
 Formal and Informal Organization

• Formal Organization – Intentional structure of roles in a formally

organized enterprise

• Informal organization – a network of personal and social relations not

established or required by the formal organization but arising
spontaneously as people associate with one another
Organization structure
Organization Structure
Defined as:

1. The set of formal tasks assigned to individuals and

departments.

2. Formal reporting relationships.

3.The design of systems to ensure effective coordination

of employees across departments.
Structural Characteristics
Departmentation
Height

Span of Control
 Department
• A distinct area, division, or branch of an organisation over which a
manager has authority for the performance of specified activities
• Production division

• The sales department

• The market research section

• The accounts receivable unit

 Departmentation

• By enterprise function

• By territory or geography

• By customer group

• By product

• Matrix Organization
Criteria for setting up SBU’s

• Own mission statement

• Definable group of competitors

• Prepare its own integrative plans

• Manage its own resources

• Neither too large nor too small

Span of Management/ Span of Control

• A number of subordinates a superior can manage

• Upper levels – four to eight

• Lower levels – eight to fifteen

 Factors determining an effective span
• Training of subordinates

• Clarity of delegation of authority

• Clarity of plans

• Use of objective standards

• Rate of change

• Communication techniques

• Amount of personal contact needed

ORGANIZATIONAL LEVELS AND THE SPAN OF
MANAGEMENT
• While the purpose of organizing is to make human cooperation
effective,
• the reason for levels of organization is the limitation of the span of
management.
• In other words, organizational levels exist because there is a limit to
the number of persons a manager can supervise effectively, even
though this limit varies depending on situations.
AUTHORITY AND POWER
• Authority in organization is the right in a position (and, through it, the
right of the person occupying the position) to exercise discretion in
making decisions affecting others. It is of course one type of power,
but power in an organizational setting
• Power, a much broader concept than authority, is the ability of
individuals or groups to induce or influence the beliefs or actions of
other persons or groups
• When people speak of authority in managerial settings, they are
usually referring to the power of position
Line and Staff Authority
•Line Authority

•Staff Authority

•Functional Authority
Line Authority

• Line Authority is that relationship in which a superior

exercise direct supervision over a subordinate.

• An authority relationship with a direct line or steps

Line Authority
Line Manager:

• A manager who is (1) in charge of essential activities such as

sales and (2) authorized to issue orders to subordinates down the

chain of command.

E.g.: The president, production manager, sales manager etc.

Staff Authority

Staff Manager:
• A manager without the authority to give orders down the chain
of command (except in his or her own department);
• generally can only assist and advise line managers in specialized
areas such as human resources management.
E.g..: HR manager, Legal Manager etc.
Staff Authority

• The nature of Staff relationship is advisory.

• The function of people in a pure staff capacity is to

investigate, research, and give advice to line managers.

Line and Staff Authority

• In large organisations, they are usually Line and Staff

managers

• In small organisations, only line managers exists.

 Authority
Formal and legitimate right of a manager to make

decisions, issue orders, and to allocate resources to

achieve organizationally desired outcomes.

 Authority
Authority is distinguished by three characteristics:
•Authority is vested in organizational positions, not
people.
•Authority is accepted by subordinates.
•Authority flows down the vertical hierarchy.
 Responsibility
•The duty to perform the task or activity an employee

has been assigned.

•Managers need authority commensurate with

responsibility.
 Power
• An individual’s capacity to influence decisions.
• It is the ability of individuals or groups to
induce or influence the beliefs or actions of
other persons or group
 Types of Power
Coercive power:
Power based on fear; maintained by the use of threats and
punishment.
Closely related to reward power and normally arising from legitimate
power, it is the power to punish, whether by firing a subordinate or by
withholding a merit pay increase.
Reward power:
Power based on the ability to distribute something that others value.
 Types of Power
Expert power

Power based on one’s expertise, special skill, or knowledge.

Legitimate power
Power based on one’s position in the formal hierarchy.
Referent power
Power based on identification with a person who has desirable
resources or personal traits.
people believe in them and their ideas.
 Employee Empowerment
• Employee empowerment is giving employees a certain degree of
autonomy and responsibility for decision-making regarding their
specific organizational tasks.
 Empowerment
• Empowerment is based on the idea that giving employees skills,
resources, authority, opportunity, motivation, as well holding them
responsible and accountable for outcomes of their actions, will
contribute to their competence and satisfaction.
• Scalar principle in organization: the clearer the line of authority from
the ultimate management position in an enterprise to every
subordinate position, the clearer will be the responsibility for
decision-making and the more effective will be organizational
communication
DELEGATION OF AUTHORITY
• Authority is delegated when a superior gives a subordinate discretion to
make decisions. Clearly, superiors cannot delegate authority they do not
have, whether they are board members, presidents, vice presidents, or
supervisors
• The process of delegation involves (1) determining the results expected
from a position,
• (2) assigning tasks to the position,
• (3) delegating authority for accomplishing the tasks, and
• (4) holding the person in that position responsible for the accomplishment
of the task
• Studies almost invariably find that poor or inept delegation is one of the
causes of managerial failures.
• Both delegation and empowerment are a matter of degree. They also
require that employees and teams accept responsibility for their
actions and tasks. Conceptually, this can be illustrated as follows:
• Power should be equal to responsibility (P = R).
• If power is greater than responsibility (P > R), then this could result in
autocratic behavior of the superior who is not held accountable for
his or her actions.
• If responsibility is greater than power (R > P), then this could result in
frustration because the person has not the necessary power to carry
out the task for which he or she is responsible.
DECENTRALIZATION OF AUTHORITY
• Decentralization is the tendency to disperse decision-making
authority in an organized structure. It is a fundamental aspect of
delegation, to the extent that authority that is delegated is
decentralized.
• It refers to the dispersal of decision making power to the lower
level of the organization
• How much should authority be concentrated in or dispersed
throughout the organization?
Centralization:

• Centralization of authority refers to the concentration of decision making

power at the top level of management. All important decisions are taken at
the top level
• Different Kinds of Centralization
• Centralization of performance pertains to geographic concentration; it
characterizes, for example, a company operating in a single location.
• Departmental centralization refers to concentration of specialized
activities, generally in one department. For example, maintenance for a
whole plant may be carried out by a single department.
• Centralization of management is the tendency to restrict delegation of
decision making. A high degree of authority is held by managers at or near
the top of the organizational hierarchy.
 Organisation environment for Entrepreneuring,
Intrapreneuring, Reengineering
• Intrapreneur: Intrapreneur is a person who focuses on innovation and creativity
and who transforms a dream or an idea into a profitable venture by operating
within the organizational environment. This notion is also sometimes referred
to as corporate venturing.
• Entrepreneur: The entrepreneur is a person who does similar things, but
outside the organizational setting. Entrepreneurs have the ability to see an
opportunity, obtain the necessary capital, labor and other inputs, and then put
together an operation successfully. They are willing to take personal risk of
success and failure
• Innovation and Entrepreneurship: Entrepreneurs have creative ideas; they use
their management skills and resources to meet identifiable needs in the
marketplace. If successful, an entrepreneur can become wealthy. Innovation is
not a matter of sheer luck; it requires systematic and rational work, well organized
and managed for results.
• What does entrepreneurship imply? It suggests dissatisfaction with
how things are and an awareness of a need to do things differently.
Innovation comes about because of some of the following
situations:
• An unexpected event, failure, or success
• An incongruity between what is assumed and what really is
• A process or task that needs improvement
• Changes in the market or industry structure
• Changes in demographics
• Changes in meaning or in the way things are perceived
• Newly acquired knowledge
• Reeingineering: It is sometimes called “starting over” because
Michael Hammer and James Champy, who popularized the
concept, suggested that one asks this question: “If I were
recreating this company today (from scratch), knowing what I
know now and given current technology, what would it look
like?”

• More specifically, Hammer and Champy define reengineering

as “the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical
contemporary measures of performance, such as cost, quality,
service, and speed.”
 Process of Organizing
• Establishing enterprise objectives

• Formulating supporting objectives, policies and plans

• Identifying and classifying the activities necessary to accomplish

these

• Grouping these activities

• Delegating authority necessary to perform the activities

• Tying the groups together horizontally and vertically

Importance of Organizing Function
1. Facilitates Administration
2. Encourages Growth & Diversification
3. Encourages Good Human Relations
4. Stimulates Innovation & Technology
5. Ensures Continuity of Enterprise
6. Coordination
Effective Organising
To work, an organization structure must be understood, and principles must be put into practice. In organizing,
there is no one best way; it depends on the specific situation.

1. Avoiding mistakes in organising by planning :Establishment of objectives and orderly planning are necessary
for good organization.
• Planning for ideal: Many mistakes in organizing can be avoided by first planning the ideal organization for goal achievement.
ideal organization plan constitutes a standard; and by comparing the present structure with it, enterprise leaders know what
changes should be made when possible. Organization structure needs to be tailor-made (customized).
• Modification for the Human Factor: If the available personnel do not fit into the ideal structure and cannot or should not be
pushed aside, the only choice is to modify the structure to fit individual capabilities, attitudes, or limitations.
• Organization planning : identifies staffing needs and helps overcome staffing deficiencies. It also discloses duplication of
effort, unclear authority and communication lines, and obsolete ways of doing things. Planning the organization structure helps
determine future personnel needs and required training programs.
2. Avoiding organisational inflexibility
An effective organization remains flexible and adjusts to changes in the environment.

Avoiding Inflexibility through Reorganisation:

compelling reasons for reorganization: changes in business business environment

include changes in operation caused by acquisition or sale of major properties, changes
in product line or marketing methods, business cycles,

competitive influences, new production techniques, labor union policy, government

regulatory and fiscal policies, and the current state of knowledge about organizing.

• reorganization may be caused by demonstrated deficiencies in an existing structure.

organizational weaknesses: excessive
spans of management, an excessive number of committees, lack of uniform policy,
slow decision-making, failure to accomplish objectives, inability to meet schedules,
excessive costs, or a breakdown of financial control. Other deficiencies may stem
from inadequacies of managers.
• Failure due to lack of knowledge or skill of a manager who for some reason cannot
be replaced may be avoided by organizing in a way that moves much of the authority
for decision-making to another position.
• Personality clashes between managers also may be solved by reorganization.
Readjustment and change:In addition to pressing reasons for reorganization, there is
a certain need for moderate and continuing readjustment merely to keep the
structure from becoming stagnant.
3. Making staff work effective:The line–staff problem is not only one of the most difficult that
organizations face but also the source of an extraordinarily large amount of inefficiency.
 Understanding authority relationships: As long as managers regard line and staff as groups of people or
groupings of activities, confusion will result .Line and staff are authority relationships, and many jobs have
elements of both. The line relationship involves making decisions and acting on them. The staff relationship,
on the other hand, implies the right to assist and counsel. In short, the line may “tell,” but the staff must “sell”
(it recommendations).
 Line and staff team efforts(Making Line Listen to Staff): Line managers should be encouraged or required to
consult with staff. Enterprises would do well to adopt the practice of compulsory staff assistance where line
must listen to staff
 Keeping staff informed: Many criticisms arise because the staff is not kept informed on matters within their
field. situations. If line managers fail to inform their staff of decisions affecting their work or if they do not
pave the way—through announcements and requests for cooperation—for staff to obtain the requisite
information on specific problems, the staff cannot function as intended.
 Staff should be problem solvers and not problem creators.
4. Avoiding conflict by clarification
A major reason for conflict in organizations is that people do not understand their
assignments and those of their coworkers. Understanding is aided materially by the proper
use of organization charts, accurate job descriptions, spelling out of authority and
informational relationships, and introduction of specific goals for specific positions
• Organisation charts:An organization chart indicates how departments are tied together along
the principal lines of authority. unsound. Subordinate– superior relationships exist not
because of charting but, rather, because of essential reporting relationships. Organization
charts are subject to important limitations. A chart shows only formal authority relationships
and omits the many significant informal and informational relationships
• Position description:A good position description informs every one of the incumbent’s
responsibilities.
5. Ensuring understanding of organising:All the members of an enterprise must understand the structure of their organization. since
formal organization is supplemented by informal organization, members of an enterprise must understand the general workings of
informal as well as formal organization in order for that structure to work
• Teaching the nature of organisation:understandable. If an organization structure is put into written words and charts, it has a
better chance of being clear than if it is not. However, even the best-written words and charts do not always clearly convey the
same meaning to every reader, so effective managers cannot stop with written clarification. They must teach those in their
operation the meaning of the organization structure, their position in it, and the relationships involved. Managers may do this by
individual coaching, through staff or special meetings, or by simply watching how the structure works.
• Importance of informal organisation:Another way of making the formal organization work effectively is to recognize and take full
advantage of informal organization. They include interrelationships that are not usually charted, such as the unwritten rules of
organizational conduct. best-known examples of informal organization, one which seems to exist in every department and
organization is the “grapevine.”
• The grapevine Informal organization tends to exist when members of a formal organization (perhaps a company department)
know one another well enough to pass on information—sometimes only gossip—that is in some way connected with the
enterprise.
• Benefits of the informal organization Informal organization brings a kind of cohesiveness to formal organization. It imparts to
members of a formal organization a sense of belonging, status, self-respect, and satisfaction. Many managers, understanding this
fact, consciously use informal organizations as channels of communication and molders of employee morale.
6.Organization Culture
• The attitude, traits and behavioral patterns which govern the way an individual interacts with others is
termed as culture.

• In the same way organizations have certain values, policies, rules and guidelines which help them create
an image of their own.

• Organization culture refers to the beliefs and principles of a particular organization.

• The culture followed by the organization has a deep impact on the employees and their relationship
amongst themselves.

• The effectiveness of an organization is also influenced by the organization culture, which affects the way the
managerial functions of planning, organizing, staffing, leading, and controlling are carried out
Types of organizational culture
Strong Organization Culture:

• where the employees adjust well, respect the organization’s policies

and adhere to the guidelines.

• In such a culture people enjoy working and take every assignment

as a new learning and try to gain as much as they can.

• They accept their roles and responsibilities willingly.

Types of organizational culture
Weak Organization Culture:

• Individuals accept their responsibilities out of fear of superiors and

harsh policies.

• The employees in such a situation do things out of compulsion.

• They just treat their organization as a mere source of earning

money and never get attached to it.
The Influence of the Leader on Organization Culture:
• Managers, especially top managers, create the climate for the
enterprise.
• Their values influence the direction of the enterprise. Although the
term value is used differently, a value can be defined as a fairly
permanent belief about what is appropriate and what is not that
guides the actions and behavior of employees in fulfilling the
organization’s aims. Values can be thought of as forming an ideology
that permeates everyday decisions
Google workplace culture
Businesses like Google revolutionized the workplace by creating a corporate culture
that was not only fun, but encouraged creativity, flexibility and companionship
among colleagues. Often known to have endless perks on-site, Google campuses
include play areas, coffee bars, outdoor terraces, free meals, and dog-friendly work
environments across the world. Google established their corporate culture
definition to focus on having happy employees and creating a productive
workplace. The long-term success of Google is indisputably and consistently tied
directly back to their company culture.
Netflix corporate culture
Another business that largely credits its success to its employees and company
culture is Netflix. Employees are given unlimited vacation from the start because
Netflix created a workplace culture founded on trusting employees and treating
them like adults. To promote work-life balance, Netflix promotes working regular
hours and producing great work over long hours and subpar results. By defining
“What is corporate culture?” within their organization, Netflix was able to deeply
root these values throughout their business.

Netflix Jobs
• https://www.youtube.com/watch?v=4cBN8xH-5Qw