MANAGEMENT 1 ORGANIZING AS A PROCESS

CHAPTER 4: ORGANIZING Organizing as a process should consider several factors or

fundamentals.
First, the structure must reflect objectives and plans
ORGANIZING because activities of the organization are based on them .
Organizing is the process of grouping together of men Second , the structure must reflect authority given to top
and establishing relationships among them, defining the and middle management.
authority and responsibility of personnel by using the Third, organization structure, like any other plan, should
company's other basic resources to attain predetermined reflect their external environment. Likewise, the premises
goals or objectives. of a plan may be economic, technological, political, social
Organizing is the identification of the grouping of work to or ethical, which are also true of an organization
be done, the delegation of authority and responsibility to structure. The organization establishes structure in order
the employees, and the establishment of relationships to permit contributions by members of the group, and to
among the personnel in order to use to maximum help people gain objectives efficiently and effectively in a
advantage the company 's basic material resources in the changing future. In this case, a sound organization
accomplishment of a common goal. structure can never be either mechanistic or static.
Men working together in groups to achieve a goal should Fourth, the organization must be manned. Groupings of
have their respective roles to play, similar to basketball activities, and the authority of an organization structure
players. Whether their roles are developed by themselves must consider the people's limitations, customs and
must be defined and designed by someone who wants to traditions. This does not mean that the structure must be
make sure that men can contribute in a definite way to based around the individuals instead of around the goals
group effort. A role would mean that what men do has a and supporting activities.
specific purpose and objective. Their activity is a situation
where they know how their jobs fit into group effort and THE NATURE AND DEVELOPMENT OF
where they have the necessary tools and information to
ORGANIZATION
accomplish it. This can be demonstrated in a simple effort
Although there are differences of interpretations as to
as putting up camp on a fishing expedition .
the exact nature of organization, it is an undeniable fact
that the proper organization is the backbone of the
NATURE OF ORGANIZING successful enterprise, the solid foundation upon which
It has been proven that a weakness in the organization is the entire business is built.
a positive sign because it induces the people to attain
team work, since they know that there should be
WHAT IS AN ORGANIZATION?
cooperation to accomplish something. Subsequently,
The term "organization" has several definitions. One is
those people could work together more effectively if they
the "executive structure of a business." This definition
know the roles they want to perform in any group
indicates that organization is the situations by which the
undertaking and how their roles relate to one another.
work of a business, managerial or otherwise, is
performed, that it provides the required channels, points
This is possible in business or government as it is in
of origin, and flow of management direction and control.
basketball or volleyball. The design and structure and
"Organization " also connotes a creative process. All the
improvement of these systems of roles are basically the
parts of a business do not come into existence
managerial function of organizing. Organizing is a broad
spontaneously. They are the results of managerial efforts
term that can be interpreted differently by many
to carry out a predetermined course of action. The term
management theorists. Some believe it includes the
organization is sometimes used to mean the total
behavior of all members of the group. Others say it is the
business organization, including facilities, materials,
total system of social and cultural relationships.
money, and manpower. This final definition refers to the
Generally, most managers think that the terms mean a
term "concept," to which a member is assigned specific
formalized design of intentional structures, roles, and
duties and under the term of which all employees work
positions.
effectively together within a framework of superior and foremen retain supervisory authority and control over
subordinate relationship. the activities of personnel of their respective
departments. They are the coordinating force that work
TYPES OF ORGANIZATION STRUCTURES toward the preservation of harmony and good personnel
It has been stated that organization structures may differ relations between the workmen and the special executive
in terms of the specific needs of a given business assistants. These assistants frequently carry the title of
enterprise. There are, however, four principal process engineer, design engineer, industrial engineer, or
organization types with different degrees of complexity budget officer.
appropriate to the business in terms of its size and type
of product. 3. Functional organization
It gthe pure services of experts or specialists. The
development of staff departments and positions led quite
These types are: naturally to attempt complete reorganization on a
1. Line organization functional basis. This removed the staff specialist from his
This is the simplest form cf structure and refers to a direct "assisting" capacity and gave him the pure authority and
straight-line responsibility and control from the top responsibility for supervision and administration of the
management to the middle management and to the function, replacing the operating foreman. The
lower level. It acquired this name because there are movement as indicated in Figure 4.3, each worker in the
direct single lines of authority and responsibility between production department has eight supervisors.
the manager and his subordinates. It is the oldest form of The Gang boss prepares for the production and the
organization structure based on the classical principle of worker has to approach him for direction in this area.
the Scalar Chain. In this form of structure, authority The Speed boss is assigned with the responsibilities of
passes responsibility-directly to his immediate superior. introducing men and getting the set standards of
production.
This form of organization is common in many small and The Inspector is in charge of checking the quality of work.
medium sized companies. The managers of the The Repair boss takes care of the equipment and tool
departments are given complete authority and repairs.
responsibility over the activities involving their functional The job of Order-of-Work Clerk is to plan and schedule
areas. One of the disadvantages of this type of structure order.
is that a manager of a department must be familiar with The Instruction Card Clerk determines the best way to do
diverse activities related to the operation of the the job.
department. A Sales Manager, for instance, must have The information relating to cost and production is
knowledge in personnel activities. He has to recruit maintained by the Time and Cost Clerk.
salesmen, train them, and take care of their benefit
programs.

2. Line and staff organization

This utilizes the assistance of experts or specialists.
Business leaders have recognized - as their companies
expand from simple to complex organizations - that a
small number of managers could not personally assume
direct responsibility for all functions, such as research,
planning, distribution, public relations, industrial
relations, and many other activities of business.

Therefore, one option toward reorganization as a

company expands in size and complexity is to appoint
assistants to managers. Specific advisory responsibility is
delegated to these assistants. Managers and general
Taylor felt that the advantage of functional specialization
will be achieved to a great extent under this method of
Any manager or supervisor has the right to form a
organization. But this type of organization violates one of
committee if it is needed by his department or company.
the traditional principles of organization, namely, the
In order to facilitate a cooperative relationship within a
"Unity of Command."
large industrial enterprise, many companies add a
According to this principle, no one subordinate can have network of committees to the line and staff organization.
more than one supervisor. Reporting to several bosses
Committees may be classified as:
may create organizational problems such as lack of clarity
of authority, inadequate control, confusion, and conflicts. a. Ad Hoc Committee.
This undertakes temporary activities; or
b. Standing Committee.
This is sometimes called permanent committee
which undertakes permanent activities, such as
the budget committee.

A committee is a tool for the development of ideas and

procedures. It is a means by which ideas can be pooled
and offered for criticism. It is the strong right arm of a
tactful administration that realizes the importance of
getting its people to work together in the solution of its
own problems. Committees, like other phases of
organization, should be varied in terms of the needs of a
given enterprise.

However, there are at least four basic principles to be

considered.

1. The organization of a committee should grow out of a

need that is recognized by the representatives of the
departments and the personnel affected.

2. The members of a committee should be

representatives of the function and the personnel
concerned who have variations in opinion among them.

3. Duties, authority, and responsibility must be clearly

defined.
4. Committees
4. The organization and operation of a committee should
Committee is another common organizational form used be a cooperative development.
in situations where group participation and decision are
required. Two types of thinking seem to be common
when it comes to the use of the committee form of
organization. On one side, the committee approach has
been taken for granted and committees are automatically
set up without even considering the purpose and the
need for such committees. On the other side, managers
are totally reluctant to use committees because of a fear
of diverse opinions. These are created to undertake
special activities rather than routinary activities.
ORGANIZATION CHART 3. Personnel Chart.

An organization chart is a diagram or drawing showing The personnel chart shows the departments in the same
the important aspects of an organizational structure. It relative manner as the functional chart. But instead of
shows the relationship among positions as to authority, listing the functions, the titles of the positions of the
responsibility and accountability, and the people who names of persons are indicated. The chart also shows the
occupy them. As defined by George Terry: "An class titles of all positions in the department together
organization chart is a diagrammatical form which shows with their locations in the organization.
important aspects of an organization including the major
functions and their respective relationships, the channels
of supervision, and the relative authority of each How to Draw an Organization Chart
employee who is in charge of each function."
An organization chart may consist of an entire business,
for each department or for each section of a business.
Before drawing an organization chart, one should observe
PURPOSE OF AN ORGANIZATION CHART
the following procedures.
An organization chart assists one to view the firm's
First, gather the necessary information on the following:
structure as a whole. It shows the principal divisions and
lines of formal authority and responsibility. It assists 1.existing positions and/or departments;
management to divide the different duties or functions in
the business establishment so that they will be 2. objectives, functions, and activities of positions and/or
performed effectively and efficiently. A well-prepared departments;
chart shows all of those involved in any undertaking, 3. organization;
what each of them is to do and to whom each is
responsible. It shows the grouping of departments for 4. lines of authority and responsibility from top
easier direction, and control of activities. It is a way of management to middle management;
sorting the responsibilities of the positions so that time
5. functioned relationships between line and staff
and effort are not duplicated and, therefore, wasted.
positions/departments;

6. positions and job titles;

Types of Organization Chart
Some organization charts show positions and/or 7. physical location of each position/department.
departments; others show only the functions to be
The second step is to draw a temporary chart and check it
performed. Others would show either, both positions and
for accuracy with the managers of the various
functions, or departments, individuals, and functions.
departments or sections.
1. Master Chart or Chart o f Authority.
Finally, the chart as drawn must be submitted and
The master chart shows the entire organizational recommended to top management for approval and
structure. It is a master plan of the principal implementation. The lines of communication, also known
departments, with lines of authority and responsibility as the flow of authority and responsibility, should be
and the mutual relationships of all departments or major specific and clear. The organization chart shows the work
components. to be performed, their divisions, and their
interrelationships. It shows the vital functions of the top
2. Functional Chart. management and the subordinate functions in
The functional chart shows at a diagram or drawing the successively descending positions, thereby indicating a
functions and activities of the positions and/or hierarchy of positions from top management to rank and
departments. It shows the major responsibilities of file. The chain of command should be clearly established.
departments or positions. Listed below each job title are Staff departments/personnel should be properly
brief statements of the responsibilities. indicated by using dotted lines or broken lines. When it is
drawn, it is generally in a pyramid shape, with the few 4. When an assistant to the head of an organizational
work at the top and an increasing number of work position acts in the capacity of a staff or technical
toward the base. Positions carrying out work at the top of assistant without exercising managerial authority over
the chart have the greatest managerial authority and the line organization, the box should be drawn to the side
responsibility, while those at the bottom have the least of the line organization. It could either be on the right or
authority and responsibility. Positions/departments on left side. 5. Staff and service functions are placed under
the same horizontal level on the chart indicate equal the office or units served, usually to the right using the
responsibility and authority in the organization. dotted lines. They should be drawn of the same sizes.

The job titles or the names of the job should be shown

clearly on the chart. Briefly, an organization chart helps
management to visualize the different divisions,
departments, and sections of the business. Similarly, an
engineer makes a blueprint plan as a guide in the
construction of a building, factory, or bridge. The
organization chart shows the managerial positions in the
form of boxes connected by the solid lines that indicate
the line of the command; authority flowing from one
position at the top down to the various heads of
divisions, departments, sections or units and finally to
employees and workers at the base of the pyramid. As
each new unit is created, the number of parts multiplies.
The organization chart should be supported by written
job descriptions stating the duties and responsibilities of
each job and also a written job specification which REORGANIZATION
indicates the qualification requirements for the job.
Reorganization is the process by which an existing
The following rules should be observed in drawing an organization undergoes changes in the size and shape of
organization chart. the organization structure. The change may range from
simple to complex.
1. Boxes or rectangles representing various positions/jobs
in the organization should be grouped and placed In the figure at the previous slide, the organization is
according to their levels (top management, middle structured along two dimensions. In one dimension, the
management, rank and file) in the organization. structure shows basic functional departments such as
Research, Development, Finance, Production, Sales and
2. The boxes indicating the organizational functions on Marketing. The Department Head in each of these
the same level should be of the same sizes, i.e., top functional areas plans and controls the dimension, a
management level, 3/8" x 2 1/ 2". Project Manager plans and controls the efforts for all
3. Solid/block lines should connect boxes or rectangles to projects currently in that phase of development. In the
designate managerial control or line of authority. Lines of other dimension, a Project Manager plans and controls
authority do not pass through a box or rectangle. Each an entire project through all the functional areas
box should have lines indicating its relation to the necessary to its completion by placing personnel from
organizational units above and below it. These lines each of the appropriate functional departments. Thus,
should connect the box at the top center and then either two hierarchal structures intersect one another. While
at the bottom center or at the side of the box or the former is functionally oriented, the latter is often
rectangle. Dotted/broken lines should indicate service in project-oriented.
staff relationship.
DEPARTMENTATION power to make, consult, or give service which is related
to the staff function.
Departmentation results from the no one , the desire to
obtain organization units of manageable size, and to Other types of authority aside from what has been
utilize managerial ability. An organization structure and mentioned are:
design are shaped significantly by the departmentation
A. those that result out of one's knowledge which
followed. Examples of departments are Accounting
is called the authority of knowledge;
Department, Personnel Department, Sales Department,
B. those arising out of one's nearness to those with
etc. It seems quite apparent that if the stated goals and
line authority.
objectives of an organization are to be attained, certain
activities have to be performed. And it would also seem These should be differentiated from delegated authority.
that the organizing function of a manager would involve It is significant that an understanding of our concept of
grouping the functions and activities necessary to attain authority is clarified. There are three current concepts of
the goals of an enterprise. The term for that process is authority
Departmentation (or Division of Organization). As stated
above, the process of grouping the functions and A. the traditional,
activities in an organization is known as B. the behaviorist, and
Departmentation. It gives a horizontal dimension to an C. the functional.
organization.

Knowledge of these concepts can give us a better view of

authority. The traditional concept uses Henri Fayol's
THE ELEMENTS OF DELEGATION
statement: “Authority is the right to command and the
Delegation is the process of entrusting and transferring power to make oneself obeyed." A latter interpretation of
responsibility and authority by the top management to the statement is “Authority is the right to give others
the lowest level. The elements of delegation are the orders and the power to exact obedience." This view is
following: present among those who claim themselves belonging to
the scientific school of management, where the worker is
1. Responsibility seen as a mere tool in the organizational machine. The
behaviorist or social scientist treats authority differently
This is the work or duty assigned to a particular position.
as opposed to the traditional concept. They explain
Responsibility involves mental and physical activities
authority to be a relationship between the supervisor
which must be performed to carry out a task or duty. This
and the worker. They believe that authority is given by
can be delegated. The work of the manager can be
subordinate to superior. The direction of authority is,
divided into two categories:
therefore, upward instead of downward. The real source
First, The management functions which cover planning, of power is the subordinate and not the superior. The
organizing, staffing, directing, and controlling activities; ultimate source of power is the group, and as long as the
and, group allows itself to be under the authority, the
management can exercise that power.
Second, the operative functions which include all
activities that have to do directly with their specialization.

2. Authority
It refers to the power or the right to be obeyed. It is also
the and rights entrusted to make possible the
performance, of the work delegated. Authority includes
such rights and powers with regard to receipt and
disbursement of money, and hiring and dismissing of
employees. It may sometimes be limited only to the
. Accountability routine matters. The idea here is that managers should
concentrate on those matters that require their abilities
This is the answerability of the obligation to perform the and not become bogged down with duties that their
delegated responsibility and to exercise the authority for subordinates should be doing.
the proper performance of the work. Accountability
cannot be delegated. The key concept of Bureaucracy is Hierarchy - the ranking
of individuals according to the amount of rational-legal
Accountability is given to the person who accepts the authority they can exercise when they are fulfilling the
responsibility and is accountable only to the .extent that responsibilities of their positions. When an individual
he is given the authority to perform. Each person can be comes into the organization, she is assigned a particular
accountable to only one person, his immediate boss. The position. An immediate superior has power over this
superior can only exact responsibility to the extent that individual, that is, the ability to give commands that she
standards of performance are defined. must accept. This individual, in turn, has power over her
own subordinates. Typically, an individual reports to only
one superior to avoid confusion and role conflict, so there
THE ART OF DELEGATION is unity of command throughout the hierarchy.

Delegation is considered an art and a science. It is an art

because it is a skill that the manager performs effectively
FORMAL AND INFORMAL ORGANIZATIONS
if he practices it. Delegation should first and foremost be
tackled before the establishment of goals and objectives Every organization structure has two systems of
and a clear definition of responsibility and authority has operation: the formal and informal. The formal system is
been made. To be effective, the manager must motivate composed of the recognized and formalized lines of
the subordinates to work on the delegated responsibility communication, authority, and control. This system is
and authority. Positive motivation, instead of negative, frequently pictured in the official organization chart. The
should be given. Positive motivation maybe described as second, or informal system, is much more subtle and
psychological as w ell as monetary and other tangible invisible in the organization chart. While the formal
benefits. The technique of using group participation and organizations have a rigid organization structure, showing
effective communication can provide the subordinates a the functional roles, the informal organizations lack rigid
sense of belonging in the group. This condition would structure. Often the informal organizations are formed
induce the person to integrate his objective with for the purpose of satisfying some social needs.
organization objectives. The manager should always
challenge the subordinates in the form of providing work These organizations may exist within the" formal
that are difficult but not impossible to attain to remove organizations or may exist and operate independently.
the effects of boredom. The superior should see to it that Various clubs, teams, associates, and similar other groups
training is given to subordinates when necessary. Lastly, come under this category. All business, industrial
the manager should not delegate responsibility and then organizations and educational institutions are formal
forget about what he delegated. If this happens, the next organizations.
time you delegate the job, it will be the subordinate's
turn to forget.
CENTRALIZED AND DECENTRALIZED
ORGANIZATIONS
THE EXCEPTION PRINCIPLE
One of the most important questions that a company
The exception principle (also known as management by must answer as it grows is whether or not to continue
exception) is closely related to the parity principle. The management that is centralized in one person, or to
exception principle states that managers should decentralize management by delegating some of its
concentrate their efforts on matters that deviate authority to subordinates. In a centralized management
significantly from the normal and let subordinates handle organization, major decisions are made by a few top
executives, subordinates exercise little (if any) initiate in
decision making. Even when there are multiple branches,
most decisions are made at the main office rather than at
the local branch. Chain department and grocery stores
frequently adopt a centralized management scheme.

Centralized management in these organizations assume

that the responsibility for buying, advertising, marketing,
accounting, and other functions will be conducted at one
location even though there are many operating branches.
A decentralized management organization represents a
systematic effort to delegate to lower levels all authority,
except that which can only be exercised at the highest
level. In a centralized organization, authority rests only in
a few hands and most of the decisions are made by these
few. On the other hand, in a decentralized organization
authority is dispersed throughout and decision making is
distributed throughout the organization.