PRINCIPLES OF MANAGEMENT

MANAGEMENT FUNCTION OF ORGANISING

1
 Structure
 DEFINITION
 PRINCIPLES OF ORGANISING
 IMPORTANCE
 ORGANISING PROCESS
 ORGANISATIONAL STRUCTURES
 AUTHORITY AND RESPONSIBILITY

8-2
 DEFINITION OF ORGANISING
• The process of arranging people and other resources to work
together to accomplish a goal
• It involves coordinating human and other material resources.
• The process by which managers establish working relationships
among employees to achieve goals.
The functions of Organizing

4
Principles/Concepts of Organizing
Organizing is one of the major functions of
management. It is performed by all mangers and it
is a continuous process.
The principle of organizing has to do with the
grouping of organizational activities into various
units and dividing responsibility and authority
accordingly. Some of the widely practiced principles
are as follows:
•Objective: The goals and objectives
must be clearly defined for the entire
organization for each department and
even for each position in the organization
structure.
Once the objectives have been clearly
defined, organizing function become
easier.
 PRINCIPLES /CONCEPTS OF ORGANISING
• Work specialization/ Departmentalization - where
activities are divided into specialized groups referred to as departments for the
purpose of specializing activities to simplify tasks of managers.

• Span of Control- an unbroken line of authority that links all persons

in an organization and defines who reports to whom. Has two underlying
principles: unity of command and scalar principle.

 Unity of command - states that an employee should have one and only one
supervisor to whom he or she is directly responsible.
 PRINCIPLES /CONCEPTS OF ORGANISING
 Scalar Principle - refers to a clearly defined line of authority that
includes all employees in the organization i.e. a clear and unbroken
chain of command linking every person in the organization

 The span of control is wide if a superior is in charge of many

employees and narrow if the superior is in charge of a few employees.
 PRINCIPLES /CONCEPTS OF ORGANISING
 Reasons for Wide Span of Control
- The manager and the subordinates are very competent
- The organization has a well-established set of standard operating
procedures
- Few new problems are anticipated
 Reasons for narrow span of control
- The manager has a lot of work to do in addition to supervising workers.
- A great deal of interaction is required between supervisor and workers.
- New problems arise frequently
•Delegation of authority: Proper authority
should be delegated at all level of management. The
authority delegated should be equal to
responsibility so as to enable each manager to
accomplish the task assigned to him/her.
•Responsibility: Once authority is given, managers
have to be responsible for their actions. They are
also responsible for the action of their
subordinates.
•Efficiency: The organization structure should function
efficiently and accomplish organizational goals/objectives
with the lowest possible cost. Hence it should ensure
optimum utilization of all resources.
•Simplicity: The organization structure should be kept as
simple as possible. A complex organization structure
means difficulty of communication and coordination.
•Flexibility: Since, external environment always changes,
it is necessary to cope up with the changing environment.
Organizational structure should be flexible enough to
cope up with the changes in the external environment
•Balance: There should be a reasonable balance in the size of
various departments and between centralization and
decentralization. Imbalances creates problem to achieve its goals for
an organization in an effective and efficient way.
•Unity of Direction: There should be one objective and one plan
for a group of activities having the same objective.
A boss with many objectives will create chaos. Thus unity of
direction facilitates verification and coordination of activities.
•Staffing: Staffing principle focuses on employing, rewarding and
developing people in the organization to motivate them in order to
work in the direction to achieve organizational goals. The
organization structure must ensure optimum use of human
resources and encourage management development programmes
 IMPORTANCE OF ORGANISING
 It promotes rational use of resources
 Harmonies processes in the organization
 For control purposes
 Interaction among various managerial positions -
Build relation ships.
 It helps to avoid conflicts -Principal of division of
work, unity of command
 Easy flow of information
 STEPS OF THE ORGANISING PROCESS
• Detailing of work - determination of what kind of work is to be done
i.e. list and analyze all the tasks that need to be accomplished in order
to reach organizational goals.
• Division of work – Effective organization must promote specialization.
The activities of the enterprise should be divided according to
functions and assigned to persons according to their specialization.
 STEPS OF THE ORGANISING PROCESS
• Departmentalization - the grouping of similar activities to create
departments /sections / units.
• Coordinating the work / Design a hierarchy of relationships -
determine the vertical (decision-making) and horizontal (coordinating)
relationships of the organization as a whole
• Monitoring effectiveness and re- organization - ensure necessary
resources are put together and are used well i.e. supervising and
evaluating work performance to keep it according to the plan and
where faults are discovered, re-organising resources to improve
performance.
 ORGANISATIONAL STRUCTURES
Organizing process leads to creation of an Organizational Structure

Organization structure - The system of tasks, workflows, reporting

relationships, and communication channels that link together diverse
individuals and groups.

General Types of Structures

 Tall Structures
 Flat structures
 ORGANISATIONAL STRUCTURES
 Tall Structures – has many  Flat structures - relatively
levels of management and few layers or just one layer
supervision i.e. a “long chain of of management i.e. the
command” running from the “Chain of Command” from
top to the bottom of the top to bottom is short and
organisation the “span of control is wide
 TYPES OF ORGANISATIONAL STRUCTURES
 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.
 TYPES OF ORGANISATIONAL 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.
• Gaining access to interpersonal networks.
• Informal learning.
 FORMS OF FORMAL ORGANIZATIONAL STRUCTURES
Functional structures
 People with similar skills and performing similar tasks are grouped together
into formal work units normally departments
 Members work in their functional areas of expertise.
Board of Directors

Chief Executive

Production Marketing Accounts Personnel IT

Manager Manager Manager Manager Manager
 FUNCTIONAL STRUCTURES
ADVANTAGES DISADVANTAGES
– Avoids duplication of resources e.g – Difficult for departments to
many personnel departments communicate with others
sometimes
– Task assignments consistent with
expertise and training. – Preoccupation with own
department and losing sight of
– High-quality technical problem
organizational goals.
solving,
– Excessive upward referral of
– In-depth training and skill
decisions i.e. difficult to make
development.
decisions as the organization
– Clear career paths within functions expands
– Hinders diversification of skills
 Functional structures
Advantages Disadvantages
• Facilitates specialization • Encourages excessive
• Simplifies coordination centralization
• Permits use of current • Restricts development of
technologies and managerial skills
equipment • Limits personal growth

22
 FORMS OF FORMAL ORGANISATIONAL STRUCTURES

 Divisional structures
– Group together people who work on the same
product or process, serve similar customers, and/or
are located in the same area or geographical region.
– Common in complex organizations.
– Avoid problems associated with functional structures.
Product,
customer/
Market and
Geographic
Structures

EXAMPLE ONE

10-24
Divisional structures based on product, geography, customer,
and process.

Management - Chapter 10
25
 Product Organization
Advantages Disadvantages
• Facilitates coordination • Requires management
• Encourages management talents
development • Technical obsolescence
• Provides for decentralization of specialists
• Promotes growth • Changes take time to
effect

26
 DIVISONAL/GEOGRAPHICAL STRUCTURES
ADVANTAGES DISADVANTAGES
• More flexibility in responding Duplication of resources and
to environmental changes efforts across divisions.
• Improved coordination. Competition and poor
• Clear points of responsibility coordination across divisions.
• Expertise focused on specific Emphasis on divisional goals at
customers, products, and expense of organizational goals.
regions. Inconsistency in standards may
• Greater ease in restructuring. develop in different locations
 Advantages of Divisional Structures - continued
• Accountability becomes easy- very simple to identify managers
responsible for success and failure particular products, locations,
customers and different processes.
• Division managers become experts in their area
• Removes need for direct supervision of division by corporate
managers
• Divisional management improves the use of resources
• Its cheaper to establish local factories /offices than to service
markets in one location
 Forms of Formal Organizational Structures
 Matrix structure
– Combines functional and divisional structures to gain advantages and minimize
disadvantages of each.
– Common in organizations that use team and project work (have teams and projects)
– Creates dual authority – where an employee reports to two immediate bosses
– Used in:
• Manufacturing
• Service industries
• Professional fields
• Non-profit sector
• Multi-national corporations
Matrix structure Organizational Chart

Management - Chapter 10
30
 MATRIX ORGANISATIONAL
STRUCTURES
DISADVANTAGES
ADVANTAGES
• Two-boss system is susceptible
• Better cooperation across functions
to power struggles
• Improved decision making – Two-boss system can create task
• Increased flexibility in restructuring confusion and conflict in work
• Better customer service priorities.
• Better performance accountability • Team meetings are time
• Improved strategic management consuming
– Team may develop “groupitis.”
Factors To Consider when Developing Organizational
Structures
Environment

Determine design
Strategy or organizational Technology
structure

Human
Resources
 Determinants of Structure
 The environment: Fast-changing environments require flat
structures; slowly changing environments favor tall structures.
• Structure must be more flexible when environmental change is
rapid.
– Usually need to decentralize authority.
 Strategy: Different strategies require the use of different structures.
• A differentiation strategy needs a flexible structure, low cost may
need a more formal structure.
• Increased vertical integration or diversification also requires a
more flexible structure.
 Technology
 Small Batch Technology: produces small quantities of one-of-a-kind
products.
• Based on the skills of the workers who need a flexible (flat) structure.
 Mass Production Technology: automated machines make high
volumes of standard products.
• Workers perform repetitive tasks so a formal (strict) - tall structure works
well.
 Continuous Process Technology: totally mechanized systems of
automatic machines.
• Workers must watch for unexpected problems and react quickly. A flexible
structure is needed here.
 Determinants of Structure
 Human Resources: the final factor affecting organizational structure.
• Higher skilled workers who need to work in teams usually need a more flexible
structure.
• Higher skilled workers often have professional norms (CPA’s, physicians).

Managers must take into account all four factors (environment,

strategy, technology and human resources) when designing the
structure of the organization.
 AUTHORITY AND RESPONSIBILITY

• Authority may be defined as the right to give orders and the power to
exert influence or the power to make decisions which affect or guide the
actions of others
• Authority may never be effective unless accepted.
• Influence; Actions that cause changes in behaviour or attitude of others
directly or indirectly
• Power is the ability to exert influence
 Sources /Types of Power
Reward
Power

Legitimate Coercive
Power Power

Enable managers to be
leaders & influence
subordinates to
achieve goals

Expert
Referent
Power Power
 Sources of Power
– Legitimate Power: manager’s authority resulting by their
management position in the firm.
• Can be power to hire/fire workers, assign work.
– Reward Power: based on the manager’s ability to give or
withhold rewards.
• Pay raises, bonuses, verbal praise.
• Effective managers use reward power to signal employees they are doing
a good job.
 Sources of Power
– Coercive Power: based in ability to punish others.
• Ranges from verbal reprimand to pay cuts to firing.
• Can have serious negative side effects.
– Expert Power: based on special skills of leader.
• First & middle managers have most expert power.
• Often found in technical ability.
– Referent Power: results from personal characteristics of the leader
which earn worker’s respect, loyalty and admiration.
• Usually held by likable managers who are concerned about their workers.
 RESPONSIBILTY AND ACCOUNTABILITY
• Authority goes with responsibility
• Responsibility is the obligation to use authority to get things
done.
• Responsibility requires those with authority to account for it. Authority
must be used as expected.
• Accountability is the evaluation of how authority has been used.
• To have authority means accepting responsibility and being accounted
for.
 DELEGATION OF AUTHORITY

 Delegation of Authority is a process by which managers assign

some of their tasks to their subordinate s and permit them to
exercise authority on their behalf. The manager also holds them
accountable for their performance.
 Delegation of authority is the means by which total authority
vested in top management is passed to the next chain in a
graded manner.
 FACTORS INFLUENCING DELEGATION

 The culture of the organization - , there may be a culture of

waiting for the boss to decide
 The specific situation involved - Urgency or routine
 The relationship between personalities - delegator and delegatee
 Capabilities of the people in the situation – delegator and
delegatee
 NEED AND IMPORTANCE OF DELEGATION
 Saves you time i.e. many tasks are performed at the same time and
can save you hundreds of hours of unnecessary work
 Quick decision making
 Improving the job satisfaction, motivation and morale of
subordinate
 Develops people i.e. grooms a successor
 Promotes healthy superior and subordinate relationship
 Subordinates acquire valuable experience in decision making -
Provides invaluable training
 Increases productivity - staff feels motivated and more confident
BARRIERS TO EFFECTIVE DELEGATION OF AUTHORITY

 Organizational structures where subordinates have to wait for the

boss to decide
 Personality issues – managers may be afraid that subordinate may
dominate and replace them.
 Fear or managerial insecurity - Authorities may reduce their
power and status in the organization.
 Lack of time on the part of the delegator or the delegatee
 Poor organizational structures -Due to the lack of clarity and
formalness in the procedure of the organization.
 BARRIERS TO EFFECTIVE DELEGATION OF
AUTHORITY
 Urgency of the matter i.e. delegation becomes impossible if the
matter / issues is urgent.
 Delicate issues e.g. a doctor can not tell the subordinate to operate
a patient
 Lack of suitable person to delegate to
 Accountability problems
 GUDELINES TO EFFECTIVE DELEGATION OF
AUTHORITY
 Scalar Principle
 Unity of command
 Training of people
 Open Communication
 Analysis of goals -Task requirements capability, determine what
you will delegate
 Understand the nature of task
 Analyze the skill and capabilities of the subordinates
 GUDELINES TO EFFECTIVE DELEGATION OF
AUTHORITY
 Delegate to the right person -Cross check the subordinates skill to
follow the instruction
 Concurrent job monitoring and evaluation of subordinates
 Obtain feedback from employees
 Establish a follow-up schedule
 PRACTICING QUESTIONS
• What is organizing?
• What factors influence the span of control?
• What factors would you consider when developing an
organization structure.
• What's the importance of delegation?
• What are the steps in the delegation process?
• Discuss guidelines in effective delegation
• What are the Barriers to effective delegation

6/25/2021 48