chp10

Daft 6th ed
Fundamentals of Organizing

Developed by Cool Pictures & MultiMedia Presentations

Developed by Cool Pictures & MultiMedia Presentations

Copyright 2003 by South-Western, a division of Thomson Learning. All rights reserved.

Copyright 2002 by South-Western, a division of Thompson Learning. All rights reserved.

Organizing
The deployment of organizational
resources to achieve strategic goals
Reflects deployment of resources
Shows division of labor
Formal lines of authority and
mechanisms is developed

Organization Structure
Defines how tasks are divided,

resources are deployed, and

departments are coordinated
The set of formal tasks assigned
Formal reporting relationships
The design of systems to ensure
effective coordination of
employees across department

The Organization Chart

Visual representation
Set of formal tasks
Framework for vertical control
Formal reporting relationships

The Home Depot is the world's largest home

improvement retailer currently operating 1,363
stores.

Work Specialization
Tasks are subdivided into individual
jobs
Division of labor concept
Employees perform only the tasks
relevant to their specialized function
Jobs tend to be small, but they can
be performed efficiently

Chain of Command
Unbroken
Unbroken line
line of
of authority
authority that
that
links
links all
all persons
persons in
in an
an
organization
organization
Shows
Shows who
who reports
reports to
to whom
whom
Associated
Associated with
with two
two underlying
underlying
principles
principles

Unity
Unity of
of Command
Command

Scalar
Scalar Principle
Principle

Authority
Formal and
and legitimate
legitimate right
right of
of aa manager
manager
Formal
to make
make decisions
decisions and
and issue
issue orders
orders
to
Allocate resources
resources to
to achieve
achieve
Allocate
organizationally desired
desired outcomes
outcomes
organizationally
Authority is
is distinguished
distinguished by
by three
three
Authority
characteristics
characteristics
Authority
Authority is
is vested
vested in
in organizational
organizational

positions, not
not people
people
positions,
Authority
Authority is
is accepted
accepted by
by subordinates
subordinates

Authority
Authority flows
flows down
down the
the vertical
vertical

hierarchy
hierarchy

Responsibility
The duty to perform the task or activity
an employee has been assigned
Managers are assigned authority
commensurate with responsibility

Accountability
Mechanism through which

authority and responsibility are

brought into alignment
People are subject to reporting
and justifying task outcomes to
those above them in the chain of
command
Can be built into the
organization structure

Delegation
1
Process managers use to transfer authority and responsibility

2
Organization encourage managers to delegate authority to lowest possible level

Delegation
Give thorough
instructions

Maintain feedback

Evaluate and reward

performance

Techniques for Delegation

Delegate the whole task

Ensure that authority

equals responsibility

Select the right

person

Line and Staff Positions

Line vs. staff positions
Line vs. staff authority
Advantages and complexities of
using staff positions

TM 8-8

TYPES OF AUTHORITY
President
Line authority
Staff authority

Legal
Department

Vice-President,
Production

Vice-President,
Marketing

Department
A
Irwin/McGraw-Hill

Vice President,
Accounting

Department
B

Department
C

The McGraw-Hill Companies, Inc.

Span of Management
Number
Numberof
ofemployees
employees who
whoreport
report to
toaa
supervisor
supervisor
Traditional
Traditionalview,
view, about
aboutseven
seven subordinates
subordinates
per
permanager
manager
Many
Many lean
lean organizations
organizationstoday
todayhave
have 30,
30,
40,
40, or
oreven
evenhigher
highersubordinates
subordinates
When
When supervisors
supervisorsmust
must be
be closely
closelyinvolved
involved
with
with subordinates,
subordinates,the
thespan
span should
should be
be
small
small
Supervisors
Supervisors need
need little
littleinvolvement
involvement with
with
subordinates,
subordinates, ititcan
can be
belarge
large

Factors Influencing the

Span
Supervisor
Preferences and skills
Few non-supervisory duties

Subordinates
Competence and needs

Job
Work similarity
physical proximity
Low interaction requirements

Tall versus Flat Structure

Span of Control used in an organization
determines whether the structure is tall
or flat
Tall structure has a narrow span and
more hierarchical levels
Flat structure has a wide span, is
horizontally dispersed and fewer
hierarchical levels
The trend has been toward wider spans
of control

TM 8-6

SPAN OF MANAGEMENT
Org.
Level

MEMBERS AT
EACH LEVEL

(highest)

2
3
4
5

16

64

64

512

256

4,096

1,024

6
7

4,096

Span of 8
Operatives : 4,096
Managers : 585

Span of 4
Operatives : 4,096
Managers : 1,396

Irwin/McGraw-Hill

The McGraw-Hill Companies, Inc.

Centralization vs.
Decentralization
The extend to which the power and
authority is retained at the top vs.
delegated to lower levels.
Factors influencing
Size of the organization
Geographic dispersion
Technological complexity
Environmental uncertainty

TM 8-7

DECENTRALIZATION

ak
ing

De
ci

-m

si o

n
sio

n-m
ak

ci
De

i ng

CENTRALIZATION

Restrictive
policies, rules,
procedures

small
centralized
simple
certain
Irwin/McGraw-Hill

General
policies, rules,
procedures

size
geographics
technology
environment
factors

large
dispersed
complex
uncertain

The McGraw-Hill Companies, Inc.

Decentralization Tends To

Make greater use of human

resources
Reduce burdens of top managers
Cause decisions to be made close
to the action
Permit rapid response to changes

Departmentalization
The basis on which individuals are grouped
into departments
Vertical functional approach. People are grouped

together in departments by common skills.

Divisional approach. Grouped together based on a
common product, program, or geographical region.
Horizontal matrix approach. Functional and divisional
chains of command. Some employees report to two
bosses
Team-based approach. Created to accomplish specific
tasks
Network approach. Small, central hub electronically
connected to their other organizations that perform vital
functions. Departments are independent, and can be
located anywhere.
Virtual approach. Brings people together temporarily to
exploit specific opportunities then disbands

Five Approaches to
Structural Design

Five Approaches to
Structural Design
Slide 2

Functional Structure
Advantages
Efficient use of resources
Skill specialization development
Top management control
Excellent coordination
Quality technical problem solving

Functional Structure
Disadvantages
Poor communications
Slow response to external changes
Decisions concentrated at top
Pin pointing responsibility is difficult
Limited view of organizational goals by employees

Divisional Structure
Advantages
Fast response, flexibility in an unstable
environment
Fosters concern for customers needs
Excellent coordination across functional
departments
Emphasis on overall product and
divisional goals
Development of general management
skills

Divisional Structure
Disadvantages
Duplication of resources across
divisions
Less technical depth and specialization
in divisions
Poor coordination across divisions
Less top management control
Competition for corporate resources

Horizontal Matrix Advantages

More efficient use of resources than
divisional structure
Adaptable to changing environment
Development of both general and
specialists management skills
Expertise available to all divisions
Enlarged tasks for employees

Dual Authority Structure in

a Matrix Organization

Horizontal Matrix
Disadvantages
Dual chain of command
High conflict between two sides of matrix
Many meetings to coordinate activities
Need for human relations training
Power domination by one side of matrix

Team Advantages
Same advantages as functional
structure
Reduced barriers among departments
Quicker response time
Better morale
Reduced administrative overhead

Team Disadvantages
Dual loyalties and conflict
Time and resources spent on
meetings
Unplanned decentralization

Network Approach
Advantages
Global competitiveness
Work force flexibility
Reduced administrative
overhead

Network Approach
Disadvantages
No hands-on control
Loss of part of the organization
severely impacts remainder of
organization
Employee loyalty weakened

Virtual Organization
Advantages
Can draw on expertise worldwide
Highly flexible and responsive
Reduced overhead costs

Disadvantages
Lack of control, weak boundaries
Greater demand on managers
Communications difficulties