CHAPTER

11

Basic Elements of
Organizing

PowerPoint Presentation
by Charlie Cook

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 Learning Objectives
After studying this chapter, you should be able to:
– Identify the basic elements of organizations.
– Describe alternative approaches to designing jobs.
– Discuss the rational and the most common basis for
grouping jobs into departments.
– Describe the basic elements involved in establishing
reporting relationships.
– Discuss how authority is distributed in organizations.
– Discuss the basic coordinating activities undertaken by
organizations.
– Describe basic ways in which positions within the
organization can be differentiated.

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 Chapter Outline
• The Elements of Organizing • Establishing Reporting
– Designing Jobs Relationships
– Job Specialization – Determining the Appropriate
Span
– Benefits and Limitations of
• Distributing Authority
Specialization
– The Delegation Process
– Alternatives to Specialization
– Decentralization and
• Grouping Jobs: Centralization
Departmentalization • Coordinating Activities
– Rationale for – The Need for Coordination
Departmentalization – Structural Coordination
– Common Bases for Techniques
Departmentalization • Differentiating Between Positions
– Chain of Command – Differences Between Line and
– Narrow Versus Wide Spans Staff
– Tall Versus Flat Organizations – Administrative Intensity

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 The Elements Organizing
• Organizing
– Deciding how to best group organizational activities and
resources.
• Organization Structure
– The set of building blocks
that can be used to
configure an organization.

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 Designing Jobs
• Job Design
– The determination of an individual’s work-related
responsibilities.
• Job Specialization (Division of Labor)
– The degree to which the overall task of the organization is
broken down and divided into smaller component parts.
– Benefits of Specialization
• Workers can become proficient at a task.
• Transfer time between tasks is decreased.
• Specialized equipment can be more easily developed.
• Employee replacement becomes easier.
– Limitations of Specialization
• Employee boredom and dissatisfaction with mundane tasks.
• Anticipated benefits do not always occur.
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 Adam Smith’s Example
of Job Specialization

Making a pin (nail) requires 18 tasks

1 worker doing all 18 tasks might make
20 pins (nails) a day.

20 workers = (20 x 20) = 400 pins

______________________________

With specialization:
20 workers make 100,000 pins a day.
1 worker = 5,000 pins
20 pins vs. 5,000 pins per worker

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 Alternatives to Specialization
• Job Rotation
– Systematically moving employees from one job to another in
an attempt to reduce employee boredom. Most frequent use
today is as a training device for skills and flexibility.
• Job Enlargement
– An increase in the total number of tasks workers perform.
– Increases training costs, unions contend that workers
deserve more pay for doing more tasks, and the work may
still be dull and routine.
• Job Enrichment
– Increasing both the number of tasks the worker does and the
control the worker has over the job.

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 Alternatives to Specialization (cont’d)
• Job Characteristics Approach:
– Core Dimensions
• Skill variety—the number of tasks a person does in a job.
• Task identity—the extent to which the worker does a complete or
identifiable portion of the total job.
• Task significance—the perceived importance of the task.
• Autonomy—the degree of control the worker has over how the work
is performed.
• Feedback— the extent to which the worker knows how well the job is
being performed.
– Growth-Need Strength
• The desire for some people to grow, develop, and expand their
capabilities that is their response to the core dimensions.

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 Critical
Core job Personal and
psychological
dimensions work outcomes
states

• Skill variety Experienced • High internal

• Task identity meaningfulness work motivation
• Task significance of the work

• High-quality work
Experienced performance
• Autonomy responsibility
for outcomes
of the work • High satisfaction
with the work

Knowledge of the
• Feedback actual results of • Low absenteeism
work activities and turnover

Source: J. R. Hackman and G. R. Oldham,

Job Characteristics Employee “Motivation Through the Design of Work: A Test

of a Theory,“ Organizational Behavior and Human
growth-need Performance, Vol. 6 (1976), pp. 250–279.
Approach strength Copyright © Academic Press, Inc. Reprinted by
permission of Academic Press and the authors.

Figure 11.1
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 Alternatives to Specialization (cont’d)
• Work Teams
– An alternative to job specialization that allows the entire
group to design the work system it will use to perform an
interrelated set of tasks.

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 Grouping Jobs: Departmentalization
• Departmentalization
– The process of grouping jobs according to some logical
arrangement.
• Rationale for Departmentalization
– Organizational growth exceeds
the owner-manager’s capacity
to personally supervise all of
the organization.
– Additional managers are
employed and assigned
specific employees to supervise.

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 Grouping Jobs: Departmentalization
(cont’d)
• Functional Departmentalization
– Is the grouping of jobs involving the same or similar
activities.
• Advantages • Disadvantages
– Each department can be – Decision making becomes
staffed by functional-area slow and bureaucratic.
experts. – Employees narrow their
– Supervision is facilitated in focus to the department
that managers only need and lose sight of
be familiar with a narrow organizational goals/
set of skills. issues.
– Coordination inside each – Accountability and
department is easier. performance are difficult to
monitor.
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 Bases for Departmentalization: Apex Computers

President

Computers Software

Manufacturing Finance Marketing Marketing Finance Design

Dallas Phoenix Chicago St. Louis

Industrial sales Consumer sales

Northwest U.S. Southwest U.S. Central U.S. Southeast U.S. Northeast U.S.

Figure 11.2
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 Product Departmentalization Form
• Product Departmentalization
– The grouping of activities around products or product
groups.

• Advantages • Disadvantages
– All activities associated – Managers may focus on
with one product can be their product to the
integrated and exclusion of the rest of the
coordinated. organization.
– Speed and effectiveness of – Administrative costs may
decision making are increase due to each
enhanced. department having its own
– Performance of individual functional-area experts.
products or product
groups can be assessed.

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 Customer Departmentalization
• Customer Departmentalization
– Grouping activities to respond to and interact with specific
customers and customer groups.
• Advantage
– Skilled specialists can deal
with unique customers or
customer groups.
• Disadvantage
– A large administrative staff
is needed to integrate activities
of various departments.

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 Location Departmentalization
• Location Departmentalization
– The grouping of jobs on the basis of defined geographic sites
or areas.
• Advantage
– Enables the organization to
respond easily to unique
customer and environmental
characteristics.
• Disadvantage
– Large administrative staff may
be needed to keep track of
units in scattered locations.

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 Departmentalization
• Other Forms of Departmentalization
– Grouping activities by time
• Dividing daily activities into specific units of time (e.g., day, evening,
and night shifts).
• Grouping activities by sequence.
• Assigning responsibilities by a characteristic of the customer,
product, or service (e.g., telemarketing calls from business listings).
• Other Considerations
– Departments are often called by other names (e.g., divisions,
units, sections, and bureaus).
– Organizations are likely to employ multiple bases of
departmentalization, depending on level.

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 Establishing Reporting Relationships
• Chain of Command
– A clear and distinct line of authority among the positions in
an organization.
– Unity of Command
• Each person within an organization must have a clear
reporting relationship to one and only one boss.
– Scalar Principle
• A clear and unbroken line of authority
must extend from the bottom to the
top of the organization.

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Establishing Reporting Relationships (cont’d)
• Narrow Versus Wide Spans
– Span of Management
• The number of people who report to a particular manager.
• Sometimes called the span of control.
– A. V. Graicunas
• Subordinate interactions
–Direct—the manager’s relationship with each subordinate.
–Cross—among the subordinates themselves.
–Group—between groups of subordinates.
–Formula for the number of interactions of all types:
» I = N(2N/2 + N - 1), where I is the total number of interactions
and N is number of subordinates.
– Ralph Davis
• Operative span for lower-level managers up to 30 workers.
• Executive span for middle and top managers at 3 to 9.

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 Establishing Reporting Relationships:
Tall versus Flat Organizations

• Tall Organizations • Flat Organizations

– Are more expensive – Lead to higher levels of
because of the number of employee morale and
managers involved. productivity.
– Foster more – Create more administrative
communication problems responsibility for the
because of the number of relatively few managers.
people through whom – Create more supervisory
information must pass. responsibility for managers
due to wider spans of
control.

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 Tall Versus Flat Organizations

Tall Organization
President

Flat Organization
President

Figure 11.3
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 Determining the Appropriate Span:
Factors Influencing the Span of Management
1. Competence of supervisor and subordinates (the greater the
competence, the wider the potential span).
2. Physical dispersion of subordinates (the greater the dispersion,
the narrower the potential span).
3. Extent of nonsupervisory work in a manager’s job (the more
nonsupervisory work, the narrower the potential span).
4. Degree of required interaction (the less required interaction, the
wider the potential span).
5. Extent of standardized procedures (the more procedures, the
wider the potential span).
6. Similarity of tasks being supervised (the more similar the tasks,
the wider the potential span).
7. Frequency of new problems (the higher the frequency, the nar-
rower the potential span).
8. Preferences of supervisors and subordinates.

Table 11.1
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 Distributing Authority
• Authority
– Power that has been legitimized by the organization.
• Delegation
– The process by which managers assign a portion of their
total workload to others.
• Reasons for Delegation
– To enable the manager to get more work done by utilizing the
skills and talents of subordinates.
– To foster the development of subordinates by having them
participate in decision making and problem solving that
allows them to learn about overall operations and improve
their managerial skills.

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 Steps in the Delegation Process
Step 1 Step 2 Step 3
Assigning Granting Creating
responsibility authority accountability

Manager Manager
Manager Manager
Manager

Subordinate Subordinate Subordinate

Figure 11.4
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 Problems in Delegation
• Manager • Subordinate
– Reluctant to delegate. – Reluctant to accept
– Disorganization delegation for fear of
prevents planning failure.
work in advance. – Perceives no rewards
– Subordinate’s success for accepting
threatens superior’s additional
advancement. responsibility.
– Lack of trust in the – Prefers to avoid any
subordinate to do well. risk and responsibility.

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 Decentralization and Centralization
• Decentralization
– The process of systematically delegating power and authority
throughout the organization to middle- and lower-level
managers.
• Centralization
– The process of systematically retaining power and authority
in the hands of higher-level managers.
• Factors Determining the Choice of Centralization
– The complexity and uncertainty of the external environment.
– The history of the organization.
– The nature (cost and risk) of the decisions to be made.

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 Coordinating Activities
• Coordination
– The process of linking the activities of the various
departments of the organization.
• The Need for Coordination
– Departments and work groups are interdependent; the
greater the interdependence, the greater the need for
coordination.

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 Coordinating Activities:
Three Major Forms of Interdependence
• Pooled interdependence
– When units operate with little interaction; their output is
simply pooled at the organizational level.
• Sequential interdependence
– When the output of one unit becomes the input of another
unit in sequential fashion.
• Reciprocal interdependence
– When activities flow both ways
between units.

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 Three Major Forms of Interdependence

Sequential Reciprocal

Input Output Input Output Input Output

Pooled
Input

Input Output

Input
Input Output

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 Structural Coordination Techniques
• The Managerial Hierarchy
– Placing one manager in charge of interdependent
departments or units.
• Rules and Procedures
– Routine coordination activities can be handled via rules and
procedures that set priorities and guidelines for actions.
• Liaison Roles
– A manager coordinates
interdependent units by acting
as a common point of contact,
facilitating the flow of
information.

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 Structural Coordination Techniques
(cont’d)
• Task Forces
– Used with multiple units when coordination
is complex requiring more than one
individual and the need for coordination
is acute.
– Disbanded when the need for
coordination has been met.
• Integrating Departments
– Permanent organizational units that maintain internal
integration and coordination on an ongoing basis.
– May have authority and budgetary controls.

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 Differentiating Between Positions
• Line Positions
– Positions in the direct chain of command that are responsible
for the achievement of an organization’s goals.
– Have formal (legitimate) authority to direct the workforce.
• Staff Positions
– Positions intended to provide expertise, advice, and support
to line positions.
– Have advisory authority; can give compulsory advice.
– Have functional authority to enforce compliance with
organizational policies and procedures.
• Administrative Intensity
– The degree to which managerial positions are concentrated
in staff positions.

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