LECTURE 8 NOTES
FUNDAMENTALS OF ORGANIZING
SUMMARY:
Lecture 8 begins the study of the organizing function of management and also helps
students develop the organizing skills they will need as managers to meet organizing
challenges throughout their careers. Organizing involves the process of establishing
orderly uses for resources within the management system. This orderly use of resources
emphasizes the attainment of the organization’s objectives and assists managers not
only in making the objectives apparent but also in clarifying which resources will be
used to attain those objectives.
LEARNING OBJECTIVES:
1. An understanding of the organizing function
2. Knowledge regarding the benefits and costs of bureaucracy
3. Insights into the advantages and disadvantages of division of labor
4. An appreciation for the complexities of determining appropriate organizational
structure
5. An appreciation for the advantages and disadvantages associated with the different
types of departmentalization
TARGET SKILLS:
Organizing Skill: the ability to establish orderly uses for resources within the
management system
OUTLINE:
This chapter is divided into five sections:
1. Definitions of Organizing and Organizing Skill
2. Weber’s Bureaucratic Model
3. Division of Labor
4. Structure
5. Types of Departmentalization
Definitions of Organizing and Organizing Skill:
This section introduces to the organizing function of management and the skills managers use
within the organizing function.
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Organizing
o Process of establishing orderly uses for resources within the management
system
Organizing Skill
o Ability to create a network of people throughout the organization who can
help solve implementation problems as they occur
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A primary function of organizing is determining what individual employees will do in
an organization and how their individual efforts should best be combined to advance
the attainment of organizational goals and objectives
Organization
o The end result of the organizing process
o Figure 8.1 provides a listing of Henri Fayol’s organizing guidelines
Organizing responsibilities
o Periodically formulate reorganization plans that make the management
system more effective and efficient
o Foster and support an advantageous organizational climate within the
management system
o Develop plans to improve managerial skills so they fit current management
system needs
The Organizing Process
o Figure 8.2 provides an illustration of the five main steps of the organizing
process
 Reflect on plans and objectives
 Establish major tasks
 Divide major tasks into subtasks
 Allocate resources and directives for subtasks
 Evaluate result of implemented organizing strategy
o As Figure 8.2 represents, managers are continuously repeating these steps
and through this repetition they are able to gather feedback that helps
improve the existing organization
 The text provides a thorough example to use in class of how the
organizing process works using the management of a restaurant
Classical Organizing Theory
o Brings together the work of early management writers on how organizational
resources can be used to enhance goal attainment
 The next three sections of the chapter discuss major components of
classical organizing theory
 Weber’s Bureaucracy Model
 Division of Labor
 Structure
Weber’s Bureaucratic Model:
This section introduces students to the work of Max Weber, the writer who had the most
profound influence on classical organizing theory.
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Weber’s most notable contribution to organizing theory was his concept of
bureaucracy
Bureaucracy
o Management system that includes three primary components
 Detailed procedures and rules
 Clearly outlined organizational hierarchy
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 Impersonal relationships among organization members
Weber’s concern was that management would see bureaucracy as a means to the end
of management system goal attainment rather than his intentions as noted above
Main criticism of Weber’s work was that there was no focus on the human variable
within organizations
o Today this work is viewed such that the bureaucratic approach without an
appropriate emphasis on the human variable is almost certainly a formula for
organizational failure
Another criticism of Weber’s work is that bureaucracy may unnecessarily influence
organizational effectiveness
o The text uses an example of GM and how its bureaucracy negatively impacted
organizational effectiveness – Bringing the 2014 recalls and CEO change would
be a good way to further illustrate the downsides of bureaucracy.
Division of Labor:
This section provides a discussion of division of labor – a primary consideration of any
organizing effort. The essence of division of labor is that individuals specialize in doing part of
a task rather than the entire task. The chapter also provides discussion of advantages and
disadvantages of division of labor, the relationship between division of labor and coordination,
and coordination guidelines.
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Division of Labor
o Assignment of various portions of a particular task among a number of
organization members
o Production is divided into a number of steps, with the responsibility for
completing various steps assigned to specific individuals
Automobile production lines are typically used as an illustration of division of labor
Advantages and Disadvantages of Division of Labor
o Advantages
 When workers specialize in a particular task, their skill at performing
that task increases
 Workers who have one job and one place in which to do that job do not
lose valuable time changing tools or locations
 When workers concentrate on performing only one job, they naturally
try to make the job easier and more efficient
 Creates a situation where workers need to know how to produce only
their part of the work task rather than the entire process for producing
the end product
o Disadvantages
 Focuses solely on efficiency and economic benefit and overlooks the
human variable in the organization
 Work that is extremely specialized tends to become boring followed by
production rates decreasing as employees become resentful of being
treated like machines
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o Managers need to find the balance between these advantages and
disadvantages, though finding that balance is an ongoing challenge for
organizations
Division of Labor and Coordination
o Coordination is key when using division of labor as there are multiple
employees performing multiple portions of the task
o Coordination
 Orderly arrangement of group effort to provide unity of action in the
pursuit of a common purpose
 Involves encouraging the completion of individual portions of a task in
a synchronized order appropriate for the overall task
o Could involve monitoring by management though managers should try to
break away from the idea that coordination can be achieved only through
their watching and monitoring
Follett’s Guidelines on Coordination
o Mary Parker Follett is another classical/behavioral management theorist
o Follett’s guidelines on coordination provided valuable advice on how
managers can establish and maintain coordination within the organization
o Guidelines
 1 – Coordination can be attained with the least difficulty through direct
horizontal relationships and personal communications
 Peer discussion may be the best way to resolve coordination
problems
 2 – Coordination can be a discussion topic throughout the planning
process
 Managers should plan for coordination
 3 – Maintaining coordination is a continuing process and should be
treated as such
 Managers cannot assume just because a management system
shows coordination today, it will also show coordination
tomorrow
o Coordination can only be achieved through purposeful management action
and therefore cannot be left to chance
o Follett stressed the importance of the human element and communication as
key elements involved in coordination
 Primary considerations include employee skill levels, employee
motivation levels, and effectiveness of the human communication
process used during coordination activities
o The Practical Challenge: Coordination box in the text provides an example of
How the MBTA Moved Forward with Security using coordination
Structure:
This section defines the concept of organization structure.
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Structure
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o Refers to the designated relationships among resources of the management
system
o Purpose is to facilitate the use of each resource as the management system
attempts to attain its objectives
o Two basic types of structure:
 Formal structure
 Relationships among organizational resources as outlined by
management
 Represented primarily on the organization chart
 Informal structure
 Patterns of relationships that develop because of the informal
activities of organization members
 Evolves naturally – spontaneously
 Shaped by norms and values of the social system in the
organization
o Organization Chart
 Graphic illustration of the firm’s organization structure
 Constructed in a pyramid form with individuals at the top of the
pyramid having more authority and responsibility than those at the
bottom
 Boxes on the chart are jobs/positions
 Lines between boxes designate formal lines of communication
between individuals
o Structure involves two primary dimensions:
 Vertical dimension
 Horizontal dimension
Vertical Dimensioning
o Extent to which an organization uses vertical levels to separate job
responsibilities
o Directly related to the concept of Scalar Relationship – chain of command
 Individuals at the top possess the most authority
 Other individuals’ authority is scaled downward according to their
positions on the organization chart
 The lower an individual’s position on the chart, the less authority that
person possesses
o Unity of Command
 Management principle recommending an individual employee have
only one boss
 Too many bosses can result in confusion, contradiction, and
frustration – which leads to ineffectiveness and inefficiency in
an organization
o Span of Management
 Number of individuals a manager supervises
 The more the number, the greater the span of management
 The fewer the number, the smaller the span of management
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Greatest concern is determining how many individual employees a
manager can effectively manage
Designing Span of Management: A Contingency Viewpoint
 Key situational factors influencing the appropriateness of the
size of an individual’s span
o Similarity of functions
o Geographic contiguity
o Complexity of functions
o Coordination
o Planning
 Table 8.1 summarizes the factors that tend to increase and
decrease the span of management
Graicunas and Span of Management
 V. A. Graicunas formula for determining the number of possible
relationships between a manager and his/her employees when
the number of employees is known.
C = n(2n/2 + n – 1)
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C = total number of possible relationships
n = known number of employees
As number of employees increases arithmetically, the
number of possible relationships between the manager and
employees increases geometrically
Criticisms – formula only looks at possible, not actual
relationships and it does not take into consideration a
manager’s relationships outside the organization
o Height of Organization Chart
 Span of management directly influences the height of an organization
chart
 The greater the height of the organization chart, the smaller the
span of management
o Organization height is Tall
 The lower the height of the organization chart, the greater the
span of management
o Organization height is Flat
 Figure 8.3 provides an illustration of the relationship between
organization chart height and span of management
 The textbook provides good discussion of organizations who have made
organization height and span of management decisions
Horizontal Dimensioning
o The extent to which organizations use lateral subdivisions or specialties
within the organization
o To build organizations horizontally, organizations establish departments
o Department
 Unique group of resources established by management to perform
some organizational task
o Departmentalizing
 Process of establishing departments within the management system
Types of Departmentalization:
This section highlights several different ways in which managers may departmentalize their
organizations.
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Table 8.2 summarizes the advantages and disadvantages associated with each of the
following types of departmentalization
o Departments Based on Function
 The most widely used basis for establishing departments
 Work functions are the activities being performed within the
management system
 Frequently divided into the major categories of marketing, production,
finance, research & development, etc.
 Figure 8.4 is an example of a functional departmentalization for Sony
 Advantage
 Control is conferred to various department heads
o VP of Marketing controls and coordinates the marketing
plan for all of the organization’s products, geographies,
etc.
 Disadvantage
 May implicitly impose functional standardization that may not
meet the needs of the organization’s various products and
services
o Departments Based on Product or Service
 Departmentalizes resources according to the products or services
being offered
 Permits the logical grouping of resources necessary to produce and
market each product or service
 Figure 8.5 is an example of product/service departmentalization for
Sony
 Advantage
 Ability to focus the organization’s efforts on each of the firm’s
products or services
 Directly associates responsibility for each of the firm’s products
 Disadvantage
 Duplication of efforts leading to higher costs
o Departments Based on Geography
 Departmentalizes according to territory – the places where the work is
being done or geographic markets the firm is focusing on
Physical distances between places can make this departmentalization
cumbersome – resources can then be assigned according to territory
 Figure 8.6 is an example of geography/territory departmentalization for
Sony
 Advantage
 Helps organization focus equally on organizational geographic
locations
 Assists firm in identifying clearly the individuals responsible for
the various regions
 Disadvantage
 Lack of focus on products and services
o Departments Based on Customer
 Departmentalizes based on organization’s major customers
 Assumes major customers can be identified and divided into logical
categories
 Figure 8.7 is an example of customer departmentalization for Sony
 Advantage
 Firm focuses explicitly on its customers
 Disadvantage
 Can create redundancies and increase costs
o Departments by Matrix
 Figure 8.8 is an example of a matrix departmentalization for Sony
 Adds a series of projects to the traditional organization form (shown in
Figure 8.4)
 Project manager(s) borrows workers from various parts of the
organization to complete a specific project
 Projects can be long- or short-term
 Once finished, the borrowed employees return to their original
departments and jobs
 Workers are responsible for original activities along with their project
activities
 Project managers generally report to the firm’s CEO due to the
importance of the projects
 Advantages
 Allows organization to focus on various projects simultaneously
 Disadvantages
 Can be confusing
 Employees are reporting to two bosses – confusion results
when asked to complete two different tasks – which one should
they complete first?
 The Steps for Success box in the text provides ideas for helping managers
succeed in a matrix departmentalization
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Forces Influencing Formal Structure
 Formal structure of an organization continuously evolves due to four primary forces
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o Forces in the manager
o Forces in the task
o Forces in the environment
o Forces in the subordinates
Managerial forces include the unique way a manager perceives organizational
problems
o A manager’s background, knowledge, experiences, and values influence their
perception
Employee forces influence similarly and therefore play a key role in how he or she
views work, as well as their needs and skill levels
Task forces include the degree of technology involved in performing the task and the
task’s complexity
Environment forces include customers and suppliers of the management system
along with existing political and social structures
Fayol’s Advice on Using Formal Structure
 Fayol advised the strict adherence to a particular chain of command is not always
advisable
 Figure 8.9 illustrates Fayol’s rationale
 The route through an organization’s traditional chain of command and
organizational hierarchy can be time consuming and therefore expensive for the
organization
 Fayol’s rationale provided a bridge/gangplank to allow individuals to bypass levels
and go directly to other levels
 A potential downside is that individuals in lower levels of the organization may
receive communication and insight sooner than higher levels – management needs to
be careful when allowing the use of the organizational bridges
Informal Organization Structures
 Mechanistic Structures
o Formal organizational structures as discussed in the chapter
 Organic Structures
o Less formal
o Represents loosely coupled networks of workers
 Mechanistic structures are thought to be better suited for large companies and those
operating in stable industries
 Organic structures are thought to be better suited for smaller companies and those
operating in more volatile industries