Basic Elements of
Organizing
11–1
In this chapter you will learn
• Definition of Organizing
• Definition of organizational structure
• The Elements of Organizing
• 1. Designing Jobs
–
–
–
Job Specialization
Benefits and Limitations of
Specialization
Alternatives to Specialization
2. Grouping Jobs: Departmentalization
–
–
Rationale
Common Bases and advantage and
disadvantages of each base
3. Establishing Reporting Relationships
–
–
–
–
4. Distributing Authority
– The Delegation Process
– Decentralization and Centralization
5. Coordinating Activities
– The Need for Coordination
– Structural Coordination Techniques
6. Differentiating Between Positions
– Differences Between Line and Staff
– Administrative Intensity
Chain of Command
Narrow Versus Wide Spans
Tall Versus Flat Organizations
Determining the Appropriate SOC
11–2
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.
11–3
Hierarchical
Organisation
In a hierarchical
organisation employees
are ranked at various
levels within the
organisation, each level is
one above the other. At
each stage in the chain,
one person has a number
of workers directly under
them, within their span of
control.
11–4
Macquarie's organizational
approach is designed to be nonhierarchical. Management of the
organization is largely delegated
to the Executive Committee, a
central group comprising the
Chairman, Managing Director,
Deputy Managing Director, Head
of Risk Management and heads of
the Bank's six major business
Groups.
Within overall guidelines and
specific parameters set by the
Board and Executive Committee,
the six business Groups have
substantial discretion in the
conduct of their various
businesses. Business activities are
carried out by Divisions, which
focus on particular products and
markets. Outside the major
business Groups is a specialist
business, Macquarie Direct
Investment, which is responsible
for managing the Bank's private
equity activities.
Macquarie Bank - Organisation Structure
11–5
Basic elements organizing
– Job Designing
– Departmentalization
– Reporting
Relationships
– Distribution of
Authority
– Coordination
– Differentiation
11–6
Basic Elements of Organizing
1-Job Design
3- Reporting Relationship
5- Coordination
2- Departmentalization
4- Distributing Authority
6- Differentiation
Designing Jobs
• What is ‘Designing Jobs’?
• How would you design jobs for an entire
organization?
• Define ‘Job Specialization - JS’?
• What are the benefits of JS?
• What are the limitations of JS?
• Define the following terms:
–
–
–
–
–
Job Rotation
Job Enlargement
Job Enrichment
Team work
Job- Characteristics Approach
11–8
Job Design
Determination of an
individual’s workrelated
responsibilities.
11–9
Job Specialization (Division of Labor)
The degree to which the
overall task of the
organization is
broken down and
divided into smaller
component parts
11–10
Making a nail dilemma?
• How many tasks does it
take to make a nail?
– 18
• How many nails can one
worker make in a day, if
he/she is doing all the
tasks?
– 20
• How many nails can be
made by 20 workers?
– 20 * 20 = 400 nails
• How many steps does it
take to make a nail?
– 18
• How many nails can one
worker process in a day, if
he/she is specialized in one
task one?
– 5000
• How many nails by 20
workers?
– 20 * 5000 = 100,000 nails
11–11
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
11–12
+ & - Job Specialization
Benefits
•Proficient
•Transfer time
•Specialized equipment
•Replacement
Limitations
•Boredom and dissatisfaction
•Anticipated benefits do not always occur.
11–13
Alternatives to Job Specialization
•Job Rotation
•Job Enlargement
•Job Enrichment
•Team Work
•Job Characteristics
Approach
11–14
Classify the following into: Work Teams, Job
Enrichment, Job Enlargement and Job Rotation.
• An operator has four different jobs. He spends three weeks on each
of these jobs and then starts the cycle over again with the first job of
the operation.
• Sulma’s job is a data entry operator. Her job has been redesigned
and now she also has a higher level responsibility in the PR. Now
she is also responsible to reply customers complaints.
• Fatima is a typist for the sales section. Her job has been redesigned
to include typing for the advertising section as well.
• Ahmed, Sulman and Ali are working as a group. They have the full
autonomy to design the work system that they will use to perform an
interrelated set of tasks.
11–15
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.
• Job Enrichment
– Increasing both the number of tasks the worker does and the
control the worker has over the job.
11–16
Alternatives to JS
• 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.
11–17
Alternatives to Specialization:
Job Characteristics Approach
• 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
• Feedback
• the degree of control the worker has over how
the work is performed
• the extent to which the worker knows how well
the job is being performed.
11–18
Assess the jobs below using the dimensions of the job characteristics approach
* Assembly line operator responsible to put lids on the moving jam jars
* A dentist
Skills Variety
Number of tasks is high
Number of Tasks is limited
Tasks Identity
Worker does a minute or
unidentifiable portion of the
total job
Worker does a complete or
identifiable portion of the
total job
Task Significance
The perceived importance of
the task is high
The perceived importance of
the task is low
Autonomy
The employee has low
control over how the work is
performed
The employee has high
control over how the work is
performed
Feedback
The employee clearly and
immediately knows how well
the job is being performed.
It takes time for the
employee to formally know
well the job has been
performed
11–19
Assess the jobs below using the dimensions of the job characteristics approach
* Assembly line operator responsible to put lids on the moving jars
Number of Tasks is limited
Skills Variety
Tasks Identity
Worker does a minute or
unidentifiable portion of the
total job
the perceived importance of
the task is low
Task Significance
Autonomy
Feedback
The employee has low
control over how the work is
performed
It takes time for the
employee to know well the
job has been performed
11–20
Assess the jobs below using
the dimensions
of the job characteristics approach
Number
of tasks is high
Skills Variety
* A dentist
Tasks
Identity
Task Significance
Worker does a complete or
identifiable portion of the
total job
the perceived importance of
the task is high
The employee has high
control over how the work is
performed
Autonomy
Feedback
The employee clearly and
immediately knows how well
the job is being performed.
11–21
Which of the following job dimensions will lead the dentist
to experience the specified psychological state
•
The dentist will experience
meaningfulness of his work
because his job includes
a)
b)
c)
d)
e)
•
High skills variety
High task identity
High task significance
High Autonomy
High Feedback
The dentist will experience
that he/she is responsible for
the work done because
his/her job is designed with
a)
b)
c)
d)
e)
High skills variety
High task identity
High task significance
High Autonomy
High Feedback
• The dentist will experience
that he/she has knowledge
of the actual results of
his/her activities because
his/her job is designed
with
a) High skills variety
b) High task identity
c) High task significance
d) High Autonomy
e) High Feedback
11–22
Matching the person & the job
• You have been asked to design jobs • Would you design a job for
Jassim that is high on the five
for the following job candidates. Use
core dimensions of the job
the Job Characteristics Approach to
characteristics approach.
design the jobs.
–
–
Jassim is highly motivated, exercises
self control, fast learner ,independent
and is a risk taker. He is always on the
look for new challenges.
Abullah is a reserved person, who likes
to be told what to do and strictly
follows the orders. He is risk averse.
• Whom would you describe as a
person who is eager to grow. In
other words who has strong desire to
develop, and expand his capabilities.
–
–
(a) Jassim
(b) Abullah
(a) Yes
(b) No
• Would it be right to describe
Jassim as person who has high
growth needs.
(a) Yes
(b) No
• Would you describe the job that
you would design for Jassim as
– (a) strong on all five dimensions
of the job characteristics
approach
– (b) Low on all five dimensions of
the job characteristics approach
11–23
Core job
dimensions
• Skill variety
• Task identity
• Task significance
• Autonomy
• Feedback
Job Characteristics
Approach
Critical
psychological
states
Experienced
meaningfulness
of the work
Experienced
responsibility
for outcomes
of the work
Knowledge of the
actual results of
work activities
Personal and
work outcomes
• High internal
work motivation
• High-quality work
performance
• High satisfaction
with the work
• Low absenteeism
and turnover
Employee
growth-need
strength
11–24
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.
11–25
Building Block 2: Grouping Jobs: Departmentalization
• What is Departmentalization?
• From the facts below, draw an organization chart for Apex
Computers. Specify the departmentalization bases for each
hierarchical level.
Apex computers has two divisions for its main products,
Computers and software. Manufacturing, Finance an Marketing are
the departments in the Computers division. The Software division
is has Marketing, Finance and Design departments. The Design
department has two sections, Saudi Arabia and Bahrain. The
Manufacturing Department has two sections, UEA and Oman. The
Marketing Department in the Computer Division has two sections,
Industrial Sales and Consumer sales. The Consumer Sales section
has five units, Saudi Arabia, UAE, Bahrain, Oman and Qatar.
11–26
11–27
Bases for Departmentalization: Apex Computers
President
Software
Computers
Manufacturing
Finance
UAE
Marketing
Marketing
Finance
Saudi
Arabia
Oman
Industrial
sales
Saudi
Arabia
UAE
Design
Bahrain
Consumer
sales
Bahrain
Oman
Qatar
11–28
Functional Departmentalization
• Is the grouping of jobs involving the
or
same
similar activities.
• Advantages
– experts.
– Supervision is facilitated
– Coordination
• Disadvantages
– slow and bureaucratic.
– narrow focus
– Accountability
11–29
Product Departmentalization Form
• Product Departmentalization
products or
product groups.
– The grouping of activities around
• Advantages
– All in one
– Speed and effectiveness
– Performance assessment
• Disadvantages
– Product focus.
– Administrative costs
11–30
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.
11–31
Location Departmentalization
• Location Departmentalization
– The grouping of jobs on the basis of defined
geographic sites or areas.
• Advantage
– Quick response
• Disadvantage
– Large administrative
11–32
Advantages and Disadvantages of Each Departmentalization Base
Functional
Product
Customer
Location
Advantage (+) and Disadvantage (-)
+The department can be staffed with experts in the functional areas
+Supervision is facilitated as each individual manager has to deal
with relatively narrow set of skills
+ All activities associated with a specific product or product group are
easily integrated and coordinated. Therefore, the speed and effectiveness
of decision making regarding a specific products is enhanced
+ All activities associated with a customers are easily integrated and
coordinated. Therefore, the speed and effectiveness of decision making
regarding a specific customers is enhanced as skilled specialists can deal
with unique customers or customer groups.
+ All activities associated with a specific geographical areas are easily
integrated and coordinated. Therefore, the speed and effectiveness of
decision making regarding a specific geographical area is enhanced
+ the performance of individual products or product groups can be
assessed more easily and objectively
-Accountability and performance becomes more difficult to measure
+Quick response to the specific needs of customers in a specific
geographical area
-As the organization grows, decision making tend to become slower
and more bureaucratic
-narrow focus as employees tend to concentrate on their own unit
rather than the total organization
- A large administrative staff is needed to integrate activities
of various departments.
11–33
Other Forms of Departmentalization:
•Time
•Sequence
11–34
Other Considerations
• Sometimes
departments are
called something
different, such as:
– Division.
– Units.
– Section.
– Bureaus.
11–35
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
one
and only one boss.
a clear reporting relationship to
– Scalar Principle
unbroken line of
authority must extend from the
bottom to the top of the organization.
• A clear and
11–36
Chain of Command
Unity of Command – one and
only one boss
Scalar Principal – clear and unbroken line of
authority extending from the bottom to the top
11–37
02-05-I200-SL
Span of Control (SOC)
Number of people
who report to a
particular manager
11–38
02-12-I200-SL
Span of Control
Narrow Span of control
11–39
02-12-I200-SL
Span of Control
Narrow - Effective
Narrow - Effective
Narrow - Effective
span of controlspan of controlspan of control
Wide Span of Control
11–40
02-12-I200-SL
Optimum Span of Control ?
Supervisor
1 2 3 4 5
11–41
02-13-I200-SL
? What is the optimum SOC
A. V. Graicunas
•Subordinate
interactions
• I = N(2N/2 + N - 1)
• Ralph Davis
– Operative span for
lower-level managers
up to 30 workers.
– Executive span for
middle and top
managers at 3 to 9.
• Al-Qosaibi
– Refer to article
11–42
Highlight the appropriate
type
Advantages (+) or Disadvantages (-)
Tall
Organization
Flat
Organization
- Expensive (Why?)
Tall
Organization
Flat
Organization
- Communication is relatively more
difficult
Tall
Organization
Flat
Organization
+ leads to higher levels of employees
moral and productivity
Tall
Organization
Flat
Organization
-Create more supervisory
responsibility for managers due to the
wider spans of control.
Tall Versus Flat Organizations
Tall Organization
Flat Organization
Presiden
t
President
11–44
Establishing Reporting Relationships:
Tall versus Flat Organizations
• Tall Organizations
– expensive
– communication problems
• What type of SOC is
associated with tall
organization?
• Flat Organizations
– higher levels of employee
morale and productivity
– Create more supervisory
responsibility for managers
due to wider spans of
control.
• What type of SOC is
associated with tall
organization?
11–45
Determining the Appropriate Span:
Factors Influencing the Span of Management
1. Competence of supervisor and subordinates - the greater the
competence, the (wider, narrower) the potential span.
2. Physical dispersion of subordinates - the greater the dispersion,
the (narrower, wider) the potential span.
3. Extent of nonsupervisory work in a manager’s job - the more
nonsupervisory work, the (narrower, wider) the potential span.
4. Degree of required interaction - the less required interaction, the
(wider, narrower) the potential span.
5. Extent of standardized procedures -the more procedures, the
(wider, narrower) the potential span.
6. Similarity of tasks being supervised - the more similar the tasks,
the (wider, narrower) the potential span.
7. Frequency of new problems - the higher the frequency, the
(narrower, wider) the potential span.
8. Preferences of supervisors and subordinates.
Table 11.1
11–46
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 narrower the potential span).
8. Preferences of supervisors and subordinates.
Table 11.1
11–47
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.
• Temporary
• Reasons for Delegation
– get more work done
– development of subordinates
11–48
Steps in the Delegation Process
Step 1
Assigning
responsibility
Manager
Subordinate
Step 2
Granting
authority
Manager
Manager
Subordinate
Step 3
Creating
accountability
Manager
Manager
Subordinate
Figure 11.4
11–49
Steps in the Delegation Process
Step 1
Telling the subordinated
to do the job
Manager
Subordinate
Step 2
Power
Manager
Manager
Subordinate
Step 3
Establishing
Obligation
Manager
Manager
Subordinate
11–50
Problems in Delegation
• Manager
• Subordinate
– Reluctant to delegate
– Fear of failure
– Disorganized manager
– Avoidance of risk and
responsibility
– Threat
– no rewards
– Trust issue
11–51
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.
11–52
Coordinating Activities
• Coordination
– The process of
linking the activities of the various
departments of the organization.
• The Need for Coordination - Interdependence -
11–53
Coordinating Activities: Three Major Forms of Interdependence
•
When the output of one unit
becomes the input of another unit
in an ordered fashion.
a) Pooled interdependence
b) Sequential interdependence
c) Reciprocal interdependence
•
When units operate with little
interaction; their output is simply
gathered at the organizational
level.
a) Pooled interdependence
b) Sequential interdependence
c) Reciprocal interdependence
•
When activities flow both ways
between units.
a) Pooled interdependence
b) Sequential interdependence
c) Reciprocal interdependence
11–54
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.
11–55
Three Major Forms of Interdependence
Sequential
Input
Reciprocal
Output
Input Output
Input Output
Pooled
Input
Input
Input
Output
Input
Output
11–56
Coordination Techniques
The nature of the Finance
and Project Management
Department is acute
In Kmart, lunching a
new product requires
temporary coordinating
between many units
In Kmart the nature of work
in the Loading and
Unloading sections is
highly interrelated
Structural
Coordination
Techniques
In Kmart, everyone knows
that the truck shipment
has priority over mail
shipment
2 groups of employees
working on different
shipments for the
same destination.
One manager is
Acting as a point of contact
between the two groups
Select the appropriate
coordinating technique to
each of the cases
1- Rules and Regulations
- Routine coordination
activates can be handled via Rules
and Regulations
2-Liaison Roles
- A manager in a liaison
role coordinates interdependent
units
3-Managerial Hierarchy
– Placing one manager in
charge of two interdependent units
4- Integrating Department
-Creating a permanent
department to coordinate between
to highly interdependent units
5- Taskforce
- Creating a temporary
taskforce to manage the
coordination
Structural Coordination Techniques
•
Routine coordination activities can be
handled via formal predetermined steps
that set priorities and guidelines for actions.
a)
b)
c)
d)
e)
•
Placing one manager in charge of
interdependent departments or units.
a)
b)
c)
d)
e)
•
The Managerial Hierarchy
Rules and Procedures
Liaison Roles
Task Forces
Integrating Departments
The Managerial Hierarchy
Rules and Procedures
Liaison Roles
Task Forces
Integrating Departments
A manager coordinates
interdependent units by acting
as a common point of contact,
facilitating the flow of
information.
a) The Managerial Hierarchy
b) Rules and Procedures
c) Liaison Roles
d) Task Forces
e) Integrating Departments
• Used with multiple units when
coordination is complex, requiring
more than one individual, and the
need for coordination is acute. This
type of coordination is disbanded
when the need for coordination has
been met.
a)
b)
c)
d)
e)
The Managerial Hierarchy
Rules and Procedures
Liaison Roles
Task Forces
Integrating Departments
• Permanent organizational units that
maintain internal integration and
coordination on an ongoing basis. It
may have authority and budgetary
controls.
a)
b)
c)
d)
e)
The Managerial Hierarchy
Rules and Procedures
Liaison Roles
Task Forces
Integrating Departments
11–58
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.
11–59
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.
11–60
Designing Jobs
Job
Specialization
Benefits and
Limitations of
Specialization
Alternatives to
Specialization
Chain of Command
Unity of Command
Scalar Principle
Span of Control
Narrow Versus Wide
Spans
Tall Versus Flat
Organizations
The Need for
Coordination
Types of Coordination
Structural
Coordination
Techniques
Rationale
Common Bases
Product
Customer
Location
Functional
The Delegation Process
Decentralization and
Centralization
Differences Between Line and Staff
Administrative Intensity
In this chapter you will learnt
• Definition of Organizing?
• Definition of organizational structure
• The Elements of Organizing
• 1. Designing Jobs
–
–
–
Job Specialization
Benefits and Limitations of
Specialization
Alternatives to Specialization
2. Grouping Jobs: Departmentalization
–
–
Rationale
Common Bases and advantage and
disadvantages of each base
3. Establishing Reporting Relationships
–
–
–
–
Chain of Command
Narrow Versus Wide Spans
Tall Versus Flat Organizations
Determining the Appropriate SOC
4. Distributing Authority
– The Delegation Process
– Decentralization and Centralization
5. Coordinating Activities
– The Need for Coordination
– Structural Coordination Techniques
6. Differentiating Between Positions
– Differences Between Line and Staff
– Administrative Intensity
11–62