Organizing is the grouping of activities while staffing involves HR activities such as job evaluation,
job analysis, recruitment, training and promotion and thus, staffing as a function of organizing.
In planning we establish the goals and objectives of the organization. After developing the goals
and objectives, the next is to identify the specific activities that are needed to achieve these goals
and objectives and that is the purpose of the organizing function.
Organizing – groping of major and minor activities to know what to prioritize and to easily allocate
human and non-human resources which we also call departmentation. It involves dividing tasks
into jobs specifying the appropriate department for each job and determining the optimum
number of jobs in each department. It is the identification and classification of required activities;
grouping of similar activities necessary to attain objectives.
There should be assigned manager for every department that will supervise the activities of every
department. There should also be constant communication and coordination of people in the
horizontal and vertical levels of organizational structure.
The essence of managing the organizing function can be broken down into 4 fundamental
components:
1. Ensuring work activities are completed in the best way. This first fundamental of
organizing emphasizes standardization which refers to developing uniform practices
breaking down the overall work into individual subtasks and identify the optimal way to
perform it for organizational members to follow in doing their jobs.
2. Ensuring that each member’s subtasks to the whole. This is addressed by placing
emphasis on specialization which involves selecting subsets of standardized
organizational tasks and allocating them to separate jobs. Typically, specialized
knowledge, skills, abilities and other characteristics are required to perform each job and
each member should have an understanding which of the subtasks he or she is
responsible for performing.
3. Ensuring that there is orderly deference among organizational members. Ideas related to
authority and the degree of its centralization are key to ensuring that there is orderly
deference among organizational members. Authority refers to the formal power given to
specific members, usually managers, to arrange resources and/or assign tasks and direct
the activities of other members in ways that help to achieve organizational goals. This
helps members know from whom to take cues in the everyday operation of the
organization.
4. Ensuring that members work together harmoniously. In ensuing that members work
together harmoniously; departmentalization is used to address the fourth fundamental
or organizing. Departmentalization refers to how members and resources are grouped
together to achieve the work of the larger organization where each member has a sense
of the overall goals of the unit and understands how their individual effort complements
the efforts of others to meet those goals.
There is a fundamental logic to organizing called the organizing process. The organizing process
or the logic of organizing consists of the following six steps:
1. Establishing enterprise objectives
2. Formulating support objectives, policies, and plans
3. Identifying, analyzing, and classifying the activities necessary to accomplish these
objectives
4. Grouping activities in light of the human and material resources available and the best
way under the circumstances of using them
5. Delegating to the head of each group the authority necessary to perform the activities
6. Tying the groups together horizontally and vertically, though authority relationships and
information flows
Although steps one and two are actually part of planning, these steps are considered in the
organizing process because you cannot commence the organizing process without setting your
objectives and other plans. Concurrent to the implantation of organizing steps, feasibility studies
and feedbacks are also done to determine the optimum number of jobs in each department and
the delegation of authority within and among departments.
Organization is a word used by many people loosely. Generally, it is defined as a group of people
working together to achieve common goals and objectives but more technically, it is formalized
intentional structure of roles or positions. The roles people ask to fill are intentionally designed
to ensure that required activities are done and the activities are fit together so people can work
smoothly, effectively and efficiently in groups. Organization is also the total system of social and
cultural relationships; thus, most managers believe they are organizing when they establish such
an intentional structure.
Most management books distinguish between the formal and informal organization and both
types are found in organizations.
Formal organization:
-
-
Means the intentional structure of roles in a formally organized enterprise
A group of people officially created by an organization for a specific purpose. If a manager
is to organize well, the structure must furnish an environment in which individual
performance both present and future contributes most effectively to group goals
An organization described as formal does not mean it is not flexible or confining. A formal
organization must be flexible in such a way that there should be room for discretion, for
beneficial utilization of creative talents and for recognition of individual like and capacities
in the most formal of organizations. Yet the individual effort in a group situation must be
channeled towards group and organizational goals.
Informal organization:
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-
It is a network of interpersonal relationships that arise when people associate with each
other.
It can also be described as any joint personal activity without conscious joint purpose,
although contributing joint results.
It is a group that is established by employees rather than by the organization to serve
group members interest or social needs. Usually, it is much easier to ask for help on an
organizational problem from someone you know personally even if he or she may be in a
different department than from someone you know only as a name on an organization
chart.
Thus, informal organizations relationships not appearing on an organization chart.
To clearly differentiate the two types of groups that exists in an organization, here is an
organizational chart:
Formal organizations have levels or hierarchy of roles that show a clear line of authority and
subordinate relationships. The organization is formally grouped together by departmentation
which has common goals and objectives. Whereas with informal organizations, there is no level
of hierarchy nor authority and subordinate relationship. People or employees are grouped based
on interest and friendship and not based on departmentation which may or may not have
common goals or objectives. Thus, managers also need to understand informal groups because
of their potential in influencing organizational effectiveness by enhancing the flow of information
and reinforcing the willingness of employees to work together cooperatively.
Another element of organizing is the span of management or levels of the organization. While
the purpose of organizing is to make human cooperation effective, the reason for levels of
organization is the limitation of the span of management.
In other words, organizational levels exists because there is a limit to the number of persons a
manager can supervise effectively, even though this limit varies depending on situations.
The principle of the span of management states that there is a limit to a number of subordinates
a manager can effectively supervise but the exact number will depend on the impact of
underlying factors. With too many subordinates, managers can become overloaded, experience
difficulty coordinating activities and lose control of what is occurring in their work units. On the
other hand, with too few subordinates, managers are underutilized and tend to engage in
extensive supervision leaving subordinates little discretion in doing their work.
Span of management or span of control refers to the number of people who report to one
manager or supervisor. Although it is not obvious, spans of management directly influence the
number of hierarchical levels in an organization.
Wide span of management
A wide span results in a flat organization, that is, a large number of employees reporting to one
supervisor and is associated with a few organizational levels. Having a wide span of control there
can be advantages and disadvantages.
Advantages
Disadvantages
Fewer managers are required and wages are There is a danger of managers losing control
saved.
and a tendency to become a decision
bottleneck and because of this, managers may
make snap decisions as they are looking after
too many employees.
Superiors can be forced to delegate and due
to this, subordinates are carefully selected. A
high-quality subordinate who could make
their own decisions and carry out their own
tasks with less supervision and without
interference by managers.
Narrow span of management
A narrow span result in a tall organization, in which a small number of employees report to a
supervisor, necessitating a larger number of supervisors.
Advantages
Implementing a narrow span would result in
close supervision and control.
It creates personal contact between managers
and subordinates as there would be fast and
direct
communication
between
the
subordinates and superiors and managerial
efficiency is increased since managers can
think of other matters and will not be
burdened with a large number of contacts and
relationships
Disadvantages
Many and higher levels of management would
mean high costs due to salaries and wages.
There would also be excessive distance
between the lowest level and top level and
has longer chain of command and because
there would be close contact and supervision,
superiors tend to get too involved in
subordinate’s work.
There is no formula in determining the ideal span of control. What is required is a more precise
balancing in a given situation of all pertinent factors. Aside from such personal capacities as
comprehending quickly, getting along with people and commanding loyalty and respect, the most
important determinant is a manager’s ability to reduce the time he or she spend with
subordinates. This ability naturally varies with managers and their jobs but several factors
materially influences the number and frequency of such contacts and therefore, the span of
management as shown in the table.
Organization structure:
- is a formal pattern of interaction and coordination designed by management to link the tasks of
individuals and groups in achieving organizational goals
- it is a system of tasks, workflows, reporting relationships and communication channels that
connect the work and activities of diverse individuals and groups within the firm in achieving in
achieving organizational goals
Four Basic Elements of Organizational Structure:
1. Standardization – which is developing uniform practices for organizational members to
follow in doing their jobs.
2. Specialization – the grouping of standardized organizational tasks into separate jobs.
3. Centralization – is where the decision-making authority rests with managers at the top of
an organization’s hierarchy.
4. Departmentalization – a grouping of members and resources together to achieve the
work of the larger organization
The grouping of activities and people into departments makes it possible to expand
organizations. A department has a distinct area, division, or branch of an organization over which
a manager has authority for the performance of the specified activities. Departments, however,
differ with respect to the basic patterns used in group activities.
Departmentation can be done by enterprise function, by territory, or geography and by the kinds
of customers served. Other kinds of departmentation are: product organization grouping, matrix
or grid organization.
Functional departmentation
Department by enterprise function or functional departmentation – grouping activities in
accordance to the functions of an enterprise. It embodies what enterprises typically do.
The basic enterprise function of a manufacturing company includes production, purchasing,
marketing, accounting and personnel. Another example is the functions of a hospital. It includes
surgery, psychiatry, nursing, housekeeping and billing.
Functional departmentation is the most widely employed basis for organizing activities and is
present in almost every enterprise at some level in the organization structure.
Typical functional grouping for a manufacturing company:
It is logical to group these activities into such departments as engineering, production, marketing,
and finance. The functional form of organization has several major advantages and
disadvantages.
Advantages
It encourages the development of expertise
because employees can foster specialization
within a single function and can have a clear
path
Disadvantages
It may de-emphasize the overall company
objectives and focuses more on the
department’s objectives. The coordination
across functions may delay because decisions
may have to pass through the chain.
Grouping by functions increases the potential Bottlenecks may develop as one function
for
developing
specialized
technical waits for another to complete its work.
competencies, which can constitute and
advantage over competitors
Limits the development of managers within
one function and hence have only limited
knowledge of other functions.
Functional structure in a hotel and lodging industry:
The functions of the company is divided into major services of the hotel such as front desk,
housekeeping, maintenance, food & beverages, human resources, marketing and sales, and
accounting.
Departmentation by territory or geography
Departmentation by territory or geography – departmentation based on territory is rather
common in enterprise that operate over wide geographic areas. Business firms resort to this
method when similar operations are undertaken in different territories. Organizations that are
spread over a wide area may find advantages in organizing along geographic lines so that all the
activities performed in a region are managed together.
Departmentation by territory or geography – it is the grouping of activities by area or territory
that is common in enterprises operating over wide geographic areas.
Territorial departmentation is most often used in engineering, production, accounting, and sales.
It is not used in finance which is usually concentrated at the headquarters.
In this example five geographical divisions were created in five regions. Each area was given
responsibility for its own engineering, production, accounting, and sales and other business
functions.
Advantages
With this structure, divisions can react quickly
within their region when necessary and do not
to coordinate with other regions or the
headquarters before taking action.
Responsibility for problems and issues and
local markets is placed at the lower level and
contained within the division.
Disadvantages
Because of the scale of control, it makes it
more difficult for top management and
therefore requires more individuals with high
quality general manager abilities.
There would also be duplication of roles and
resources at the regional level.
Departmentation by customer group
Departmentation by customer group – grouping of activities that reflects a primary interest in
customers which is common in a variety of enterprise. Customers are the key to the way activities
are grouped.
When each customer group is managed by one department head, business owners and managers
frequently arrange activities on this basis to cater to the requirements of clearly defined
customers groups. For example, educational institutions offer regular and extension courses to
serve different groups of students.
The customer structures are useful in services such as banks.
For example, large banks use them to give separate attention to community city baking, real
estate and mortgage loans, corporate banking, agricultural banking, and institutional banking
where the customer’s various need within a standard functional structure is addressed and
coordinated.
Advantages
With this structure, emphasis is given on
customer needs which gives the customers
the feeling that they have an understanding
supplier and whatever their needs are will be
provided.
Likewise, the operation is tied with customer
satisfaction which may be more beneficial to
the organization
Disadvantages
It may require managers and staffs to be
expert in customers issues and problems.
It may also be difficult to coordinate
operations between competing customer’s
demands as services and response may vary in
every situation.
In this example, the organization structure focused its attention on diverse markets such as
consumer products, small business market, and small major accounts where the same standard
enterprise functions are performed and coordinated for their customers.
Departmentation by product
Departmentation by product – grouping activities on the basis of products or product lines have
been growing in importance in multi-line, large-scale enterprises. All the activities necessary to
product and market a product or group of similar products are grouped together. Typically,
companies and other enterprises adopting this form of departmentation were organized by
enterprise function. With the growth of the firm, production managers, sales and service
managers and engineering executives encountered problems of size.
An example of a typical product organization grouping for a manufacturing company:
This structure permits top management to delegate to a division executive extensive authority
over the manufacturing, sales, service, and engineering functions that relate to a given product
or product line.
Advantages
Permits growth and diversity of products and
services as it places attention and effort on
the product line and facilitates the use of
specialized capital facilities, skills, and
knowledge.
Disadvantages
On the other hand, for large organizations,
manufacturing numerous products and
product lines, control may present to be an
increasing concern on top management and
will require individuals with high quality
general manager abilities.
It also permits improved coordination of There would also be duplication of roles and
functional activities contained within the resources in this type of structure.
product or product line.
Matrix organization
Another kind of departmentation is matrix or grid organization or project or product
management. The essence of matrix organization is the combining of functional and project or
product patterns of departmentation in the same organization structure. This kind of
organization occurs frequently in construction, in aerospace such as designing and launching a
weather satellite, in marketing, in the installation of and electronic data processing system or in
management consulting firms where management experts work together on a project
The figure depicts matrix organization in an engineering department:
There are functional managers in charge of engineering functions and an overlay of project
managers responsible for the end product.
Advantages
Disadvantages
Primary benefits of matrix structure derive The additional team leaders needed to staff a
from team members working closely together matrix structure result in higher costs.
across functional lines and sharing expertise
and information in a timely way.
There are better communication and
cooperation across functions and improved
decision making where problem solving takes
place at the team level where the best
information is available.
The two-supervisor system is susceptible to
power struggles problem and frustrations
occur when functional supervisors and team
leaders don’t coordinate well and end up
sending conflicting messages and priorities or
even competing one another for authority.
While this form is common in engineering and in research and development, it has also been
widely used although seldom drawn as a matrix in the product marketing organization.
Workers in a matrix structure simultaneously belong to at least two formal groups: a functional
group and product program or project team. They also report to two supervisors, one within the
function and the other within the team.
Conclusion:
In choosing the pattern of departmentation, there is NO single best form of departmentation
that is applicable to all organizations or to all situations. The pattern used will depend on the
given situations and on what managers believe will yield the best results for them in the situation
they face such as the jobs to be done and the way they should be done, the people involved in
their personalities, the technology employed in the department, the users being served and other
internal and external environmental factors in the situation. However, if they know the various
departmentation patterns and the advantages, disadvantages and dangers of each, practicing
managers should be able to design the organization structure most suitable for their particular
operations.