The Basic Elements of Organizing
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The Elements Organizing
• Organizing
– Deciding how to best group organizational activities
and resources.
Here are the main elements we
will cover:
• Job Design
• Departmentalization
• Chain of Command
• Span of Management
• Authority
• Centralization vs.
Decentralization
• Tall vs. Flat Organizations
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Job Design-• 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
• 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.
• 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.
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Alternatives to Specialization
Job Characteristics Approach: suggests jobs
should be diagnosed and improved along 5
core dimensions.
– 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.
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Alternatives to Specialization
• 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 ownermanager’s capacity to personally supervise all of
the organization.
– Additional managers are employed and assigned
specific employees to supervise.
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Departmentalization (cont’d)
• Functional Departmentalization
– Grouping jobs involving the same or similar activities.
• Product Departmentalization
– Grouping activities around products or product
groups.
• Customer Departmentalization
– Grouping activities to respond to and interact with
specific customers and customer groups.
• Location Departmentalization
– The grouping of jobs on the basis of defined
geographic sites or areas.
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Bases for Departmentalization
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Reporting Relationships
Chain of Command
A clear and distinct line of authority among the positions in
an organization.
Span of Management (Span of Control)
The number of people who report to a particular manager.
Determined by many factors:
• Competence of manager and subordinate
• Extent of Standardized Procedures
• Degree of required interaction
• Amount of non-supervisory work in manager’s job
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Tall Versus Flat Organizations
Wide spans of management result in flat organizations which
can improve communication and flexibility.
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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 development of subordinates by having
them participate in decision making and problem.
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Decentralization and
Centralization
• Decentralization
– Systematically delegating power and authority
throughout the organization to middle- and lowerlevel managers.
• Centralization
– Systematically retaining power and authority in the
hands of higher-level managers.
• Factors Determining Choice of Centralization
– External environment’s complexity and uncertainty
– History of the organization
– Nature (cost and risk) of the decisions to be made.
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The Nature of
Organization Design
• Organization Design
– The overall set of structural elements and the
relationships among those elements used to
manage the total organization.
– A means to implement strategies and plans to
achieve organizational goals.
• Organization Design Concepts
– Organizations are not designed and then left
intact.
– Organizations are in a continuous state of change.
– Designs for larger organizations are extremely
complex and have many nuances and variations.
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The Bureaucratic Model of
Organization Design
• Bureaucratic Model (Max Weber)
– A logical, rational, and efficient organization
design based on a legitimate and formal system of
authority.
– Characteristics
• A division of labor with each position filled by an expert.
• A consistent set of rules that ensure uniformity in task
performance.
• A hierarchy of positions which creates a chain of
command.
• Impersonal management; with the appropriate social
distance between superiors and subordinates.
• Employment and advancement is based on technical
expertise, and employees are protected from arbitrary
dismissal.
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Situational View of Organization Design
• Assumes that the optimal design depends on a set of
relevant situational factors. Four Basic Factors:
1. Technology
1.
2.
3.
Unit or Small Batch
Large-Batch or Mass Production
Continuous-Process Technology
2. Environment
1.
2.
Stable environments that remain constant over time.
»
Mechanistic – similar to bureaucratic, most frequently found
in stable environments
Unstable environments subject to uncertainty and rapid change
»
Organic – flexible and informal; usually found in unstable
and unpredictable environments
3. Size
4. Organizational Life Cycle
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Basic Forms of
Organization Design
• Functional or U-form (Unitary) Design
– Organizational members and units are grouped
into functional departments such as marketing and
production.
– Coordination is required across all departments.
– Design approach resembles functional
departmentalization in its advantages and
disadvantages.
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Functional or U-form Design for a
Small Manufacturing Company
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Basic Forms of Organization
Design (cont’d)
• Conglomerate or H-form (Holding) Design
– Organization consists of a set of unrelated
businesses with a general manager for each
business.
– Holding-company design is similar to product
departmentalization.
– Coordination is based on the allocation of
resources across companies in the portfolio.
– Design has produced only average to weak
financial performance; has been abandoned for
other approaches.
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Conglomerate (H-form) Design
at Samsung
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Basic Forms of Organization
Design (cont’d)
• Divisional or M-form (Multidivisional) Design
– Multiple businesses in related areas operating
within a larger organizational framework.
– Results from a strategy of related diversification.
– Some activities are decentralized down to the
divisional level; others are centralized at the
corporate level.
– M-form design advantages are the opportunities
for coordination and sharing of resources.
– Successful M-form organizations can out perform
U-form and H-form organizations.
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Multidivisional (M-form) Design
at Limited Brands
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Basic Forms of Organization
Design (cont’d)
• Matrix Design
– Two overlapping bases of departmentalization:
• A set of product groups or temporary departments are
superimposed across the functional departments.
– Employees in the matrix belong to their
departments and the project team:
• A multiple command structure in which an employee
reports to both departmental and project managers.
– A matrix design is useful when:
• There is strong environmental pressure.
• There are large amounts of information to be processed.
• There is pressure for shared resources.
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A Matrix Organization
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Basic Forms of Organization
Design (cont’d)
• Hybrid Designs
– Based on two or more common forms of
organization design—may have a mixture
of related divisions and a single unrelated
division.
– Most organizations use a modified form of
organization design that permits them to
have sufficient flexibility to make
adjustments for strategic purposes.
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Emerging Issues in
Organization Design
• The Team Organization
– Relies almost exclusively on project-type teams,
with little or no underlying functional hierarchy.
• The Virtual Organization
– Has little or no format structure with few
permanent employees, leased facilities, and
outsourced basic support services.
– May conduct its business entirely on-line and
exists only to meet for a specific and present
need.
• The Learning Organization
– Works to facilitate the lifelong learning and
development of its employees while transforming
itself to respond to changing demands and needs.
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