Principles Of Management-II ORGANIZING & DEPARTMENTIZATION Lecture No.3

THE ORGANIZING

DEFINITION OF ORGANIZAION Organizations are experimenting with different approaches to organizational structure and design.

ORGANIZATION STRUCTURE The system of tasks, workflows, reporting relationships, and communication channels that link together different individuals and groups.

The Elements of Organizing Organizing is deciding how best to group organizational elements (resources). Organizational Structure is a set of six basic building blocks (elements) that managers may use to configure (construct) an organization.

Six Basic Building Blocks for Organization Structure Designing jobs Grouping Jobs Establishing reporting relationships between jobs Distributing authority among jobs Coordinating activities among jobs Differentiating among positions

Span of Management Number of employees reporting to a supervisor Tradition has recommended a span of management of four to seven subordinates What is best depends on the situation 14

Major Concerns in Organizing Division of Labor (Differentiation) Coordination (Integration) In Reference to the Organizational Chart, Organizing Involves: VERTICAL STRUCTURE Coordination from Top to Bottom HORIZONTAL STRUCTURE Departmentalization (Who works together?) 2

2

Distributing Authority Steps in the Delegation Process: Manager should assign responsibility or give the subordinate a job to do. Manager must give the subordinate the authority to do the job. Manager must establish the subordinate’s accountability – ‘willingness to accept an obligation to carry out the task assigned’.

Steps in the Delegation Process

CENTRALIZATION AND DECENTRALIZATION

CENTRALIZATION AND DECENTRALIZATION Centralization and decentralization refer to the degree to which authority is delegated in a business. Complete centralization means that employees have no authority to make decisions. Complete decentralization (delegation) means employees have all the authority to make decisions. Centralization Decentralization

DEPARTMENTIZATION

Departmentalization is an aspect of organizational design that includes the subdivision of a business into units based on their function or other criteria. Most companies, including restaurants, are likely to use two or more types of departmentalization simultaneously.

Departmentalization Grouping of jobs into working units (departments, units, groups, divisions) Functional departmentalization Product departmentalization Geographical departmentalization Customer departmentalization

Functional Departmentalization Employees grouped into department based on the day-to-day nature of their job descriptions

Product Departmentalization Employees grouped into departments based on the product they are making

Geographical Departmentalization Employees grouped by geographical region FF

Customer Departmentalization Employees grouped into departments based on their end consumer (consumers or businesses)

Formal Communication Flow of communication within the formal organizational structure as depicted on organizational charts. Upward communication Downward communication Horizontal communication