1. Basic Elements of Organizing
CHAPTER 11
Basic Elements of Organizing
PowerPoint Presentation by Charlie Cook
Copyright © by Houghton Mifflin Company. All rights reserved.

2. Learning Objectives
After studying this chapter, you should be able to:
Identify the basic elements of organizations.
Describe alternative approaches to designing jobs.
Discuss the rational and the most common basis for grouping jobs into departments.
Describe the basic elements involved in establishing reporting relationships.
Discuss how authority is distributed in organizations.
Discuss the basic coordinating activities undertaken by organizations.
Describe basic ways in which positions within the organization can be differentiated.

3. Chapter Outline The Elements of Organizing
Designing Jobs
Job Specialization
Benefits and Limitations of Specialization
Alternatives to Specialization
Grouping Jobs: Departmentalization
Rationale for Departmentalization
Common Bases for Departmentalization
Chain of Command
Narrow Versus Wide Spans
Tall Versus Flat Organizations
Establishing Reporting Relationships
Determining the Appropriate Span
Distributing Authority
The Delegation Process
Decentralization and Centralization
Coordinating Activities
The Need for Coordination
Structural Coordination Techniques
Differentiating Between Positions
Differences Between Line and Staff
Administrative Intensity

4. The Elements 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.

5. Designing Jobs Job Design Job Specialization (Division of Labor)
The determination of an individual’s work-related responsibilities.
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
Employee boredom and dissatisfaction with mundane tasks.
Anticipated benefits do not always occur.

6. 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 10

7. 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.
Increases training costs, unions contend that workers deserve more pay for doing more tasks, and the work may still be dull and routine.
Job Enrichment
Increasing both the number of tasks the worker does and the control the worker has over the job.

8. Alternatives to Specialization (cont’d)
Job Characteristics Approach:
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.
Growth-Need Strength
The desire for some people to grow, develop, and expand their capabilities that is their response to the core dimensions.

9. Job Characteristics Approach
Core job
dimensions
Personal and
work outcomes
Critical
psychological
states
Experienced
responsibility
for outcomes
of the work •
Skill variety
Task identity
Task significance
Autonomy
Feedback
Knowledge of the
actual results of
work activities
Employee
growth-need
strength
High internal
work motivation
High-quality work
performance
High satisfaction
with the work
Low absenteeism
and turnover
meaningfulness
Job Characteristics Approach
Source: J. R. Hackman and G. R. Oldham, “Motivation Through the Design of Work: A Test of a Theory,“ Organizational Behavior and Human Performance, Vol. 6 (1976), pp. 250–279. Copyright © Academic Press, Inc. Reprinted by permission of Academic Press and the authors.
Figure 11.1

10. Alternatives to Specialization (cont’d)
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. Grouping Jobs: 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.

12. Grouping Jobs: Departmentalization (cont’d)
Functional Departmentalization
Is the grouping of jobs involving the same or similar activities.
Advantages
Each department can be staffed by functional-area experts.
Supervision is facilitated in that managers only need be familiar with a narrow set of skills.
Coordination inside each department is easier.
Disadvantages
Decision making becomes slow and bureaucratic.
Employees narrow their focus to the department and lose sight of organizational goals/ issues.
Accountability and performance are difficult to monitor.

13. Bases for Departmentalization: Apex Computers
Design
Marketing
Computers
President
Software
Manufacturing
Finance
Phoenix
Dallas
Consumer sales
Industrial sales
St. Louis
Chicago
Southwest U.S.
Southeast U.S.
Northeast U.S.
Northwest U.S.
Central U.S.
Figure 11.2

14. Product Departmentalization Form
The grouping of activities around products or product groups.
Advantages
All activities associated with one product can be integrated and coordinated.
Speed and effectiveness of decision making are enhanced.
Performance of individual products or product groups can be assessed.
Disadvantages
Managers may focus on their product to the exclusion of the rest of the organization.
Administrative costs may increase due to each department having its own functional-area experts.

15. 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.

16. Location Departmentalization
The grouping of jobs on the basis of defined geographic sites or areas.
Advantage
Enables the organization to respond easily to unique customer and environmental characteristics.
Disadvantage
Large administrative staff may be needed to keep track of units in scattered locations.

17. Departmentalization Other Forms of Departmentalization
Grouping activities by time
Dividing daily activities into specific units of time (e.g., day, evening, and night shifts).
Grouping activities by sequence.
Assigning responsibilities by a characteristic of the customer, product, or service (e.g., telemarketing calls from business listings).
Other Considerations
Departments are often called by other names (e.g., divisions, units, sections, and bureaus).
Organizations are likely to employ multiple bases of departmentalization, depending on level.

18. 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 a clear reporting relationship to one and only one boss.
Scalar Principle
A clear and unbroken line of authority must extend from the bottom to the top of the organization.

19. Establishing Reporting Relationships (cont’d)
Narrow Versus Wide Spans
Span of Management
The number of people who report to a particular manager.
Sometimes called the span of control.
A. V. Graicunas
Subordinate interactions
Direct—the manager’s relationship with each subordinate.
Cross—among the subordinates themselves.
Group—between groups of subordinates.
Formula for the number of interactions of all types:
I = N(2N/2 + N - 1), where I is the total number of interactions and N is number of subordinates.
Ralph Davis
Operative span for lower-level managers up to 30 workers.
Executive span for middle and top managers at 3 to 9.

20. Establishing Reporting Relationships: Tall versus Flat Organizations
Tall Organizations
Are more expensive because of the number of managers involved.
Foster more communication problems because of the number of people through whom information must pass.
Flat Organizations
Lead to higher levels of employee morale and productivity.
Create more administrative responsibility for the relatively few managers.
Create more supervisory responsibility for managers due to wider spans of control.

21. Tall Versus Flat Organizations
President
Tall Organization
Flat Organization
Figure 11.3

22. Determining the Appropriate Span: Factors Influencing the Span of Management
Table 11.1

23. Distributing 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 the development of subordinates by having them participate in decision making and problem solving that allows them to learn about overall operations and improve their managerial skills.

24. Steps in the Delegation Process
Manager
Step 1
Assigning responsibility
Step 3
Creating accountability
Step 2
Granting authority
Subordinate
Figure 11.4

25. Problems in Delegation
Manager
Reluctant to delegate.
Disorganization prevents planning work in advance.
Subordinate’s success threatens superior’s advancement.
Lack of trust in the subordinate to do well.
Subordinate
Reluctant to accept delegation for fear of failure.
Perceives no rewards for accepting additional responsibility.
Prefers to avoid any risk and responsibility.

26. Decentralization and Centralization
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.

27. Coordinating Activities
Coordination
The process of linking the activities of the various departments of the organization.
The Need for Coordination
Departments and work groups are interdependent; the greater the interdependence, the greater the need for coordination.

28. 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.

29. Three Major Forms of Interdependence
Sequential
Reciprocal
Input
Output
Input
Output
Input
Output
Pooled
Input
Input
Output
Input
Input
Output

30. 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.

31. 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.

32. Differentiating Between Positions
Line Positions
Positions in the direct chain of command that are responsible for the achievement of an organization’s goals.
Have formal (legitimate) authority to direct the workforce.
Staff Positions
Positions intended to provide expertise, advice, and support to line positions.
Have advisory authority; can give compulsory advice.
Have functional authority to enforce compliance with organizational policies and procedures.
Administrative Intensity
The degree to which managerial positions are concentrated in staff positions.