Chapter 3 ORGANIZING By Nasser A Kadasah Chapter
Chapter 3 ORGANIZING By : Nasser A. Kadasah
Chapter 3 will cover: 3. 1 Organization Theory 3. 3 Types of Organizations 3. 5 Centralization & Decentralization 3. 6 Authority and Responsibility
Organizing S Definition: The formal grouping of people and activities. S To: facilitate achievement of the firm’s objectives.
Relationship of Objectives and Organizational Levels Organization Hierarchy 1. Socio. Economic Purpose Board of directors 2. Mission Top-level Managers 3. Overall Objectives of the Organization (long range strategic) Middle Managers 4. More specific Overall Objectives (e. g. In key result area ) Lower-Level Managers some 5. Division Objectives some 6. Department and Unit Objectives 7. Individual Objectives: • Performance • Personal development objectives Hierarchy of Objectives
3. 1 Organization Theory S Study of S of the structure. Functioning. Performance organization & behavior of groups and individuals.
3. 3 Types of Organizations 3. 3. 1 Military or Line System 3. 3. 2 Functional System 3. 3. 3 Line and Staff System 3. 3. 4 Matrix System 3. 3. 5 Hybrid design
3. 3. 1 Military or Line System…(1) S Authority flows from the person at the top to the lowest person, VERTICALLY. S The General Manager may be put in charge of the whole organization. S Business unit is divided into departments headed by Department Head. ¥ Department Head receives orders from the General Manager.
Military or Line System…(2) S The employees at the same line do not receive orders from each other. S The workers do not have the authority to approach higher officers except through their immediate poss.
3. 3. 1. 1 Merits S Simplicity: Simple to establish & simple to explain to employees. S Unified control: Unity of Control. S Strong discipline: Because of unified control. S Fixed responsibility: Everyone knows whom he is responsible. S Prompt decision: Because of unification of authority and responsibility ensures quick & prompt decisions. S Flexibility: Since executive has the full authority he can change.
3. 3. 1. 2 Demerits S Overloading: Too much is expected from the person in authority. S Lack of specialization: Foreman cannot give guidance in all matters below him. S Inadequacy of communication: No communications from the lower ranks. S Scope for favoritism: May judge people according to his notion. S Suitability: Restricted suitability. S Good only for: ¥ ¥ Small Units Routine works.
3. 3. 2 Functional Organization S Entire work is divided into various departments. S No duplication. S The work allotted to one department consists of interrelated jobs. S Similar work in one department
3. 3. 2. 1 Merits S Ensure greater division of labour get advantage of specialization. S High efficiency Because : Workers do limited. ¥ Number of operations. ¥ S Ensure the separation of mental and manual functions. S Facilitates mass production through: Specialization. ¥ Standardization. ¥
3. 3. 2. 2 Demerits S Unstable: weakens disciplinary controls because of making workers work under several bosses. S Too complicated: Divided functions to more & more sub functions. S Difficult: For managers for fix responsibility for unsatisfactory results. S Conflict: Among foreman & equal ranks.
3. 3. 3 Line & Staff Organization S Staff specialists advice: Line managers in performing their duties. S Purely Advisory. S Have right to recommend BUT no authority to enforce their preferences.
3. 3. 3. 1 Merits S Specialization: Experts to provide advice. S Quality Decisions: Good decisions due to careful study and thought. S Prospect for personal growth: Opportunity for concentrating in a particular area thereby increasing personal efficiency. S Training ground for personnel: ¥ ¥ Training needs can be easily identified. Staff provides knowledge & expertise to line managers.
3. 3. 3. 2 Demerits S Lack of well-defined authority. S Line & staff conflicts. S Suitability: Generally good in large organization where specialization of activities is required.
3. 3. 4 Matrix Organization S Imposing a set of project structure on top of a functional structure. S Members of project team are selected from the functional department.
3. 3. 4. 1 Merits S Challenge for team members. S Enlarges tasks for people. S Develops employees skills. S Encourages people to identify with end products.
3. 3. 4. 2 Demerits S Require high level of interpersonal skills. S Negative morale when there is pressure. S Leads to power struggles between functional & project manager. S Costly to implement and maintain.
3. 5 Centralization & Decentralization 3. 5. 1 Advantages of Centralization 3. 5. 2 Advantages of Decentralization
3. 5 Centralization & Decentralization S Centralization: Much of decision-making authority is retained at the top management. S Decentralization: Much of decision-making authority is pushed downward lower management.
3. 5. 1 Advantages of Centralization S Broad overview of business is easier to achieve. S Strategic direction setting is easier. S Gives absolute and clear control. S Makes administration easier. S Common standards can be fixed. S Provides certain expert functions cost effectively. S Conflicting decisions are easier to avoid. S Economies of scale can be achieved.
3. 5. 2 Advantages of Decentralization S Local management can react to changing local conditions so that business can act quickly. S Decision-making is quicker, clearer and based on more precise understanding of local conditions. S Greater likelihood of innovation and creativity will make for a healthier business. S Local responsibility and authority result in effective development of managerial skills. S Burden of administration and paper work are reduced. S Functional department will be leaner and easier to control.
3. 6 Authority & Responsibility 3. 6. 1 Source of Authority 3. 6. 3 Responsibility & Delegation 3. 6. 4 Principle of Delegation
3. 6 Authority and Responsibility S Authority: Legal or power that gives a right to command. S Responsibility: The obligation of a subordinate to whom a duty has been assigned to perform the duty.
3. 6. 1 Source of Authority S The Formal Authority Theory: ¥ Power is given or pass because of position. S The Acceptance Authority Theory: ¥ Subordinates acceptance of power.
3. 6. 3 Responsibility & Delegation S Responsibility cannot be delegated. S Accountability: indicates liability for the proper discharge of duties by subordinates.
3. 6. 4 Principles of Delegation S Principle of functional definition: ¥ Needs: patience, intelligence and clarity of objectives & plans. S Scalar principle: ¥ The chain of direct authority relationships from superior to subordinates. S Authority level principle: ¥ Decision to be taken based on authority. S Principle of unity of command: ¥ Each subordinates should report to only one superior.
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