Chapter Eleven Basic Elements of Organizing Slide content

Learning Objectives After studying this chapter, you should be able to: 1. Identify the basic elements of organizations. 2. Describe alternative approaches to designing jobs. 3. Discuss the rationale and the most common bases for grouping jobs into departments. 4. Describe the basic elements involved in establishing reporting relationships. 5. Discuss how authority is distributed in organizations. 6. Discuss the basic coordinating activities undertaken by organizations. 7. Describe basic ways in which positions within an organization can be differentiated. Copyright © Houghton Mifflin Company. All rights reserved. 2

The Elements Organizing • 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. Copyright © Houghton Mifflin Company. All rights reserved. 3

Designing Jobs • Job Design – The determination of an individual’s workrelated 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. Copyright © Houghton Mifflin Company. All rights reserved. 4

Designing Jobs (cont’d) • Job Specialization (Division of Labor) – 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. Copyright © Houghton Mifflin Company. All rights reserved. 5

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 Copyright © Houghton Mifflin Company. All rights reserved. 6

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. Copyright © Houghton Mifflin Company. All rights reserved. 7

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. Copyright © Houghton Mifflin Company. All rights reserved. 8

Figure 11. 1: The Job Characteristics Approach Copyright © Houghton Mifflin Company. All rights

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. Copyright © Houghton Mifflin Company. All rights reserved. 10

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. Copyright © Houghton Mifflin Company. All rights reserved. 11

Grouping Jobs: Departmentalization (cont’d) • Functional Departmentalization – Grouping jobs involving the same or similar activities. • Advantages – Each department can be staffed by functionalarea experts. – Supervision is facilitated in that managers only need be familiar with a narrow set of skills. – Coordination inside each department is easier. Copyright © Houghton Mifflin Company. All rights reserved. • 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. 12

Figure 11. 2: Bases for Departmentalization Copyright © Houghton Mifflin Company. All rights reserved.

Product Departmentalization Form • Product Departmentalization – Grouping 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. Copyright © Houghton Mifflin Company. All rights reserved. • 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. 14

Customer Departmentalization • 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. Copyright © Houghton Mifflin Company. All rights reserved. 15

Location Departmentalization • 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. Copyright © Houghton Mifflin Company. All rights reserved. 16

Departmentalization • Other Forms of Departmentalization – Grouping activities by time • By specific units of time • By sequence. • By a characteristic of the customer, product, or service • Other Considerations – Departments are often called by other names. • Divisions, units, sections, and bureaus – Organizations are likely to employ multiple bases of departmentalization, depending on level. Copyright © Houghton Mifflin Company. All rights reserved. 17

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. Copyright © Houghton Mifflin Company. All rights reserved. 18

Establishing Reporting Relationships (cont’d) • Narrow Versus Wide Spans – Span of Management (Span of Control) • The number of people who report to a particular manager. – A. V. Graicunas • Subordinate interactions – – Direct—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(2 N/2 + N - 1), where I is the total number of interactions and N is number of subordinates. Copyright © Houghton Mifflin Company. All rights reserved. 19

Establishing Reporting Relationships (cont’d) • Narrow Versus Wide Spans – Ralph Davis • Operative span for lower-level managers of up to 30 workers. • Executive span for middle and top managers set at 3 to 9. • Span depends on managers’ jobs, company growth rate, and similar factors – Lyndall Urwick and General Ian Hamilton • Executive span should never exceed six Copyright © Houghton Mifflin Company. All rights reserved. 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. Copyright © Houghton Mifflin Company. All rights reserved. • 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

Figure 11. 3: Tall Versus Flat Organizations Copyright © Houghton Mifflin Company. All rights

Table 11. 1: Factors Influencing the Span of Management Copyright © Houghton Mifflin Company.

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. Copyright © Houghton Mifflin Company. All rights reserved. 24

Figure 11. 4: Steps in the Delegation Process Copyright © Houghton Mifflin Company. All

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. Copyright © Houghton Mifflin Company. All rights reserved. • 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 • 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. Copyright © Houghton Mifflin Company. All rights reserved. 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. Copyright © Houghton Mifflin Company. All rights reserved. 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. Copyright © Houghton Mifflin Company. All rights reserved. 29

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. Copyright © Houghton Mifflin Company. All rights reserved. 30

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 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. • Electronic Coordination – E-mail, electronic scheduling, PDAs, cell phones Copyright © Houghton Mifflin Company. All rights reserved. 31

Differentiating Between Positions • Line Positions – Positions in the direct chain of command responsible for the achievement of an organization’s goals. • Have formal (legitimate) authority. • 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. Copyright © Houghton Mifflin Company. All rights reserved. 32

Key Terms • • organizing organization structure job design job specialization job rotation job enlargement job enrichment job characteristics approach • work teams • departmentalization Copyright © Houghton Mifflin Company. All rights reserved. • functional departmentalization • product departmentalization • customer departmentalization • location departmentalization • chain of command • span of management • authority • delegation • centralization • coordination • pooled interdependence 33