The Organizing
Process
ORGANIZATIONS
Are groups of people, with ideas and resources, working toward common goals.
The purpose of the organizing function is to make the best use of the
organization’s resources to achieve organizational goals.
FORMALIZE ORGANIZATION
It is an important aspect of structure.
It is the extent to which the units of the organization are explicitly defined and its
policies, procedures, and goals are clearly stated.
It is the official organizational structure conceived and built by top management.
The formal organization can be seen and represented in chart form.
An organizational chart displays the organizational structure and shows job titles,
lines of authority, and relationships between departments.
INFORMAL ORGANIZATION
It is the network, unrelated to firms formal authority structure of social
interactions among its employees.
It is the personal and social relationships that arise spontaneously as people
associate with one another in the work environment.
Organizational Structure
Is the formal decision-making framework by which job task are divided, grouped, and
coordinated.
One widely used classification is the twofold system: mechanistic versus organic
forms of organizational structure developed by Tom Burns and G. M. Stalker in their
study of electronic firms in the United Kingdom. (Burns Tom and G. M. Stalker,
Management of Innovations, London: Tavistock Publications, 1961, p.19)
Mechanistic Structure
is the traditional or classical design, common in may medium and large size
organizations.
Are somewhat rigid in that they consist of very clearly delineated jobs, have a
well-defined hierarchical structure, and rely heavily on the formal chain of
command for control.
Bureaucratic organizations, with their emphasis on formalization, are the primary
form of mechanistic structure.
According to Max Weber, bureaucracy is a form of organization characterized by
a rational, goal-directed hierarchy, impersonal decision-making, formal controls,
and subdivision into managerial position and specialization of labor.
Bureaucratic organizations are tall consisting of hierarchies with many levels of
management.
In tall structure, people become relatively confined to their own are of
specialization.
Bureaucracies are driven by a top-down or command and control approach in
which managers provide considerable direction and have considerable control
over others.
Organic Structure
Is more flexible, more adaptable to a participative form of management and less
concerned with a clearly defined structure.
The organic organization is open to the environment in order to capitalize upon
new opportunities.
Organic organizations have a flat structure with only one or two levels of
management.
Flat organizations emphasize a decentralization approach to management that
encourage high employee involvement in decisions.
The purpose of this structure is to create independent small business or enterprises
that can rapidly respond to customer needs or changes in the business
environment.
The supervisor tends to have a more personal relationship with his or her
employees.
Contingency Organization
Means that the most appropriate organization structure for each situation depends
upon technology, organizational size, goals and strategy, environmental stability,
and characteristics of the employees.
Mechanistic organizations are best suited to repetitive operations and stable
environments.
Organic organizations are best suited to an uncertain task and changing
environment.
Organization Design
Designing an organization involves choosing an organizational structure that will
enable the company to most effectively achieve its goals.
Is the creation of the organization’s structure, traditionally functional, divisional,
and/or matrix.
Functional Organization
Functions or divisions arrange traditional organization
In functional organization, authority is determined by the relationships between
group functions and activities.
Functional structures group similar or related occupational specialties or
processes together under the familiar heading of finance, manufacturing,
marketing, accounts receivable, research, surgery, and photo finishing.
Divisional Organization
Corporate divisions operate as relatively autonomous businesses under the larger
corporate umbrella.
In a conglomerate organization, divisions maybe unrelated.
Divisional structure are made up of self-contained strategic business units that
each produces a single product.
A central headquarters, focusing or results, coordinates and control the
activities, and provide support services between divisions.
Matrix Organization
Teams are formed and team members report two or more managers.
Matrix structures utilize functional and divisional chains of command
simultaneously in the same part of the organization, commonly for one-of-a-kind
projects.
It is use to develop a new product, to ensure the continuing success of a product
of which several departments directly contribute and to solve a difficult problem.
Matrix organization are particularly appealing to firms that want to speed up the
decision-making process. However, the matrix organization may not allow long-
term working relationships to develop.
Boundary less Organizations
Can form relationships (joint ventures, intellectual property, distribution channels,
or financial resources) with customers, suppliers and/or competitors.
Boundary less environment is required by learning organizations to facilitate
team collaboration and the sharing of information.
Learning organization is one that is able to adapt and respond to change.
Organizing Function
Deals with all those activities that result in the formal assignment of task and
authority and a coordination of effort.
Steps in the organizing process include:
Review plans
List all tasks to be accomplished
Divide task into groups
Group related jobs together in a logical and efficient manner,
Assign work to individuals
Delegate authority to establish relationships between jobs and groups of jobs.
Division of Labor or work specialization is the degree to which tasks in an
organization are divided into separate jobs.
Workflow analysis looks at how work moves from he customer or the demand
source through the organization to the point at which the work leaves the
organization as a product or service to meet customer demand.
Workflow analysis can be used to tighten the connection between employees’
work and customers’ needs.
It can help to make major performance breakthroughs throughout business
process reengineering (BRP) a fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in cost, quality, service, and
speed.
BRP uses workflow analysis to identify jobs that can be eliminated or recombined
to improve company performance.
Departmentalization
Is the basis on which work or individuals are grouped into manageable units.
Five (5) Traditional Methods for Grouping Work Activities
1. Departmentalization by Function
2. Departmentalization by Product
3. Departmentalization by Geographical Regions
4. Departmentalization by Process
5. Departmentalization by Customer
Departmentalization by Function
Organizes the function to be performed. The functions reflect the nature of the
business.
The advantage of this type of grouping is obtaining efficiencies from
consolidating similar specialties and people with common skills, knowledge and
orientation together in common units.
Departmentalization by Product
Assembles all functions needed to make and market a particular product are
places under one executive.
For instance, major department stores are structure around product groups such as
home accessories, appliances, women’s clothing, men’s clothing, and children’s
clothing.
Departmentalization by Geographical Regions
Group jobs on the basis of territory or geography.
For example, Zuelig, a major pharmaceutical company, has its sales domestic
departmentalized by region such as Northeast, Southeast, Midwest, Southwest,
and Northwest in Ilocos region.
Departmentalization by Process
Groups jobs on the basis of products and customer flow. Each process requires
particular skills and offers basis for homogeneous categorizing of work activities.
A patient preparing for an operation would first engage in preliminary diagnostic
tests, then go to the admitting process, undergo a procedure in surgery, receive
post operative care, be discharged and perhaps receive out-patient attention. These
services are each administered by different departments.
Departmentalization by Customer
Groups jobs on the basis of common set of needs or problems of specific
customers.
For instance, a plumbing team may group its work according to whether it is a
private sector, public sector, government, or not-for-profit organizations.
A current departmentalization trend is to structure work according to customer,
using cross-functional teams. This group is chosen from different functions to
work together across various department to interdependently create new products
or services.
For example, a cross-functional team considering of managers from accounting,
finance, and marketing is created to prepare a technology plan.
Centralization vs. Decentralization
Involves placing related activities Several individuals are located
under the jurisdiction of one throughout the organization have control
person. or jurisdiction over related activities.
A centralized record management The managers of each unit are totally
program. One individual within responsible for the maintenance of the
the organization is responsible for records in their respective department.
the program.
Unit or department managers maintain
The administrative office manager responsibility for the decentralized office
is responsible for the centralized activities within their respective areas.
office activities.
Organizational Principles
These principles provide basic guidelines that are useful when designing and structuring
various organizational activities.
Definition of Objectives – the objective serves as the guide to future planning and action.
It integrates policies, projects, and programs. It enables everybody in the organization to
act consistently in accomplishing a common goal.
Span of Control – the number of subordinates an individual is able to supervise
effectively. Organizational units are used because of the limitations of both human ability
and time.
Chain of Command – the formal identification of who reports to whom with the
organization is known as chain of command. The chain is a series of superior –subordinate
relationships.
Unity of Command – the unit of command principle states that an employee should be
directly responsible to only one supervisor.
Division of Work – specialization, produces, more and better work with the same effort.
It focuses effort while maximizing employee efforts. It is applicable to all work including
technical applications. There are limitations to specialization which are determined by its
application.
Authority and Responsibility – Authority is the right to give orders and the power to
exact obedience. Distinction must be made between manager’s official authority
deriving from the office and personal authority created to individual personality,
intelligence and experience. Authority creates responsibility.
Discipline – obedience and respect between and its employees based on clear and fair
agreements is absolutely essential to the functioning of any organization. Good discipline
requires
Unity of Direction – organizational activities must have one central authority and one
plan of action.
Subordination of Individual Interest to General Interest – the interests of one
employee or group of employees are subordinate to the interests and goals of the
organization and cannot prevail over it.
Remuneration of Personnel – salaries are the price of services rendered by employees.
It should be fair and provide satisfactions both to the employee and employer. The rate of
remuneration is dependent on the value of the services rendered as determined by the
employment market.
Centralization – the optimum degree of centralization varies according to the dynamics
of each organization. The objective of centralization is the best utilization of personnel.
Scalar Chain – a chain of authority exists from the highest organizational authority to the
lowest ranks. While needless departure from the chain of command should be
discouraged, using the “gang plank” principle of direct communication between
employees can be extremely expeditious and increase the effectiveness of organizational
communication.
Order – organizational order for materials and personnel is essential. The right materials
and the right employees are necessary for each organizational function and activity.
Equity – in organizations equity is a combination of kindliness and justice. The desire for
equity and equality of treatment are aspirations to be taken into account and dealing with
employees.
Stability of Tenure of Personnel – in order to attain the maximum productivity of
personnel, it is essential to maintain a stable work force. Management insecurity produces
undesirable consequences. Generally, the managerial personnel of prosperous concerns is
stable that of unsuccessful one is unstable.
Initiative – thinking out a plan and insuring its success in an extremely strong motivator.
At all levels of the organizational ladder zeal and energy on the part of employees are
augmented by initiative.
Esprit de Corps – teamwork is fundamentally important to an organization. Creating
work teams and using extensive face-to-face verbal communication encourages this.
