Organizing:

Organizational Structural
Dr. Wahid Bux Mangrio
Assistant Professor, MUISTD
Purpose of Organizing
• Divides work to be done into specific jobs and departments.
• Assigns tasks and responsibilities associated with individual jobs.
• Coordinates diverse organizational tasks.
• Clusters jobs into units.
• Establishes relationships among individuals, groups, and
departments.
• Establishes formal lines of authority.
• Allocates and deploys organizational resources.
Organizational structure
• Backbone of every organization
• The structure of an organization establishes:
• Link between the various functions of an organization
• Support decision-making process
• Clarifies the role of each member of the organizations
• A large, diversified company may have multiple product line and
product mixes
• Product line: an array of similar product lines
• Product mixes: different products
• Strategic (or Independent) Business Units (SBU/IBU)
Organizing
• While planning helps in deciding what to do, organizing focuses on
how to do it by properly forming groups
• Behavioural scientists and sociologists view organization as
comprising human relationships in group activity.
• In an operational sense, however, organization can be considered
as consisting of division of work among people and coordination
of their activities towards some common objectives.
• An organization is essentially a formal structure of people set up to
achieve some defined goals
Organization’s attributes
• An organization is a group of people who are organized to
achieve a common purpose.
• It is an entity, a unit, or an establishment, which utilizes
resources to achieve some common purpose.
• It shows a structure of relationships in an enterprise.
• It is a process that helps to relate tasks and abilities of people
working in an enterprise to achieve intended goals.
Concept of organization
• Organizations is used to refer to a social group that is deliberately
created and maintained to achieve some intended goals
• Defined as social group
• Referred to as a process of determining activities that are required to
achieve intended goals, creating various roles,
• Ensuring effective operation of total system
• Organizing is defined as a management process, which
corroborates with the earlier definition of organization as a process
of identifying, classifying, grouping, and assigning various activities
with adequately defined authority relationships to achieve intended
goals.
Concept of organization
• Organizational structure is the outcome of the organizing process.
• It is a framework of decision-making authority, that is, a system of
relationships that govern the activities of the people working in the
organization to achieve the intended goals.
• Organizational structure helps to determine authority relationships
among the members of an organization
• it influences the behavior of individuals, groups, and divisions within the
organization
Concept of organization
• Organizational structure can be shown visually in an organizational
chart
• When managers create or change the structure, they’re engaged in
organizational design, a process that involves decisions about six
key elements:
• Work specialization,
• Departmentalization,
• Chain of command,
• Span of control,
• Centralization and decentralization, and
• Formalization
Work Specialization
• Work specialization: which is dividing work activities into separate
job tasks
• Work specialization makes efficient use of the diversity of skills that workers
have.
• In most organizations, some tasks require highly developed skills; others can be
performed by employees with lower skill levels.
• skilled workers are paid more than unskilled workers, and, because wages tend to
reflect the highest level of skill
• Early proponents of work specialization believed that it could lead to great
increases in productivity (figure on next slide)
Example: McDonald’s uses high work specialization to get its
products made and delivered to customers efficiently and quickly—
that’s why it’s called “fast” food.
Work Specialization

• its introduction almost always

generated higher productivity.

• At some point, the human

diseconomies from division of
labor—boredom, fatigue,
stress, low productivity, poor
quality, increased absenteeism,
and high turnover—exceed the
economic advantages
Departmentalization
• How jobs are grouped together is called departmentalization.
• Five common forms of departmentalization are used, although an
organization may develop its own unique classification
• TODAY’S VIEW. Most large organizations continue to use
combinations of most or all of these types of departmentalization
• For example, a major Japanese electronics firm organizes its divisions
along functional lines, its manufacturing units around processes, its sales
units around seven geographic regions, and its sales regions into four
customer groupings
Departmentalization
Departmentalization
Departmentalization
Departmentalization
Departmentalization
Chain of Command
• The chain of command is the line of authority extending from
upper organizational levels to lower levels, which clarifies who
reports to whom.
• Managers need to consider it when organizing work because it
helps employees with questions such as “Who do I report to?” or
“Who do I go to if I have a problem?”
• To understand the chain of command, you have to understand
three other important concepts:
• Authority
• Responsibility
• Unity of command
Chain of Command: key concepts
• Authority: Authority refers to the rights inherent in a managerial
position to tell people what to do and to expect them to do it.
• Managers in the chain of command had authority to do their job of
coordinating and overseeing the work of others
• Authority could be delegated downward to lower-level managers,
giving them certain rights while also prescribing certain limits within
which to operate.
• Acceptance Theory of Authority: authority comes from the
willingness of subordinates to accept it
• If an employee didn’t accept a manager’s order, there was no authority
 Chain of Command: key concepts
• Chain of command
and line authority
 Chain of Command: key concepts
• Two forms of authority
• Line authority
• Staff Authority
Chain of Command: key concepts
• Responsibility
• When managers use their authority to assign work to employees, those
employees take on an obligation to perform those assigned duties.

• This obligation or expectation to perform is known as responsibility

• Employees should be held accountable for their performance!

• Assigning work authority without responsibility and accountability can

create opportunities for abuse.

• Likewise, no one should be held responsible or accountable for work tasks

over which he or she has no authority to complete those tasks.
Chain of Command: key concepts
• Unity of command:
• The unity of command principle (one of Fayol’s 14 management principles)
states that a person should report to only one manager

• Without unity of command, conflicting demands from multiple bosses may

create problems
Span of Control
• How many employees can a manager efficiently and effectively
manage? That’s what span of control is all about.
• The traditional view was that managers could not—and should not
— directly supervise more than five or six subordinates
• Determining the span of control is important because to a large
degree, it determines the number of levels and managers in an
organization—an important consideration in how efficient an
organization will be
• All other things being equal, the wider or larger the span, the more
efficient an organization is
Span of Control: Contrasting Spans of Control
Centralization and Decentralization
“At what organizational level are decisions made?”
• Centralization is the degree to which decision making takes place
at upper levels of the organization.
• If top managers make key decisions with little input from below, then the
organization is more centralized.
• The more that lower-level employees provide input or actually
make decisions, the more decentralization there is.
• Early management writers proposed that the degree of
centralization in an organization depended on the situation
• Complex and changing environment, many managers believe that
decisions need to be made by those individuals closest to the
problems, regardless of their organizational level
Centralization OR Decentralization
Formalization
• Formalization refers to how standardized an organization’s jobs
are and the extent to which employee behavior is guided by rules
and procedures.
• In highly formalized organizations, there are explicit job
descriptions, numerous organizational rules, and clearly defined
procedures covering work processes.
• Employees have little discretion over what’s done, when it’s done,
and how it’s done.
• However, where formalization is low, employees have more
discretion in how they do their work.
Mechanic and Organic Structures
• Mechanistic organization: An organizational design that’s rigid
and tightly controlled
• Organic organization: An organizational design that’s highly
adaptive and flexible
Contingency factors affecting Structural Choice

• Strategy and Structure

• logical that strategy and structure are closely linked
• the flexibility and free-flowing information of the organic structure works
well when an organization is pursuing meaningful and unique
innovations
• The mechanistic organization with its efficiency, stability, and tight
controls works best for companies wanting to tightly control costs.
• Size and Structure
• Large organization tend to have more specialization, departmentalization,
centralization, and rules and regulations than do small organizations
• Environmental Uncertainty and Structure
 Contingency factors affecting Structural Choice
• Technology and Structure
• Every organization uses some form of technology to convert its inputs into
outputs.
• Unit production: described the production of items in units or small batches
• Mass production: described large-batch manufacturing
• Process production: The production of items in continuous processes production

Woodward’s
Findings on
Technology and
Structure
Contingency factors affecting Structural Choice

• Environmental Uncertainty and Structure

• Some organizations face stable and simple environments with little
uncertainty;
• Others face dynamic and complex environments with a lot of uncertainty
• Managers try to minimize environmental uncertainty by adjusting the
organization’s structure

• In stable and simple environments, mechanistic designs can be more

effective.
• On the other hand, the greater the uncertainty, the more an organization
needs the flexibility of an organic design
Traditional Organizational Designs
• When designing a structure, managers may choose one of the
traditional organizational designs.
• These structures tend to be more mechanistic in nature.
• Simple Structure
• Most companies start as entrepreneurial ventures using a simple
structure, which is an organizational design with:
• low departmentalization,
• wide spans of control,
• authority centralized in a single person,
• little formalization
Traditional Organizational Designs
• Functional Structure
• A functional structure is an organizational design that groups similar or
related occupational specialties together
• Divisional Structure
• The divisional structure is an organizational structure made up of separate
business units or divisions
Traditional Organizational Designs
 The Process of Organizing
• No one best way
to organize
• Any organizing
efforts typically
involves several
activities:
• Grouping tasks
into jobs
• Grouping jobs
into departments
• Determining
authority and
channels of
communication