Management - Organizing Function.pptx

1. CHAPTER 
ORGANIZING
FUNCTIONS
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2. After studying this session you should be able to:
 Describe the nature and need for organizing.
 Define organizational structure, design and chart.
 Describe the process of organizing.
 Differentiate formal and informal organization.
 Differentiate authority, delegation, responsibility and
accountability.
 Appreciate authority relationship in an organization.
 Define span of management and analyze the types
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3. Introduction
 In planning, set goals / objectives and determine what to
do to attain these objectives.
 Planning, consequently, requires organizing the efforts of
many people. It forces us to address several basic
questions:
1. What specific tasks are required to implement our plans?
2. How many organizational positions are needed to perform
all the required tasks?
3. How should these positions be grouped?
4. How many layers of management (organizational levels)
are needed to coordinate them?
5. How many people should a manager supervise directly?
• The answers to these and other questions enable us to
create an organizational arrangement, a structure, for
putting plans into action.
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4. 5.1 THE CONCEPT OF ORGANIZATION
Meaning of Organizing
 It is a management function that involves arranging
human and non-human (physical) resources to help
attain organizational objectives.
 It is the management function that establishes
relationship between activity and authority.
• Organizing is the deployment of organizational
resources to achieve strategic goals.
 The end result of an organizing process is an
organization.
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5. Cont’d…
• Organizing involves assigning tasks, grouping
tasks into departments, delegating authority,
and allocating resources across the
organization.
 It is the function in which the managers develop
the organization structure that allows working
together and achieve organizational goals.
 It involves grouping similar activities in one
department .
 It also involves clearly stating authority and
responsibility.
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Dr.
Bogale
Alemu

6. THE ORGANIZING
PROCESS
The organizing process has the following steps.
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7. Cont’d….the organizing process
1. Identification/ reviewing of plans /goal
2. Identification of the specific activities task needed to
accomplish the goal
3. Grouping of activities necessary to attain objectives
4. Grouping of activities according to their similarities to
form department
5. Assigning work and delegating authorities
6. Provision for coordination/Design a hierarchy of
relationships
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8. Importance of organizing
1. Organizing promotes collaboration. Thus, it improves
communication within the organization.
2. Organizing sets clear-cut lines of authority and
responsibility
3. Organizing improves the directing and controlling
functions of managers.
4. Organizing develops maximum use of time, human,
and material resources.
5. Organizing enables the organization to maintain its
activities coordinated
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9. 5.2. TYPES OF ORGANIZATIONS
There are two types of organization:
i. Formal and
ii. Informal
i. Formal organization
• The formal organization represents the classification of activities
within the enterprise, indicates who reports to whom.
Characteristics of formal organization
 It is properly planned
 It is based on delegated authority.
 It is deliberately impersonal
 Organizational charts are usually drawn
 Unity of command is normally maintained
 It provides for division of labor.
 The responsibility and accountability at all levels of organization is
clearly defined.
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10. Continued…
ii. Informal organization: is an organizational structure which
establishes the relationship on the basis of the likes and dislikes
of officers without considering the rules, regulations and
procedures.
Characteristics of informal organization
• Arises voluntarily.
• It is a social structure formed to meet personal needs.
• Has no place in the organization chart
• It acts as an agency of social control.
• Can be found on all levels of organization
• The rules and traditions are not written but are commonly
followed.
• Develops from habits, conduct, and behavior of social groups.
• Informal organization is one of the parts of total organization
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11. 5.3. Elements of the Organizing Function
1. Organizational structure: is the arrangement of people
and tasks to accomplish organizational goals.
• It is the framework in which the organization defines
how tasks are divided, resources are deployed, and
departments are coordinated.
2. Organization design: is the process of developing an
organization structure.
3. Organizational chart: The visual representation of an
organization’s structure.
• It is a line diagram that depicts the broad outlines of an
organization’s structure.
• Organizing enables the organization to maintain its
activities coordinated.
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Sample of Organization chart
Organization
structure

13. Importance of Organization chart
The organization chart can tell us;
1. Who reports to whom (chain of command)
2. The number of managerial levels
3. The span of control.
4. Channel of official communication
5. How the organization is structured by function,
territory,…
6. The work being done in each job
7. The hierarchy of decision-making
8. Type of authority relationships፡ line authority,
staff authority, and functional authority.
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14. Major Elements of Organizing Function
• Generally the following are the major elements of the
organizing function
1. 5.3.1. Division the work
2. 5.3.2. Departmentization
3. 5.3.3. Delegation of authority
4. 5.3.4. Centralization and decentralization
5. 5.3.5. Authority relationships in organizations
6. 5.3.6. Span of management
7. 5.3.7. Organization structure
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15. 5.3.1. Division the work
• Division of labor refers to the process of dividing the total task
of a unit to successively smaller jobs.
 Overall task must be split into its component jobs and
apportioned among the people involved.
 All jobs are specialized to some degree, since every one cannot
do everything, but some jobs are considerably more
specialized than other.
In short, division of labor involves:
 Breaking down a task into its most basic elements
 Training workers in performing specific duties
 Sequencing activities so that one person’s efforts build on
another’s
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16. 5.3.2. Departmentization: meaning and basis
Meaning
1. Departmentation is a means of dividing the large
and complex organization into smaller, flexible
administrative unit.
2. Department – is a distinct area division or branch
of an organization over which a manager has
authority for the performance of specified
activities.
Bases for Departmentation
1. The five common from of departmentalization are
functional, territorial, product, service and
customer.
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17. Bases for Departmentation
Five common forms of departmentation are:
Departmentation Functional- groups based on function
Act., Engineering, HR, Purchasing, manufacturing….
Departmentation Geographical / territorial- good to handle
specific regional issue that arise
Sales director at region x, y, z….
Departmentation Product- allow specialization in particular
products and services
Shoe, Coat product for leather company
Departmentation Process- based on product or customer
flow
Planning, Assembling, Inspection …..
Departmentation Customer- focus on specific & unique
customers
Whole sale accounts, retail accounts …..
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18. Departmentation based on Function
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19. Departmentation based on Geography
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20. Departmentation based on Product
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21. Departmentation based on Process
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22. Departmentization(cont…)
Matrix departmentalization
1. Combination of functional
and product
departmetantion
2. More flexible
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23. 5.3.3. Delegation of authority
Authority:-
 Is the formal and legitimate right of a manager to make
decision, issue order, and allocate resources to achieve
organizational desired outcome.
 Is the formal right of a superior to command and compel his
subordinates to perform a certain act.
 Level of authority varies with levels of management
 It carries with it the burden of responsibility
Delegation of Authority:-
 Is the downward pushing of authority from superiors to
subordinates to make decision within their area of
responsibilities.
 Use to transfer authority and responsibility to positions
below them
 In delegating authority a manager doesn’t surrender his
power.
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24. Delegation is the process managers use to
transfer authority and responsibility to positions
below them in the hierarchy.
• For achieving delegation, three steps required
• Assignment of tasks and duties…Clarity of duty as well
as result expected has to be the first step in delegation.
• Granting of authority…. The managers at all levels
delegate authority and power which is attached to
their job positions
• Creating responsibility and accountability
• The delegation process does not end once powers are
granted to the subordinates
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Cont’d…

25. How to delegate?
1) Delegate the whole task.
2) Select the right person
3) Ensure that authority equals responsibility.
4) Give thorough instruction.
5) Maintain feedback
6) Evaluate and reward performance
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Cont’d…

26. Cont’d…
The process of delegation of authority
Delegation of authority has the following steps
1. Assignment of tasks
2. Delegation of authority
3. Acceptance of Responsibility : is the obligation to carryout
one’s assigned duties to the best of one’s ability.
4. Creation of accountability: is the fact that the people with
authority and responsibility are subject to reporting and
justifying task outcomes to those above them in the
organizational hierarchy.
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27. Cont’d…
Authority
• Authority is the formal and legitimate right of a
manager to make decisions, issue orders, and
allocate resources to achieve organizationally
desired outcomes
• Authority is distinguished by three characteristics:
– Authority is vested in organizational positions, not
people
– Authority is accepted by subordinates
– Authority flows down the vertical hierarchy
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28. Quotes
• The key to successful leadership today is influence
not authority- Kenneth Blanchard
• Anyone can stand adversity but to test a person’s
character, give them power - Abraham Lincoln
• The price of greatness is responsibility.“ Winston
Churchill
• It is wrong and immoral to seek to escape the
consequences of one's acts.- Mahatma Gandhi
• Accountability is the measure of a leaders height.-
Jeffrey Benjamin
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29. Responsibility
• is the duty of the person to complete the task
assigned to him. If the tasks for which he/she was
held responsible are not completed, then he/she
should not give explanations or excuses.
• Responsibility without adequate authority leads
to discontent and dissatisfaction among the
person.
• Responsibility flows from bottom to top. The
middle level and lower level management holds
more responsibility.
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Cont’d…

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31. Accountability
• Means giving explanations for any variance in the
actual performance from the expectations set.
Accountability can not be delegated. For
example, if ’A’ is given a task with sufficient
authority, and ’A’ delegates this task to B and asks
him to ensure that task is done well,
responsibility rest with ’B’, but accountability still
rest with ’A’.
• The top level management is most accountable.
• Accountability, in short, means being answerable
for the end result. Accountability can’t be
escaped. It arises from responsibility.
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Cont’d…

32. When managers have responsibility for task
outcomes but little authority, the job is
possible but difficult.
They rely on persuasion and luck.
When managers have authority exceeding
responsibility, they may become tyrants, using
authority toward frivolous outcomes.
Accountability is the mechanism through
which authority and responsibility are brought
into alignment.
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Cont’d…

33. Differences between Authority and
Responsibility
Authority Responsibility
It is the legal right of a
person or a superior to
command his subordinates.
It is the obligation of subordinate to
perform the work assigned to him.
Authority is attached to the
position of a superior in
concern.
Responsibility arises out of superior-
subordinate relationship in which
subordinate agrees to carry out duty
given to him.
Authority can be delegated by
a superior to a subordinate
Responsibility cannot be shifted and
is absolute
It flows from top to bottom. It flows from bottom to top.
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34. 5.3.4. Centralization and decentralization
I. Centralization-is the extent to which power and authority are
systematically retained by top managers.
If an organization is centralized
 Decision-making power remains at the top
 The participation of lower-level managers in decision-making is very low
II. Decentralization - Is the extent to which power and authority are
systematically dispersed/delegated throughout the organization to middle
and lower level managers.
When decentralization is greater:
 The greater is the number of decisions made at lower level of the organization
 The more functions are affected by decisions made at lower levels
 The less a subordinate has to refer to his/her manager prior to a decision.
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35. 5.3.5 Authority Relations in Organization (Line, Staff and Functional)
• Authority: is the legitimate right to make decision, to allocate
resource or to command a subordinate.
• Created in relation between individuals /departments in an organization.
• Of three type
1. Line authority
2. Staff authority
3. Functional authority
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36. Authority Relations in Organization(cont…)
1. Line authority
Line authority defines the relationship between superior and subordinate.
 It is an exercise of direct command over the subordinate
 In line authority a superior exercises direct command over a subordinate.
 Line authority is represented by the standard chain of command
Example: department head
2. Staff authority
Staff authority is the authority to give advise , assistance and help.
 Have no direct supervisory control over subordinates.
 Expertise technical assistance, and support to help line managers to work
more
Example: R&D advisor, Legal advisor, repair and maintenance officer
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37. Authority Relations in Organization(cont…)
The line department
1. It is established to meet the
major objective of the firm
2. Headed by a line manager
Example:
1. Marketing department
2. Finance department
3. Production department
The staff department
1. It is established to assist line
department through advice,
service and assistance
2. Created based on the special
need of the organization
Examples:
1. Legal department
2. R&D department
3. Repair and maintenance
department
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38. Authority Relations in Organization(cont…)
3. Functional authority
• It is the right, given to an individual or a department to control specified
process or practices undertaken by persons in other
departments.
• If unity of command had strictly applicable only line authority would exist
Examples Functional authority
 The finance manager command to the marketing manager
 The legal Advisor command to other on legal affairs
 The personnel manager command to others regarding
recruitment, selection, performance appraisal systems
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39. 5.3.6. Span of Management
• Number of employees reporting to a supervisor and also
called span of control.
• Type…. Narrow and wide span of management. Characteristics of
Narrow SM.
Tall organization structure
More communication
between superiors and
subordinates.
Managers are underutilized
and their subordinates are
over controlled
More trained managerial
personnel and centralized
authority.
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40. Span or Management (cont…)
Characteristics Wide span of management
The process of delegation of authority
 A flat organization structure
 Many number of subordinates
 Decentralized authority
 Managers are overstrained
and their subordinates receive
too little guidance and control
 Fewer hierarchal level
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41. Factors Determining an Effective Span of Management
1. Ability of the Manger
2. Manager’s personality
3. The Abilities of Subordinates
4. Motivation and commitment
5. Need for autonomy by (employees)
6. Type of work
7. Geographic dispersion of subordinates
8. The availability of information and control systems
9. Levels of management
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42. End of the chapter!