CHAPTER11Basic Elements of OrganizingCopyright by Houghton Mifflin Company. All rights reserved.PowerPoint Presentation by Charlie Cook

Learning ObjectivesAfter studying this chapter, you should be able to:Identify the basic elements of organizations.Describe alternative approaches to designing jobs.Discuss the rational and the most common basis for grouping jobs into departments.Describe the basic elements involved in establishing reporting relationships.Discuss how authority is distributed in organizations.Discuss the basic coordinating activities undertaken by organizations.Describe basic ways in which positions within the organization can be differentiated.

Chapter OutlineThe Elements of OrganizingDesigning JobsJob SpecializationBenefits and Limitations of SpecializationAlternatives to SpecializationGrouping Jobs: DepartmentalizationRationale for DepartmentalizationCommon Bases for DepartmentalizationChain of CommandNarrow Versus Wide SpansTall Versus Flat OrganizationsEstablishing Reporting RelationshipsDetermining the Appropriate SpanDistributing AuthorityThe Delegation ProcessDecentralization and CentralizationCoordinating ActivitiesThe Need for CoordinationStructural Coordination TechniquesDifferentiating Between PositionsDifferences Between Line and StaffAdministrative Intensity

The Elements OrganizingOrganizingDeciding how to best group organizational activities and resources.Organization StructureThe set of building blocks that can be used to configure an organization.

Designing JobsJob DesignThe determination of an individuals work-related 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.Benefits of SpecializationWorkers 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 SpecializationEmployee boredom and dissatisfaction with mundane tasks.Anticipated benefits do not always occur.

Adam Smiths Exampleof Job SpecializationMaking 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

Alternatives to SpecializationJob RotationSystematically moving employees from one job to another in an attempt to reduce employee boredom. Most frequent use today is as a training device for skills and flexibility.Job EnlargementAn increase in the total number of tasks workers perform.Increases training costs, unions contend that workers deserve more pay for doing more tasks, and the work may still be dull and routine.Job EnrichmentIncreasing both the number of tasks the worker does and the control the worker has over the job.

Alternatives to Specialization (contd)Job Characteristics Approach:Core DimensionsSkill varietythe number of tasks a person does in a job.Task identitythe extent to which the worker does a complete or identifiable portion of the total job.Task significancethe perceived importance of the task.Autonomythe 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 StrengthThe desire for some people to grow, develop, and expand their capabilities that is their response to the core dimensions.

Job Characteristics ApproachFigure 11.1Source: J. R. Hackman and G. R. Oldham, Motivation Through the Design of Work: A Test of a Theory, Organizational Behavior and Human Performance, Vol. 6 (1976), pp. 250279. Copyright Academic Press, Inc. Reprinted by permission of Academic Press and the authors.

Alternatives to Specialization (contd)Work TeamsAn alternative to job specialization that allows the entire group to design the work system it will use to perform an interrelated set of tasks.

Grouping Jobs: DepartmentalizationDepartmentalizationThe process of grouping jobs according to some logical arrangement.Rationale for DepartmentalizationOrganizational growth exceeds the owner-managers capacity to personally supervise all of the organization. Additional managers are employed and assigned specific employees to supervise.

Grouping Jobs: Departmentalization (contd)AdvantagesEach department can be staffed by functional-area experts.Supervision is facilitated in that managers only need be familiar with a narrow set of skills.Coordination inside each department is easier.DisadvantagesDecision 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.Functional DepartmentalizationIs the grouping of jobs involving the same or similar activities.

Bases for Departmentalization: Apex ComputersFigure 11.2

Product Departmentalization FormAdvantagesAll 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.DisadvantagesManagers 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.Product DepartmentalizationThe grouping of activities around products or product groups.

Customer DepartmentalizationCustomer DepartmentalizationGrouping activities to respond to and interact with specific customers and customer groups.AdvantageSkilled specialists can deal with unique customers or customer groups.DisadvantageA large administrative staff is needed to integrate activities of various departments.

Location DepartmentalizationLocation DepartmentalizationThe grouping of jobs on the basis of defined geographic sites or areas.AdvantageEnables the organization to respond easily to unique customer and environmental characteristics.DisadvantageLarge administrative staff may be needed to keep track of units in scattered locations.

DepartmentalizationOther Forms of DepartmentalizationGrouping activities by timeDividing daily activities into specific units of time (e.g., day, evening, and night shifts).Grouping activities by sequence.Assigning responsibilities by a characteristic of the customer, product, or service (e.g., telemarketing calls from business listings).Other ConsiderationsDepartments are often called by other names (e.g., divisions, units, sections, and bureaus).Organizations are likely to employ multiple bases of departmentalization, depending on level.

Establishing Reporting RelationshipsChain of CommandA clear and distinct line of authority among the positions in an organization.Unity of CommandEach person within an organization must have a clear reporting relationship to one and only one boss.Scalar PrincipleA clear and unbroken line of authority must extend from the bottom to the top of the organization.

Establishing Reporting Relationships (contd)Narrow Versus Wide SpansSpan of ManagementThe number of people who report to a particular manager.Sometimes called the span of control.A. V. GraicunasSubordinate interactionsDirectthe managers relationship with each subordinate.Crossamong the subordinates themselves.Groupbetween groups of subordinates.Formula for the number of interactions of all types:I = N(2N/2 + N - 1), where I is the total number of interactions and N is number of subordinates.Ralph DavisOperative span for lower-level managers up to 30 workers.Executive span for middle and top managers at 3 to 9.

Establishing Reporting Relationships: Tall versus Flat OrganizationsTall OrganizationsAre more expensive because of the number of managers involved.Foster more communication problems because of the number of people through whom information must pass.Flat OrganizationsLead 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.

Tall Versus Flat OrganizationsFigure 11.3

Determining the Appropriate Span:Factors Influencing the Span of ManagementTable 11.1

1.Competence of supervisor and subordinates (the greater the competence, the wider the potential span).

2.Physical dispersion of subordinates (the greater the dispersion, the narrower the potential span).

3.Extent of nonsupervisory work in a managers job (the more nonsupervisory work, the narrower the potential span).

4.Degree of required interaction (the less required interaction, the wider the potential span).

5.Extent of standardized procedures (the more procedures, the wider the potential span).

6.Similarity of tasks being supervised (the more similar the tasks, the wider the potential span).

7.Frequency of new problems (the higher the frequency, the narrower the potential span).

8.Preferences of supervisors and subordinates.

Distributing AuthorityAuthorityPower that has been legitimized by the organization.DelegationThe process by which managers assign a portion of their total workload to others.Reasons for DelegationTo enable the manager to get more work done by utilizing the skills and talents of subordinates.To foster the development of subordinates by having them participate in decision making and problem solving that allows them to learn about overall operations and improve their managerial skills.

Steps in the Delegation ProcessFigure 11.4

Problems in DelegationManagerReluctant to delegate.Disorganization prevents planning work in advance.Subordinates success threatens superiors advancement.Lack of trust in the subordinate to do well.SubordinateReluctant to accept delegation for fear of failure.Perceives no rewards for accepting additional responsibility.Prefers to avoid any risk and responsibility.

Decentralization and CentralizationDecentralizationThe process of systematically delegating power and authority throughout the organization to middle- and lower-level managers.CentralizationThe process of systematically retaining power and authority in the hands of higher-level managers.Factors Determining the Choice of CentralizationThe complexity and uncertainty of the external environment.The history of the organization.The nature (cost and risk) of the decisions to be made.

Coordinating ActivitiesCoordinationThe process of linking the activities of the various departments of the organization.The Need for CoordinationDepartments and work groups are interdependent; the greater the interdependence, the greater the need for coordination.

Coordinating Activities:Three Major Forms of InterdependencePooled interdependenceWhen units operate with little interaction; their output is simply pooled at the organizational level.Sequential interdependenceWhen the output of one unit becomes the input of another unit in sequential fashion.Reciprocal interdependenceWhen activities flow both ways between units.

Three Major Forms of InterdependenceInputOutputSequentialPooledInputInputInputOutputOutputInputOutputInputOutputInputReciprocal

Structural Coordination TechniquesThe Managerial HierarchyPlacing one manager in charge of interdependent departments or units.Rules and ProceduresRoutine coordination activities can be handled via rules and procedures that set priorities and guidelines for actions.Liaison RolesA manager coordinates interdependent units by acting as a common point of contact, facilitating the flow of information.

Structural Coordination Techniques (contd)Task ForcesUsed with multiple units when coordination is complex requiring more than one individual and the need for coordination is acute.Disbanded when the need for coordination has been met.Integrating DepartmentsPermanent organizational units that maintain internal integration and coordination on an ongoing basis.May have authority and budgetary controls.

Differentiating Between PositionsLine PositionsPositions in the direct chain of command that are responsible for the achievement of an organizations goals.Have formal (legitimate) authority to direct the workforce.Staff PositionsPositions 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 IntensityThe degree to which managerial positions are concentrated in staff positions.

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