The Basic Elements of Organizing

• Organization Structure and Design
–Specify the set of structural elements that can be used to configure
the total organization.

• This chapter will introduce the following elements: job specialization,
departmentalization, reporting relationships, distribution of authority, and
coordination.

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Job Specialization

• 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

Limitations

•

Workers can become proficient at a task.

•

•

Transfer time between tasks is decreased.

•

Specialized equipment can be more easily
developed.

•

Employee boredom and dissatisfaction
with mundane tasks.

•

Possible higher absenteeism, lower quality
of work, and overspecialize.

Employee replacement becomes easier.

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Alternatives to Job Specialization

Job Specialization
Alternatives

Job

Job


Work

rotation

enrichment

teams

Increase both the number of tasks

Move from one job to another

Work is assigned to a team and the

a worker does and the control the

team members have control over each

worker has over the job

Job
enlargement

worker’s duties

Job characteristics approach

More tasks to perform
Job should be diagnosed and

improved alone five core dimensions
(see next slide)
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Job Characteristics: 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

Autonomy

Feedback

Growth Need Strength

The perceived importance of the task by the worker

The degree of control the worker has over how the work
is performed

The extent to which the worker knows how well the job
is being performed


The desire for people to grow, develop, and expand their capabilities that is their response to the core
dimensions

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FIGURE 6.1

The Job Characteristics Approach

Note: Although the job characteristics
approach is one of the most promising
alternatives to job specialization it is
probably not the final answer because
not all the researches support this
approach strongly.

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The Basic Elements of Organizing
Find the best response on the top to describe the condition on the bottom.

a.

Job Enlargement b. Job Enrichment

d. Job Specialization

e. Job Evaluation


c. Job Rotation
f. Job Satisfaction

I. ______ Giving individual workers more control over and responsibility for their jobs

II. ______ Giving workers more things to do in their jobs

III. ______ Systematically moving workers through a series of jobs

IV. ______ Breaking the overall task into smaller component parts

Answer: B, A, C, & D
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Grouping Jobs: Departmentalization

• The second element of organization structure is departmentalization.
• Departmentalization
– The process of grouping jobs according
to some logical arrangement.

• Rationale for Departmentalization
– Organizational growth exceeds the owner-manager’s capacity to personally
supervise all of the organization.

– Additional managers are employed
and assigned specific employees to supervise.


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Common Bases of Departmentalization

Finance

Home
Users

By Function

By Product

CEO

CEO

Marketing

Operations

Computers

Printers

By Customer

By Location


CEO

CEO

Business Users

Educational Users

Africa

Software

Europe

Asia

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Functional Departmentalization
The grouping of jobs involving the same or similar
activities

•

Advantages

– Each department can be staffed by functionalarea experts.

– Supervision is facilitated in that managers only

need to be familiar with a narrow set of skills.

– Coordination inside each department is easier.

•

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.

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Product Departmentalization
The grouping of activities around products or product groups

•

Advantages

– All activities associated

•

Disadvantages


– Managers may focus

with one product can be integrated and

on their product to the exclusion of the

coordinated.

rest

– Speed and effectiveness
of decision making are enhanced.

– Performance of individual products or product
groups can be assessed.

of the organization.

– Administrative costs may increase due to
each department having its own
functional-area experts.

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Customer Departmentalization

The grouping of 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.

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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.

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Establishing Reporting Relationships

•

Chain of command is a clear and distinct line of authority among positions in the organization.
The chain of command has two components:

– Unit of command suggests that each person within an organization should have a clear
reporting relationship to one and only one boss.

– Scalar principle suggests that there should be a clear and unbroken line of authority that
extends from the lowest to the highest position in the organization.

•

Span of management: Determines how many people will report to each manager.

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Establishing Reporting Relationships


Establishing the
Reporting relationship

Chain of Command

Span of
management

Unity of command

Scalar
principle
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Tall Versus Flat Organizations

Tall Organization

Flat Organization

President

President

Tall organizations have more layers of management than do flat organization.
Given the same number of employees in the tall and flat organization, which one has a bigger span of management?

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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.

•

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.

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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 solving.

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Steps in the Delegation Process

Step 1

Step 2

Assigning

Granting

Creating


responsibility

authority

accountability

Manager

Subordinate

Step 3

Manager
Manager

Manager
Manager

Subordinate

Subordinate

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Problems in Delegation

• Manager
– Reluctant to delegate.

– Subordinate’s success threatens
superior’s advancement.

– Lack of trust in the subordinate to do
well.

• Subordinate
– Reluctant to accept delegation for fear of
failure.

– Perceives no rewards for accepting
additional responsibility.

– Prefers to avoid any risk and
responsibility.

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Factors in the Choice of Centralization
or Decentralization
Centralization is the process of systematically retaining power and authority in the hands of higher-level managers.
Decentralization is the process of systemically delegating power and authority throughout the organization to middle and
lower level managers.

Organization’s
Centralization Choice

External environment’s
complexity and uncertainty


Nature
History of the organization

(cost and risk) of decisions
to be made
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Factors in the Choice of Centralization
or Decentralization

• Usually the grater the complexity and uncertainty of the environment, the greater is
the tendency to ___________.

– Answer: Decentralize

•

Does company have the tendency to follow the past or not?

– Answer: Yes

• When involving a lot of costly and risky decision making, the company tends to
________?

– Answer: The costlier and riskier the decisions, the more pressure there is to centralize.

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Coordinating Activities

• Coordination
– The process of linking the activities of the various departments of the organization.

• The Need for Coordination
– Departments and work groups need information and resources from each other to do their
jobs.

– The greater the interdependence of departments and work groups, the greater the need for
coordination.

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Major Forms of Interdependence

Sequential

Input

Reciprocal

Output

Input

Output


Input

The output of one unit becomes the input for another. This creates a moderate level of interdependence.

Pooled
Input

Input

Output

Input

Input

Output

Exists when activities flow both ways between units.
Represents the lowest level of interdependence. Units with pooled interdependence operate with little
interaction – the output of the units is pooled at the organizational level.

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Output


Quiz
Find the best organizational design for the condition described in the following
a. pooled


•

b. total c. reciprocal d. sequential e. content

_______ Information that flows from R&D to Design Department to Manufacturing Department to Sales Department.
This is ____ interdependence.

•

_______ At BMW the Marketing Department helps develop Sales Forecast for the Operations managers, who give
availability information to dealerships. When dealerships have a specific order, they send it to operations. What level of
interdependence does this example represent?

•

______In school, Math, English, Science and Social Studies departments operate separately. What level of
interdependence does this represent?

•

______In school, Statistics I may feed directly into Statistics II. Statistics I serves as a pre-requisite for Statistics II.
What level of interdependence does this represent?

Answer: D, C, A D
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