Ass. Prof. Dr. Özgür KÖKALAN İstanbul Sabahattin Zaim University

Chapter Objectives

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Define what organizing function is Describe fundemental concepts of organizing Indentify the factors that affect organizational structure Describe types of departmentalization 5-2

Defination of Organizing

 Organizing is a process for grouping and structuring actitivities, assigning duties and coordinating the efforts of personnel organizational goals.

in their attainment of

 When a structure is set up, many things should be consideren as follows:  To what extend should specilization in organizing?

managers encourage  What would be line and levels of authority that managers should establish?

 How much formalization should be encouraged?

 To what extend should decision making be centralized or decentralized?

Chain of Command Division of Work (Specialization) Authority Centralization & Decentralization

Fundementals of Organizing Process

Delegation Formalization Span of Control

Fundamentals of Organizing

 Specilization (Division of Work); it is concerned with division of labor within organization. It is referred to as subdividing the wide variety of tasks within the organization into individiual jobs to be performed efficiently by the skilled employees.

 Chain of Command; who orders and reports to whom. The chain of command shows the authority structure of an organization.

 Authority; it is managers to make decisions, issue orders, and allocate resorces.

formal and legitimate right of a  There are three categories of authority within the organization.

  Line authority; managers working departments have full and direct authority in the line Staff authority; it is a limited authority used by managers only to advise within the scope of their field of expertise.

 Functional authority; some managers may have full and direct authority over other departments than their own in respect to their specialist function.

Type Of Authority Within The Organization

President Legal Counsellor Human Resources R&D Accounting Operations Product A Product B Line Authority Staff Authority Functional Authority

 Delegation; The right of managers to transfer part of their legitimate authority to a subordinate is called as delegation.  Span of Control (Span of Management); The number of subordinates that a manager can effectively control.

 Factors affecting the span of control can be described as follows:  Characteristics of task performed        Degree of standardization in the workplace Qualification of subordinates Availability of support and staff services within the organization Complexity level of tasks Mangers personal preferences Local characteristics (single / numerous workstations) Degree of formalization organization) (written rules and procedures defining

1 2 1 2 3 4 Narrow Span of Management Large Span of Management 5

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Examples for Span of Control,

 If the task are standardized and not complex and subordinates are educated and experienced in their task  Span of control would be set …………………….

 If a manager is responsible for seperate and different units located in numerous and geographically dispersed places, and when the tasks are very complex and need strict control  Span of control would be set …………………….

 Formalization; it is referred to as the degree of written documentation used to direct and control employees. These documents may provide such information as descriptions of taks, procedures in task performing, responsibilities and decision making.

 Centralization or Decentralization; The decision at the top organization level describes centralization.

The decisions are made by lower organizational level that is called as decentralization.

Factors Affecting Organizational Structure

 Managers should study some contingency factors when they attempt to design an organization.

 Some contingecy factors that influence the organization structure as fallows:  Strategic Goals and Strategy  The Environment  Technology  Departmental Interdependence

 Strategic Goals and Strategy; strategic goals pertain to an organization as whole. An organization’s structure is very much related with strategy. There are mainly two kinds of strategy applied by organizations  Cost leadership strategy; the goal is to minimize the costs to accomplish more appropriate prices for organizastion’s standard product.

 Differentation strategy; the goal is to produce different products with premium prices charged to customers to serve their unique needs

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The Environment;

the envoriment creates uncertainty. The sturucture design of an organizations is vey much dependent on the level of uncertainty in the environment in which it operates.

 When the environment is stable, organization should have a mechanistic structure that emphasizes rigid managerial control in traditional vertical chain of command.

 In an environment with uncertainty, the best structure is likely the organic structure that emphasizes flexible, loose managerial control and lateral relationship within the hierarchical positions.

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Technology,

structure technology directly.

There affects three organizational significant manufacturing technologies; small batch, mass and continuous process manufacturing. The differences among these technologies are called as technological complexity. The degree of tecnological complexity determines the organizational structure.

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Departmental Interdependence;

The degree to which departments depend on one another for organizational resources in their task accomplishment

Type of Departmentalization

 The grouping of tasks and positions into departments and departments into organization is called as departmentalization.

Tridational Approaches to Departmentalization

 There are two main type of deparmentalization in traditional approaches.

 Functional departmentalization; The grouping of people and taks is made and put together in departments according to their common skills, experiences and work activities.

President Operations Finance Marketing

 Divisional Departmentalization; In this approach, diverse departments are brought together to create self contained units for producing a single organizational output.

 Some common divisional structures are as follows:  Departmentalization by Product; The departments are grouped into seperate self contained product.

 Departmentalization by Geographical Regions; The departments’ grouping into self- contained divisions serving customers who are physically dispersed in spesific geographical regions.

 Departmentalization by Customer; divisional structure groups the departments into self-contained units to serve various needs of different customer groups

Modern Approach to Departmentalization: Matrix Structure

 Matrix structure blends the functional and divisional departmentalization. The most typical arrangements are product- function matrix, project-function matrix and product – region matrix.  In matrix structure, there is a dual command system in which subordinates have two bosses to report to.  It is more flexible than traditional structure.

Contemporary Approach to Departmentalization

 The new contemporary approach do not rely on vertical chain on command.  Organizational structure are set up based on competitive global and fast changing environment  There are two types of structure  Team-based organization; the organization establish series of teams to achieve specific tasks. Organization structure are set up based on these teams  Network organization; the organization’s disaggregating its major fuctions, activities and resources into seperate companies that produce the goods and services for them.

Marketing Company Accounting Company Core Company Design Company HRM Company Manufacturing Company