PB301 BUSINESS

MANAGEMENT
CHAPTER 5: ORGANIZING

DEFINITION OF ORGANIZING

Efficient way managing organizational resources in order to achieve

the planned goal and objective.

Organizing refers to the coordination of human resources and

organization resources whereby
-Job
-Physical resources
-Financial resources

IMPORTANCE OF ORGANIZING

Job division or specialization whereby unit or department bears a

specific job burden and responsibilities in a organization.

Duties and responsibilities of each department in an organization.

Relationship between managers and subordinates.

Types of jobs performed in an organization.

Grouping of work segment in an organization.

Departments or unit at each management level in the organizational

hierarchy.

THE ORGANIZING PROCESS

The organizing process into various steps :Listing the job

Listing the job
Dividing the jobs
Dividing the jobs
Establishing the job
Establishing the job
Coordinating the jobs
Coordinating the jobs
Performing evaluations and adjustments
Performing evaluations and adjustments

 Listing the jobs

-Managers need to list the details of each job or activity that is to be
performed by the employees.
Dividing the jobs.
-Job division need as each individual will not be able to achieve
organizational goals or objectives by working alone.
Establishing the departments.
- Organizations will need to conduct departmentalization, which refers
to gathering employees who would be performing the same task into
one group.

 Coordinating the jobs.

-The mechanism of coordinating different jobs between departments is

created as without job coordinating, conflicts or confusions would
happen among employees from different department due to the
overlapping of jobs.
Performing evaluations and adjustment
-Managers need to evaluate the effectiveness of the organizing process
that was implemented and make the necessary adjustment toward any
changes that occur

Other management gurus have divided the organizing process into four stages : -

a)

Identifying the activities

b)

Grouping the activities

c)

Distributing the tasks

d)

Coordinating the tasks

ORGANIZATIONAL STRUCTURE

The way each activity in an organization is performed.

The way formal jobs are allocated.

The position of a unit or division in the organization.

General
Manager

Finance
Manager

Marketin
g
Manager

Productio
n
Manager

Administr
ation
Manager

Employe
es

Employe
es

Employe
es

Employe
es

Advantage Organization Chart

Provides a description of the organizational structure to employees

Helps identify the weakness of an organizational

Requires minimum coordination.

Requires minimum organizational relations skills.

Offers jobs according to the profession

Disadvantage Organizational Chart

Does not show a detailed description of all the jobs performed.

Does not show the most powerful individual.

Cannot identify the most important communication channel in an

organization

The Functional Organization

Activities or tasks are grouped according to organizational function

such as production ,marketing, and finance.

The marketing manager is responsible to market all products

produced by the organization.

President
Vice
President
Operatio
n

Vice
President
Production

Vice
President
Marketin
g

Vice
President
Finance

Advantages And Disadvantages of

Functional Organization

Advantage

Disadvantage

1. Emphasizes job
specialization.

1. Involves the implementation

of routine tasks.

2. Minimizes conflicts in
resource
utilization.

2. Lack of communication
among employees in different
department.

3. The problem-solving process

is more effective due to
specialization of skills.

3. Career development is limited

to certain areas.

4. Decision making process is

4. Employees tend to
more effective because the
concentrate on achieving
authority of making decisions is department objectives.
centralized.
5. Easier to control the
organization as managers
practise job specialization.

5. Cannot produce employees

who are skilled in many areas
due to job specialization.

The Divisional Organization

Activities are grouped according to similarities in terms of product

,market, and geographical location.

Divisional can be divided into three types:

a)

Product departmentalization

b)

Geographical departmentalization

c)

Customer departmentalization

a)

Product departmentalization

Product departmentalization involves the grouping of activities.

Usually practised by organizations producing multiple products.

Functional organization is not suitable due to difficulties in controlling

the organization.
)

Each manager will report to the general manager.

b) Geographical departmentalization

Is performed based on location.

Managing all the branches with the assistance of branch manager.

General
Manager

Perak
Branch
Manager

Johor
Branch
Manager

Sarawak
Branch
Manager

c) Customer departmentalization

Based on customer group who purchase the organizations products.

Example organization products industrial customer, ordinary

customer, and office customer.

Can fulfil customer needs and requirements promptly.

General
Manager

Manager
Industrial
Customers

Manager
Ordinary
Customers

Manager
Office
Customers

Advantage And Disvantage of

Divisional Organization

Advantage

Disadvantage

1. Reacts fast to any changes in

the environment.

1. Conflicting resources utilization

in every divisions.

2. Facilitates coordination of
functions in every division.

2. Concentration towards
divisional objectives.

3. Emphasizes customer demands

and requirements.

3. Knowledge and skills are not

shared among divisions.

4. Fulfils customer needs quickly

and accurately.

4. The purchase of new technology

involves high costs.

5. Project coordination can be

performed more effectively.

5. Feelings of envy might arise

between divisions due to the fight
for power and duties.

The Matrix Organization

Operator in a horizontal and vertical organizational structure.

Such as the division or line managers and the functional or project

managers.

Know as a Multi Commands System.

Operates in an environment that is always changing due to tight

competition and technological changes.

Suitable for organization either limited resources.

General
Manager

Project
Vehicle A

Project
Vehicle B

Project
Vehicle C

Productio
n
Manager

Finance
Manager

Marketing
Manager

Productio
n Unit

Finance
Unit

Marketing
Unit

Productio
n Unit

Finance
Unit

Marketing
Unit

Productio
n Unit

Finance
Unit

Marketing
Unit

Advantages And Disadvantages

of Matrix Organization

Advantages

Disadvantages

1. Objectives are established before 1. Conflicts might occur between

any task is started.
functional managers and project
managers due to the competition to
obtain limited resources.
2. The roles of managers and team
members are stated in detail. This
enables the management to
identify the person who is
responsible when a problem occurs

2. The extra workload will create

pressure among managers and
team members.

3. Managers are selected based on

their knowledge of the business
environment and current issues,
rather than status and position

3. The authority and power of

functional managers and projects
managers are not balanced.

4. Experienced managers can

handle any project satisfactorily.

4. Involves lengthy communication

and discussion sessions which may
hinder the effort to perform duties
and actions.

5. Rewards and benefits are

allocated fairly to managers and
team members.

5. Individuals performing important

tasks must have skills in certain
area.

Division Of Labour

Are introduced by Adam Smith.

Perform specific or specialized jobs according to their skills

,qualifications ,and abilities.

To increase the production efficiency of employees.

Division of each job to smaller jobs that is performed repeatedly.

Example: In a private firm, a receptionist is assigned to answer phone

calls and receive visitors ,while the account clerk is assigned to
record into the accounts books.

Two important aspects that are related to job specialization

a)

Job depth

b)

Job scope

a)

Job Depth

Concept emphasizes the degree of freedom employees.

Provides detailed tasks, and supervises the work movements of an

employees in detail.
)

Perform their jobs better without feeling stressed and can master
all aspects of their work.
Example: In an audit firm, employees must follow the set rules
such as being honest, punctual, and careful with figures.

b) Job Scope

To overcome employees level of dissatisfaction by increasing .

Increase an employees skills, and provides challenges, motivates, and

frees employees from control.

Example: If the audit clerk is dissatisfied and bored with his job, the
management can increase the number of jobs for this employees.

Advantage And Disadvantages

Of Job Division

Advantages

Disadvantages

1. Employees become skilled

and efficient.

1. Does not encourage

creativity because employees
perform the same job every
day

2. Job are completed faster

which saves time .

2. Employees can get bored

and lazy quickly

3. Reduces workload

3. Employees are unable to go

into a new job area

4. Save training costs

4. Employees are unable to

show new talents

5. Employees level of expertise 5. Employees productivity

increase
decreases due to the loss of
concentration towards the job
performed
6. Resources are used
efficiently

6. Increases training costs if

there are any changes to the

The Are Three Way To Design a Job In Order To Overcome

Boredom And Dissatisfaction

a)

Job enlargement

b)

Job enrichment

c)

Job rotation

a)

Job enlargement

Refers to the number of employees, the different and the frequency

jobs performed by the employees.

The frequency of job performed by an employees reduced, the job

scope is narrow.

b) Job enrichment

To overcome employees dissatisfaction is to increase the level of

employees job depth.

Who are given challenging jobs and bigger responsibilities in an

organization.

To provides various jobs, autonomy, and responsibilities to the

employees in order for them to perform their tasks until completed.

c) Job rotation

Involves transfer of employees to another department within a similar

job scope.

To provides opportunities for employees to learn various skills related

to their new job.

The Importance Of Authority And Responsibility In An

Organization

Manager responsible for their work and the jobs performed by their
lower level employees.

Must ensure that specific duties or tasks under their control.

Manager must be responsible for their subordinates actions.

DELEGATION

Definition Of Delegation
Process where by leaders or managers give the right or power
and responsibility to lower-level employees to perform certain
duties on their behalf.
Stoner and Wankel, delegation is the action of allocating
authority and formal responsibilities to another party.

Principles of Delegation

The delegation authority from the top level management to the

lower-level management must be shown clearly.
Authority must be aligned with responsibility.
The levels of management must be shown clearly.
Division of jobs must be practiced fully.
Control of power is maintained by the top-level management.

Delegation Concepts

Responsibility.
Accountability.
Coordination.
Power and authority.

Responsibility
Is the obligation of individuals to perform their duties thoroughly.
Responsibility is usually given to one employees who its trust worthy
negotiable, and always follows the rules.

Accountability
Managers must be responsible for their own actions and performances
of their employees.
Managers or employees should be ready to accept complimented and
critiques.

Coordination
Is a process of integrating of object and activities in order to achieve
organizational goals.
Without coordination, an employee will work to achieve his personal
goals and lose concentration on the organizations goals.

Power and authority

Managers right to make decisions.
Authority enables manager to give orders to their employee
Authority and responsibility must exists at the same times. In other
words, when an employee is given responsibility, the power or
authority to perform the responsibility should be given simultaneously.

Three types of authority

Functional authority.
Line authority.
Staff authority.

Functional authority
Gives managers the power to control others departments
activities.

Line authority
Managers who have the right and direct responsibility to
command and control subordinates who perform important
activities.
Line authority flows to lower level of the organization through the
chain of commands

Staff authority
Cannot give commands to other employee through the main of
commands.
For examples, human resource managers can advise the production
managers on suitable selection test to be used in the process of
selecting employees.
Power is the ability to influence or change an individuals attitude.
Several type of power.

Coercive power.
Reward power.
Legitimate power.
Expert power.
Referent power.

Staff authority
Cannot give commands to other employee through the main of
commands.
For examples, human resource managers can advise the production
managers on suitable selection test to be used in the process of
selecting employees.
Power is the ability to influence or change an individuals attitude.
Several type of power.

Coercive power.
Reward power.
Legitimate power.
Expert power.
Referent power.

Coercive power
Refers to ability to punish and fine and individual because they do not
fulfil the requirements, wants, or instructions.
Examples a troop leader who gives order to his soldiers is said to have
coercive power.

Reward power
Refers to the ability to give acknowledgement or rewards to an
individual who has performed the duties entrusted to them.
Examples, managers with rewards power would rewards employees
who have performed well by increasing their salaries.

Legitimate power

Refers to the right to give commands and orders as allowed

by law.
Individuals receiving order must perform the order.
Examples, a judge has legitimate power to sentence a
criminal for the crime that falls under his jurisdiction.

Expert power
Managers with expert power possess wide knowledge and specific
skills in a certain area.

Referent power
An individuals with referent power is usually made a role model
or is copies by other, is obtained from character, behaviour, or
standpoint that attracts the attention of others.
Individuals who possess referent power area parents, teachers,
singers, actor and actresses.

The Delegation Process

Step delegation:
Allocate duties
Allocate duties
Give authority
Give authority
Give responsibilities
Give responsibilities

Establish accountabilities
Establish accountabilities

Allocate duties
Duties will be allocated to employees according to their skills
and abilities. Each employee will perform is duties as directed
by the managers in the organization.

Give authority
Managers must give authority to the employees in order for
them to perform the duties well.

Give responsibilities
Responsibilities is an individuals obligation to perform a
given task which has been entrusted to him.

Establish accountability
Managers play an important role in the delegation process
Managers have establish accountability of their employee
in order for them to be responsible for their job.

Advantages and
Disadvantages of Delegation

Advantages of Delegation
Duties can be performed in detail and thoroughly.
Duties can be allocated fast and with flexibility.
Power given will cause employees to be more responsible in
performing their jobs.
Can create the spirit of cooperation among department.
Interaction can be increased and as a result, strengthen the
relationship between managers and subordinates.
All duties in the organization will be conducted smoothly

Disadvantages of Delegation
Employees worry that they will be punished if they fail to perform
duties well.
Proud managers might be reluctant to give authority to their
employees.
Abuse of power by employees may occur.
Unfair delegation may bring conflicts among employees.
Job overlapping as a result of ineffective delegation will lead to job
uncompleted.
Difference of opinions on ways to perform a job can cause
misunderstanding between managers and subordinated.

Problem in Delegation

Problem Faced by Managers Who Perform Delegation.

Problem Faced by Employees Who Receive Authority.
Ways to Overcome Problem in Delegation.

Problems Faced by Managers Who Perform Delegation

Managers may feel that they can perform all the jobs
better than their employees.
Managers may also feel that the employees do not have
enough ability to perform a job.
Managers do not have a skill to plan jobs that will be
performed by the subordinates.

Problems Faced by Employees Who Receive Authority

Employees worry that their importance will be weakened

and they will be penalized if they cannot perform their
duties satisfactorily.
Employees do not have the motivation to complete a
certain duty if there are no incentives for good
performance.

Ways to Overcome Problems in Delegation

Managers must give employees an appropriate amount
freedom to complete the given duties.
Understanding between managers and subordinates would
enable jobs to be allocated efficiently and performed
satisfactorily.
Managers can allocate jobs to their employees in stages in
order to avoid confusion and communication problem.

LOCUS
OF
CONTROL

Definition Locus of Control

Refers to the number of subordinates who report directly

to a manager or supervisor.
Can influence the effectiveness of interaction between
managers and their subordinates, and the effectiveness of
supervision b managers.

Narrow locus of control

Suitable for large organizations wit many management

levels.
Distribution of power is practised but bureaucracy causes
the decision making process to become inefficient.
Easier to control

Hierarchy Narrow Locus of Control

25
125
625

Wide locus of control

Suitable for smaller organizations wit fewer

management level.
Interactions between mangers and subordinates are
lesser.
Difficult to control.

Hierarchy Wide Locus of Control

12

144

CENTRALIZATION AND DECENTRALIZATION

Centralization
-The situation whereby there is no istribution of power to
subordinates.
-Managers have the full autrority toward all duties performed by
employees and the employees only follow given orders.

Decentralization
-The distribution of power from the management to the
employees.
-They also have the authority to identify any problem or issues and
sugegest suitable solutions to overcome the problems.

ADVANTAGES AND DISADVANTAGES OF CENTRALIZATION

AND DECENTRALIZATION
The Advantages and Disadvantages of Centralization
Advantages

Disadvantages

Facilitate the coordination of

organizational activities in order to
achieve the set goals.

Top-level management takes a longer

time to make dicisions. This could
lead to loses in terms of economic
resources.

Avoid the abuse of power by

subordinates

Difficulties in adjusting organizational

activities and dicisions parallel to
changes in the busines environment.

Facilitate the coordination of orders

given to employees at different
management levels.

Employees are not motivated to work

harder because trust or opportunities
to show their abilities are not given

The Advantages and Disadvantages of Decentralization

Advantages

Disadvantages

The organization become more

flexible.

The organization may easily lose

control due to the abuse of power by
subordinates.

Middle and lower-level management

are given opportunities to decisions.

Employees may given more

importance to their respective
departments.

Middle-line managers and first-level

managers are given opportunities to
demonstrate their abilities.

Authority given to employees may

cause employees to become
inconsiderate.

Reduces the workload of top-line

managers in term of decision making.

Mistakes in decision making process

tend to happen due to the lack of
skills.