ORGANISING FUNCTION

• Lecture outline
• 
• 4.1 Introduction
• 4.2 Lecture objectives
• 4.3 Principles of organizational design
• 4.4 Departmentalization
• 4.5Delegation
• 4.6 Line and staff functions
• 4.7 Span of control
• 4.8 Summary
Introduction
• Organizing is the second function of management.
• DEFINITIONS OF TERMS
• Organizing is the managerial function of designing and maintaining a system
of roles. An organizational role must include: objectives; major activities of
role; authority; availability of necessary information and other resources.

• Organizing: is the process of creating a structure for the organization that will
enable the various players to work together effectively towards its objectives.
• Organizational structure: is the basic framework of formal relationships
among responsibilities, tasks and people in the organization. It can be seen as
the division of activities into manageable
• units where everyone knows who is to do what and who is responsible – it
removes confusion and conflict.
• Organizational design: design of an organizational structure involves the task of
dividing up the work, allocating responsibility and establishing chains of
command.
• Organizational Chart: Is a diagrammatic explanation of an organization’s
structure. It depicts the organization as a whole, the various components and their
interrelationships. It can be compared to a road map – thus a chart is not the
organization, but a representation of it.
• Reasons for organizing
• Organizing is necessary to avoid confusion of roles, tasks etc.
• Organizing clarifies the responsibilities of the employees of the organization
• It allocates accountability to each employee for the outcomes of the work they are
responsible for
• It establishes clear channels of communication
• It enables managers to deploy resources (human, financial, informational, and
physical) meaningfully and synergy can be reached
• It enables monitoring of organizational activities
• Allows for co-ordination of different parts of the organization and different areas
of work
• It provides the flexibility needed to respond to future demands and developments
• ORGANIZATIONAL DESIGN
• Organizational design is the decision-making process through which managers
construct an organizational structure appropriate to the plans and strategies of
the organization.
• Steps in organizational design are:
• Reflecting on the plans and objectives of the organization
• Establishing major tasks
• Dividing the major tasks into sub-tasks
• Allocating resources for sub-tasks
• Evaluating the results of the organizing strategy
• Basic principles of organizing
• Effective organizations are guided by the following principles:
• Division of work and specialization – involves dividing total workload
into tasks that can be logically and effectively performed by individuals
with specialized knowledge
• Departmentation – refers to the logical grouping into manageable sizes of
organizational activities belonging together. The departments created
constitute the organization’s structure and appear on the organizational
chart. (A department is a distinct area, division or branch over which a
manager has authority over performance e.g. production, accounts or sales)
• Coordination - the process of integrating departments both horizontally
and vertically. It is achieved through authority relationships, which involve
allocation of responsibility and authority to each position in the
organizational structure.
• Chain of command – defines the reporting lines of individuals and groups
in the organizations
• Unity of command – implies that each subordinate must have only one
manager to report to
• Span of control – refers to the number of subordinates working under one
manager
• THE ORGANIZING PROCESS
• Organizing creates a vertical hierarchy of positions, which involves structuring
authority, responsibility and accountability. The hierarchy is a channel or conduit
through which authority, power and accountability flow. While authority and
power flow downwards, accountability flows upward and responsibility rests with
individuals.

• Authority
• It is the right to do something – it is the right of a manager to make a subordinate
do something in order to accomplish organizational goals. Managerial authority is
the right to command others by making decisions, assigning tasks to subordinates
and expecting and requiring satisfactory performance from subordinates.
However, being able to enforce this right is a different matter.
• Delegation of authority
• This refers to the process by which a supervisor gives a subordinate the authority to
do the supervisors job. A manager, however, cannot delegate the functions of
planning, organizing, leading and control as this would lead to breakdown in
organizational performance.

• Power
• While authority is the right to do something, power is the ability to do it. The
sources of a manager’s power are:
• Ability to give or withdraw rewards
• Ability to punish or threaten to punish
• Power is subjective and is influenced by moral and ethical considerations. The
perception that people have about the power of another is more important than the
actual power possessed. People in authority sometimes bluff, pretending they have more
power than they actually do.

• Authority and power must be balanced to avoid conflict. Too much power leads to abuse
while less authority leads to ineffectiveness.

• Responsibility
• This is closely related to authority and power. It refers to the obligation to do something.
It is the duty to perform organizational tasks, functions etc. In formal organizations
everyone has a responsibility
• Delegation of responsibility

• Responsibility cannot be delegated. A supervisor’s responsibility is not

diminished because of delegation of authority to a subordinate. In fact,
responsibility may increase because in addition to ensuring that the delegated
work is done, he has to supervise the subordinate. Whether a manager does the
work or chooses to delegate to a subordinate, he retains complete responsibility
for the accomplishment of the task.
Source of responsibility

• Responsibility is created within a person when accepting an assignment together

with the appropriate responsibility. The act of responsibility is created internally
when a person agrees to perform a task. Refusal to be responsible for a task leads
to disciplinary action or dismissal. Responsibility is not a flow as in accountability
and authority but is retained within the person assigned. It is an internal obligation
to perform tasks.
• Accountability
• In addition to personal responsibility to oneself, an employee is accountable to
higher authority.
• Accountability comes into being because the manager has a right to require an
accounting for the authority and power delegated and tasks assigned to a
subordinate.
• The subordinate must account/answer to the manager the stewardship of the power
and authority granted. “Each employee is obliged to report to his superiors how well
he has exercised his responsibility and the use of the authority delegated to them”
• Just as a manager cannot reduce responsibility by delegating, accountability cannot
also be reduced.
• Problems with imbalance between authority, power, responsibility and
accountability
• For the sake of organizational stability there must be equilibrium between the
above four factors.
• If authority and power exceed responsibility and accountability there is likely to
be abuse of power. Power can be used arbitrarily with little regard on its impact on
others. It creates fear of the potential acts of the holder of excessive authority e.g.
a dictatorship form of government or the police.
• If responsibility and accountability exceeds authority and power, then people
would be held accountable for actions beyond their control. People will eventually
object and seek additional authority.

• DEPARTMENTALIZATION
• Departmental specialization can take many forms such as functional, product,
geographical or matrix designs.
• Functional design: Each major function reports to the CEO and other sub
functions report to the major functional heads. The idea is to group specialists
with similar interests and training together e.g. marketing, HRM, finance or IT.
This is the most common design
• Product design: this is common in organizations that deal in multiple products. It
is a modification of the functional design. Each major product or line is managed
by an executive who reports to the CEO. The product manager has control over
the functions in his division such as sales, marketing, HR and finance.
• Geographical design: Where an organization operates in a wide geographical
area, territorial groupings are designed. A company’s activities are divided into
regions with a manager for each with a home office for coordinating the activities
of the geographical units.
• Customer design: Activities are structured to respond to specific groups of
customers. For example, the lending activities in banks that are tailored to meet
the needs of different customers say business/corporate clients, personal,
mortgage or small business.
• Matrix design: this involves a grid or matrix of authority flows. Authority flows
both vertically and horizontally while vertical authority is exercised by functional
managers, horizontal authority is vested in project managers so that some
employees find themselves reporting to two managers. Project managers have
formal authority over budgetary funds, time and tasks.
• Advantages
• Matrix designs are useful when:
• The activity has a definite completion date
• Cost constraints are a critical factor
• Specialized skills are required for the completion of a project
• Activity is new or unfamiliar to the participants
• When a high degree of competence is required and flexibility is needed
• The need to share resources and reduce costs
• Disadvantages
• Conflict over allocation of resources and division of authority
• Dilution of functional authority
• Divided loyalty for project teams
• It sacrifices the principle of unity of command

• NB: It is rare to find organizations that use only one of these designs. Most use
combinations of two or more forms.
THE PROCESS OF DELEGATION

• Delegation is the process by which managers assign a portion of their total

workload to others. It includes assigning formal authority and responsibility for
completion of specific activities.

• Why delegate?
• Get more work done
• Subordinates may have some unique expertise which the manager lacks
• Helps develop subordinates managerial skills
• Enhances prompt action
• Superiors can take higher level tasks
• Better decisions as they are made lower down where the problems are
What are the barriers to delegation?
• Reluctance/inability to delegate due to lack of planning what to and not to
delegate
• Insecurity due to fear that subordinates may do better and threaten their positions
• Lack of confidence in the subordinate to do the job
• Reluctance by subordinate to accept delegation due to fear of failure, lack of
rewards, risk avoidance tendencies etc.
• Incompetent subordinates
• Some guidelines to effective delegation
• Free communication to ensure subordinates understand their responsibility,
authority and accountability
• Balance responsibility and authority- give enough authority to achieve desired
results
• Define the expected results clearly
• Evaluate the experience and competence of the subordinate before delegating
• Be flexible with delegation- modify, increase, decrease or withdraw
• Supportive managerial climate free from fear, frustration and threats
• Put in place checks and controls to ensure delegated authority is not abused
• LINE AND STAFF RELATIONSHIPS
• The concepts of line and staff can be viewed both as functions and as authority
relationships.
• Line functions: Refers to those functions that have direct responsibility for
accomplishing the objectives of the firm. The managers responsible are line
managers and the others are line employees.
• Line authority: refers to the chain of command where line officials have authority
over subordinates e.g. a manager and a subordinate. This is exercised by all
managers irrespective of whether they are line or staff.
• Staff functions: refer to those functions that support the line functions by
providing expertise, advice and support. Examples are HRM, finance or research
and development