Chapter 4

The organizing
function
Definitions of organizing and organization
Organizing
 is the process of arranging people and physical resources
in an orderly manner to carry out planned objective.
 is the process of achieving a coordinated effort through
the design of structure of tasks, authority relation ships,
people, and communication.
 is the process of identifying, grouping, assigning work
among groups and individuals, coordinating activities
and prescribing authority relationships to create a
structure capable of accomplishing predetermined
objectives.
 Continued……..

Organization
 is the total system of social and cultural relationship
among peoples who are joined together to achieve
some specific common objectives.
 It is a whole consisting of unified parts (a system)
acting in harmony to execute tasks to achieve goals
effectively and efficiently.
Process of organizing
• The organizing process involves the following steps:
1. Review plans and objectives
 Continued…….

2. Determine the work activities necessary to

accomplish objectives
3. Classify and group the necessary work activities
into manageable units
4. Assign activities and delegate authority
5. Design a hierarchy of relationships
Importance of Organizing
 Organizing promotes collaboration and negotiation
among individuals in a group. Thus, it improves
communication within the organization.
 Continued……..

 Organizing sets clear-cut lines of authority and

responsibility for each individuals or department’s.
 Organizing improves the directing and controlling
functions of managers.
 Organizing develops maximum use of time, human,
and material resources. It also enables for proper
work assignment for individuals in pursuit of
common goal.
 Organizing enables the organization to maintain its
activities coordinated so that the efforts of managers
and employees can be well integrated and directed
towards an end; i.e. to accomplish organizational
goal
 Continued………

Types of organization
1. Formal organization
 are deliberately planned and created to accomplish some
objectives through the coordinated efforts of people.
 It is characterized by a well defined hierarchy and
authority reporting relationships, job titles and specific
job duties, polices and procedures, division of labor, rules
and regulations, and a host of other factors necessary to
achieve goals or activities.
 It can exist independently of particular members and
represented by a printed chart or structures that appears
in the formal company documents.
 Continued……..

2. Informal organization
 It is unofficial relationship among people
based on their interest, behavior, attitude etc.
 it is created unconsciously.
 They are instrumental in spreading
information quickly throughout the
organization and even beyond its boundaries.
 cannot be depicted by formal organizational
chart.
 Continued………

Why people form informal groups?

• Informal groups are formed for different reasons:
1. Need for satisfaction
 People have needs that in some cases are not met
through the formal organization.
2. Proximity and interaction
 A common reason people join groups is that they
work near one another. This can be either
through working in close proximity physically or
because of frequent interaction.
 Continued…….

3. Similarity
 People may join informal groups because they
are attracted to other people who are similar
to themselves.
 Several persons with the same attitudes or
beliefs may join one group.
 Other factors or similarity can be personality,
race, sex, economic position, age, educational
background etc.
 Continued…….

 Organization chart
 is a diagram, which indicates the location of positions,
departments and functions in the organization structure.
 It is a visual representation of the complete organization
structure.
 Organization structure is a formal framework that shows
a set of tasks assigned to individuals and departments,
reporting relation ships (including line of authority,
decision responsibility, number of hierarchical levels,
and span of management control) and design of the
systems to effectively coordinate employees across
departments.
 Continued…….

Organization chart remained use full because

it provides different important information
regarding:
The chain of command –who reports to whom
The span of control-the number of
subordinate under the direction of a manager
Basis of departmentation - how the
organization is departmentalized
The hierarchy of decision making
The type of authority relationships
 Continued……..

Departmentation
 is the process of dividing the over all operations of
the organization into sub-activities and then grouping
these specialized activities and responsibility areas in
to work groups.
 It is efficient and effective grouping of jobs into
meaningful work units so as to accomplish
organizational objectives. Similar activities that are
closely related with a distinct function are grouped
together to form departments.
 It aims at achieving unity of direction, effective
communication, coordination, and control.
 Continued……..

Department
 is a distinct area, division, or branch of an
organization over which a manager has
authority for the performance of specified
activities.
Reasons for departmentation
 Helps to limit the size of the work to
manageable size
 Creates independent and semi-autonomous
units that give them a feeling of satisfaction and
recognition.
 Continued……

 Helps to fix responsibility equivalent to the delegated

authority to each unit.
 Helps to develop managers that in turn develop them
for higher-level positions and exercise decision-
making in their own areas of specialization.
Bases of departmentation
 The major bases of departmentation include:
1. Functional departmentation
 It is the process of grouping activities of the
organization into separate units or departments based
on the essential functions needed in the organization
such as productions, marketing, finance, and so on.
 Continued………

 Production department may in turn, establishes such

units as production scheduling, quality control,
purchasing, and manufacturing unit.
 Similarly marketing may establish sales, promotion,
and advertising, and logistic units.
2. Product departmentation
 Organizations with diversified products are organized
according to their product lines. For each product
manufactured by the enterprise, there is a separate
department that looks after its operation.
 E.g. Textile products - Nylon products, woolen
products, silk products, cotton products
 Continued…….

3. Geographic (territorial) departmentation

 This is grouping of activities based upon
location, area or territory.
 Is common in enterprises that operate over
wide geographic areas i.e. it is attractive to
large-scale firms or other enterprises whose
activities are physically or geographically
dispersed.
 Example -East, South, North, and Central
branches of the Commercial Bank of Ethiopia.
 Continued……….

4. Customer departmentation
 This is a classification based on users of a
product or services.
 It takes in to account the needs of each class
of customers (institutions, government,
manufacturers, wholesalers, etc).
 Example Wholesalers and retailers,
government and private sector, bank loans for
military, students, business, personal etc.
 Continued……..

5. Process Departmentation
 This is most applicable when special skill is needed to
operate different machines.
 Manufacturing firms commonly group activities according
at the products manufacturing process.
6. Matrix departmentation
 It is the combination of functional and product or project
patterns of departmentation.
 For example, an Engineering Company can use matrix
structure in which there are functional managers in charge
of engineering functions (like design, mechanical,
electrical ,hydraulic)and project managers responsible for
end product.
 Continued........

Major Elements of the Organizing Function

1. Authority, responsibility and accountability
Authority
 is the right to commit resources (that is, to
make decisions that commit an organization’s
resources), or the legal (legitimate) right to
give orders (to tell someone to do or not to do
something)
 Level of authority varies with levels of
management.
 Continued........

Types of authority
 There are three types of authorities created by
the relationship between individuals and between
departments. These are:
a. line authority
 defines the relationship between superior and
subordinate.
 Individuals/managers with line authority can
exercise a direct control on their subordinates.
 Eg authority of GM over production or marketing
department head
 Continued........

b. staff authority
 Managers with staff authority, plays the role of providing
technical assistant, experts opinion and advices.
 They can not exercise direct control over the
subordinates or individuals with whom they consult.
 E.g. Research and development (R&D)
c. Functional authority
 It is an authority delegated to an individual or
department to control specific activities undertaken by
another individual in another department.
 E.g. personnel department can be given to look after
performance appraisal in production department.
 Continued.......

Delegation of authority
Delegation
 is a temporary transfer of authority to another
person.
 superiors delegate or pass authority down to
subordinates to reduce burden or to facilitate
the work being done.
 It is necessary: when managers are absent,
over loaded or to develop subordinates
 Continued.......

Importance of Delegation
 It relieves the manager from his/her heavy
workload
 It leads to better decisions
 It helps subordinates to train and builds moral
 It encourages the development of professional
managers
 It helps to create the organization structure
 Continued.......

Responsibility
 is the obligation to carry out one’s assignment
to the best of one’s ability
Accountability
 refers to answerability to one’s action.
 It means taking the consequences.
 It is the obligation of a subordinate to report
to a superior.
 Accountability flows upward whereas,
authority flows downward.
 Continued........

2. Centralization and decentralization

Centralization
 refers to concentration of decision making
authority in few positions, especially at the
top level.
 If an organization is centralized:
Decision-making power remains at the top
The participation of lower-level managers in
decision-making is very low
 Continued.......

 Decentralization
 is the dispersion of authority for decision making
through the organization.
 In a decentralized organization decision-making
power is pushed downwards and lower-level
managers actively participate in decision-making
process.
 That is, they are not only called for
implementation but also for decision-making.
 The degree of centralization and decentralization,
as much as possible, should be balanced.
 Continued.....

3. Span of management
 refers to the optimum number of subordinates
an executive can effectively supervise.
 It is the number of immediate subordinates
who reports directly to a manager.
 Based on the number of subordinates who
should report to a manager or the number of
subordinates that a superior should supervise,
we can have Wide span of management and
Narrow span of management.
 Continued.....

Wide span of management

 This means many subordinates report to a
superior or a superior supervises many
subordinates.
 If the span of management is wide, we get:
 A flat organization structure with fewer
management levels between top and lower
level
 Many number of subordinates and
decentralized authority
 Continued.......

 Managers are overstrained and their subordinates

receive too little guidance and control
 Fewer hierarchal level
Narrow span of management
 This means superior controls few numbers of
subordinates or few subordinates report to a superior.
 This is when supervisors need to involve closely with
subordinates.
 It is a tall organization structure characterized by
narrow span of control and a relatively large number
of hierarchical levels.
 Continued........

Factors determining the span of management

 Manager’s personality
 The manager’s abilities and competencies
 Supervisory style
 Non-supervisory activities
 Ability and competence
 Motivation and commitment