Chapter 10 – Organizing
ORGANIZING AS A MANAGEMENT FUNCTION
Organizing: The process of arranging people and other resources to work together to accomplish a
Organizing is used to divide the work, arrange resources and coordinate activities.
What is organization structure?
Organization Structure: The system of tasks, workflows, reporting relationships, and
communication channels that link together diverse individuals and groups. As environments and
situations changes so must the structures.
The structure of the organization in its official state.
An organization chart is a diagram describing reporting relationships and the formal arrangement
of work positions within an organization.
An organization chart identifies the following aspects of formal structure:
o The division of work: positions and titles show work responsibilities
o Supervisory relationships: lines show who reports to who
o Communication channels: lines show formal communication flows
o Major subunits: positions reporting to a common manager are shown
o Levels of management: vertical layers of management are shown
A “shadow” organization made up of the unofficial, but often critical, working relationships
between organization members.
If it was drawn it would show who talks to who, who has meetings with who, and who goes to coffee
Potential advantages of informal structures:
o Helping people accomplish their work: during times of change because out-dated formal
structures fail to provide support to people, so they use an informal structure to fill the
o Overcoming limits of formal structure: people are in personal contact of others, tasks are
not as strictly separated
o Gaining access to interpersonal networks: social events, formal meetings
o Informal learning: interacting with people on a personal level
Potential disadvantages of informal structures:
o May work against best interests of entire organization: outside formal authority system
o Susceptibility to rumor
o May carry inaccurate information.
o May breed resistance to change.
o Diversion of work efforts from important objectives.
o Feeling of alienation by outsiders: “shadow cabinet” those who have high power working in
an inclusive environment
TRADITIONAL ORGANIZATION STRUCTURES
Departmentalization: process of grouping together people and jobs into work units
www.notesolution.com Functional Structures
People with similar skills and performing similar tasks are grouped together into formal work
Members work in their functional areas of expertise: if each functional area works properly the
whole structure will work and vice versa.
Are not limited to businesses: banks and hospitals can use this structure as well
Work well for small organizations producing few products or services: the demand for change is
o Economies of scale: efficient use of resources
o Task assignments consistent with expertise and training
o High-quality technical problem solving
o In-depth training and skill development
o Clear career paths within functions
o Difficulties in pinpointing responsibilities: quality, timeliness, innovation
o Functional chimneys problem: lack of communication, coordination and problem solving
o Sense of cooperation and common purpose break down: function is very formal (everyone
does their own thing)
o Narrow view of performance objectives
o Excessive upward referral of decisions: if there is a problem it’s automatically reported to
the higher levels to solve the problem, instead of it being solved within that department.
Group together people who work on the same product or process, serve similar customers, and/or
are located in the same area or geographical region.
Common in complex organizations (more than one product, more than one region, several
processes, diverse customer availability)
Avoid problems associated with functional structures.
o More flexibility in responding to environmental changes.
o Improved coordination.
o Clear points of responsibility.
o Expertise focused on specific customers, products, and regions.
o Greater ease in restructuring.
o Duplication of resources and efforts across divisions: increase costs
o Competition and poor coordination across divisions: everyone is competing for resources and
o Emphasis on divisional goals at expense of organizational goal
How Jobs and Activities are grouped
o Product Structures : focus on a single product or service
o Geographical Structures: focus on the same location
o Customer Structure: same customers and clients
o Process Structures: same processes
Combines functional and divisional structures to gain advantages and minimize disadvantages of
www.notesolution.com Used in manufacturing, service industries, professional fields, non-profit sector and multi-national
o Better cooperation across functions.
o Improved decision making.
o Increased flexibility in restructuring.
o Better customer service.
o Better performance accountability.
o Improved strategic management.
o Two-boss system is susceptible to power struggles.
o Two-boss system can create task confusion and conflict in work priorities.
o Team meetings are time consuming.
o Team may develop “groupitis.”
o Increased costs due to adding team leers to structure.
DIRECTIONS IN ORGANIZATION STRUCTURES
Guidelines for Horizontal Structure
o Focus the organization around processes, not functions.
o Put people in charge of core processes.
o Decrease hierarchy and increase the use of teams.
o Empower people to make decisions critical to performance.
o Utilize information technology.
o Emphasize multiskilling and m