Organizing (structuring) process is accomplished by:
• determining work activities and dividing up tasks (division of labour),
grouping jobs and employees (departmentalization), and
• assigning authority and responsibilities (delegation).
Formal organization: the order and design of relationships within the ﬁrm; consists of two or more people working
together with a common objective and clarity of purpose.
- well-deﬁned lines of authority, channels for information ﬂow, and means of control.
- Human, material, ﬁnancial, and information resources are deliberately connected to form the business
Division of labour: the process of dividing work into separate jobs and assigning tasks to workers
▯ Specialization the degree to which tasks are subdivided into smaller jobs
Departmentalization: the process of grouping jobs together so that similar or associated tasks and activities can be
1. Functional departmentalization, which is based on the primary functions performed within an organizational
unit (marketing, ﬁnance, production, sales, and so on).
2. Product departmentalization, which is based on the goods or services produced or sold by the
organizational unit (such as outpatient/emergency services, pediatrics, cardiology, and orthopedics).
3. Process departmentalization, which is based on the production process used by the organizational unit
(such as lumber cutting and treatment, furniture ﬁnishing, shipping).
4. Customer departmentalization, which is based on the primary type of customer served by the organizational
unit (such as wholesale or retail purchasers).
5. Geographic departmentalization, which is based on the geographic segmentation of organizational units
(such as Canadian and U.S. marketing, European marketing, South American marketing).
Organizational chart: a visual
representation of the structured
relationships among tasks and the people
ﬁxed the authority to do those tasks
Managerial Hierarchy: the levels of
management within an organization;
typically includes top, middle, and
- The higher a manager, the more power
he or she has.
Middle - The number of employees increases as you move down the
Employees -An interesting trend is the inverted pyramid, with the top manager
Supervisory at the bottom and the front-line employees at the top. The reason
Management for this is to graphically show that the employees are the priority
within the company.
Chain of command: the line of authority that extends from one level of an organizationʼs hierarchy to the next, from
top to bottom, and makes clear who reports to whom
- Under the unity of command principle, everyone reports to and gets instructions from only one boss Authority: Legitimate power, granted by the organization and acknowledged by employees, that allows an individual
to request action and expect compliance.
▯ Delegation of authority: The assignment of some degree of authority and responsibility to persons lower in
▯ the chain of command.
Accountability means responsibility for outcomes
Span of Control: the number f employees a manager directly supervised; also called span of management
(narrow span: a few subordinates; wide span: many subordinates)
Factors of optimal span of control
- nature of the task: the more complex the task, the narrower the span of control
- Location of the workers: the more locations the narrower the span of control
- Ability of the manager to delegate responsibility: the greater the ability to delegate, the wider the span of control
- Amount of interaction and feedback between the workers and the manager: the more feedback and interaction
required, the narrower the span of control
- Level of skill and motivation of the workers: the higher the skill level and motivation, the wider the span of control
Centralization: the degree to which formal authority is concentrated in one area or level of an organization
- In a highly centralized structure, top management makes most of the key decisions in the organization,
with very little input from lower-level employees
- Centralization lets top managers develop a broad view of operations and exercise tight ﬁnancial controls
Decentralization: the process of pushing decision-making authority down the organizational hierarchy
Decentralization is desirable when...
- the organization is very large
- The ﬁrm is in a dynamic environment where quick, local decisions must be made, as in many high-tech industries.
- Managers are willing to share power with their subordinates.
- Employees are willing and able to take more responsibility.
- The company is spread out geographically
Mechanistic organization (tall organizational structure): an organizational structure that is characterized by a
relatively high degree of job specialization, rigid departmentalization, many layers of management, narrow spans of
control, centralized decision making, and a long chain of command
Organic organization (ﬂat organizati