03 - DPB10023 PRINCIPLE OF MANAGEMENT CHAPTER 3 ORGANIZING

CHAPTER 3
ORGANIZING

3.0 Organizing 3.1.4 Apply six key elements in organizational structure
a. Work specialization
3.1 Demonstrate organizing in organization b. Departmentalization
3.1.1 Define organizing, organizational structure c. Authority and responsibility
and organizational design d. Span of control
3.1.2 Recognize the importance of organizing e. Centralization and Decentralization
3.1.3 Identify the steps in organizing process f. Formalization
a. Listing the job
b. b. Dividing the jobs 3.1.5 Discuss traditional organizational design
c. Establishing the departments a. Simple structure
d. Coordinating the jobs b. Functional structure
e. Performing evaluations and adjustment c. Divisional structure

3.1.6 Discuss contemporary organizational design
a. Team-structure
b. Matrix-project structure
c. Boundary less structure

3.1 Define organizing, organizational
structure and organizational design

ORGANIZING - is a process of forming an organizational structure- Robbins and Coulter(1996)

ORGANIZATIONAL STRUCTURE defines the hierarchy within an organization. It refers the
formal authority, power and roles in an organization.

ORGANIZATIONAL DESIGN is the process of developing an organizational structure. It is
actually a formal process of integrating people, information and technology.

3.1.2 RECOGNIZE THE IMPORTANCE OF ORGANIZING 4

1 2 3

• It shows the job • It shows duties and • It shows the
division or responsibilities of reporting relation
specialization each department in between managers
whereby a unit or an organization and subordinates
department bear a
specific job burden www.companyname.com
and responsibilities in
an organization

3.1.2 RECOGNIZE THE IMPORTANCE OF ORGANIZING 5

4 5 6

• It show the types of • It shows the grouping • It shows the
jobs performed in the of work segments in department or units
organization the organization at each management
level in the
organization
hierarchy

www.companyname.com

3.1.3 IDENTIFY THE STEPS IN ORGANIZING PROCESS 6

05

04 Performing evaluations and adjustments
03

02 Coordinating the jobs

01 Establishing the departments

Dividing the jobs

Listing the jobs

www.companyname.com

3.1.3 IDENTIFY THE STEPS IN ORGANIZING PROCESS 7

First Step Fifth Step

Listing the job-jobs Second Step Third Step Fourth Step Performing evaluations and
performed by the adjustments - Managers needs to
employees must be Establishing the departments - Coordinating the jobs - the evaluate the effectiveness of the
identified. Managers orgn will need to conduct mechanism of coordinating organizing process that was
have to determine departmentalization, which different jobs between implemented and make the
resources that will be refers to gathering employees departments is created as necessary adjustment towards
used by the employees. who would be performing the without job coordination, any changes that occur. This will
Mgrs. need to list the same tasks into one group. Ex: conflicts or confusion would help the organization to achieve
details of each job or production department, happen among employees from the set goals
activity that is to be accounting dept., administration different departments due to the
performed depart. overlapping of jobs. An effective
coordination mechanism enables
Dividing the jobs- job will be . these problems to be solved
allocated according to their using established rules,
abilities and skills. Job procedure and policies..
division must be conducted
in a fair and balanced way. If
an employee is given a
heavy workload or not
according to his
qualification, he might no be
able to perform his task
efficiently.

www.companyname.com

3.1.4 SIX KEY ELEMENTS IN ORGANIZATIONAL STRUCTURE

ORGANIZATIONAL WORK SPECIALIZATION
STRUCTURE

refers to the type of DEPARTMENTALIZATION
framework that a company

uses to distinguish power AUTHORITY AND RESPONSIBILITY
and authority, roles and

responsibilities and the SPAN OF CONTROL

manner in which CENTRALIZATION AND DECENTRALIZATION
information flows through

the organization. FORMALIZATIO

N

https://www.youtube.com/watch?v=wO_-MtWejRM

WORK A.WORK SPECIALIZATION
SPECIALIZATION
▪ Also called job specialization and division of labor.
1 ▪ Dividing work activities into separate job tasks.
▪ Individual employees “specialize” in doing part of an activity rather than the entire activity
in order to increase work output.
▪involves the division of each job into smaller jobs that is performed repeatedly.
▪Each employee will perform specific or specialized jobs according to their skills,
qualifications and abilities.
▪ Increase the production efficiency of employees.
▪With too much specialization, employees are isolated and do only a single, narrow and
boring job.

10

Important aspects in work specialization:

Job Depth

● Degree of freedom employees have in performing their jobs at the work place.
● Management established strict rules, provides detailed tasks and supervises the work

movement of an employee in detail ,the job depth of the employee is low.
● However, if there are set rules and employees can perform their jobs better without

feeling stressed and can master all aspects of their work, the job depth is high.

Job Scope
● Refers to the number of jobs that must be performed by the employees.
● Involves steps to overcome employees’ level of dissatisfaction by increasing or

widening the job scope of employees.
● Increasing the job scope increase an employees’ skills, and provides challenges,

motivates and free employees from control.

www.companyname.com

11

www.companyname.com

12

Job Design
- to overcome boredom and dissatisfaction

Job Enlargement

● Refers to the number of employees, the different jobs performed by employees and
the frequency of jobs performed by the employees.

● As number and frequency of jobs reduces, the job scope is narrowed.
● As number and frequency of jobs increases, the job scope is enlarged.

Job Enrichment
● Increases job depth, the degree to which individuals plan and control their work.
● Provide opportunity to make decisions and improve themselves.
● Employees who are given challenging jobs and bigger responsibilities tend to work

harder.

www.companyname.com

13

Job Rotation
● The transfer of employees to another department within a similar job scope.
● Aims to reduce boredom and provides opportunities to learn various skills.

Job Simplification
● Have a small number of narrow activities.
● Jobs are simple and repetitive.
● Cause boredom, low job satisfaction, absenteeism, turnover.

www.companyname.com

DEPARTMENTALIZATION B. DEPARTMENTALIZATION

2 Definition:
How jobs are grouped together

Functional Departmentalization
Definition: Grouping activities by functions performed

DEPARTMENTALIZATION Product Departmentalization
Definition: Grouping activities by major product areas
2

DEPARTMENTALIZATION Product Departmentalization
Definition: Grouping activities by major product areas
2

DEPARTMENTALIZATION Customer Departmentalization
Definition: Grouping activities by type of customer/ customer
2 segments

DEPARTMENTALIZATION Geographic Departmentalization
Definition: Grouping activities on the basis of
2 geography/territory/location

DEPARTMENTALIZATION B. DEPARTMENTALIZATION

2 Process Departmentalization
Definition: Grouping activities on the basis of work process or work
flow

AUTHORITY AND C. AUTHORITY AND RESPONSIBILITY
RESPONSIBILITY
❑ Authority is the legal and formal right to make decisions, carry out
3 actions and direct others in matters related to the duties and goals
of a position.

❑ It refers to the rights inherent in a managerial position to tell people
what to do and to expect them to do it.

❑ Managers in the chain of command had authority to do their job of
coordinating and overseeing the work of others.

❑ Authority could be delegated downward to lower-level managers,
giving them certain rights while also prescribing certain limits within
which to operate.

❑ Responsibility is an obligation to perform assigned duties.
❑ Employees should be held accountable for their performance!
❑ Assigning work authority without responsibility and

accountability can create opportunities for abuse.

AUTHORITY AND C. AUTHORITY AND RESPONSIBILITY
RESPONSIBILITY
Chain of Command and Line Authority
3

III. AUTHORITY AND RESPONSIBILITY

AUTHORITY AND LINE AUTHORITY: STAFF AUTHORITY:
RESPONSIBILITY
Authority that entitles a Positions with some authority
3 manager to direct the work that have been created to
of an employee support, assist, and advise
those holding line authority

UNITY OF COMMAND

The management principle that each person
should report to only one manager

C. AUTHORITY AND RESPONSIBILITY

AUTHORITY AND
RESPONSIBILITY

3

D. SPAN/ LOCUS OF CONTROL 24

SPAN/LOCUS ❖ The number of employees a manager can efficiently and
OF CONTROL effectively manage.

4 ❖ The number of subordinates who report directly to a manager or
supervisor.

❖ Influences the number of management levels in an organization.
❖ A high or narrow span will have more management levels,

suitable for large organizations.
❖ A low or wide span will have fewer management levels.
❖ Managers are beginning to recognize that they can handle wider

span when employees know their jobs well and when those
employees understand organizational processes.
❖ Managers with well-trained and experienced employees can
function well with a wider span.

www.companyname.com

D. SPAN/LOCUS OF CONTROL 25

SPAN/LOCUS
OF CONTROL

4

NARROW SPAN WIDE SPAN

www.companyname.com

E. CENTRALIZATION AND DECENTRELIZATION

5 Centralization Decentralization
The degree to which lower-level
The degree to which decision making is employees provide input or actually
concentrated at upper levels of the organization. make decisions.

All subjects and actions at the lower level are subject A systematic delegation of authority at
to the approval of top management. all levels of management and in all of
the organization.
No distribution of power to subordinates.

Involves the distribution of power to
subordinates.

Authority in retained by the top
management for taking major
decisions and framing policies
concerning the whole concern. Rest of
the authority may be delegated to the
middle level and lower level of
management.

E. CENTRALIZATION AND DECENTRELIZATION

5

Centralization 28

www.companyname.com 28

Decentralization 29

www.companyname.com 29

F. FORMALIZATION

FORMALIZATION

Definition:
6 Formalization is the extent to which an organization’s policies, procedures, job

descriptions, and rules are written and explicitly articulated .

An advantage of formalization is that it makes employee behavior more predictable ; this
leads to consistency of behavior.

Where formalization is high, employees have little discretion over what’s done, when it’s
done, and how it’s done.

Where formalization is low, employees have more discretion in how they do their work.

A high degree of formalization may actually lead to:
1. Reduced innovativeness because employees are used to behaving in a certain
manner
2. Reduced motivation and job satisfaction
3. Slower pace of decision making

F. FORMALIZATION

FORMALIZATION

6 Formalization helps vertical coordination because it

specifies the expected behaviors of individuals through:
a) Policies – general guidelines for employee’s operation
b) Procedures – spell out actions to be taken under

recurring circumstances
c) Rules – specify what should or should not be done in a

particular situation
d) Job description – details a particular job’s tasks and

activities

3.1.5 TRADITIONAL ORGANIZATIONAL 32

DESIGN

Organizational design is the process by which managers assess the tasks, functions and goals
of the business, allowing them to make decisions about how to group people together to best
and most efficiently achieve their objectives.
To give you a better understanding of the organizational design concept, this lesson will define and discuss
the first three designs, also known as traditional organizational designs,

1 2 3
SIMPLE STRUCTURE
FUNCTIONAL STRUCTURE DIVISIONAL STRUCTURE

https://www.youtube.com/watch?v=zUd0UNHyy60

www.companyname.com

3.1.4 TRADITIONAL ORGANIZATIONAL 1 33

DESIGN SIMPLE STRUCTURE

Simple structure is a basic organizational Simple Structure
design structure with low
departmentalization, little work specialization, ● Basic structure
wide spans of control, centralized authority ● Low departmentalization
(typically the owner has most of the power) ● Little work specialization
and little formalization or rules that govern
operation. ● Wide span of control
● Low formalization
Organizations that use a simple structure are ● Flat structure
typically flat, in that there are not many ● Centralized authority
hierarchical levels.

Used by small organizations.

www.companyname.com

3.1.5 TRADITIONAL ORGANIZATIONAL DESIGN 1 34

SIMPLE STRUCTURE

www.companyname.com

.1.5 TRADITIONAL ORGANIZATIONAL DESIGN 2 35

THE FUNCTIONAL STRUCTURE FUNCTIONAL STRUCTURE

Focuses on practical specialization whereby similar or related occupational specialties are grouped
together (also referred to as departmentalization).

Departmentalization groups workers with similar job roles into work units based on a product or

service, activities performed by employees, level of skill or expertise, types of customers or
resources

www.companyname.com

3.1.5 TRADITIONAL ORGANIZATIONAL 2 36
DESIGN
FUNCTIONAL STRUCTURE

www.companyname.com

37

www.companyname.com

3.1.5 TRADITIONAL ORGANIZATIONAL DESIGN 3 38

DIVISIONAL DESIGN STRUCTURE DIVISIONAL STRUCTURE

Gives a larger company the capacity to separate large sections of the business into semi-
autonomous units or divisions.
These groups are self-managed and focused on a narrow aspect of the business with their
own goals to accomplish.
Eg: Sunway Group - Real Estate, Construction, Educational, Healthcare, Mall, Hospitality,
Leisure, Digital, Quarry etc
Berjaya Group - Property Investment and Development, Hotel, Resort and Recreation,
Food and Beverages, Motor Trading and Distribution, Education etc

www.companyname.com

3 39

DIVISIONAL STRUCTURE

3.1.5 TRADITIONAL
ORGANIZATIONAL

DESIGN

www.companyname.com

40

www.companyname.com

3.1.6 CONTEMPORARY ORGANIZATIONAL DESIGN 41

1 2 3

TEAM-STRUCTURE MATRIX-PROJECT BOUNDARY LESS
STRUCTURE STRUCTURE

www.companyname.com

3.1.6 CONTEMPORARY ORGANIZATIONAL 1 42
DESIGN
TEAM-STRUCTURE

A team structure is a design in which an organization is
made up of work teams that perform the organization’s
work.
The employee teams design and do work in the way they
think is best.
In a team structured organization there is no hierarchy nor
chain of command.
The teams are held responsible for all work performance
results in their respective areas.

www.companyname.com

3.1.6 CONTEMPORARY 2 43
ORGANIZATIONAL DESIGN
MATRIX-PROJECT
STRUCTURE

It is a combination of the functional and divisional
structures.
It operates in a horizontal and vertical organizational
structure whereby the employees have dual reporting
relationships.
Also known as Multi Commands System.
In this structure there are two managers, the project
manager and the department or functional manager.

www.companyname.com

MATRIX ORGANIZATION STRUCTURE 2 44

MATRIX-PROJECT
STRUCTURE

www.companyname.com

45

www.companyname.com

3.1.6 CONTEMPORARY 3 46
ORGANIZATIONAL DESIGN
BOUNDARY LESS
STRUCTURE

A boundary less organization is one in which its design is not defined by, or limited
to, the horizontal, vertical, or external boundaries imposed by a predefined
structure. In other words it is an unstructured design.
This structure is much more flexible because there is no boundaries to deal with such
as chain of command, departmentalization, and organizational hierarchy.
Instead of having departments, companies have used the team approach.
In order to eliminate boundaries managers may use virtual or network organizational
structures.

www.companyname.com

3.1.6 CONTEMPORARY 3 47
ORGANIZATIONAL DESIGN
BOUNDARY LESS
STRUCTURE

A virtual organization may be described as a network of independent firms
that join together to produce a service or product, using information and
communication technology (ICT) to support their work. Work is
outsourced when necessary. There are a small number of permanent
employees, however specialists are hired when a situation arises. The typical
kinds of work done involves research, sales, marketing and social media
development, i.e. tasks that can be done remotely using a computer and
online access.
eg: Google, Facebook, Microswowfwt.companyname.com

3.1.6 CONTEMPORARY 3 48
ORGANIZATIONAL DESIGN
BOUNDARY LESS
STRUCTURE

A network organization refers to a system of delegating and coordinating
tasks among a number of people, teams, units or organizations with a
common goal of producing a specific product or service. This network
organizational structure is sometimes called a modular organization
especially in manufacturing organizations. This structural approach allows
organizations to concentrate on what they do best and to contract out
other work that they do not have the capability or expertise.

www.companyname.com

49

THE END…

Noor Rahayu binti Mohd Salleh

www.companyname.com