Basic Elements of Organizing

1. Basic Elements of Organizing

2. In this chapter you will learn Definition of Organizing Definition of organizational structure The Elements of Organizing 1. Designing Jobs Job Specialization Benefits and Limitations of Specialization Alternatives to Specialization 2. Grouping Jobs: Departmentalization Rationale Common Bases and advantage and disadvantages of each base 3. Establishing Reporting Relationships Chain of Command Narrow Versus Wide Spans Tall Versus Flat Organizations Determining the Appropriate SOC 4. Distributing Authority The Delegation Process Decentralization and Centralization 5. Coordinating Activities The Need for Coordination Structural Coordination Techniques 6. Differentiating Between Positions Differences Between Line and Staff Administrative Intensity 11–2

3. The Elements Organizing • Organizing • Deciding how to best group organizational activities and resources. • Organization Structure • The set of building blocks that can be used to configure an organization.

4. Hierarchical Organisation In a hierarchical organisation employees are ranked at various levels within the organisation, each level is one above the other. At each stage in the chain, one person has a number of workers directly under them, within their span of control.

5. Macquarie's six business Groups Macquarie's organizational approach is designed to be non-hierarchical.Management of the organization is largely delegated to the Executive Committee, a central group comprising the Chairman, Managing Director, Deputy Managing Director, Head of Risk Management and heads of the Bank's six major business Groups. Within overall guidelines and specific parameters set by the Board and Executive Committee, the six business Groups have substantial discretion in the conduct of their various businesses. Business activities are carried out by Divisions, which focus on particular products and markets. Outside the major business Groups is a specialist business, Macquarie Direct Investment, which is responsible for managing the Bank's private equity activities. Macquarie Bank - Organisation Structure

6. Basic elements organizing • Job Designing • Departmentalization • Reporting Relationships • Distribution of Authority • Coordination • Differentiation

7. 1-Job Design 2- Departmentalization 4- Distributing Authority 3- Reporting Relationship 5- Coordination 6- Differentiation Basic Elements of Organizing

8. Designing Jobs • What is ‘Designing Jobs’? • How would you design jobs for an entire organization? • Define ‘Job Specialization - JS’? • What are the benefits of JS? • What are the limitations of JS? • Define the following terms: • Job Rotation • Job Enlargement • Job Enrichment • Team work • Job- Characteristics Approach

9. Job Design Determination of an individual’s work-related responsibilities.

10. Job Specialization (Division of Labor) The degree to which the overall task of the organization is broken down and divided into smallercomponent parts

11. How many tasks does it take to make a nail? 18 How many nails can one worker make in a day, if he/she is doing all the tasks? 20 How many nails can be made by 20 workers? 20 * 20 = 400 nails How many steps does it take to make a nail? 18 How many nails can one worker process in a day, if he/she is specialized in one task one? 5000 How many nails by 20 workers? 20 * 5000 = 100,000 nails Making a nail dilemma?

12. Making a pin (nail) requires 18 tasks 1 worker doing all 18 tasks might make 20 pins (nails) a day. 20 workers = (20 x 20) = 400 pins ______________________________ With specialization: 20 workers make 100,000 pins a day. 1 worker = 5,000 pins 20 pins vs. 5,000 pins per worker Adam Smith’s Exampleof Job Specialization

13. + & - Job Specialization Benefits • Proficient • Transfer time • Specialized equipment • Replacement Limitations • Boredom and dissatisfaction • Anticipated benefits do not always occur.

14. Alternatives to Job Specialization • Job Rotation • Job Enlargement • Job Enrichment • Team Work • Job Characteristics Approach

15. Classify the following into: Work Teams, Job Enrichment, Job Enlargement and Job Rotation. • An operator has four different jobs. He spends three weeks on each of these jobs and then starts the cycle over again with the first job of the operation. • Sulma’s job is a data entry operator. Her job has been redesigned and now she also has a higher level responsibility in the PR. Now she is also responsible to reply customers complaints. • Fatima is a typist for the sales section. Her job has been redesigned to include typing for the advertising section as well. • Ahmed, Sulman and Ali are working as a group. They have the full autonomy to design the work system that they will use to perform an interrelated set of tasks.

16. Alternatives to Specialization • Job Rotation • Systematically moving employees from one job to another in an attempt to reduce employee boredom. Most frequent use today is as a training device for skills and flexibility. • Job Enlargement • An increase in the total number of tasks workers perform. • Job Enrichment • Increasing both the number of tasks the worker does and the control the worker has over the job.

17. Alternatives to JS • Work Teams • An alternative to job specialization that allows the entire group to design the work system it will use to perform an interrelated set of tasks.

18. Skill variety Task identity Task significance Autonomy Feedback The number of tasks a person does in a job. the extent to which the worker does a complete or identifiable portion of the total job the perceived importance of the task the degree of control the worker has over how the work is performed the extent to which the worker knows how well the job is being performed. Alternatives to Specialization: Job Characteristics Approach

19. Assess the jobs below using the dimensions of the job characteristics approach * Assembly line operator responsible to put lids on the moving jam jars* A dentist

20. Assess the jobs below using the dimensions of the job characteristics approach * Assembly line operator responsible to put lids on the moving jars

21. Assess the jobs below using the dimensions of the job characteristics approach * A dentist

22. The dentist will experience meaningfulness of his work because his job includes High skills variety High task identity High task significance High Autonomy High Feedback The dentist will experience that he/she is responsible for the work done because his/her job is designed with High skills variety High task identity High task significance High Autonomy High Feedback The dentist will experience that he/she has knowledge of the actual results of his/her activities because his/her job is designed with High skills variety High task identity High task significance High Autonomy High Feedback Which of the following job dimensions will lead the dentist to experience the specified psychological state

23. You have been asked to design jobs for the following job candidates. Use the Job Characteristics Approach to design the jobs. Jassim is highly motivated, exercises self control, fast learner ,independent and is a risk taker. He is always on the look for new challenges. Abullah is a reserved person, who likes to be told what to do and strictly follows the orders. He is risk averse. Whom would you describe as a person who is eager to grow. In other words who has strong desire to develop, and expand his capabilities. (a) Jassim (b) Abullah Would you design a job for Jassim that is high on the five core dimensions of the job characteristics approach. (a) Yes (b) No Would it be right to describe Jassim as person who has high growth needs. (a) Yes (b) No Would you describe the job that you would design for Jassim as (a) strong on all five dimensions of the job characteristics approach (b) Low on all five dimensions of the job characteristics approach Matching the person & the job

24. Critical Core job Personal and psychological dimensions work outcomes states • Skill variety Experienced • High internal • Task identity meaningfulness work motivation • Task significance of the work • High-quality work performance Experienced responsibility • Autonomy for outcomes of the work • High satisfaction with the work Knowledge of the • Feedback • Low absenteeism actual results of and turnover work activities Employee growth-need strength Job Characteristics Approach

25. Grouping Jobs: Departmentalization • Departmentalization • The process of grouping jobs according to some logical arrangement. • Rationale for Departmentalization • Organizational growth exceeds the owner-manager’s capacity to personally supervise all of the organization. • Additional managers are employed and assigned specific employees to supervise.

26. Building Block 2: Grouping Jobs: Departmentalization What is Departmentalization? From the facts below, draw an organization chart for Apex Computers. Specify the departmentalization bases for each hierarchical level. Apex computers has two divisions for its main products, Computers and software. Manufacturing, Finance an Marketing are the departments in the Computers division. The Software division is has Marketing, Finance and Design departments. The Design department has two sections, Saudi Arabia and Bahrain. The Manufacturing Department has two sections, UEA and Oman. The Marketing Department in the Computer Division has two sections, Industrial Sales and Consumer sales. The Consumer Sales section has five units, Saudi Arabia, UAE, Bahrain, Oman and Qatar. 11–26

27. 11–27

28. President Software Computers Manufac- turing Finance Marketing Marketing Finance Design Saudi Arabia UAE Oman Bahrain Industrial sales Consumer sales Saudi Arabia UAE Oman Bahrain Qatar Bases for Departmentalization: Apex Computers

29. Advantages experts. Supervision is facilitated Coordination Disadvantages slow and bureaucratic. narrow focus Accountability Functional Departmentalization • Is the grouping of jobs involving the same or similar activities.

30. Advantages All in one Speed and effectiveness Performance assessment Disadvantages Product focus. Administrative costs Product Departmentalization Form • Product Departmentalization • The grouping of activities around products or product groups.

31. Customer Departmentalization Grouping activities to respond to and interact with specific customers and customer groups. Advantage Skilled specialists can deal with unique customers orcustomer groups. Disadvantage A large administrative staff is needed to integrate activities of various departments. Customer Departmentalization

32. Location Departmentalization • Location Departmentalization • The grouping of jobs on the basis of defined geographic sites or areas. • Advantage • Quick response • Disadvantage • Large administrative

33. Advantages and Disadvantages of Each Departmentalization Base 11–33

34. Other Forms of Departmentalization: • Time • Sequence

35. Other Considerations • Sometimes departments are called something different, such as: • Division. • Units. • Section. • Bureaus.

36. Establishing Reporting Relationships • Chain of Command • A clear and distinct line of authority among the positions in an organization. • Unity of Command • Each person within an organization must have a clear reporting relationship to one and only one boss. • Scalar Principle • A clear and unbroken line of authority must extend from the bottom to the top of the organization.

37. Chain of Command Unity of Command – one and only one boss Scalar Principal – clear and unbroken line of authority extending from the bottom to the top 02-05-I200-SL

38. Span of Control (SOC) Number of people who report to a particular manager 02-12-I200-SL

39. Narrow Span of control Span of Control 02-12-I200-SL

40. Narrow - Effective span of control Narrow - Effective span of control Narrow - Effective span of control Span of Control Wide Span of Control 02-12-I200-SL

41. Optimum Span of Control ? 02-13-I200-SL

42. A. V. Graicunas Subordinate interactions I = N(2N/2 + N - 1) Ralph Davis Operative span for lower-level managers up to 30 workers. Executive span for middle and top managers at 3 to 9. Al-Qosaibi Refer to article ? What is the optimum SOC

44. Tall Organization President Flat Organization President Tall Versus Flat Organizations

45. Tall Organizations expensive communication problems What type of SOC is associated with tall organization? Flat Organizations higher levels of employee morale and productivity Create more supervisory responsibility for managers due to wider spans of control. What type of SOC is associated with tall organization? Establishing Reporting Relationships:Tall versus Flat Organizations

46. Determining the Appropriate Span:Factors Influencing the Span of Management Table 11.1

47. Determining the Appropriate Span:Factors Influencing the Span of Management Table 11.1

48. Distributing Authority • Authority • Power that has been legitimized by the organization. • Delegation • The process by which managers assign a portion of their total workload to others. • Temporary • Reasons for Delegation • get more work done • development of subordinates

49. Step 1 Step 2 Step 3 Assigningresponsibility Grantingauthority Creatingaccountability Manager Manager Manager Manager Manager Subordinate Subordinate Subordinate Steps in the Delegation Process Figure 11.4

50. Step 1 Step 2 Step 3 Telling the subordinated to do the job Power Establishing Obligation Manager Manager Manager Manager Manager Subordinate Subordinate Subordinate Steps in the Delegation Process