Chapter#02 Organizing

1. COURSE INSTRUCTOR : PROF. DR. SHAHAB KHUSHNOOD Chapter#02 Organizing Lecture No. 02 Course: Engineering Management MED DEPARTMENT, U.E.T TAXILA

2. To organize a company which can function effectively with minimum expenses requires inputs from various diverse areas.

3. Organizing It is the process of establishing a structure for the organization so that helps the manpower of the organization to function systematically to fulfill the organizational goals effectively.

4. Guidelines for Planning an Organization • The person who delegates responsibility is accountable. • Design positions in such a way that both functional and managing duties are separate. • Every element of organization should fulfill its own objectives as well as that of its parent enterprise. • Delegation of authority and responsibility must be as close as possible to the point of action for obtaining useful polices and decisions.

5. Guidelines for Planning an Organization (cont…) • From top to bottom of the organization the line of responsibility and authority must be clear. • The person in the organization must receive orders from only one higher authority. • the organization should be structured so that levels of management are minimum. (reduce the complexity in interlinking of management levels).

6. Steps To Design An Organizational Structure STEP-A: Divide the company into major sub group, which includes activities which are important for attaining the objectives. STEP-B: Separate line and staff activities. STEP-C: Subdivide the major sub units into staff subunits for the creation of line of command. (Authority relationships among the positions) STEP-D: This step includes designing and delegating the tasks.

7. Steps To Design An Organizational Structure

8. Why Organizational Chart is Important……? • It assigns responsibilities to individuals. • It helps to identify poor or strong control. • It makes the management functions simpler. • It serves as a framework for budgeting and scheduling. • It outlines fundamental relationships.

9. Why Organizational Chart is Important……? (cont..) • It helps to give sense of security. • It serves as a basis for directives. • It outlines basic authority. • It helps to improve communication channels. • It serves as a reference document for various purposes.

10. Fundamental Relationship in Organiza--tionalStructures of Companies In organizational structure three relationships are used: 1-Line 2- Group 3-Staff

11. 1-Line • This is known as the line or direct authority. • Line is that type of authority flows from superior X to subordinate Y and from Y to subordinate Z.

12. 2-Group • Group is that situation in which number of subordinates report to a single authority.

13. 3- Staff • The purpose of advisory staff is to help the line management to carry out the organizational objectives most effectively.

14. Span of Control It basically decides that how many individuals should report to a superior (manager) so he or she manages them effectively.

15. Span of Control (cont…) Following factors play important role for deciding the span of control. • Ability of manager to get along with his or her subordinates. • Capacity of the manager to comprehend quickly. • Loyalties of subordinates. • Respect of subordinates. • Frequency and time impact of superior-subordinate relationships.(Important Factor)

16. Span of Control (cont…) Factors Effecting Superior-Subordinate Relationship: • Communication methods effectiveness. • Proper qualification of individual. • Clarity in authority delegation. • Degree of personal touch. • Clarity in the job plans for subordinates. • Rate of changes in organization. • Degree of utilization of objective standards.

17. Lockheed’s Span of Control(Model by Lockheed Missile and Space Company) Model makes use of following factors to terminate the optimum span of control: • Geographical reporting location of subordinate to a manager. • Nature of work performed and department managed. • Similarity of functions performed by subordinates. • Organizational help given to manager.

18. Lockheed’s Span of Control (cont…) • Coordination required. • Managers and their organization units planning, functions, importance, complexity and time requirements. • Degree of direction and control needed by subordinates.

19. Delegation • It is assigning of responsibility and authority to subordinates by an executive. • Delegation of authority is important because superiors work through others.

20. Obstacles to Delegation 1- Managerial Obstacles 2- Subordinate’s Obstacles

21. Obstacles to Delegation (cont…) 1-Managerial Obstacles: William H. Newman gives following obstacles faced by managers: (Managerial Deficiencies) • Poor confidence on subordinates. • Fear of risk. • False beliefs that they can do a better job than their subordinates. • Lack of appropriate control measures. • Lack of ability to direct.

22. Obstacles to Delegation (cont…) 2-Subordinate’s Obstacles: William H. Newman gives reasons for delegations difficulties from subordinate side. • Lack of facilities. • Lack of self confidence. • Subordinate’s reluctance to sort out the problem by himself. • No worth incentives for subordinate’s extra responsibility. • Fear of mistakes. • Subordinate’s heavy work load which is outside of his limits.

23. Useful Guidelines To Delegate Authority Effectively Kelly presented the following guidelines: • Aim of understanding of the subordinate. • Decompose the job into various separate tasks. • Superior should be aware of the fact that he can delegate authority but not responsibility. *Always manager is responsible for any action of his subordinate….! • Select only those subordinates which are suitable for that delegated task.

24. Useful Guidelines To Delegate Authority Effectively (cont…) • Mangers should make certain that individuals have been given authority to perform their tasks effectively. • Outline the responsibility standards. • Setup such standards for control which are clear to the subordinate. • Periodically monitor the progress made.

25. Centralization And Decentralization Of Organizations In the centralized organization the upper managements has the authority to make the critical decisions .On the other hand in the decentralized organizations the authority is distributed to lower levels of management ladder.

26. Determining Factors For The Decentra--lization Of Authority Degrees of decentralization of authority are as follows • Thinking philosophy of management • Availability of properly trained managers which are needed to make decentralized decisions • Availability of control techniques which will help to monitor decisions made at the lower levels • Influences from external forces such as income tax policies, unions and government controls • Dynamic nature of business • Policy uniformity and costs of decisions • Size and history of company • Desire of individuals and groups for independence

27. Benefits Of Centralization And Decentralization Centralization: • It helps to reduce the number of undesirable decisions by less experienced executives • It helps to reduce the need of experienced subordinate managers as they may be required in the case of decentralized organization • It helps to reduce the cost of staffing because fewer competent managers can handle the jobs and the requirement of staff • IT helps to bring the important decisions makers close to each other, which in turn simplifies the coordination of their efforts • It helps to eliminate duplication of work • It helps to improve control over specialized functions • It helps to make centralized staff expertise more efficient and simpler to use

28. Benefits Of Centralization And Decentralization Decentralization: • It helps to ensure that the decisions are made by those managers who have the best experience of local conditions which are important for such decisions • It helps to make the overall organization stronger by facilitating the personal development of individuals • It helps to stimulate initiative and identification with the enterprise • It helps to creating better feelings of satisfaction among competent individuals relative to centralization

29. Methods Of Organization • Organization By Function This methods calls for Separating work according to discipline or subject ,in addition to performing all similar work within the framework of one unit.

30. A typical example of application of such a method is “an engineering manager being responsible to supervise all engineering work”.

31. Organization By Function (cont…) Advantages: • It eliminates duplication of facilities • It helps to permit technical specialization • It helps to make the supervision of the group easier because of group homogeneity • It helps to distribute work load evenly • It helps to produce more uniform products • It helps to have consistent policy Disadvantages: • For cross-discipline development work this approach is ot that beneficial • It makes it difficult to shift personnel • It slows the work flow

32. Methods Of Organization (cont…) 2. Organization by product • In discretization of a company each division of the company is assigned responsibility for one particular product.

33. Organization by product (cont…) Advantages: • Develop teamwork more easily • Profits responsibility is placed at the individual level • To develop better coordination of functional activities • For general manager it serves as a measureable training ground • To place better attention on the product Disadvantages: • It limits the contacts between persons of same policy • It increases the need for general managers • It makes it difficult to maintain central services economically

34. 3. Organization by territory This is used in those situations where the companies are physically dispersed. This approach calls for grouping of all activities in a specified territory and then appointing the manager to look after such a groups.

35. 3.Organization By Territory (cont...) Advantages: • To take full advantage of local operations economies • To upgrade regional coordination • It is useful in placing emphasis on local conditions • Useful in placing responsibility at a lower organizational level Disadvantages: • It makes it difficult to maintain economical central services • It increases the need for general managers

36. 4. Organization By Project: Project organization is a non-permanent organizational structure established to fulfil a certain objective. Once the project is accomplished, the persons associated with the project are either transferred to a new project or sent back to their original or permanent department

37. 4. Organization By Project (cont…) • Advantages: • To focus attention on a single project • Serves as a framework for team effort • To fulfil project requirements, the people assigned to the project can be changed quickly • To obtain better coordination of large projects • To encourage creativity because of the tendency to regroup people on a continuing basis and because of instable nature of the project organization • To increase the efficiency of work flow • It serves as a useful tool for specialization by product • To make more specific the accountability and responsibility • Disadvantages: • Inconsistent policy • Duplication in work facilities • Less uniform product • Discourages technical specialization

38. 5. Matrix Organization In the matrix organization the project manpower is a loan to project manager. Furthermore, the project manpower reports to both the project managers and the managers of the “home” Functional departments, in other words, to the managers of these departments to whom they are permanently assigned. Advantages: • Efficient in making decisions • Defined authority and responsibility • Provides a better control • Increases the role of middle management Disadvantages: • It may produce surplus skills in the event of smaller projects • It may be misapplied to projects which do not require it.

39. Functions Of An Engineering Department The main functions of engineering department are • Research and analysis • Liaison • Administrative • Product development • Services and drafting Research And Analysis: The functions involved in this group are patent and literature search, search for new ideas, finding solutions to basic problems, test and evaluation calculation and computing analytical services, etc. Liaison: • The function of this category is concerned about liaison with customers, other departments, etc. Administrative: • The functions such as budgeting, pricing, duty assignments, training, salary review, promotion, and procurement and progress reports are the components of this category.

40. Functions Of An Engineering Department (Cont...) Product Development: • The components of this category are preparing and analysing proposals, carrying out search for new products, standardizing and materials, designing new products, Redesigning and so on. Services And Drafting: • This category is composed of functions such as release of drawings and prints, publications, model shop, drafting, etc.