Chapter 10 Fundamentals of Organizing

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Human Relations
Organizational Structure
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Why be concerned with organizational structure?
Human Relations

• Organizing follows strategy. Strategy defines
  what to do organizing defines how to do it.

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Organizing
Human Relations

• Tasks are subdivided into individual jobs.
• Division of labor concept.
• Employees perform only the tasks relevant to
  their specialized function.
• Jobs tend to be small, but they can be performed
  efficiently.

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Organization Structure
Human Relations

• Defines
• how tasks are divided, resources are deployed,
  and departments are coordinated.
• the set of formal tasks.
• the formal reporting relationships.
• the design of systems to ensure effective
  coordination of employees across departments.

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Four Points About the Organization Chart
Human Relations
Visual representation
Set of formal tasks
Formal reporting relationships
Framework for vertical control
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Chain of Command
Human Relations

• Unbroken line of authority that links all persons
  in an organization.
• Shows who reports to whom.
• Associated with two underlying principles.
• - Unity of Command everyone reports to just
  one person.
• - Line of Authority is clearly defined.

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Authority
Human Relations

• Formal and legitimate right of a manager to make
  decisions, issue orders, and to allocate
  resources to achieve organizationally desired
  outcomes.
• Authority is distinguished by three
  characteristics
• Authority is vested in organizational positions,
  not people.
• Authority is accepted by subordinates.
• Authority flows down the vertical hierarchy.

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Responsibility
Human Relations

• The duty to perform the task or activity an
  employee has been assigned.
• Managers need authority commensurate with
  responsibility.

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Accountability
Human Relations

• Mechanism through which authority and
  responsibility are brought into alignment.
• People are subject to reporting and justifying
  task outcomes to those above them in the chain of
  command.
• Can be built into the organization structure.

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Delegation
Human Relations
The process managers use to transfer authority
and responsibility.
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The organization encourages managers to delegate
authority to the lowest possible level.
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Span of Management
Human Relations

• The number of employees reporting to a
  supervisor.
• Traditional view, seven or so per manager.
• Many organizations today, 30 or more per manager.
• Generally if supervisors must be closely involved
  with employees, span should be small.

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Factors Associated withLarge Spans of Control
Human Relations

• Work is stable or routine.
• Similar task is performed by everyone.
• A single location.
• Employees are highly trained.
• Rules and procedures are available.
• Support systems and personnel are available for
  supervisor.
• Little time is required in nonsupervisory
  activities.
• Personal preferences and styles of management
  favor a large span.

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Tall versus Flat Structure
Human Relations

• Span of control used in an organization
  determines whether the structure is tall or flat.
• Tall structure has a narrow span and more
  hierarchical levels.
• Flat structure has a wide span, is horizontally
  dispersed and fewer hierarchical levels.
• The trend has been toward wider spans of control.

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Tall vs. Flat Structure
Human Relations
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Centralization and Decentralization
Human Relations

• The hierarchical level at which decisions are
  made.

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Decentralization
Human Relations

• Facilities at different locations.
• Decision authority is pushed down the chain of
  command to lower levels.

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Decentralization Tends to---
Human Relations

• Make greater use of human resources.
• Reduce burdens of top managers.
• Cause decisions to be made close to the action.
• Permit rapid response to changes.

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Centralization versus Decentralization
Human Relations

• Greater change and uncertainty in the environment
  are usually associated with decentralization.
• The amount of centralization or decentralization
  should fit the firms strategy.
• In times of crisis or risk of company failure,
  authority may be centralized at the top.

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Factors that Influence Centralization/Decentraliza
tion
Human Relations

• Amount of change and uncertainty.
• Corporate culture.
• Size of organization.
• Cost and risk of failure.
• Efficiency of communication and control systems.

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Downward Communication

• Messages sent from top management down to
  subordinates.
• Most familiar and obvious flow of formal
  communication.
• Encompasses the following
• 1. Implementation of goals and strategies.
• 2. Job instructions and rationale.
• 3. Procedures and practices.
• 4. Performance feedback.
• 5. Indoctrination.

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Upward Communication
Human Relations

• Messages that flow from the lower to the higher
  levels in the organizations.
• Five types of information communicated upward
• 1. Problems and exceptions.
• 2. Suggestions for improvement.
• 3. Performance reports.
• 4. Grievances and disputes.
• 5. Financial and accounting information.

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Horizontal Communication
Human Relations

• Lateral or diagonal exchange of messages among
  peers or coworkers.
• Horizontal communications three categories
• 1. Intradepartmental problem solving.
• 2. Interdepartmental coordination.
• 3. Change initiatives and improvements.

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The Grapevine
Human Relations

• Will always exists in organizations.
• Used to fill in information gaps.
• Tends to be more active during periods of change.
• About 80 of topics are business related.
• About 70-90 of details of grapevine are
  accurate.

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Approaches To Structural DesignSlide 1 of 2
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Approaches To Structural DesignSlide 2 of 2
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Matrix Approach
Human Relations

• Functional and divisional chains of command
  simultaneously.
• Dual lines of authority.
• Functional hierarchy of authority runs
  vertically.
• Divisional hierarchy runs laterally.
• Violates the unity of command concept.

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Network Approach
Human Relations

• Organization divides major functions into
  separate companies brokered by a small
  headquarters organization.
• "Where is the organization?"
• Especially appropriate for international
  operations.
• Held together with phones, faxes, and other
  electronic technology.

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Organization Growth
Human Relations

• As organizations grow and evolve two things
  happen
• New positions and departments are added.
• Senior managers have to find a way to tie all
  departments together.

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Evolution of Organization Structures
Human Relations