IT 107 Organization and Management

HandOut #011

ORGANIZING
CONCEPT OF ORGANIZING Creating the structure and framework of the organization following a strategy, designing patterns of relationships and the hierarchy of authority appropriate to achieve the goals, assigning to the appropriate position the t4asks required to achieve the organization's objectives, along with the authority and responsibility for accomplishing those tasks, is the process of organizing. The broad task might be to staff the organization, manufacture the products, sell it, account for the money paid for the product, and invest the proceeds. Clearly, management will have to divide each of these broad tasks into many smaller jobs. The assigning of authority and responsibility for tasks often follows an organizational chart. The primary purpose of organization is to provide for the efficient and effective accomplishment of the goals and objectives of the enterprise. The goals and objectives established for an organization which are developed through the planning process serve as the basis of the organizing function. Organizing an organization: requires that managers establish patterns of relationships (structures, hierarchies) among people and other resources that work to produce an output or accomplish a common objective. is related to how work flows through the organization under guidance. involves assigning responsibilities through the division of labor and the coordination of the parts into cohesive whole. The coordination of effort requires the development of effective communications throughout the enterprise. requires the establishment of an authority structure that defines decision-making powers. involves staffing, i.e. recruiting, training, developing, and placing the right people to the right positions or assigning the right people to do the right tasks.

Managers organize as a natural extension of their planning efforts. Planning provides a framework for works - mission, objectives, strategies for accomplishing those objectives, and a hierarchy of strategic, tactical, and operational plans. Within this framework, management authority must be defined, work organized, and resources allocated. Organized human activity results from a logical division of labor and a system of coordination. Organizing has three dimensions: The organization itself has a form or configuration that describes the management hierarchy and formal channels of communications. Through the process of organizing, tasks are defined and individual jobs are structured. A philosophy of organization influences how coordination is achieved. WHY ORGANIZING IS IMPORTANT Effective organization of both human and material resources ultimately increases productivity. This is done through synergy - a process whereby an organization's members combine their efforts to collectively accomplish tasks that would far exceed the simple sum of their individual efforts. Synergy is achieved through the integration of specialized tasks. Specifically, effective organizing provides the following benefits: clarity of individual performance expectations and specialized tasks. division of work that avoids duplication, conflict, and misuse of resources, both material and human. a logical flow of work activities that can be comfortably performed by individual or groups. channels of communication that enhance decision making and control. coordinating mechanisms that ensure harmony among organization members engaged in diversified activities. focused efforts that relate to objectives logically and efficiently. appropriate authority structures with account ability to enhance planning and controlling throughout the organization. Effectiveness is achieving goals. Efficiency is doing things with minimum use of resources. Management effectiveness means doing the right things, whereas management efficiency implies doing things right. Efficiency is improved by using the most productive combinations of material and human resources. A leader is one who does the right things. The manager is one who does things right. DIVISION OF WORK

At the core of organization is the division of work. It means logically designing tasks and clarifying individual performance expectations. Division of work is the fundamental force in industrialization that describes how organizational work is to be accomplished. Organizations divide their labor into specialized tasks to improve productivity. They have done this throughout history. However, Adam Smith was the first to coin the term division of labor in The Wealth of Nations written in 1776. His famous example of making pins is worth repeating: One man draws out the wire, another straightens it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving a head; to make the head requires two or three distinct operations; to put it on is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the papers. Smith showed that ten specialists, each working on one task to complete a pin, produced 4,800 pins per day, but that when the same number of men worked individually to make a complete pin, they produced only 200 pins per day. Figure shows the task components and the derived specialized jobs for pin making in Adam Smith's time. Improved productivity of pin making resulted from task specialization, but several elements of organizing, taken for granted today, also evolved. Specialization is the planned division of work into individual tasks that can be repeated efficiently. The process of planning these tasks is called work simplification, which means breaking down work into its most common elements, such as Adam Smith's ten jobs for making a pin. As employees repeat a task, they become better at it. Using similar methods, machines, and materials over and over hones their abilities, and the work becomes standardized. Standardization means uniform work with predict able results. Managers must also be concerned with matching employees to tasks according to their abilities. Assigning tasks to individuals best suited for them enhances utilization and increases efficiency. In pin making, for example, one individual may be much better at grinding pin points than at packing. By becoming expert and then coordinating results with other experts, employees achieve excellence and productivity. POTENTIAL PROBLEMS OF SPECIALIZATION Alienation - boredom, fatigue, and emotional burnout can occur if the job is so dehumanized that people become mere biological counterparts to their machines. So while specialization is essential, excess specialization can create problems. These potential problems can take several forms. Employees may become so fatigued by monotonous work that any productivity gains achieved through specialization are cancelled out by absenteeism, resignations, strikes, and labor disputes. But productivity losses need not be so obvious. Employee may simply become alienated from their jobs, take longer breaks, become cynical about management, resist innovation, or become incapable of adapting to circumstances. Therefore, it is essential to organize individual jobs so that potential problems are minimized while the benefits of specialized tasks are maximized. This is called work design. SOME SOLUTIONS TO PROBLEMS OF SPECIALIZATION Work design is the process of structuring individual jobs, integrating them within work groups, and making work efficient and interesting. For example, managers at the Wait Disney World fill 1,000 different jobs with more than 25,000 full-time employees each year. They do it through a philosophy of organization that makes each person important. Walt Disney once said, "You, can dream, create design and build the most wonderful place in the world. But it requires people to make the dream a reality." He believed that if an organization was any thing, it was its people. Jobs are carefully designed for specialized work ranging from street sweepers on Main Street to actor playing Mickey Mouse or Pluto. But they are also made as interesting as possible. For example, all employees are expected to help define their own tasks, to bring individuality to each "role" and to make suggestions for improving their "performance." Every organization must design jobs and make them both productive and interesting. Although formalization of m1ork through specialization is essential, behavioral relationships must complement one another to ensure co-operation and enhance job satisfaction. The critical question is how to organize work without creating an organizational pathology of behavioral dysfunctions. Horizontal Job Specialization Horizontal job specialization results from dividing complicated tasks into simpler jobs. Adam Smith's example of pin manufacturing is the classic illustration of how the scope of a task us reduced by narrowing the breadth of workers' activities. Pin making was broken down into logical divisions of work and individual performance was sharply defined and standardized. The figure below shows how one task with six operations is divided into six individual tasks, each one coordinated with the others.

Vertical Job Specialization Vertical job specialization results from delegation of responsibilities for tasks and decisions to subordinates. Thus, the depth of a job becomes narrower as subordinates assume decision-making burdens previously shouldered by the superior. As organizations revolve from small entrepreneurial firms into large complex enterprises, new tasks emerge that require further subdivision of work.

Concepts of Job Enlargement and Job Enrichment Job Enlargement Job enlargement is the process of combining tasks to create a new job with broader activities. It is concerned with the breadth of work. Boredom and dissatisfaction are combated by adding more operations to a given task. Employees perform a wider range of tasks, but without vertical integration of decision making. Job enlargement is the antithesis of specialization. The goals are to reduce job boredom and mental fatigue, relieve stress, and make jobs more interesting for employees. Job enlargement does not expand a person's decision making authority, only the activities associated with the job.

Job Enrichment Job enrichment is the process of expanding a person's responsibilities so that the work becomes more challenging and satisfying. Specialized tasks are expanded in job depth to include greater decision-making responsibilities. Individual jobs are enriched by combining vertical relationships, so that machine operators monitor and correct their own mistakes, for example, instead of being monitored by inspectors and having their errors corrected by other operators. This gives employees greater autonomy for controlling their work and making decisions. They become more than workers as they share in decisions about how to perform tasks that should be accomplished. Balancing Specialization for Productivity Henry Mintzberg believes that job enlargement pays to the extent that the gains from better-motivated workers in a particular job offset the losses from less than optimal technical specialization." Jobs enlarged to extremes, however, can create problems. Employees can become over loaded, with the result that they perform poorly or quit. Individuals vary in their abilities and preferences to handle enlarged jobs. Some people prefer the clarity of simple tasks, whereas others like diversification. Striking the right balance becomes with job enrichment because employees will try to avoid decision making, preferring instead to work in less demanding position, while others will enjoy the responsibility of making decisions and be eager to assume greater leaderships roles. The ultimate rationale for improving jobs is to improve the quality of work and productivity in the work environment. Organization and designing, jobs have come to be synonymous with quality of work life, known by its acronyms QWL. A QWL program have become synonymous with productivity improvement efforts, Quality of work life is the concept of making work meaningful for employees in an environment where they are motivated to perform and satisfied with the results of their work.
FORMAL ORGANIZATIONS AND STANDARDIZATION Work can also be standardized by redefining the flow of operations. Technology often dictates work flow. For example, Assembly-line systems represent a sequential flow of operations. A tire cannot be installed

on a new car before the wheel assembly is attached to an axle; similarly, brakes cannot be tested until the tires are in place. The sequential flow of operations dictates a standard pattern of work organization Standardization may also result from management policies and legal mandates ranging from safety procedures to equal opportunity laws. Laws and rules impose constraints and lead to internal policies and procedures to guide management decisions, Policies and procedures do not necessarily impose constraints, but they do define preferred behavior. Laws and rules, policies and procedures tend to standardize human effort. The stereotype of a standardized organization is a bureaucracy in which jobs are formalized and work flow is prescribed. BUREAUCRATIC AND ORGANIC STRUCTURES Formalized organizations, particularly in the public sector, tend to be labeled bureaucracies. A bureaucracy's form of organization is one in which activities are rationally defined, division of work is unambiguous, and managerial authority is explicitly vested in individuals according to skills and responsibilities prescribed for their organizations, and it implies a less rigorous division of labor in a less formal environment. The fundamental difference between bureaucratic and organic organizations is in the degree of formalization. "Organic" implies a flexible entity, one "full of life." and although it is fashionable to think of a bureaucracy at the polar extreme, both stereotypes may be unrealistic. Bureaucratic Structures The German sociologist Max Weber coined the word bureaucracy. He has been credited with creating an organization form that has dominated Western civilization during the twentieth century, one that is inflexible, formal, coldly rational, and dehumanizing. Weber, however, created nothing; he merely described and put a name to what he saw in European organizations at the turn of the century.

Five Characteristics of Modern Bureaucracies: 1. Fixed and official jurisdictions of authority. Activities are governed by rules and regulation that fix decision-making parameters, align specific duties, and strictly define command privileges. 2. Firmly established rational chains of command. Graded levels of authority are structured in an absolute hierarchy with a narrow span of control over subordinates. It is the positions that are defined, not the individuals who meet defined criteria; positions are not redefined to suit individual characteristics.
A chain of command is the unbroken line of authority between the lowest and highest positions in an organization. It is the description of rank-ordered authority. And in bureaurcracy, there is a presumption that a subordinate will seek direction, communicate decisions, and take order directly from an immediate superior. A span of control is defined by the number of subordinates one manager supervises. In a bureaucracy, the assumption is that an optimal span of control can be unambiguously determined by rationally studying how work is performed and decisions must be made by the manager. Bureaucracies typically have narrow spans of control whereby managers supervise few subordinates. This results in many levels of management in which little authority is delegated.

3. Quantified and thoroughly documented information. Nearly everything is reduced to writing in bureaucracies: decisions and conferences are recorded, files are maintained, and allocations are quantified, which creates complex administration systems. 4. Supposition of Expertise. Because positions are filled by individuals who have met defined criteria, it is assumed that people at each skill levels have expertise. Selection for employment, then, is based on job skills; promotions are made according to criteria rather than personal attributes.
Although the art of management is recognized as important, managers of bureaucratic organizations rely on rules and procedures. This reliance leads to the assumption that once manager team administrative processes; they will have the technical knowledge necessary for managing organizations. 5. A technically scientific management process. The bureaucracy is viewed as inflexible, formal, coldly rational, and dehumanizing. In contrast, the Organic organization is conceived to be flexible, devoid of fixed lines of authority, responsive to change, and overseen by managers attentive to individual needs. Organic Structures In the classic 1966 article "The Coming Death of Bureaucracy," theorist Warren Bennis heavily criticized bureaucracies and proposed that we create organic organizations. According to Bennis, we have outgrown our need for a rational form of organization modeled on machine efficiency and explicit, in flexible lines of authority. In his view, Weber's ideal of a rational organization was a response to the "irrational" world of work of the Victorian age, when employees labored under capricious managers and subjective rules. Formalized organizations brought order and provided employees with protection.

In contrast, Bennis believes today's world of rapid change, complex technology, and diversified knowledge requires flexible patterns of organization. In his view, bureaucracies are ill-adapted to the evolving management philosophy of humanistic values with democratic ideals. In place of bureaucracy, Bennis has proposed flexible organizations, with executives as coordinators and employees organized according to their personal skills. His article heralded the arrival of organizations based on groups of projects rather than of stratified authority. Many of these changes are taking place, but bureaucracies have not disappeared. To the contrary, the sheer size and complexity of contemporary organization often lead to greater rationalization. DESIGNING THE ORGANIZATION Organization design is influenced by size, strategy, technology, and environment. These contingency factors dictate the most appropriate forms of organization. Larger size, for example, is associated with greater complexity, formalization, decentralization and support staff and a smaller percentage of top administrators. An organization's external environment can be classified according to two dimensions: rate of change and complexity. The combination of these dimensions create four general types of environment: simple-static, complex-static, simple dynamic, and complex-dynamic. Complex-dynamic environments are common today, creating high levels of uncertainty for managers. Generally, functional structures are best for simple-static environments. As environments grow more uncertain, product organization become more useful. Increased environmental complexity and the ensuing in formation-processing need of organizations led to the evolution of more innovative structures. Integrative mechanisms help coordinate the efforts of differentiated sub-units that have different environments. Slack resources and self-contained tasks reduce the need to process information. Vertical information systems and lateral relationships help the organization process more information. Organization culture has profoundly influenced management thinking. Ouchi's Theory Z organization combines the Japanese (Type J) focus on group involvement with the individualism of American (Type A) organizations. Peters and Waterman's search for excellence revealed eight attributes of outstanding US companies.

Culture is the set of assumptions, values, and beliefs shared by members of the organization. Theory Z, excellence and culture have their critics, but they focus managers' thinking on important aspects of their organization. Corporate America has restructured itself in recent years in the form of mergers, acquisitions, take-overs, and LBOs.

A merger occurs when two companies form one corporation by mutual agreement. An acquisition is the purchase of all or part of one business by another. In a takeover, the purchasing firm meets resistance from the target company's stockholders. Leveraged buyouts, or LBOs, occur when a group, often led by company management, borrows money to buy a majority of the stock in their own company. Restructuring activity has increased for a variety of reasons, including poor corporate performance, the avail ability of easy money through junk bond financing, tax advantages, and a friendly political climate. The impact of the restructuring is mixed, with some economic gains but massive debt and a laid-off workers and managers. Strategic priority after a merger; takeover, or LBO is to reduce costs, efforts to improve quality, contracting more work to outside firms, and forming strategic alliances. A variety of new organizational forms are evolving in response to these strategic requirements. Network organizations are flexible, often temporary arrangements between companies and their customers, suppliers, and competitors in which each firm concentrates on pursuing its distinctive competence. Strategic alliances are formal relationships created for the joint pursuit of mutual goals, such as when individual organization shared resources and accept joint ownership of the knowledge generated by high-technology research.

The cluster organizations is non-traditional structure in which teams, or clusters, are accountable for business results and have a customer or client orientation. The high-involvement organization is a flat, decentralized structure in which even lower-level employees have direct relationships with customers and suppliers.
By JinAd