ORGANIZATION

LESSON OBJECTIVES
Determine the nature of organization as a
management function
Discuss the nature of organizations
Explain the importance of organizing as a
management function
Integrate management concepts and theories
in daily life
 GROUP ACTIVITY
 Organize your group’s assigned
situation within 10 minutes
 A group representative will
share to the class your output
1.How organized your
group in doing the
task? Rate from 1 to 5
(lowest to highest) and
justify.
2. How do
managers conduct
their organizing
function?
ORGANIZATION
ORGANIZING
 ORGANIZATION

• A social group that has a well-

coordinated process and activities
for the purpose of achieving its
objectives and is connected to the
environment where it exists.
 ORGANIZING
• As a management function, that
entails the structuring and
grouping of jobs and ensuring that
these are performed by qualified
and competent personnel
 STEPS IN
ORGANIZING
 STEPS IN ORGANIZING
Definition of 4
authority
3
Integration of
authority and
Identification of responsibility
activities 1 2
Departmentalization
 STEPS IN ORGANIZING
1. Identification of Activities
2. Departmentalization
3. Definition of Authority
4. Integration of Authority and
Responsibility
• Keynes Corporation is
planning to have a job fair
in Danao City on January,
apply the steps in
organizing to prepare for
the said event. Include the
possible financial resources
ORGANIZATION
AL DESIGN &
STRUCTURE
 ORGANIZATIONAL DESIGN
• identifies the essential tasks and
operations of the company, establishes
effective work relationships, and
divides the company into departments
that will contribute toward achieving
its goals and objectives
 ORGANIZATIONAL STRUCTURE

• is the framework that

shows how each
component of the company
relates to each other
 CONFIGURATION
of Organizational
Structure
1) Mechanistic structure
• is a rigid and tightly controlled
structure
• flow of communication and job
responsibilities are carefully
delineated and decisions are mostly
made from the top
1) Mechanistic structure
• common in stable environments and
applicable to companies with uniform
customers and operations
• maximizes efficiency while minimizing costs
• discourages individual initiative and
innovation because of its tight controls
2) Organic structure
• more flexible and highly adaptable
• decentralized and less formal, and
employees are given broader
responsibilities based on the
current needs of the company
2) Organic structure
• employees are also empowered and
given accountability for their actions
• results in greater employee
satisfaction because they are
empowered and allowed to
innovate
 ELEMENTS of
Organizational
Structure
1) Work Specialization
2) Departmentalization
3) Chain of command
4) Span of control
5) Degree of centralization
6) Formalization
1) Work Specialization
• the way jobs are divided into
steps or individual tasks
2) Departmentalization
• grouping of similar functions,
jobs, and tasks into departments
2.1 Functional
• where personnel and tasks are related to
a single company operation are grouped
together
2.2 Divisional
• groups personnel and resources based on
product, service, process, geographic,
location, or customer
3) Chain of Command
• indicates the communication
and work relationship between
employees and managers
• it indicates who reports to
whom
Three underlying principles:
3.1 Authority
3.2 Responsibility
3.3 Unity of Command
3.1 Authority – the right inherent in a
managerial position to give directions or
tell people what to do and expect them to
undertake it
3.2 Responsibility – obligation to perform
duties assigned to an employee
3.3 Unity of Command – requires that an
employee should only report to one
superior
4) Span of Control
• refers to the number of
employees a manager can
effectively and efficiently
manage
5) Degree of Centralization
• the extent authority and
decision-making is given to
a small group of people in
the organization
• CENTRALIZATION
VS. DECENTRALIZATION
• Centralization – when major decisions
are made by the top mgmt. and the
decisions and actions of lower
management and employees must
have approval from the top
• Decentralization– when lower mgmt. is
allowed to make important decisions
6) Formalization
• is the process of standardizing jobs
and establishing rules and guidelines
that guide employees
• it helps in providing consistency in
the procedures and job
responsibilities of the employees
 Which element of organizational structure is very
important?

1) Work Specialization
2) Departmentalization
3) Chain of command
4) Span of control
5) Degree of centralization
6) Formalization
 1. Simple

• is the most basic and is applicable to small

businesses where majority of the power
and decision-making rests on the owner
• allows for quick decision-making and
hands-on interaction with the day-to-day
activities of the firm
 1. Simple

Advantage:
–businesses are easily maintained
–accountability is also easily
determined because the owner has
the sole authority and responsibility in
running the business
 1. Simple

Disadvantage:
– heavily reliant on the business owner
– if the owner is not around to oversee
operations, the organization cannot address
opportunities and challenges effectively
– may limit the activities and growth of the
business
 2. Functional
• enables a company to establish
clear professional identities
among its employees, since they
are given positions and ranks in
line with their areas of expertise
or specialization
 2. Functional
Advantage:
• it groups employees who have
similar skills under the same
department or units to easily fulfill
specific tasks to meet its functional
goals
 2. Functional
Disadvantage:
• organization cannot respond quickly to
environmental changes
• the highly rigid and segregated structure of the
organization can also lead to poor coordination
among departments
• innovation is unlikely to develop because there
is a narrower view of organizational goals
 3. Divisional
• organizes a company into divisions that
correspond to certain products/services
• each division is autonomous and has its
own departments, resources, and units
that oversee the regular operations of
the company
 3. Divisional
Advantage:
• divisions are free to manage their
own activities
• enables each division to adapt to
the changes and threats they
encounter
 3. Divisional
Advantage:
• the failure of one division will not
automatically result in the failure of
the whole company
• they can also focus more closely on
their specific products and services
 3. Divisional
Disadvantage:
• integration and standardization across
product lines is difficult
• the divisional design is also prone to
competition among divisions which may
lead one division to undermine another
 4. Matrix

• often used in larger

companies and is set up as a
grid where employees have
dual reporting relationships
 4. Matrix
Advantage:
• employees from different departments can be
selected to work on a project
• management can select the best combination
of talent to work on a specific project
• beneficial to the personal and professional
growth of employees
 4. Matrix
Disadvantage:
• there is conflict of interest among project
managers and functional managers in the
allocation of resources
• conflict of loyalty is an issue among
employees since they are reporting to
two managers
 4. Matrix
Disadvantage:
• the number of managers involved entails
high administrative costs for the company
• employees have heavier workload
because they have additional work in the
project aside from their regular tasks
 5. Team-based
• is a horizontal design structure that
organizes employees into teams whose
members perform varied functions
• employees work together in
accomplishing various tasks, seeking
solutions to problems, and identifying and
engaging in business opportunities
 5. Team-based

Advantage:
• productivity is increased since the
entire group is working for a common
goal, and the talents and skills of each
employee is maximized
 5. Team-based
Disadvantage:
• time-consuming since coordinating the
teams requires constant communication
and frequent meetings
• employees may also lack motivation since
team performance is valued rather than
individual contributions
 6. Network

• good for small companies since

they hire only few employees,
which amounts to lesser costs
for salaries and benefits
 6. Network
Advantage:
•a company enjoys more
flexibility and can be more
responsive to change since all
the functions are outsourced
 6. Network
Disadvantage:
• independent firms may be hard to
monitor
• managers do not have hands-on
control over the separate companies
and their employees
 6. Network
Disadvantage:
• requires a lot of time to build and cultivate
relationships among the workforce since
face-to-face communication is limited
• there is no corporate culture and
employee loyalty is questionable
OTHER TYPES of
Organizational
Structure
1. Entrepreneurial organization
• The power is focused on the chief
executive.
• Usually, the staff is small and
informal, with a loose division of
labor and little management
hierarchy.
2. Machine organization
• Decision-making is centralized and there
is a distinction between line and staff.
• Tasks are routine and highly specialized,
and these are grouped based on
functions.
• Communication within the organization
3. Diversified organization
• The central administration is
called headquarters and there is a
set of semi-autonomous units or
divisions under a central
administrative structure.
4. Professional organization
• has standardized products and services
and employees usually do routine work.

• This is commonly found in hospitals,

universities, and public agencies.
• It depends on the skills and knowledge
5. Innovative organization
• considered as a modern organization which
is flexible and does not utilize planning and
control systems.
• Multidisciplined teams are formed and the
firm hires experts who are trained,
experienced, and are not restricted by
traditional specializations
6. Missionary organization
• the mission is the main focus of this
type of organization.
• The employees are able to identify with
the firm’s purpose and are motivated to
enthusiastically work to achieve the
company’s mission.