Organization structure is the result of organizing process. An organizational structure is the formal framework by which job tasks are divided, grouped, and coordinated. It is an established pattern of relationships among the components of the organization. It shows the vertical flow of responsibility, authority and accountability, and the main line of communication. When managers develop or change an organization's structure, they are engaged in organization design, a process that involves decision about five key elements which are described below.
(1) Work Specialization
Work specialization describes the degree to which tasks in an organization are divided into separate jobs. An entire job is not done by one individual but instead broken down into steps, and a different person completes each step. It creates simplified tasks that can learned and completed relatively quickly.
(2) Departmentalization
Once jobs have been divided through work specialization, they have to be grouped back together so that common tasks can be coordinated. The basic by which jobs are grouped together is called departmentalization. Every organization will have its own specific way of classifying and grouping work activities.
(3) Chain of Command
The chain of command is the formal channel that defines the authority, responsibility, and communication relationship from top to bottom in an organizational. It clarifies who reports to whom.
(4) Span of Control
Since the early days of industrialization, managers worried about the number of people and departments one could effectively handle. Span of control determines the number of levels and managers in an organization. The number of employees who report to a manager determines his span of control.
(5) Authority
Once managers establish a span of control, they must decide how much authority individuals should have to do their jobs. Authority is the right to make decisions. Authority can be centralized or decentralized. Centralization describes the degree to which decision making is concentrated at a single point in the organization.
Tuesday, April 20, 2010
APPROACHES TO ORGANIZATION
For a long time organizing has meant designing organization structures. There are a number of ways to describe organizational design as well as a number of ways to conceptualize the historical development of organizational design. However, approaches to organization can be presented in the form of classical approach, behavioral approach, and contingency approach.
(1) Classical Approach
The classical approach to organization design refers to ideas that were expressed in the early 1900s. These ideas propose that certain principles of organization should guide managers who are attempting to design organizational structure.
Under classical approach Max Weber's Bureaucracy Theory is considered to be very important. Bureaucracy was the ideal system wherein positions and tasks were clearly defined, division of labor was precise and clear, objectives were explicit, and a clear chain of command was maintained.
(2) Behavioral Approach
A second approach to organization design is the behavioral approach, which evolved from the human relations movement. The behavioral approach recognized the weakness and limitations of the mechanistic characteristics of classical approach. Behavioral approaches of organization design reflect the social and psychological implications of organizational life. Two behavioral models of organizing are :
(a) Socio-technical System
(b) Likert's System 4 Approach
(3) Contingency Approach
An alternative view, termed the contingency approach, is based on the situational factors. Situational factors play a role in determining the best organizing design for any particular circumstance. The researchers and practitioners who have contributed to the ideas of contingency design have suggested a number of factors or variable influence the design decision. Following are the factors that affects the Contingency Approach:
(a) Technology
Technology is the conversation processes used to transform inputs into outputs.There are three basic forms of technology:
(1) Unit or Small Batch Production
(2) Mass or Large Batch Production
(3) Process Production
(b) Environment
The environment approach is the latest and most widely accepted view of organization. It emphasizes that the structure of an organization is the function of the environment within which it operates.
(c) Organizational Size
The size of an organization affects its design. Organizational size is determined by the total number of full-time or full-time equivalent employees. A team of researchers at the University of Aston, England, yielded a number of basic generalizations.
(d) Organizational Life Cycle
Size of the organization is not always constant. Many organizations progress through a four-stage organizational life cycle. The first stage is the birth, second is the youth, third stage is midlife ans the final stage is characterized as maturity.
(1) Classical Approach
The classical approach to organization design refers to ideas that were expressed in the early 1900s. These ideas propose that certain principles of organization should guide managers who are attempting to design organizational structure.
Under classical approach Max Weber's Bureaucracy Theory is considered to be very important. Bureaucracy was the ideal system wherein positions and tasks were clearly defined, division of labor was precise and clear, objectives were explicit, and a clear chain of command was maintained.
(2) Behavioral Approach
A second approach to organization design is the behavioral approach, which evolved from the human relations movement. The behavioral approach recognized the weakness and limitations of the mechanistic characteristics of classical approach. Behavioral approaches of organization design reflect the social and psychological implications of organizational life. Two behavioral models of organizing are :
(a) Socio-technical System
(b) Likert's System 4 Approach
(3) Contingency Approach
An alternative view, termed the contingency approach, is based on the situational factors. Situational factors play a role in determining the best organizing design for any particular circumstance. The researchers and practitioners who have contributed to the ideas of contingency design have suggested a number of factors or variable influence the design decision. Following are the factors that affects the Contingency Approach:
(a) Technology
Technology is the conversation processes used to transform inputs into outputs.There are three basic forms of technology:
(1) Unit or Small Batch Production
(2) Mass or Large Batch Production
(3) Process Production
(b) Environment
The environment approach is the latest and most widely accepted view of organization. It emphasizes that the structure of an organization is the function of the environment within which it operates.
(c) Organizational Size
The size of an organization affects its design. Organizational size is determined by the total number of full-time or full-time equivalent employees. A team of researchers at the University of Aston, England, yielded a number of basic generalizations.
(d) Organizational Life Cycle
Size of the organization is not always constant. Many organizations progress through a four-stage organizational life cycle. The first stage is the birth, second is the youth, third stage is midlife ans the final stage is characterized as maturity.
Thursday, April 15, 2010
PRINCIPLES OF ORGANIZING
Organizing is one of the major functions of management. The success or failure of the organization depends upon sound and efficient organizational structure. Hence, there is a need to follow certain principles of organizing to formulate and develop sound and efficient organization. These principles are as follows.
(1) Unity of Objectives
The goals of the organization influence the organization structure. Hence, the goals and objectives must be clearly defined for the entire organization, for each department and even for each position in the organization structure. If there is contradiction among the various levels of objectives, then entire goals of the organization cannot be achieved. There must be unity of objectives so that all efforts can be concerned on the set goals.
(2)Specialization
The total task in an organization should be divided in such a manner that every person is confined to a single job. This leads to specialization. An employee repeatedly performing a specific single job becomes an expert in that job. The work assigned should be according to his abilities and aptitude. Then he can work with greater economy and efficiency.
(3) Span of Control
Span of control represents a numerical limit of subordinates to be supervised or controlled by a manager. As there is a limit to the number of subordinates that can be supervised effectively. However, the exact number of subordinates will vary depending upon the nature of job, competence of the manger, quality of subordinates etc.
(4) Exception
Each manager should make all decisions within the limitation of delegated authority. However, only exceptionally complex matters should be referred to the higher levels for their decision. This will enable the executives at higher levels to devote time to more important and crucial issue.
(5)Scalar Principle
This principle sometimes known as the ''chain of command''. It is unbroken line of authority from the top level to the bottom of an organization. It makes clear about who will work under whom. The chain of command (scalar chain) should be short and clear which makes decision making and communication more effective.
(6) Unity of Command
The principle of command suggests that an employee should have one and only one boss. Each subordinate should have only one superior whose command he has to be obey. Directions from several superiors may result in confusion, chaos, conflict.
(7) Delegation of Authority
Proper authority should be delegated at all levels of management. The authority delegated should be equal to responsibility so as to enable each manager to accomplish the task assigned to him.
(8) Responsibility
According to this principle, the responsibility of all employees should be made clear. The superior should not be allowed to avoid responsibility by delegating authority to his subordinates.
(9) Authority
Authority is the tool by which a manager is able to accomplish the desired goals. Hence, the authority of each manager should be clearly defined and it should be equal to responsibility. In the absence of adequate authority, responsibility leads to frustration and ineffective performance.
(10)Efficiency
The efficiency of an organization is measured through the ability of achieving the predetermined goals at minimum coat. The organization structure should enable accomplishment of organizational goals. Hence, it should ensure optimum utilization of all resources.
(11) Simplicity
The organizational structure should be simple with minimum numbers of levels so that each member can understand his duties and authority relationships. An organization with few levels in organization means difficulty of communication and coordination.
(12) Flexibility
The organization structure should be adaptable to changing environment and needs of the organization. For this organization structure should be flexible. It should permit replacement without dislocation and disruption of the basic design.
(13) Balance
The principle of balance should be followed while organizing structure. There should be a reasonable balance in the size of various departments and between centralization and decentralization.
(14) Unity of Direction
There should be one objectives and one plan for a group of activities having the same objectives. There should be one official for each group of the same activity. By this there will be unity of direction. This facilities verification and coordination of activities.
(1) Unity of Objectives
The goals of the organization influence the organization structure. Hence, the goals and objectives must be clearly defined for the entire organization, for each department and even for each position in the organization structure. If there is contradiction among the various levels of objectives, then entire goals of the organization cannot be achieved. There must be unity of objectives so that all efforts can be concerned on the set goals.
(2)Specialization
The total task in an organization should be divided in such a manner that every person is confined to a single job. This leads to specialization. An employee repeatedly performing a specific single job becomes an expert in that job. The work assigned should be according to his abilities and aptitude. Then he can work with greater economy and efficiency.
(3) Span of Control
Span of control represents a numerical limit of subordinates to be supervised or controlled by a manager. As there is a limit to the number of subordinates that can be supervised effectively. However, the exact number of subordinates will vary depending upon the nature of job, competence of the manger, quality of subordinates etc.
(4) Exception
Each manager should make all decisions within the limitation of delegated authority. However, only exceptionally complex matters should be referred to the higher levels for their decision. This will enable the executives at higher levels to devote time to more important and crucial issue.
(5)Scalar Principle
This principle sometimes known as the ''chain of command''. It is unbroken line of authority from the top level to the bottom of an organization. It makes clear about who will work under whom. The chain of command (scalar chain) should be short and clear which makes decision making and communication more effective.
(6) Unity of Command
The principle of command suggests that an employee should have one and only one boss. Each subordinate should have only one superior whose command he has to be obey. Directions from several superiors may result in confusion, chaos, conflict.
(7) Delegation of Authority
Proper authority should be delegated at all levels of management. The authority delegated should be equal to responsibility so as to enable each manager to accomplish the task assigned to him.
(8) Responsibility
According to this principle, the responsibility of all employees should be made clear. The superior should not be allowed to avoid responsibility by delegating authority to his subordinates.
(9) Authority
Authority is the tool by which a manager is able to accomplish the desired goals. Hence, the authority of each manager should be clearly defined and it should be equal to responsibility. In the absence of adequate authority, responsibility leads to frustration and ineffective performance.
(10)Efficiency
The efficiency of an organization is measured through the ability of achieving the predetermined goals at minimum coat. The organization structure should enable accomplishment of organizational goals. Hence, it should ensure optimum utilization of all resources.
(11) Simplicity
The organizational structure should be simple with minimum numbers of levels so that each member can understand his duties and authority relationships. An organization with few levels in organization means difficulty of communication and coordination.
(12) Flexibility
The organization structure should be adaptable to changing environment and needs of the organization. For this organization structure should be flexible. It should permit replacement without dislocation and disruption of the basic design.
(13) Balance
The principle of balance should be followed while organizing structure. There should be a reasonable balance in the size of various departments and between centralization and decentralization.
(14) Unity of Direction
There should be one objectives and one plan for a group of activities having the same objectives. There should be one official for each group of the same activity. By this there will be unity of direction. This facilities verification and coordination of activities.
SIGNIFICANCE OR IMPORTANCE OF ORGANIZING
A sound organizing facilitates administration, promotes specialization, encourages growth, and stimulates creativity. It can contribute to the success of an organization. Hence, the significance of organizing may be discussed as below:
(1) Efficient Administration: Organizing is an important and the only tool to achieve enterprise goals. A sound organizing helps the management in many ways. It defines various activities and their authority relationships in the organizational structure. It can avoid confusion and delays as well as duplication of work and overlapping of effort. It is the mechanism by which management directs, controls, and coordinates the various activities in the enterprise.
(2) Optimum Use of Human Resources: Sound organizing ensures that every individual is placed on the job for which he is best suited. Such matching of jobs and individuals helps in better use of human talent. It also provides the benefits or specialization, which results in economy of operations and reduction in costs.
(3) Growth and Diversification: A sound organizing contributes to the growth and diversification of the enterprise organization, management can multiply its strength and undertake more activities. That is why many small firms have growth and become big.
(4) Optimum Use of New Technology: A sound organizing is flexible. It has the capacity of absorbing changes in the environment. Hence,it provides for optimum use of technological improvements.
(5) Coordination and Communication: Organizing is an important means of creating coordination and communication among different departments of the enterprise. Different jobs and positions are welded together by structural relationship. It also specifies the channels of communication among different members of the enterprise.
(6) Training and Development: A sound organizing provides a good scope for the development of managerial ability through proper delegation of authority and decentralization. It provides responsibility, sufficient freedom to the supervision and creative thinking in different levels. By this practice, managers are trained, developed and tested for assuming greater responsibilities in the future.
(7) Productivity and Job Satisfaction: A sound organizing is based on democratic and participative management. Hence, the entire organizational environment is favorable for productivity and job satisfaction.
(1) Efficient Administration: Organizing is an important and the only tool to achieve enterprise goals. A sound organizing helps the management in many ways. It defines various activities and their authority relationships in the organizational structure. It can avoid confusion and delays as well as duplication of work and overlapping of effort. It is the mechanism by which management directs, controls, and coordinates the various activities in the enterprise.
(2) Optimum Use of Human Resources: Sound organizing ensures that every individual is placed on the job for which he is best suited. Such matching of jobs and individuals helps in better use of human talent. It also provides the benefits or specialization, which results in economy of operations and reduction in costs.
(3) Growth and Diversification: A sound organizing contributes to the growth and diversification of the enterprise organization, management can multiply its strength and undertake more activities. That is why many small firms have growth and become big.
(4) Optimum Use of New Technology: A sound organizing is flexible. It has the capacity of absorbing changes in the environment. Hence,it provides for optimum use of technological improvements.
(5) Coordination and Communication: Organizing is an important means of creating coordination and communication among different departments of the enterprise. Different jobs and positions are welded together by structural relationship. It also specifies the channels of communication among different members of the enterprise.
(6) Training and Development: A sound organizing provides a good scope for the development of managerial ability through proper delegation of authority and decentralization. It provides responsibility, sufficient freedom to the supervision and creative thinking in different levels. By this practice, managers are trained, developed and tested for assuming greater responsibilities in the future.
(7) Productivity and Job Satisfaction: A sound organizing is based on democratic and participative management. Hence, the entire organizational environment is favorable for productivity and job satisfaction.
MEANING AND CONCEPT OF ORGANIZING
The term organizing means different things to different people. It is used widely to mean a structure of relationship, a process, a group of people, and a function of management. Organizing is the basic function of management. By organizing, a manager achieves organizational goals. Organization as a process integrates and coordinates the efforts of human, financial, technology and other resources. As a group of people organizing contributes their efforts towards attainment of common goals.
Once a manager has set goals and developed a workable plan, the next management function is to organize people and other resources necessary to carry out the plan. The organizing function creates a structure of task and authority relationships. It also involves assigning activities, dividing work into specific jobs and tasks, and specifying who has the authority to accomplish certain tasks. Another major aspect of organizing is grouping activities into departments or some other logical subdivision. In essence organizing is the process of creating organizational structure that enables the organization to function effectively as a cohesive whole.
According to Griffin, ''Organizing involves determining how activities and resources are to be grouped''.
In the words of Robbins and Coulter,'' Organizing involves the process of determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made.
From the above discussion, it makes clear that organization involves: identification and grouping of work, defining responsibility, delegation of authority, establishment of structural relationships, and coordination of interrelated activities.
Organizing is the process of creating organizational structure. Organizing consists of five basic elements. These are work specialization, departmentalization, chain of command, span of control and authority.
Once a manager has set goals and developed a workable plan, the next management function is to organize people and other resources necessary to carry out the plan. The organizing function creates a structure of task and authority relationships. It also involves assigning activities, dividing work into specific jobs and tasks, and specifying who has the authority to accomplish certain tasks. Another major aspect of organizing is grouping activities into departments or some other logical subdivision. In essence organizing is the process of creating organizational structure that enables the organization to function effectively as a cohesive whole.
According to Griffin, ''Organizing involves determining how activities and resources are to be grouped''.
In the words of Robbins and Coulter,'' Organizing involves the process of determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made.
From the above discussion, it makes clear that organization involves: identification and grouping of work, defining responsibility, delegation of authority, establishment of structural relationships, and coordination of interrelated activities.
Organizing is the process of creating organizational structure. Organizing consists of five basic elements. These are work specialization, departmentalization, chain of command, span of control and authority.
Tuesday, April 13, 2010
QUANTITATIVE TECHNIQUES FOR DECISION MAKING
Decision making basically is problem solving. The increasing complexity of organization problem requires the discovering and applying of improved quantitative techniques/tools for the evaluation of decision alternatives. Every alternative solution has favorable as well as unfavorable consequences, which should be analyzed and compared against one another or against a decision criteria such as desired rate of return, sales volume, etc. A number of quantitative techniques have been developed to help the decision-maker in evaluating alternatives. The most commonly used quantitative techniques are discussed below:
(1) Operation Research
Operation research is the application of scientific or mathematical methods to the analysis and evaluation of alternative solution to a problem situation. It consists of bringing together available data on a specific problem, processing these data, and obtaining quantitative report of various potential courses of action. Mathematical models are then constructed. An operations research model is a simplified representation of a problem, incorporating only its crucial elements. Hence, decision-maker obtains data in choosing the solutions which best satisfies the goals.
(2)Payoff Matrix
A payoff matrix is a statistical tool of decision making. It provides a method of computing outcomes of alternatives available to decision-maker. A payoff matrix depicts the probable value of each of the decision alternatives and the probabilities of their occurrence. A probability is the degree of likelihood that a particular event will occur. Probabilities range in value from 0(Zero-no chance of occurrence) to 1.00(certain occurrence).
(3)Decision Tree
A decision tree is a graphic representation of the sequential decisions and events that constitute decision making. The graphical model consists of tree like structure with branches to represent the possible event combinations. Relative values for the predicted outcomes of each decision are evaluated and taken into account. The outcomes that has the highest desirable end value is the course to follows. From a decision point the decision tree links a number of possible actions and possible events by means of straight lines.
(4) Simulation
Simulation is the process of experimentation with a model of same real system or situation in order to gain understanding or solve a problem in the real world. A simulation model is usually applied to evaluate alternative actions and determine which action probably would be most effective in the real situation. It has been used for analyzing the effects of organizational change, waiting line problems, job-shop scheduling and model changes in assembly line operations.
(1) Operation Research
Operation research is the application of scientific or mathematical methods to the analysis and evaluation of alternative solution to a problem situation. It consists of bringing together available data on a specific problem, processing these data, and obtaining quantitative report of various potential courses of action. Mathematical models are then constructed. An operations research model is a simplified representation of a problem, incorporating only its crucial elements. Hence, decision-maker obtains data in choosing the solutions which best satisfies the goals.
(2)Payoff Matrix
A payoff matrix is a statistical tool of decision making. It provides a method of computing outcomes of alternatives available to decision-maker. A payoff matrix depicts the probable value of each of the decision alternatives and the probabilities of their occurrence. A probability is the degree of likelihood that a particular event will occur. Probabilities range in value from 0(Zero-no chance of occurrence) to 1.00(certain occurrence).
(3)Decision Tree
A decision tree is a graphic representation of the sequential decisions and events that constitute decision making. The graphical model consists of tree like structure with branches to represent the possible event combinations. Relative values for the predicted outcomes of each decision are evaluated and taken into account. The outcomes that has the highest desirable end value is the course to follows. From a decision point the decision tree links a number of possible actions and possible events by means of straight lines.
(4) Simulation
Simulation is the process of experimentation with a model of same real system or situation in order to gain understanding or solve a problem in the real world. A simulation model is usually applied to evaluate alternative actions and determine which action probably would be most effective in the real situation. It has been used for analyzing the effects of organizational change, waiting line problems, job-shop scheduling and model changes in assembly line operations.
Thursday, April 8, 2010
TECHNIQUES FOR IMPROVING GROUP DECISION MAKING
In large and complex organizations most of the basic and strategic decisions are made bu group of managers rather than individuals. It seems safe to say that in many instances group decision making in preferable than individual decision making. Decisions relating to the determination of organization goals, formulation of plans, strategies, and policies fall under this category. Group decision making has become more wide prevalent during the past few decades because organizational problems have become so complex which requires a variety of specialized and abilities that no one person can handle effectively. Following are some recent techniques for improving decision making:
(1) Brainstorming
In many situations, groups are expected to produce creative or imaginative solutions to organizational problems. In such instances brainstorming has often been found to enhance the creative output of the group. Brainstorming is a useful technique for generating ideas about possible causes of problems, and about potential solutions to problems, once they have been identified. The objectives of brainstorming is to generate lots of ideas on a particular subject.
(2) Delphi Technique
The Delphi technique is a systematic means to obtain consensus from a group or panel of experts. The panel does not meet as a committee to discuss, or debate. In this technique participants are asked to give their ideas, suggestions, and views on the decisional problem. All responses are transcribed into a single document. Then the results are sent back to the panel members and again their reactions to others views, ideas, and suggestions are collected. The names of the participants are kept anonymous. It helps to evoke each participants unbiased opinion by preventing the influences of group dynamics. A panel coordinator contacts each participant usually by a mail questionnaire.
(3) The Nominal Group Technique(NGT)
A manager who must take a decision about an important issue sometimes needs to know what alternatives are available and how people would react to them.A technique called the nominal group technique has been developed to fit this situation.Basically, NGT is structured group meeting that proceeds as follows: a group of individuals(7 to 10) sit round a table but do not speak to one another. The problem is presented to them, and they write their reactions, ideas, suggestions, and views on a sheet of paper. After this process is over, structured sharing of ideas takes place. Each person around the table presents his ideas. A person designated as recorder writes the ideas of various members on a blackboard. At the end of it, there is a list of ideas open for discussion.The next stage involves independent voting in which each participant selects priorities by ranking or voting. The final group decision is the pooled outcome of the individual vote.
(1) Brainstorming
In many situations, groups are expected to produce creative or imaginative solutions to organizational problems. In such instances brainstorming has often been found to enhance the creative output of the group. Brainstorming is a useful technique for generating ideas about possible causes of problems, and about potential solutions to problems, once they have been identified. The objectives of brainstorming is to generate lots of ideas on a particular subject.
(2) Delphi Technique
The Delphi technique is a systematic means to obtain consensus from a group or panel of experts. The panel does not meet as a committee to discuss, or debate. In this technique participants are asked to give their ideas, suggestions, and views on the decisional problem. All responses are transcribed into a single document. Then the results are sent back to the panel members and again their reactions to others views, ideas, and suggestions are collected. The names of the participants are kept anonymous. It helps to evoke each participants unbiased opinion by preventing the influences of group dynamics. A panel coordinator contacts each participant usually by a mail questionnaire.
(3) The Nominal Group Technique(NGT)
A manager who must take a decision about an important issue sometimes needs to know what alternatives are available and how people would react to them.A technique called the nominal group technique has been developed to fit this situation.Basically, NGT is structured group meeting that proceeds as follows: a group of individuals(7 to 10) sit round a table but do not speak to one another. The problem is presented to them, and they write their reactions, ideas, suggestions, and views on a sheet of paper. After this process is over, structured sharing of ideas takes place. Each person around the table presents his ideas. A person designated as recorder writes the ideas of various members on a blackboard. At the end of it, there is a list of ideas open for discussion.The next stage involves independent voting in which each participant selects priorities by ranking or voting. The final group decision is the pooled outcome of the individual vote.
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