The organizing function is concerned with arranging and assigning tasks, allocating resources, and structuring work in order to reach organizational objectives. In other words, the organizing function creates the organization’s structure.

The purpose of organizing can be summarized as: dividing work into specific jobs; assigning tasks and responsibilities for each job; coordinating those tasks, grouping jobs into units and departments; establishing relationships and formal authority among individuals; and allocating resources.

The importance of organizing can be readily seen when managers allocate organizational resources efficiently and effectively by specifying when, where, and how resources are to be used. Effective organizing gets rid of the duplication of effort and/or maximizing the utilization of resources. For example, resources can be moved from an unprofitable business unit to a more profitable one.

Organizational structure is a system that consists of rules and policies to outline work roles, responsibilities and reporting relationships and how they fit within the overall system.

A visual representation of an organization structure is an organization chart.

Organizational design is the process of developing or changing an organization structure.

Two categories of organizational design are mechanistic design and organic design.

The key elements in organizational design include:
• division of labor
• chain of command
• span of control
• centralization / decentralization
• formalization
• departmentalization

Division of labor or work specialization is the degree to which work activities are divided into separate jobs. Although the division of labor is advantageous, too much specialization leads to problems as the job tasks can become repetitive and boring.

The chain of command is defined as the hierarchy of authority and the reporting relationships from one management level to the next. It clearly shows who is responsible for each task and who has the authority to make decisions.

The unity of command recommends that an individual should report to only one supervisor or manager. If an employee has more than one supervisor, conflicting demands from multiple supervisors may lead to problems and conflict in the chain of command.

Authority refers to the right of a person to give instructions, make decisions and allocate resources. In an organization, a manager has the formal authority from his or her position that is accepted by subordinates. The authority flows down the hierarchy such that top managers have more authority than those at the bottom.

There are two forms of authority: line authority and staff authority.

Line authority takes the form of employeremployee relationship that moves from top to bottom according to the chain of command.

Staff authority is created to assist, support, and advise the work of line managers.

Power is a personal trait or capacity to influence others’ actions, decisions, and performances. The major source of power is knowledge and expertise.

It may be thought that the terms authority and power are one and the same. However, there is a difference between the two in organizations. While authority flows downward through the hierarchy, power flows in any direction and individuals can be powerful even though s/he has little authority.

Responsibility refers to the obligation or expectation that all employees have to perform the duties associated with their jobs. Those duties are assigned by managers who have the authority to assign work to employees.

Delegation occurs when a manager divides work among subordinates and gives them the responsibility and authority to accomplish tasks. A manager is responsible for all work in an area and can only complete the work by delegating part of the work to subordinates. This process continues down the chain of command.

To be more effective at delegation, managers should keep in mind to select the right person for the job, to ensure that authority equals responsibility, to maintain feedback and to evaluate and to reward performance. In today’s dynamic business environment, managers may need to delegate more to lower level employees especially those who regularly face customers. This way, organizations can be more responsive to customer needs while becoming more flexible and adaptable to the changes in the environment.

The span of control or span of management refers to the number of employees directly supervised by a manager. The question is the appropriate number of subordinates each manager can efficiently and effectively manage in the hierarchy.

The span of control in a company influences the height of its hierarchy. A flat organization structure has relatively fewer layers of management while a tall structure has multiple layers. Generally, the lower the height of the structure, the wider the span of control.

Centralization is when most important decisions are made by managers at the top of the hierarchy. When the decision authority is pushed down to lower levels of the hierarchy, this means decentralization.

Formalization refers to the use of written or computerized documents to describe and guide behaviors and activities of employees. Documentation includes rules, procedures, regulations, policy manuals and job descriptions. Formalization is used to standardize operations in organizations.

Departmentalization is the basis for grouping of jobs into logical units. Managers group employees into departments, each a unique group of resources to perform certain related tasks.

Five common types of departmentalization are functional, product, customer, geographic, and process.

Functional departmentalization groups work activities together by the functions employees perform.

Product departmentalization groups resources according to specific products or services offered by an organization.

Customer departmentalization targets specific customer classifications in order to serve the needs of identifiable customer groups.

Geographic departmentalization is based on the geographic markets or the locations where work is done.

Process departmentalization is used to divide the organizations according to production process of goods or services.

A mechanistic structure is characterized by a rigid bureaucratic structure that is controlled by rules and procedures in a clear hierarchy of authority or the chain of command. It is tightly controlled or that the span of control is narrow which leads to a relatively tall structure.

An organic structure is the opposite end of design choices where the structure is more adaptive and flexible with looser chain of command. This means a lower level of formalization as rules and regulations are flexibly applied as employees can figure out what to do.

Common organization structures that managers can choose from are as in the following:
• Functional structure
• Divisional structure
• Matrix structure
• Virtual network structure
• Team structure
• Hybrid structure

In a functional structure, activities are grouped according to their similar or related skills, expertise and use of the same resources.

A divisional structure is made up of separate divisions according to similarities or demands of product, customers, or geography. Each division has some autonomy; with a divisional manager who is responsible for its performance.

A matrix structure combines advantages of both functional and divisional structures simultaneously in order to be highly responsive to changing external business environments. In other words, a matrix structure groups people and resources by function and by product or project.

A virtual network structure is where most major functions or business processes are subcontracted to other firms. A small headquarter is used to coordinate those activities. A virtual network structure is very fluid and flexible because the core organization can add or take away parts of the network in order to meet a changing environment.

A team structure emphasizes work groups or project type teams with little or no functional hierarchy and with team authority as its building block. Work activities are divided into projects or units; each with a team that is responsible and accountable for the assigned project. Members work together to utilize their skills and knowledge to achieve common goals.

A hybrid structure has several business units or divisions and makes use of different forms of structures in order to tailor to an organization’s specific needs. A large and complex organization in particular often operates with a hybrid structure.

Three important contingency factors that affect design choices are strategy, environment and technology.

Firms may prefer to follow either the mechanistic design or the organic design to fulfill their needs.

Environmental factors create uncertainty for managers. To be effective, managers need to manage those uncertainties.

Environmental uncertainty is a situation where the management of a firm has little information about its external environment.

Two characteristics influencing uncertainty are:
• The number of factors in the external environment.
• The rate of change of those factors in the environment

The term technology is used here to include computers, machines, skills and knowledge, procedures, techniques and work methods. Manufacturing and service organizations employ different sets of technologies. Many service firms need to be physically close to their customers who are often in several geographic areas. Those firms would disperse their facilities into several smaller units or offices in order to provide faster and better service to their customers.50 Therefore, service firms tend to be decentralized and flexible with an overall organic structure.

There is a pattern between technical complexity of the manufacturing process and the companies. Technical complexity is categorized according to the level of mechanization of the manufacturing process. Low technical complexity means that workers perform much of the work in the production process.

Routine technologies are characterized by work tasks that are repetitive with work procedures, such as in an assembly line. Routine tasks are high in standardization and formalization with centralized authority.

A team is a group of people who interact and coordinate their work together to achieve shared goals.

A team should have a small size and must contain four elements which are as in the following:
• Common commitment and purpose
• Performance goals
• Complementary skills
• Mutual accountability

Several types of teams can exist within an organization. Five common classifications are as follows:
• problem-solving teams
• self-managed teams
• cross-functional teams
• virtual teams
• global teams

A problem-solving team is a team that is involved in efforts to improve work activities or to solve specific problems

A self-managed team or self-directed team is a small self-organized group of employees whose members determine, plan, and manage their day-to-day activities under reduced or no supervision.

A cross-functional team is a team composed of employees from different departments or functions.

A virtual team is composed of members who are geographically dispersed, often interacting by electronic means (such as e-mail, videoconferencing, and social networking) and engaged in interdependent tasks.

A global team is made up of people from different nationalities operating in multiple countries.

Some important team composition factors include team role, size, ability, personality and diversity.

One of the most important composition factors to a team’s effectiveness is the concept of team role. A team role is the tendency for members to behave, contribute and relate with others in a particular way.

These include technical skills, problem-solving skills, interpersonal skills and organizational skills.

Technical skills in a specific discipline such as finance or market research.

Being able to analyze difficult situations and to craft solutions.

Especially the ability to collaborate with others effectively.

Organizational skills including networking, communicating well with other parts of the firm, ability to navigate political landscape, and to avoid conflict.

The five stage model includes the forming stage, the storming stage, the norming stage, the performing stage and the adjourning stage.

The forming stage is when the team is formed and members get acquainted and oriented to the task and to each other. They learn what is expected and what is acceptable, i.e. the grand rules.

The storming stage is marked by competition and conflict as members may disagree on the team’s mission and goals or how to achieve them. The team leader should guide the team towards clear goals and agreements to reach the team’s objectives.

The norming stage is reached when conflict is resolved and agreements about the roles of members, values, and acceptable behaviors are reached.

The performing stage is reaching a productive stage where members are committed to the team’s mission.

The adjourning stage is the last stage when the team is finishing its job. If it is a temporary team then it prepares to disband.

A team develops a certain level of team cohesiveness which is the extent to which members remain united and committed to the team’s goals. High cohesiveness is generally considered positive as members have high interaction and communications with each other and are more committed to the team.

A team also develops team norms as it goes through the stages of team development. Team norms are a set of guidelines or expectations shared by team members such as norms that focus on team effort and performance. In other words, they set the foundation for how the team operates and how members behave.

Conflict is defined by the Business Dictionary as “the friction or opposition resulting from actual or perceived differences or incompatibilities”. During the second stage of team development (the norming stage), conflict often arises as differences in viewpoints escalate.

Common techniques such as negotiation and compromise can be used as conflict should be dealt with constructively. Although conflicts are mostly seen as negative; they are not necessarily destructive to teams. Conflicts can lead to new ideas and can facilitate the surfacing of important problems that should be addressed.

There are several types of conflict that teams experience: conflict over positions, strategies or opinion, mistrust or uneven communication, personality clashes and power issues and personal agendas.

Organizational change is the process by which organizations adopt new ideas or behaviors to increase organizational effectiveness.

They are external and internal factors. In other words, change from the environment and from within.

External forces include changing demographics and characteristics of consumers (e.g. needs, taste, age, etc.), new governmental laws and regulations, global competition, and changing technology, among others. In other words, the changes can be brought on by all environmental sectors: technology, economics, customers, competitors, legal and global environment.

Internal factors creating the need for change can come from new corporate goals and objectives, for example, a goal of rapid company expansion. This would lead to new or updated internal activities to meet the new goal. Other factors arise from employees such as the change in managerial personnel or in composition of the workforce. Deficiencies in existing processes or declining effectiveness of the organization can also create the need for organizational change.

There are three types of change: technology, structure and people change.

Technology change deals with how the work is done such as the use of new equipment, tools, machines, work methods, and work processes.

A structure change pertains to the organization’s structural variables such as procedures and policies, job tasks, the degree of centralization or decentralization, and authority relationships.

People change refers to changes in attitudes, expectations, perceptions and behaviors of employees in an organization.

Resistance to change can come from individual employees as a change leads to uncertainty about its outcome so employees can feel insecure. Changes often lead to new ways of working and new roles and relationships. Some may perceive these changes to affect them negatively, e.g. some workers may have to be retrained or worse, lose their jobs.

When managers perceive resistance to change as a threat or when the change effort is in serious trouble; they may become competitive, defensive and uncommunicative. Instead, managers should see the resistance as a form of feedback because employees know about day-to-day operations first hand. Managers can use resistance to effect change more productively, for example by providing employees participation and engagement.

The managers can make use of the following ways to positively influence organizational change:
• Education and communication
• Participation and involvement
• Facilitation and support
• Negotiation and agreement
• Manipulation and cooptation
• Explicit and implicit coercion

Employees should be educated and communicated about any changes beforehand through discussions (one-on-one), presentations (groups) or with memos and reports. They need adequate and accurate information and analysis to understand change.

Managers can use employees’ advice about some aspects of change that may lead to potential problems. Participation often leads to commitment and increasing the chance of successful change.

Managers should provide support through employees training of new skills and emotional support in order to deal with personal fear and anxiety that cause the resistance in the first place.

Managers can offer incentives such as higher wages or better benefits for employees. Negotiation is needed to win acceptance and approval, especially when someone may lose out as a result of change.

Managers can try to influence others by the selective use of information or the structuring of events. Cooptation involves giving an individual or a group desirable roles in the change process.

Managers can force people to accept a change or lose something (such as rewards, promotions or loss of jobs). This can be used when the firm is in a crisis situation or when there are no other options.

Organizational development is a field of research, theory, and practice techniques to expand the knowledge and effectiveness of people to accomplish successful organizational change and performance.

Some of the popular techniques are the following:
• Team building
• Survey feedback
• Sensitivity training
• Large groups intervention approach

Team building activities are designed to improve the capacity of the members to work together in a harmonious environment and to function as a team. Interpersonal interactions and communications play a significant part of team building to increase the sensitivity of the members’ behaviors and to promote a healthy and functional team.

Data is collected via a questionnaire on topics such as the quality of work, working conditions, employees’ attitude, cohesion, etc. The data is processed and analyzed to identify problems with the employees’ engagement in problem solving.

Technique where employees interact, get better acquainted and form relationships in order to understand each other better. Members can express themselves in a safe and controlled environment to increase trust and comfort with each other.

A planned meeting of organization members and outside stakeholders to address organizational problems and opportunities. Large group interventions can vary in size, purpose, composition, structures and numbers. Although they tend to focus on the future, broad participation, intense prior planning and information sharing. Large group interventions are often used for large scale changes, therefore, the importance of dealing with the whole system (i.e. the entire organization) is significant.

The purpose of organizing can be summarized as: dividing work into specific jobs; assigning tasks and responsibilities for each job; coordinating those tasks, grouping jobs into units and departments; establishing relationships and formal authority among individuals; and allocating resources.

The organizing function is a mechanism that managers use in order to activate plans. The importance of organizing can be readily seen when managers allocate organizational resources efficiently and effectively by specifying when, where, and how resources are to be used.

Organizational structure is a system that consists of rules and policies to outline work roles, responsibilities and reporting relationships, and how they fit within the overall system.

Division of labor or work specialization is the degree to which work activities are divided into separate jobs. It has specialization by functions such as sales and production. Production tasks are separated into purchasing, quality control and manufacturing. This way, individual employees perform only the tasks they are specialized in rather than the entire activity.

Authority refers to the right of a person to give instructions, make decisions and allocate resources. In an organization, a manager has the formal authority from his or her position that is accepted by subordinates. 

Legitimate Power – based on a person’s right in the formal hierarchy to make demands.

Reward Power – based on a person’s ability to compensate another for compliance.

Expert Power – based on a person’s skill and knowledge.

Referent Power – based on a person’s perceived attractiveness, worthiness and a right to others’ respect.

Coercive Power – based on the belief that a person can punish others for noncompliance.

Informational Power – based on a person’s ability to control the information that others need to accomplish something.

The most basic method to divide job activities for managers is to follow the sequence of activities:

? Examine objectives,

? Design job activities to reach those objectives,

? Group similar activities to specific jobs, and

? Assign individuals to those jobs.

Delegation occurs when a manager divides work among subordinates and gives them the responsibility and authority to accomplish tasks. A manager is responsible for all work in an area and can only complete the work by delegating part of the work to subordinates. This process continues down the chain of command. 

The span of control refers to the number of employees directly supervised by a manager.

When the decision authority is pushed down to lower levels of the hierarchy, this means decentralization.

In a functional structure, activities are grouped according to their similar or related skills, expertise and use of the same resources. It is often used by SMEs (small and medium-sized enterprises) around basic business functions such as production, marketing and sales, and finance and accounting. We can readily see the benefits of grouping by specialization: it encourages in-depth skills development and core competence, high standards and efficient use of resources. Centralized operations within each function enhance the coordination of work activities.

A divisional structure is made up of separate divisions according to similarities or demands of product, customers, or geography. Each division has some autonomy; with a divisional manager who is responsible for its performance. In some companies, the divisions may be given a high level of autonomy and are often called business units. Some of the business units in very large firms may be totally independent businesses altogether.

A matrix structure combines advantages of both functional and divisional structures simultaneously in order to be highly responsive to changing external business environments. In other words, a matrix structure groups people and resources by function and by product or project.

A hybrid structure has several business units or divisions and makes use of different forms of structures in order to tailor to an organization’s specific needs.

Environmental uncertainty is a situation where the management of a firm has little information about its external environment.

Technical complexity is categorized according to the level of mechanization of the manufacturing process. Low technical complexity means that workers perform much of the work in the production process. 

Katzenbach and Smith assert that a team should have a small size and must contain four elements:

• Common commitment and purpose – team members do not perform as individuals but as a powerful unit of collective performance with a purpose they can believe in.

• Performance goals – a common purpose is translated into specific and measurable performance goals which help define work products, facilitates clear communications and maintains focus.

• Complementary skills – a team should develop the right mix of skills or the complementary skills necessary to do the team’s job.

• Mutual accountability – a team must hold itself accountable as a team.

A problem-solving team is a team that is involved in efforts to improve work activities (such as quality and efficiency) or to solve specific problems. Members share ideas or offer suggestions on how a work process or a work method can be improved. 

Organizational change is the process by which organizations adopt new ideas or behaviors to increase organizational effectiveness.

Resistance to change is expected from within the organization because people often try to maintain the status quo. However, resistance to change lowers a firm’s effectiveness therefore, managers need to understand this issue in order to implement change more effectively.

When managers perceive resistance to change as a threat or when the change effort is in serious trouble; they may become competitive, defensive and uncommunicative. Instead, managers should see the resistance as a form of feedback because employees know about day-to-day operations first hand. Managers can use resistance to effect change more productively, for example by providing employees participation and engagement.