The Organizing Function - Principles of Management - ثالث ثانوي

وبارت التعليم 2.3 The Organizing Function www. LEARNING OBJECTIVES Once you have completed this lesson, you should be able to: 2.3.1 Describe factors shal managers should consider when organizing work. 2.3.2 Discuss how the characteristics of good organization contribute to a more effective work environment. KEY TERMS Organization Chart Responsibility Authonty Empowerment Accountability Unity of Command Chain of Command Span of Control/ Span of Management REALITY CHECK Time to Get Organized? Norah is on the senior leadership team of an ethical clothing man- ufacturer headquartered in Abha. The company began as a small family business, with no formal organization structure, which has gradually grown to a point where they are considering expanding operations into other cities across Saudi Arabia Umil now, various family members have contributed their expertise in areas including accounting, design, production and technical support, as and when needed Nora belleves the time has now come to establish an or ganization structure with designated roles. She discusses the idea with her sister, Maha. "I don't know," replies Maha "I've always liked the arrangement we have already. It's much more flexible around our lives. It also means everyone can make a contribution, without any arguments. Your Idea sounds too formall" "A business of this size needs some kind of formalized organiza- tion," Nara responds. "I think it's fundamental to growth. I think it will also lead to fewer arguments if everyone has ownership of a specific task and knows who is accountable for what." What's Your Reaction? What is your perspective on Nora and Maha's individual points of view? is an organization chart necessary for every business? Lesson 2.3 The Organizing Function 87

التعليم 4 88 LO 2.3.1 Organizing Work Before a plan can be put into operation, the company must be organ- ized to carry out the plan and perform work effectively. Organizing is concerned with determining how plans can be accomplished most effectively and arranging resources to perform work. More specifically, it involves arranging resources and relationships between departments and employees and defining the responsibility each has for accom- plishing work. For example, when the plan is to start manufacturing a new product, specific activities will be determined and assigned to the appropriate departments. Making a new product involves several departments: research, manufacturing, human resources, marketing and sales, finance, and information management. Each department manager organizes the activities so the work will be accomplished on a schedule that fits in with the work of the other departments. The Role of Organization Charts An organization chart is an illustration of the structure of an organi- zation, major job classifications, and the reporting relationships among the organization's personnel. The purposes of an organization chart are to (1) show the major work units that make up the business, (2) allow employees to identify which unit they belong to, how it relates to other units, and who they are accountable to, and (3) identify lines of author- ity and formal communication within the organization. Figure 2-5 is an example of an organization chart for part of a retail business. Large organizations usually provide new employees information through an employee handbook or on the company's website that explains the organization of the business and shows an organization chart. By understanding an organization chart, employees have some idea of where and how they fit into the company, how the organization works, and possible promotion opportunities. As changes occur in an organization through reorganization of work or when operating units are bought and sold, the company's organization chart can become out- dated. To be a useful management and communication tool, the chart should be revised when changes occur in the organizational structure. Chapter 2 Planning and Organizing

عبارت التعليم Vice President of Purchasing Euniral Manener Vice President, if Merchandising Vice President of Financ Advertising and Promotion Manager Customer Service Manage! Sales Manager Sumire and Remein Malang Figure 2-5 Organization Chart for Part of a Retail Business An organization chart provides a visual picture of how work is structured in a business. The Process of Organizing Work Many new small businesses are being established in Saudi Arabia, as a result of the growing private sector and government stimulation of innovation. As a new small business grows, the owner has the com- plicated task of organizing the entire structure of the business. Just because an established business is already organized, the managers cannot ignore the organization function. The organization may need to change when goals are revised or when the business expands. Using the Reality Check example from the beginning of the chapter, if Ibrahim is successful in developing an Internet sales department, he will have a very different organization than before the expansion. It is unlikely that the current organizational structure and employees will be able to accommodate all of the new activities and the extra workload. He will need to carefully organize the business so that it will be able to perform the new activities efficiently while still maintaining the existing business activities. If he does not pay attention to the organization of the work, the business may not be able to adjust to the changes. Lusun 23 The Organizing Function 89

ارد التعليم 90 Whether the focus is on a new or existing department, division, or an entire business, the process of organizing involves three elements: 1. the division of work 2. the facilities and working conditions 3. the employees. Division of Work In establishing an organization structure, the total work to be done must be divided into units, such as departments. The first consideration is the grouping of activities into broad, natural divisions, such as buy- ing and selling or production, marketing, and administration. For small businesses, only two or three divisions may be needed to separate the work into manageable units. For large businesses with many employees and activities, the major divisions will need to be divided several times into departments or work units of reasonable size. Departments should be organized around meaningful and related work, work should flow smoothly within and among departments, and employees should be assigned to the units where they have expertise to perform that work. Major divisions of work vary with the type of industry and business. A small retailer will usually organize the work around the major activities of purchasing and selling. Manufacturing businesses will be divided into purchasing, production, and marketing departments. Most businesses have departments or work units for administration, information technol- ogy management, and human resources. For effective management and control, even small businesses benefit from organizing work into related and manageable units. As a business grows, the number of major divisions will increase or existing divisions will be reorganized. When the small retailer expands, the basic selling division may be subdivided. A larger marketing division may be established and subdivided into advertising and promotion, personal selling, and customer service. Determining how to divide work into efficient units is based on: 1. the type of work to be done in each unit 2. the amount of work to be done. Chapter 2 Planning and Organizing

وزارة التعليم The organization charts shown in Figures 2-6, 2-7, and 2-8 point out how the organization of a business may change as the company grows, using two business people, Amir and Hassan, as examples. Purchasing Pricing Inventor Sales Advertising Creat and Caffections Accounting and France Figure 2-6 Organization Chart for Amir's Company The owner of a small business might perform all of the work. Purchasing Pricing Inventory Sales Advertising Accoutting and Finance Credit and Collisions Figure 2-7 Organization Chart for Amir & Hassan's Partnership Two owners allow for a division of work. VP of Purdning Purchasing Ping inventory D V.r. of Sales Vit. of Marking Sale: Dilector Advermun Sales Figure 2-8 Organization Chart for Amir & Hassan's Corporation As the business expands, there can be a further division of work with a clear delegation of responsibility and authority. Accounting and unince Credit and Collections Lussun 2.3 The Organizing Function 91

التعليم 92 A small business needs good organization just as much as a large organization. Management problems often begin to occur in a small business when employees are added but work responsibilities and relationships are not dear. Making organizing decisions as a small business expands may not at first result in a formal organization chart. However, the business's work should be carefully studied and assigned to specific employees. Even without an organization chart, the work responsibilities, the relationships among employees, and their author- ity should be dearly communicated to everyone. For example, the owner of a retail business that sells and services home appliances in Dammam hires two employees, A and B. The owner is responsible for management of the business and is involved In both selling and service as time permits. Employee A is given responsibility for appliance sales and is the contact with the suppliers from which the company purchases appliances. Employee A is also in charge of the business when the owner is absent. Employee B is responsible for appliance service and repair and has the authority to make decisions related to customer relationships after the customer has purchased a product from the business. These organizational decisions clearly identify who the work should be done by and the relationships among the people involved. The example illustrates how even very small organizations can develop an effective organizational structure and manage work. Facilities and Working Conditions While divisions of work are being established, the physical aspects of organizing must also be considered. The business must provide the necessary equipment and materials for employees to be able to perform their work. The layout of the facilities needs to be arranged so that all work flows smoothly with little waste while providing the best and safest working conditions possible. Work should move through the business as efficiently as possible. Employees should not have to waste time, and the work of one group should not delay the work of others. A mechanic repairing an auto- mobile, for example, should have ready access to the needed tools Chapter 2 Planning and Organizing

وزارة التعليم 172 144 HAL and parts dose to the work area. If special parts are needed, a system to order and obtain the parts quickly should be in place so the repairs are not delayed. Many auto repair companies have computer systems that can quickly locate auto parts from area suppliers and an express pickup and delivery service to immediately obtain the needed parts. When a customer comes in for a service, an auto service specialist will consult with the customer to identify problems and write a ser- vice order that identifies the work needed, the time and personnel required to perform the repairs, and the parts and supplies required. If the items are not in stock in the repair facility, an emergency order will be placed to obtain the missing items as quickly as possible. Physical working conditions also have an effect on the morale of workers, Job satisfaction is influenced by basic environmental factors such as lighting, temperature, ventilation, and cleanliness of the work areas, as well as the quality and maintenance of tools and equipment. Even facilities outside the work area should be carefully planned, such as convenient and sate parking facilities and easy access to cafeterias and break rooms. Why do you think office environment can Improve employee morale and productivity Lesson 2.3 The Organizing function 93

التعليم 94 Employees Dividing the work into manageable units and providing adequate equipment and facilities must be done with employees in mind. In fact, organizing involves establishing a balance among the employees, the work to be performed, and the facilities needed, so that produc tivity will be high. In part, organization is a successful matching of the employee and the employee's materials and work. Employees should be matched to work that they are prepared to do. That means that they have the necessary preparation and skill to perform the assigned tasks. It employees are members of work teams, the total skills of the team should match the work requirements. In addition, employees should be assigned to work that they enjoy. If employees are dissatisfied with their work assignment, problems with the quality and quantity of their work will result. Although not all work is enjoyable, managers should look for opportunities to make the best work assignments possible, to spread less desirable assign ments among employees 50 a few people do not have to spend all of their time doing that work, and to work closely with employees to establish a positive working environment. ? CHECKPOINT What are the three elements that should be consid- ered when organizing work? LO 2.3.2 Characteristics of Good Organization When one person operates a business, there is little need for an organi- zation chart-that person performs all the work. The need for organiza- tion increases when two or more people work together. When people engage in any kind of cooperative activity, whether as members of an athletic team or as construction workers building a house, they can Chapter 2 Planning and Organizing

حرارت التعليم accomplish better results if the overall task is planned and organized. In that way, each person knows what is expected and how they are expected to work together to accomplish the necessary work. Several characteristics of good organization apply to the management of work, such as responsibility and authority, accountability, unity of command, and span of control. Responsibility and Authority Responsibility is the obligation to do an assigned task. In a good or ganization, the assigned tasks are clearly identified so all employees know exactly what work they are responsible for. Authority is the right to make decisions about work assignments and to direct other employ- ees to perform assigned tasks. Authority is delegated from the top of the organization to others at lower levels. One of the greatest mistakes in business is to assign responsibilities to employees without giving them sufficient authority to carry out those responsibilities. Consider the situation of an employee at a car rental company. The employee is responsible for providing a car to a customer standing at the counter who has a reservation, but the type of car requested is currently unavailable. The employee must have the authority to rent another car that will meet the customer's needs, or the customer will be very upset. Each employee and each manager should know specifically: 1. the description and duties of each job 2. what authority accompanies the job 3. the manager in charge 4. who reports to the manager 5. what is considered satisfactory performance. A common practice in many organizations today is employee empow- erment. Empowerment is the authority given to individual employees to make decisions and solve problems they encounter on their jobs with the resources available to them. Empowered employees need to be well trained and be effective decision makers and problem solvers. Lussun 23 The Organizing Function 95

Why is it important for amplovees to have the machonity to tanke decisive whipp withstones They need to understand the effects of their decisions on the business, other employees, and customers. Empowered employees have the con- fidence that their managers will support the decisions they make. Some companies have been reluctant to empower their employees, believing that managers, will lose control of the organization. However, experi- ence has shown that empowerment improves employee morale, pro- duces more satisfied customers, reduces work problems, and increases work efficiency Unless employees know their specific responsibilities, duties, and au thority, they are likely to be unsure about the work they are to do. Furthermore, conflicts may arise due to misunderstandings about what needs to be done and who makes decisions about work assignments and satisfactory performance. When employees understand responsibil- ity and authority, overlapping duties can be eliminated. Effective organ- ization is helpful in eliminating conflicts between managers, employees, and departments and in increasing cooperation and collaboration.

Why is it important for amplovees to have the machonity to tanke decisive whipp withstones They need to understand the effects of their decisions on the business, other employees, and customers. Empowered employees have the con- fidence that their managers will support the decisions they make. Some companies have been reluctant to empower their employees, believing that managers, will lose control of the organization. However, experi- ence has shown that empowerment improves employee morale, pro- duces more satisfied customers, reduces work problems, and increases work efficiency Unless employees know their specific responsibilities, duties, and au thority, they are likely to be unsure about the work they are to do. Furthermore, conflicts may arise due to misunderstandings about what needs to be done and who makes decisions about work assignments and satisfactory performance. When employees understand responsibil- ity and authority, overlapping duties can be eliminated. Effective organ- ization is helpful in eliminating conflicts between managers, employees, and departments and in increasing cooperation and collaboration.

الصليم Managers evaluate employees' work by comparing the work to estab- lished goals and work standards. For the assigned work, each employee is accountable for achieving the quality and quantity defined by the goals and standards. Managers need to communicate the goals and expected standards when assigning work, and then use those same goals and standards when evaluating the employee's work. Unity of Command An important principle of good organization is unity of command. Unity of command means that each employee reports to one-and only one-supervisor at a time or for a particular task. Confusion and poor work relations result when a person has work assigned by and is accountable to more than one supervisor. The person may not know which assignment to perform first or may receive conflicting instructions regarding the same work assignment. Within teams, problems with unity of command are more likely to occur. Teams and their supervisors must practice the same careful organization of work as used in more traditional structures. Teams need clear assignments of responsibility and authority for their tasks, and all team members need to be aware of who is in charge of each activity. Ultimately the entire team and its supervisor are responsible and accountable for the results produced. A team member cannot shift the blame to someone else when something goes wrong or fail to take on a share of the workload if that organization structure is to work successfully Chain of command is a concept closely related to unity of command. The chain of command refers to the hierarchy of the organization, from the highest level to the lowest level. For instance, the president of the firm may have multiple vice presidents who report directly to him or her. Each vice president might have multiple directors as direct reports, and each director may have many supervisors as direct reports. Under the idea of chain of command, information flow is expected to move up and down this hierarchy. A supervisor would relay a concern about an existing procedure or an idea for a new procedure to his or her director, rather than to the president of the firm. When the chain of 98 Chapter 2 Planning and Organizing

command is not followed by team members, the managers who were placed in the hierarchy to act on the company's behalf are not the ones making the decisions or solving problems, which is an ineffective use of resources that may result in poor decisions. Following the chain of command cannot work unless unity of command already exists within the company. Span of Control (Span of Management) Span of control and span of management are used interchangeably to describe the number of employees that any one manager supervises to effectively implement an organization's goals Organizations must establish a reasonable span of control for each manager The manager who supervises too many people is overworked and unable to perform all duties effectively. Employees may not have access to the manager when help is needed. On the other hand, time and money are wasted if How can a business define what is a rewonable spon of control for u ITianager?

التعليم a manager supervises too few people. That manager may supervise each person too closely or spend too much time in nonmanagement work. In general, the span of control is larger at the lower levels of an organiza tion than at the higher levels. For example, the head nurse in charge of a floor unit in a hospital may supervise 15 or more employees, whereas only three vice presidents report to the chief executive of the hospital. Companies that use work teams and encourage employees to be more involved in planning and decision making have found that they can increase the span of control. Well-trained and motivated employees do not require as much direct supervision as those who must rely on managers for direction. These companies have been able to reduce the number of managers required or have been able to increase the size of their workforces without hiring additional managers. CHECKPOINT What is likely to happen if employees are assigned responsibility for work tasks but are not given the needed authority? 100 Chapter 2 Planning and Organizmy

عبارت التعليم 2.3 Assessment UNDERSTAND MANAGEMENT CONCEPTS Determine the best answer for each of the following questions. 1. A well-designed organization chart shows all of the following except the mujor work units that make up the husis b which unreich umploye belang, ng how it relates in dither unit. G. and who employed are acountalule to lines at outfiurity and formal communication within the wganiza d. the primary groups sugamers to whom the hubnecells s paduers 2. The hierarchy of the organization, from the highest level to the lowest level, is called the a. rallif command b. wor spa of ins duney of command THINK CRITICALLY Answer the following questions as completely as possible 3. Do you believe that a large business will operate more efficiently and effectively with more or fewer organizational units? Justify your answer. 4. If you were a supervisor, what would you do to make sure each employee is aware of his or her responsibilities and authority? What could you do to make your employees teel empowered to make decisions and solve problems associated with their work? Lesson 23 The Organizing function 101

FOCUS ON Innovation Utilizing Employee Ideas To remain competitive, businesses need to look for produs improvements and new product ideas. Top company executives or a research and prod- uct development department usually develop these ideas That procedure often results in a few ideas that are good enough to develop into profita- ble opportunities for the company However, increasingly more companies are taking the innovative ap- proach of involving all employees in product development. For many busi- nesses, success means having a regular supply of new products as well as responding quickly to new technology and changing customer expecta- tions for challenging and exciting experiences. Innovative companies develop a culture that attracts optimistic, ener- getic people who have both technical skills and an interest in collaboration Their employees are creative, want to be involved, and are willing to work hard to make the company successful. These companies encourage ideas that could save money or increase efficiency; ideas for new products or services, and ideas for new and improved technologies Various company schemes have been introduced in the business world, providing an outlet for employees to suggest new ideas, whether for new products or simply a better way of doing things in an open environment. Rewards are given if the idea is successfully instigated. The result has been a number of innovative products, often finding a new application for an existing technology that the company specializes in Think Critically 1. Do you think most company owners and top managers would sup- port the Idea of smart office environments? Why or why not? التعليم 2. What do you believe makes this collaborative approach a success- ful way to develop new product ideas?

3. If you were an employee of a company that took this approach. would you volunteer to work on a product idea without a guaran- tee of being paid for your time? Explain. Innovation FOCUS ON