Organising

Chapter 5
Learning Outcomes
This chapter should enable you to:
• define the term ‘organising’
• list the steps in the organising process
• discuss the different forms of authority
• distinguish between authority, accountability, responsibility and delegation
• explain the reason for specialisation
• discuss the different types of divisional structures and a reason for using
each one
• give your views on co-ordination
• identify the different types of organisational structure.
Introduction
• Once planning is completed, these plans must be put into action. To do this
involves organising.
• Organising means co-ordinating activities so that objectives can be
achieved.
• As a management task, organising is mainly concerned with the
classification and allocation of activities to divisions, the creation of posts
within these divisions, and the determination of employees’ duties,
responsibilities and authority
• Organisation is an interdependent function within the management
process; it must go hand-in-hand with planning, leading, motivating and
controlling.
• It must take the business environment into account. The environment
determines the business’s strategy, and this strategy determines the
business’s structure, therefore the way the business is organised must
change with the environment.
The organising process
2. Identifying
1. Gathering 3. Classifying
and analysing
information activities
activities

5. Assigning
6. Facilitating 4. Allocating
authority and
work staff
responsibility
Principles of organising
Co-ordination
• refers to the integration of the business parts to achieve the desired
outcome.
• There are three elements of co-ordination
1. Chain of command
• Refers to the line of authority that flows from the top of the business
down to any employee.
• This clarifies an order of reporting, avoids confusion and tends to
improve decision making and communication
2. Unity of command
• This principle means that each employee should answer to, and take instructions from,
only one immediate superior
3. Span of control
• The span of control refers to the number of direct subordinates reporting to any manager.
• A manager’s span of control can be influenced by:
• the manager’s training, qualifications and competence
• the subordinates’ training, qualifications and competence
• the physical distances between employees
• the degree of non-supervisory tasks included in the manager’s job description
• the interaction required with the subordinates
• the similarity of the subordinates’ tasks
• the level of standardisation of the subordinates’ work
• the frequency of new problems
• the strictness of control required
Authority
• Authority is the right to make decisions, issue orders and utilise resources. The
types of authority that a business uses will depend on how it is structured
• Ethically → it is important to remember that even though the management of
a business or organisation automatically possesses some form of authority, it
does not mean that management’s point of view should always be accepted as
correct and as what is best for the business.
• Management must make a conscious decision to pay attention to the feedback
and ideas from their employees and ensure that they make the most
appropriate decisions for the business based on having a complete picture of
the day-to-day activities.
Line authority
• Line authority refers to the direct authority that a manager has over an employee
who is under his or her line of command.
Staff authority
• Staff authority is largely advisory and is most common on the middle-management
level.
• We can identify the following three types of staff authority:
[Link] authority refers to when specialist knowledge is used, but the inputs of the
specialist are not enforceable, it is only advice.
[Link] advice is when the manager of one section is compelled to listen to the
specialist, but is not compelled to carry out the recommendations.
[Link]-operative authority is when the specialist has equal authority regarding a certain
matter. In this case there must be consensus between the manager and specialist
before a decision can be taken.
Line-and-staff authority
• Line-and-staff authority is when line managers and staff managers form
a collaborative partnership. Line departments would not be successful
without the support of staff departments and they can be seen as
internal customers of the staff departments.
Functional authority
• Functional authority is the right that staff specialists have to give orders
to line employees in an established area of responsibility.
Project authority
• Project authority is the horizontal (sideways) authority of a project
manager, which can extend over many different departments.
Responsibility
• Responsibility means the duty to do certain work. In accepting a job, the
employee takes responsibility for performing the activity involved in it. The
nature, scope (range) and details of specific job responsibilities should always
be made clear to the employee whether he or she is at a managerial level or
not.

Accountability
• Accountability is any means of ensuring that the employee who is supposed to
perform an activity in fact performs it, and does so correctly.
Delegation
• Delegation is the process by which managers allocate to subordinates the
responsibility and authority to execute and make decisions for accomplishing
objectives in certain situations.
Centralisation and decentralisation
• The centralisation and decentralisation of authority are management
philosophies of delegation.
• Centralisation is the degree to which the decision-making power is
concentrated at a single point in the organisation.
• Decentralisation, on the other hand, refers to the degree to which lower-level
management provides input regarding the decision-making process or actually
makes the decisions.

Specialisation
• Specialisation refers to the division of work in order to improve how goals are
achieved.
• Few employees have the necessary skills, knowledge and expertise to perform
every task in a business, so employees with special skills are appointed to
work in a division where they can apply their special skills, interests and
knowledge to their jobs.
FIGURE 5.1 Example of specialisation in a building business (p. 109)
Divisionalisation
• Divisionalisation means creating self-managing units within a
business. Each division then has its own departments.

A divisional structure based

on business functions

FIGURE 5.2 Divisionalisation according to business functions (p. 110)

 A functional structure can
also be organised around a
business’s value chain. A
value chain is a series of
activities that flow from the
sourcing of raw materials to
the delivery of a product.

FIGURE 5.3 A generic (whole group) value chain (p. 111)

A divisional structure based on products

FIGURE 5.4 Divisionalisation according to product (p. 111)

 A divisional structure
based on geographic
location

FIGURE 5.5 Divisionalisation according to geographic location (p. 112)

 A divisional structure based on
projects

FIGURE 5.6 Divisionalisation according to projects (p. 113)

 A divisional structure based on consumer or client needs

FIGURE 5.7 Divisionalisation according to consumer or client needs (p. 113)

Organisational structures

The organisational structure of a

business helps the business to
achieve its goals by providing a The environment in which the
framework for managers to divide organisations operate will influence
responsibilities, allocate authority, the structural design of the
coordinate activities, control organisation
performance and hold employees
accountable for their work.
Line a simple hierarchy where the lines of authority run vertically
organisational from the top to the bottom of the business.
structure

Line-and-staff has vertical lines of authority for its basic functions, but staff
organisational specialists are added to perform more complicated
structure functions.
Functional the structure of a line organisation reflects the basic
organisational functions of a business
structure

Divisional aims to support self-contained divisions

organisational
structure
Matrix uses both vertical and horizontal lines of authority. The vertical functional line
organisational of authority provides control within functional departments while the
horizontal divisional line provides co-ordination across these functional
structure departments

Unity of command is not always possible

Team cross-functional team is a selected group of employees from different

organisational functional departments who meet as a team to solve shared problems
structure

permanent team is a group of employees from several functions whose

permanent job is to solve general problems
Network
organisational has its functions operated by separate
structure businesses, which are run by a small
headquarters. Instead of the various business
functions operating under one roof, these
services are provided by other businesses that
are working under contract and are connected
electronically (computers, internet, email) to
the central office
The changing organisation
• Today’s businesses function in an ‘economy of ideas’. Never before in
the history of business has so much change been introduced so
quickly.
• Uncertainty occurs when the external environment is rapidly changing
and complex
• An uncertain environment causes, among others:
• increased differences among divisions/departments
• an increased need for co-ordination between divisions/departments
• a need for the business to adapt to change.
In a changing organisation, the most important energy comes from
good, new ideas.

Knowledge management means using the intellect of the people

who work for the business.

It refers to the finding, unlocking and sharing of the people’s

expertise, their skills, their wisdom and, lastly, their relationships.

Communication among different divisions, departments or other

sub-units of the business must be of a high level.
Management changes have become a critical managerial function.

For a business to be able to adjust to market needs, it will sometimes mean that the
business has to change its whole organisational structure.

Businesses in the past were designed to make life easier for management, rather than to
please the customer.

Today businesses are realising they must have an organisational structure that can respond
quickly to the needs of the market.

A business’s environment determines a business’s strategy, and this strategy determines the
business’s structure, therefore the business structure must change with the environment.

Only if changes in the environment are recognised will it be possible to keep developing an
effective organisational structure.
Summary
• Organisations today revolve around resources, and the most important resource in any
organisation is people.
• The organisational process is all the actions that convert efforts into productivity that
customer’s value.
• Organising is all about how things get done in the organisation. Organising involves the
use of certain principles for identifying and arranging the activities and resources of a
business. This can be done by structuring the business at both horizontal and vertical
levels through the allocation of duties, responsibilities and authority to members of the
workforce and to divisions.
• Through organisation, an effective business structure can be developed that will
contribute to achieving the objectives of the business in the most efficient way possible,
and will encourage co-operation.
• A person can understand the swift expansion of organisational structures better by
recognising the need of the organisation to design systems which will enable the
effective integration and coordination of a large workforce.