A

PRESENTATION

ON

ORGANIZING

BY

AMIT M. RAMPURE (5)

NAMRATA BAHULE (7)

Sinhgad Technical Education Society’s

SINHGAD INSTITUTE OF MANAGEMENT
Vadgaon (Bk),Sinhgad road

Pune-4110041

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 CONTENTS

1. Opening case-The HP WAY 3.

2. Introduction 4.
3. Process of organizing 6.
4. Organization design 8.
5. Departmentation 9.
6. Line and Staff Authority 14
7. Mechanistic and Organic Organization 16
8. Delegation of Authority 20
9. Decentralization 22
10. Span of Management 25
11. Formal and Informal organization 30
12. Coordination 32
13. Trends in Organization. 35
14. Bibliography

1. Opening Case

Hewlett-Packard and Digital Revolution-THE HP WAY

Hewlett and Packard like many of leading companies , Began 1990s with the
changing of the guard. The company announced that in July 1992 that Lewis Platt
would be taking over the longtime CEO John Young. Unlike IBM and Digital
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Equipment corporation (DEC), However HP was an organization that was not in
need of reconstruction. In fact in terms of Profit, HP was excelling against nearly
all competitors. It seems that Platt had to seat back and maintain course But
during 26 years he spent with company, Platt had learned that success should
not give way to complacency.

While serving as Head of HP’s Computer system organization plat has

witnessed the beginning of a revolution-a digital revolution. As computers
communications and consumer electronics began to merge ,Platt saw that all
type of media were being converted into digital form. Everything from TV
programs to telephone calls was being translated into binary computer code so
that it could be transmitted anywhere in the world that s digital network
reached. Platt saw it lays a multibillion dollar market that were promise to open.
The problem was that the companies place in the new industry was less clear. Hp
was absent from the merger and joint venture; while IBM and Apple were
approached by likes of Sony and Time Warner. Platt Knew that HP was not able to
hop on to the digital bandwagon. The role of Hp in new arena was severely
limited.

Platt decided that HP was going to need entirely new line of products and
consumers. By marshalling HP’s numerous technologies and cross breeding them
Platt began to drive the HP full speed ahead into a new era. By reinventing and
rejuvenating what already works, Platt moved to secure HP a future in the
coming Digital revolutions. Platt setup three primary objective for 1993 and
beyond. First Platt promised aggressive restructuring in an attempt to improve
HP’s profitability even further. Second he encouraged customer satisfaction. The
company has reputation of being difficult to deal with, Platt want to rectify finally
Platt intends to increase HP’s emphasis on enlightened management in the
company’s culture.

Along with developing company’s strategy Platt must lead the decision
making process to determine how to organize the company for implementation
of the strategy. It is likely the collaboration among existing parts of HP
organization, where knowledge strengths reside, will be necessary. And it is
possible that HP managers and employee will need to cultivate relationship with
new outsiders to develop new products.

2. INTRODUCTION
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 An Organization is a pattern of relationships through which people , under
direction of managers, pursue their common goals. Thegoals that managers
develop trough the planning are typically ambitious, far reaching and open
ended. Managers want to ensure that their organization need a stable,
understandable framework within they work to achievethe Goals. The managerial
process of Organising involves making decisions about creating this kind of
framework so that organization can last from present well in future.

Organization is a Social unit or human grouping deliberately structured for

purpose of attaining specific goals. Organising is the process of coordinating and
allocating a firm’s resources so that the firm can carry out its plans and achieve
its goals

At Hewlett and Packard Lewis Platt must decide on a pattern of relationships

that will enable HP employees to capitalize on what they know and what they
have learned in the past work. Platt does not start from zero. He walked into a
preexisting organization. people relate to one another in certain way. So Platthas
challenge is to build on this base as he develops a structure that will take HP in
future.

PURPOSES OF ORGANIZING

• Implementation of plans, Strategies.

The plans are just intentions without the implementation. To

implement the plans, the organizingis required. The well designed
organization will have different functions which will work towards
attaining the goals

• To increase efficiency of work.

Properly designed Organization assures that the work is done in

most efficient and effective manner. The Work division, proper
authority, and the persons with different skills are placed in most
efferent manner which will work efficiently.

• Personal Identity

The Organization structure defines the role of each member of the

enterprise. Thus every member knows where he and his department
stands in the enterprise and in relation to other departments.

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• Determination of responsibility

Organization structure fixes definite responsibility of each

department and that of each member.

• Determination of Authority

Organization structure defines the authority of each member of

organization who can delegate his responsibility but remains
responsible for himself for the act of subordinates.

• Coordination.

Organization structure defines the activities and their sequences to

be performed. This establishes the different stages through work
will pass, person responsible and channel of communication. The
management hierarchy, Rules and regulations, plans and goals
provide the path for coordination.

• Optimum staff use.

Organization structure defines the activities and sequence to

perform with the responsibility of the person. Due to this way it
makes possible to secure the maximum output with the minimum
effort.

• Specialization.

The clear picture of the work to be done at each work point, it

becomes easy to find persons with the specialization in the
concerned field to do it.

• To study human behavior.

Organization provide ideal setting for the study of human behavior.

Research and study of organization leads to many important
discoveries vital for continues well-being of our society.

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3. Process of Organising

DIVISION OF WORK

1. IDENTFICAION OF ACTIVITIES.
DEPARTMENTATION
To have effective organizing process, the manager must identify the
series of activities to be carried out in order to achieve the desired
objectives. Manager has to take care that all main and connected activities
are thought of and included. In identifyingHIERARCHY
the activities the manager
must keep in mind the objectives to be achieved.

Divide the total workload into tasks that can be logically and
comfortably be performed by individual groups. This is called as division of
work. Adam Smiths’s Wealth of nation opens with a famous passage on
DECENTRALIZATION
the specialization of labour in ht manufacture of pins.” One man draws
the wire, another straightens it, a third cuts it, a fourth points it, a fifth
grinds it at top fro receiving the head.”Ten men working in this fashion
made 48000 pins in one day, but if they are working separately they have
produced only 20 pins a day.The great advantage is the breaking of total
job down into small, simple, separate operation which different work could
specialize which increases productivity.

2. GROUPING OF ACTIVITIES

Once all activities are identified then the related activities are
grouped together. This is referred as Departmentation. For example the
activities of manufacturing firm may be grouped according to their
function as production marketing finance, HR etc. the activities of each
department is further classified and placed under the charge of different
sections.

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 3. ASSIGNING THE ACTIVITIES

After grouping the activities, the competent personnel/manpower

who could carry out the activity is identified. This refers to staffing. The
competence and acceptability of person for the process is very important.
This can be also be referred as the creating hierarchy. Hierarchy is a
pattern of multiple levels of an organization structure, at the top of which
is the senior-ranking manager responsible for the operation of entire
organization; other, lower-ranking managers are located down the various
levels of organization.

4. DELEGATION OF AUTHORITY

Any position in the organization comes into existence only when the
position are empowered to carry out the activities, for which the positions
are designed. This means injecting the positions with the managerial
authority. To carry out any activity, one must have enough authority. If no
authority is there ; the person doing work cannot be held responsible. The
managers should delegate the authority to their subordinates so as to
have maximum effectiveness of the staff. The decentralization is the policy
through which the top management gives more authority to different
layers of organization.

4. ORGANIZATION DESIGN

Organizational design is the decision-making process by which managers

choose an organizational structure appropriate for the strategy for organization
and environment in which members of organization carry out that strategy.

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 The manner in which the components of an organization interrelate and
interact influence the design of an organization. An organization structure
defines how job tasks are formally divided, grouped and coordinated.

There are six important things that managers need to know while designing
the proper organizational structure. They are:

1. Work specialization
2. Departmentalization.
3. Chain of command.
4. Span of Control.
5. Centralization, Decentralization and decision making authority.
6. Formalization

5. DEPARMENTATION

1. FUNCTIONAL DEPARTMENTATION

Departmentalization by function organizes by the functions to be

performed. The functions reflect the nature of the business. The
advantage of this type of grouping is obtaining efficiencies from
consolidating similar specialties and people with common skills,
knowledge and orientations together in common units.

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Advantages Disadvantages

• Development of expertise • De- emphasizes overall objective.

2. PRODUCT DEPARTMENTATION
• Clear career path within function • Narrow view point of key persons

• Departmentalization
Simplifies training • Reduction
by product assembles in co-ordination.
all functions needed to
make and market a particular product are placed under one executive. For
• Furnishes means of Tight control at • Responsibility of profit at Top
instance, major department stores are structured around product groups
top.
such as home accessories, appliances, women's
• Slow clothing,
adoption men's
to changes.
clothing,
and children's clothing.

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Advantages Disadvantages

• More focus on products • Duplication of resources.

• Easier to evaluate performance of product

• Problems for customers
purchasing across multiple
• Product responsiveness to market changes
product groups
• Less burden on the top executive in making operating
• Conflicts between product
decisions
group and corporate
objectives

• Conflict between product

groups

3. GEOGRAPHICAL DEPARTMENTATION

Departmentalization by geographical regions groups jobs on the basis

of territory or geography. For example, Merck, a major pharmaceutical
company, has its domestic sales departmentalized by regions such as
Northeast, Southeast, Midwest, Southwest, and Northwest.

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Advantages Disadvantages

• Responsibility at a lower level. • More persons with manager

ability.
• Emphasis on local market &
Problems. • Increases problem at top
level.
• Improves co-ordination in a region.
• Tends to make maintenance of
• Better face to face
central services difficult.
communications.

• Take advantages of local

economies.

4. PROCESS DEPARTMENTATION

Departmentalization by process groups jobs on the basis of product

or customer flow. Each process requires particular skills and offers a basis
for homogeneous categorizing of work activities. A patient preparing for
an operation would first engage in preliminary diagnostic tests, then go
through the admitting process, undergo a procedure in surgery, receive
post operative care, be discharged and perhaps receive out-patient
attention. These services are each administered by different departments.

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Advantages Disadvantages

• More persons with manager • More persons with manager

ability. ability.

• Increases problem at top • Increases problem at top

level. level.

• Tends to make maintenance of • Tends to make maintenance of

central services difficult. central services difficult.

5. CUSTOMER DEPRARTMENTATION

Departmentalization by customer groups jobs on the basis of a

common set of needs or problems of specific customers. For instance, a
plumbing firm may group its work according to whether it is serving
private sector, public sector, government, or not-for-profit organizations. A
current departmentalization trend is to structure work according to
customer, using cross-functional teams. This group is chosen from
different functions to work together across various departments to
interdependently create new products or services. For example, a cross-
functional team consisting of managers from accounting, finance, and
marketing is created to prepare a technology plan.

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 Advantages Advantages

• Focus on Customer needs. • May be difficult to coordinate

operations between
• Gives customer a feeling that
competing customer
they have an understanding
demands.
supplier..
• Requires managers & staff
• Develops expertness in
expert in customer problems.
customer area.
• Customer groups may not be
always defined

6. LINE AND STAFF AUTHORITY

In many organizations, Managers uses authority by dividing it into line
authority, staff authority, and functional authority. These kinds of authority differ
according to the kinds of Power on which they are based.

LINE AUTHORITY
Managers with Line Authority are those people in organization who are
directly responsible for achieving organizational goals. Line authority is
represented by standard chain of command, starting with board of directors and
extending through the various levels in hierarchy to the point where the basic
activities of organization carried out. Line authority is based primarily on
Legitimate power.

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 Managers in manufacturing company may limit line functions to
production and Sales, while in departmental store ,in which buying and selling
are key functions, will consider Purchasing department and selling department as
Line activities.

STAFF AUTHORITY
Staff authority belongs to those individuals or groups in organization who
provide the services and advice to line managers. The concept of staff includes
all elements of organization that are not classified as line. Advisory staffs have
been used by decision makers from kings to dictators and parliaments over the
course of recorded history.

Staff provides managers with varied types of expert help and advice. Staff
authority is primarily based on expert power. staff can also assist in policy
implementation, monitoring and control; in legal and financial matters; and in the
design and operation of data processing systems.

FUNCTIONAL AUTHORITY

The role of staff members-to provide advice and service to line members-
implies that staff lacks independent, formal authority. In reality, staff
departments, especially those responsible for audit functions, may have formal
authority over line members within the limits of their function. The right to
control activities of other departments as they relate to specific staff
responsibilities is known as functional authority.

7. MECHANISTIC AND ORGANIC ORGANIZATION

Through their Theory of Mechanistic and Organic Systems, Tom Burns and
G.M. Stalker have provided a way to understand which organization forms fit to
specific circumstances of change or stability. In their highly influential work "The
Management of Innovation", they provide the following characteristics of
Mechanic vs. Organic Systems:

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 Mechanistic Organization Form Organic Organization
/ Management System Form / Management
System

Appropriate
Stable Changing
Conditions
Specialized differentiation of functional
Contributive nature of special
tasks into which the problems and tasks
Distribution of tasks knowledge and experience to
facing a concern as a whole are broken
the common task of the concern
down
The abstract nature of each individual
task, which is pursued with techniques
and purposes more or less distinct from The "realistic" nature of the
Nature of Individual those of the concern as a whole: i.e., the individual task, which is seen as
task functionaries tend to pursue the technical set by the total situation of the
improvements of means, rather than the concern
accomplishment of the ends of the
concern
The reconciliation, for each level in the
hierarchy, of these distinct performances
The adjustment and continual
by the immediate superiors, who are also,
Who (re)defines tasks redefinition of individual tasks
in turn, responsible for seeing that each is
through interaction with others
relevant in his own special part of the
main task
The shedding of
"responsibility" as a limited
The precise definition of rights and field of rights, obligations and
Task scope obligations and technical methods methods (problems may not be
attached to each functional role posted upwards, downwards or
sideways as being someone
else's responsibility)

The translation of rights and obligations The spread of commitment to

How is task
and methods into the responsibilities of a the concern beyond any
conformance ensured
functional position technical definition

Structure of control,
Network, Presumed Community
authority and Hierarchic, Contractual
of Interest
communication

Reinforcement of the hierarchic structure Omniscience no longer imputed

by the location of knowledge of to the head of the concern;
actualities exclusively at the top of the knowledge about the technical
Locating of hierarchy, where the final reconciliation or commercial nature of the
knowledge of distinct tasks and assessment of here and now may be located
relevance is made anywhere in the network
Communication Vertical; i.e., between superior and Lateral; i.e., between people of
between members of subordinate different rank, resembling
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 consultation rather than
concern
command

Governance for
Instructions and decisions issued by Information and advice rather
operations and
superiors than instructions and decisions
working behavior

Commitment to the concern's

task and to the "technological
Insistence on loyalty to the concern and
ethos" of material progress and
Values obedience to superiors as a condition of
expansion is more highly
membership
valued than loyalty and
obedience
Importance and prestige attach
Greater importance and prestige
to affiliations and expertise
attaching to internal (local) than to
Prestige valid in the industrial and
general (cosmopolitan) knowledge,
technical and commercial
experience, and skill
milieux external to the firm
Book: Tom Burns, G.M. Stalker – “The Management of Innovation”

In simplified form the characteristics can be shown as

Structure
Characteristics Mechanistic organic
Job specialization High Low
Departmentalization Rigid Loose
Management hierarchy Tall (many levels) Short (few levels)
Span of control Narrow Wide
Decision making authority Centralized Decentralized
Chain of command Long Short

MATRIX ORGANIZATION

Sometimes an organization needs to run according to what projects they

have to do. In these situations people usually work together in a team to achieve
their projects goals. A person working on a project would have two bosses, the
boss of the department that they work in and the leader or manager of the
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particular project that they are working on at the moment. A project may cover
some or all of the organizations departmental areas.

For example in the aerospace industry (manufacture and development of

aeroplanes and spacecraft) the government might ask for a space shuttle type
aircraft to be developed and manufactured. Another government department
might ask for a spacecraft to go to Mars. Obviously these craft would be very
different. How could an organization set itself up to complete both projects? Well
it might set up two project groups. The Mars group and the shuttle group, both of
which would utilize resources, staff etc from all of the different departments in
the organization. When the projects are completed, these project groups would
be disbanded

• Advantages

– teamwork

– efficient use of resources

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 – flexibility

– ability to balance conflicting objectives

– higher performance

– opportunities for personal and professional growth

• Disadvantages

– power struggles

– confusion among team members

– lack of cohesiveness

8. DELEGATION OF AUTHORITY
It is impractical for the supervisor to handle all of the work of the
department directly. In order to meet the organization's goals, focus on
objectives, and ensure that all work is accomplished, supervisors must delegate
authority. Authority is the legitimate power of a supervisor to direct subordinates
to take action within the scope of the supervisor's position. By extension, this
power, or a part thereof, is delegated and used in the name of a supervisor.
Delegation is the downward transfer of formal authority from superior to
subordinate. The employee is empowered to act for the supervisor, while the
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supervisor remains accountable for the outcome. Delegation of authority is a
person-to-person relationship requiring trust, commitment, and contracting
between the supervisor and the employee.

Authority
The organizational structure provides the framework for the formal
distribution of authority. Formalization is the degree to which tasks are
standardized and rules and regulations govern employee behavior. Authority is
the legitimate power of a supervisor to direct subordinates to take action within
the scope of the supervisor's position. Formal authority in the organization can
be traced all the way back to the U.S. constitutional right to own property. The
owner of the organization has the authority to make decisions. For example,
entrepreneurial firms have an informal arrangement of employees and
centralization of decision-making authority, the owner.

Power
Power is the ability to exert influence in the organization beyond authority,
which is derived from position. The supervisor's personal power could include job
knowledge, personal influence, interpersonal skills, and ability to get results,
empathetic ability, persuasive ability, and physical strength

Legitimate power is a result of the position a person holds in the organization

hierarchy. This position power is broader than the ability to reward and punish, as
members need to accept the authority of the position. Coercive power is the
threat of sanctions. It is dependent on fear and includes, but is not limited to the
ability to dismiss, assign undesirable work, or restriction of movement. Reward
power results in people doing what is asked because they desire positive benefits
or rewards. Rewards can be anything a person values (praise, raises, and
promotions). Expert power comes from expertise, skill, or knowledge. Referent
power refers to a person who has desirable resources or personal traits. It results
in admiration and the desire to emulate. Information power is based upon the
persuasiveness or content of a communication and is independent of the
influencing individual.

PROCESS OF DELEGATION OF AUTHORITY

The process of delegation can be analyzed in three parts:

1. The first part is the assignment of responsibility or obligation to perform

the task as directed by superior. It is assumed that this step will also
provide the subordinate with necessary assistance and training for the
new assignment.

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 2. The second parts grants the subordinate the authority to get job done.
subordinate may require the authority to draw recourses for material ,
equipments ,suppliers, labour and so on.
3. Finally the third part, the manager creates subordinate accountability to
proper accomplishment of the task.

The process of delegation should follow the authority and

responsibility principle that delegated authority should equal the
delegated responsibility.

ADVANTAGES

 Maximum effectiveness of Organization.

 Improvement of self confidence & high morale.

 willingness to take initiative.

 Better & Speedy decisions

 Simplifies problem of management succession

9. DECENTRALIZATION AND CENTRALIZATION

Centralization is the degree to which decision-making is

concentrated in top management's hands. Decentralization is the extent
to which decision-making authority is pushed down the organization
structure and shared with many lower-level employees. Centralized
organizations have more levels of management with narrow spans of
control. Employees are not free to make decisions. Decentralized
organizations have fewer levels of management with wide spans of control
giving employees more freedom of action. All other things being equal, a
wide span of control is more efficient because it requires fewer managers.
However, it is important to recognize that, at some point, effectiveness will
decline

The current trend is toward broadening decentralization. As

competition intensifies, the need for organizations to be responsive
increases. This has made employees, usually those at the lower levels,
who are closest to customers extremely important. They are an excellent
source of knowledge and implement changes that directly impact

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 performance. Giving this group more input into certain decision-making
activities can result in increased firm performance.

As the fig shows, judging the size of desk, the decentralization and
centralization can be shown. The distribution of authority in this picture is
illustrated by the size of desk.

HP’s founders Hewlett and Packard are always believed in decentralization.

Therefore decentralization is history and philosophy of company. At Hackborn’s
unit based in Idaho, due to decentralization, the hackborn and his managers
makes number of decision quickly. They decided to market the laser printer to
the entire PC market instead of designing it to be used with HP equipments only.
Third they lined up an extensive network of retailers. Finally they put control on
operation, making the production steady with low prices. Sales took off and got
boost.

DIFFERENT FACTORS INFLUENCING DECENTRALIZATION

• History and Philosophy of organization

The history and philosophy of organization are most important role

in the decentralization policy. the history helps to create the organizational
culture.The history of operations of company shows the environment in
which company was operating, the philosophy of work is developed over a
period of year. This philosophy shows the needs for decentralization or
centralization.

• Strategy and organizational environment.

A strategic plan will influence the types of market, technological

environment, and competition with which the organization must contend.
These factors will in turn influence the degree of the decentralization.
where markets are predictable production process is less dynamic
competition is stable the centralized authority is the referable choice.

• Availability of competent subordinates

If the subordinates are competent and have ability to perform the

certain work will be very useful for company in future. The company must
take initiative to give them responsibility with authority to develop their
confidence.

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 • Dispersal of operations.

If company operates from different regions ,then it becomes necessary

to decentralize the authority to greater extent. the company division can’t
wait for much time for any kind on decision in the competitive
environment.

• Size and growth of organization.

As an organization grows in size complexity, decentralization tends

to increase. The faster the rate of growth, the more likely it is that upper
management, bearing the weight of ever increasing work load will be
forced to accelerate the delegation of authority to lower levels.

• Degree of diversification.

Disadvantages:
• Problems of Co-Ordination.

• Increase in Administrative Cost.

• Scope of unhealthy Competition.

• Communication Gap between levels

CASES IN POINT
BRAND MANAGEMENT AT PROCTER & GAMBLE.

Since Proctor & Gamble (P & G) first use the concept way back in
1927 to manage Camay soap, Brand management has been almost
synonymous with company. P& G can be viewed as practically a textbook
case on how to run a consumer oriented company .but early 1980s P&G
share in a number of important markets has begun to slip.

Despite emphasis on brand management, P&G has maintained a

fairly centralized approach to decision making. In beginning the approach
works well. Over years excessive centralization began to bog down the
company

Gradually almost every decision is pushed at the top. (e.g.. Weather

the company’s new decaffeinated instant coffee should have green or a
gold cap was elevated all the way to CEO, He chose Gold!)

The chief medium of decision making and symbol of growing

centralization was one page memo. managers had to carefully summarize

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 any proposal in a single page which has written almost endless times as it
made its way in hierarchy.

Brand managers were frustrated because of lack of authority and

had to answer to layers of management as well as staff areas such as
legal department. These conditions effectively cancelled the coordination.

P&G executives took the step to dismantle the overly bureaucratic

practices .for one thing they substituted use of “talk sheet” for strict
adherence to one page memo. The talk sheet is an informal outline that
allows managers on several levels to develop and refine a proposal
through discussions ,rather than paper only.

Management began to decentralize decision making under new

approach teams are often put together that include representatives from
functional area who help develop the proposal itself.

This system helps P&G cut costs ,get new products on shelves more
quickly and greatly increase sales. Now, P&G continues to have reputation
as a premier exploiter of brand management for competitive advantages

10. SPAN OF MANAGEMENT

Span of management control is the number of people who report to one

manager. If ten subordinates reports to one manager then ;the span of
control of that manager is ten. The span of management is also called as
“Span of Supervision” and the “Span of Control”. In simple words, it is the
jurisdiction over which a person has control.

When an executive is expected to govern or control the activities of

individuals in a group ,the number of persons in a group indicates the span
of control.

Span of control has three limitations:

1. Limited time -at the disposal of executive to undertake the

activities.
2. Limited energy –has to depend upon others to supplement his
energy.
3. Limited capacity-0to concentrate and attend subjects.

Theory of V. A. Graicunas

Graicunas , a French management consultant, demonstrated by the

mechanical calculations that as number of subordinates is increased

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arithmetically the number if relationships among them is increased
geometrically.

The mathematical formula for calculating relationships is:

r=n[2(n-1)+n-1]
where, n= number of subordinates and r= number of relationships.

For n=1, 1 relationship

n=2, 6 relationships

n=3, 18 relationships

An executive can manage effectively 222 relationships and therefore, the

span of control is six subordinates. Thus, a limit of five to six is desirable at top
level and a limit to 20 subordinates should be thereat bottom level.

Span of control depends on following factors.

• Interaction requirements
If there is no need of high level of interaction between the manager
and subordinates and also managers need not to explain the works
to be done; then the span of control can be wide. This interaction
levels may be depends on the work, ability of subordinates,
teamwork ,faith in subordinates or clarity of work etc.

• Ability of Subordinates.
If subordinates has ability and capability to perform the work in
organization then the work can be easily carried out with the
delegation of authority and responsibility. Therefore the span of
control should be wider.

• Nature of Work
If the nature of work is simple then the span can be wider; while if
the work is complex ,then the manager has to give more time to
explain and supervise the work therefore it demands for much more
time and narrow span of control.

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 • Degree of team work.
As the team work increases, the problem even if complex can be
solved with the group discussion and mutual understandings of
team mates. Team work also divides the work in smaller parts which
makes it simple and can be easily performed. Therefore the span of
control of manager is wider in this case.

• Faith & trust in Subordinates

This is an important aspect. If Manager have faith and trust in
subordinates then he can handle more employees. The span of
control is wider here.

TALL ORGANIZATION (NARROW SPAN)

Consider an organization with span of control two and thirty one managers
will create a rather tall organization with five layers of management.

The advantages of a narrow span of control are:

A narrow span of control allows a manager to communicate quickly with

the employees under them and control them more easily

Feedback of ideas from the workers will be more effective

It requires a higher level of management skill to control a greater number

of employees, so there is less management skill required

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FLAT ORGANIZATION (WIDE SPAN)
If span of control is now increase to four then the levels of management
drops down to only three. This creates shorter structure

The advantages of wide span of control are:

There are less layers of management to pass a message through, so the

message reaches more employees faster

It costs less money to run a wider span of control because a business does
not need to employ as many managers

CASES IN POINT
TOTOTA SHEDS WITH MANAGEMENT LEVELS

Faced with increased global competition, management at the TOYOTA undertook

a restructuring aimed at eliminating 2 management levels. In keeping with
Japanese tradition of attempting to avoid layoffs the company shifted a number
of middle managers to “Hands on work” rather cutting jobs.

Toyota’s primary aim in restructuring was to streamline decision making by

reducing the number of layers through which decisions must travel. The changes
affected 25000 of approx. 65000 Toyota employees including 1000 managers.
Cost cutting is not major factor as company making admirable profits. Company
was slow to take the competitive action than its smaller Japanese rivals. At
Toyota there was “so many steps to reach top management that it took time to
make a decision Toyota ”Further there was significant middle level managers
whose main activity is “sit quietly without doing nothing”

Not displaced managers will need to become involved in the process of creating
and doing hands-on work. Hiroshi Okuda –first non family president of Toyota
since 1967 has reduced management levels still further and continues to cut the
size of work force through mandatory retirements and attrition. The company
also aiming to hire 30% of its new workers as contract employees to reduce
lifetime commitments

Current Trends in Spans

• To increase the spans of control (decreases number of

organizational levels)
Fig shows the importance of increasing the span of control of
manager for four to eight, it shows that the managers are reduced from
1365 to 585 only. this also shows the trend of making the organization flat.

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Results of Wider Spans

1. Significant reduction of administrative costs

2. More effective and efficient organization communication

3. Faster Decisions and closer interaction between levels

4. Requirement for more personnel training for all levels

5. Better leadership at all levels

Due to Competitive scenario Hp cant afford to wait decisions and long chain
of command which will delay the decision implementations ;therefore there is
need of Flat organization for HP-computers and scientific instruments each with
own sales force.

11. FORMAL & INFORMAL ORGANISATION

FORMAL organization is one which is characterized by formal hierarchy of
structure with the different levels of responsibility and authority. Every one
knows his area of work ,responsibility, authority etc .in this organization the
formal structure drives the people to do work rather than any other humanistic
approach. Rules and regulation governs the work as well as coordination.

FORMAL

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 INFORMAL (Chess group ,tea
group)

Informal organization is the network of connections and channels of

communication based on the informal relationships of individuals inside an
organization. It give employees more control over their work environment
by delivering a continuous stream of company information, helping
employees stay informed. It creates ownership to the company.

FUNCTION

• Friendships and social contact

• Information and sense of control over their work environment

• Source of status and recognition

CASES IN POINT
DISNEY’S DESIGN-Dream as Team.

The Walt Disney Company is heralded as the world’s largest entertainment

company. It has astonished reputation through tight control over the entire
operation, control over open minded brainstorming that takes place 24 hours a
day.; control over engineers who constructed the fabulous theme park rides,
control over animators who create the designs of beloved characters to life.
Although the control pervades the company it has not too strong grip. Employees
are well aware of the objectives and parameters to meet that. But in conjunction
with the predetermined responsibilities, managers at Disney encourages
independent and innovative thinking.

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People at the company has adopted the phrase “Dream as a Team” as a
remainder that whimsical thoughts adventure ideas, and all out dreaming are at
the core of the company philosophy. The overall control over each department is
tempered by this concept. Disney managers strive to empower their employees
by leaving room for their creative juices to flow. In fact managers do more than
encourage innovation. They demand it. Project assigned to the staff “Imagineers”
seem impossible at first glance. Doing the impossible means innovation.

Teams of Imagineers gather together in a brainstorming session known as the

“Blue Sky” an inhibited exchange of wild, ludicrous, outrageous ideas, both good
and bad continues till solution is found and impossible is done. Disney drives
employees to be creative.

Disney leader Michael Eisner has established the “Dream as a Team” as concept.
Eisner realized that the managers at Disney needed to let their employees
brainstorm and create with support. As Disney president Frank Wells said that “If
a good idea is there, you know it, you feel it, you do it, no matter where it comes
from”

12. COORDINATION
Coordination is the process of integrating the activities of separate
departments in order to pursue organizational goals effectively. without
coordination, people would lose sight of their roles within the total organization
and to be tempted to pursue their individual departmental goals.

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 The extent of coordination depends on the nature of tasks performed and
degree of interdependence of people in various unit. Coordination can also occur
among people working in different languages. The mergers and acquisitions can
also pose the problems of coordination in two organizations. Coordination
involves brining people back together to ensure that work relationships between
people with different but related jobs can contribute to organizational goals.

APPROACHES TO ACHIEVE EFFECTIVE COORDINATION.

Communication is key to effective coordination. Coordination is directly
depends on the acquisition, transmission and processing of information. The
greater the uncertainty of tasks to be coordinated, greater the need of
information.

1. BASIC MANAGEMENT TECHNIQUE

Relatively modest coordination requirements can be often met with

basic management techniques. one of them is chain of command. By
specifying relationships in organization, the chain of command facilitates
the flow of information.

The other tool is the Rules and Regulations, procedures designed to

let employee handle routine coordination. By specifying the role of
each person from different departments to achieve the overall plans and
goal for the organization. This creates the coordination automatically for
achieving those common goals. the realization of plan goals will drive
people together to achieve them with removal of their individual or
departmental goals.

2. INCREASING COORDINATION POTENTIAL

When number of contacts between departments increases

dramatically, it may be best to create a permanent liaison between the
departments. such a liaison is said to fill a boundary-spanning role.
Effective boundary spanning employees understand the needs,
responsibilities and concerns of both departments. and can help the
departments to communicate.

For example, the members of engineering and marketing

departments can sometimes speak different languages. An effective
boundary spanning employee is able to translate the customer oriented
language of marketing into the product oriented languages of engineering,
and vice versa.

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 3. REDUCING NEED FOR COORDINATION

When the need for coordination is so great that the methods given
above are ineffective, the best approach may be to reduce the
coordination

Providing Slack (additional) recourses gives units leeway in meeting

each other’s requirements. Suppose if Mercedes Benz managers anticipate
that 10000 cars will be brought in given region of US over 3 month period
beginning January 1. The management might establish a production quota
of 12000 cars in case of demand is larger than anticipated. And a
production deadline of october1 of previous year to give themselves 3
months safety margin if any problems arises. without this safety margin,
the close coordination is required to produce the required quantity.

Another way to reduce the coordination is to create independent

units whose members can perform all the necessary aspects of task
themselves rather than relying on other departments.

MBWA-management by Walking around. in this technique Managers take

time to walk around various departments and production facilities. They observe
operations and talk informally with employees. Lewis Platt has already held
dozens of face to face meetings with HP employees.

As HP is gearing for completion, Platt and his collogues have good reasons
to use the boundary spanning approach. knowledge is quite widely distributed
among engineers of HP which needs to be harnessed.

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13. TRENDS IN ORGANIZATION

Virtual corporation
The virtual organization is temporary network of independent companies-
suppliers, customers, even erstwhile rivals-linked by information technology to
share skills, costs and access to one another’s markets. It will have neither
central offices nor organization chart. It will have no hierarchy, no vertical
integration.

Today’s joint ventures and strategic alliances may be an early glimpses of

the business organization of future. the key attributes of this kind of organization
are:

Technology: informational networks will help far flung companies to link up and
work together from start to finish. It will also create the electronic contacts to
keep lawyers away and speed the link ups.

Opportunism: Partnerships will be less permanent, less formal and more

opportunistic. Companies will band together to meet a specific market
opportunity and more often than not fall apart once the need evaporates.

Excellence: because each partner brings its core competences to the effort. Each
function and process could be world class something that no single company
could achieve.

Trust: these relationships make companies far more reliant on each other and
require far more trust than ever before. They will share a sense if co density
meaning that the fate of each partner is dependent on each other

NO-Borders: this new corporate model redefines traditional boundaries of

company. More cooperation amongst competitors, suppliers, customers makes it
harder to determine where one company ends and another begins.

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 How much HP people can do themselves in enacting a strategy for the
Digital era is a question Platt faces. Increasingly partnerships and virtual
organizing process at company. HP formed a partnership with AT & T and Citizen
Watch co. of Japan to accelerate the project on disk drives.
Platt “ We cant do it all Ourselves.”

14. BIBILOGRAPHY

1. MANAGEMENT by James Stoner, R. Edward Freeman, Daniel Gilbert

jr.(Prentice Hall of India)

2. MANAGEMENT by Kathryn M. Bartol & David C. Martin (McGraw Hill

Publication)

3. Organizational Behavior and Principles and Practices of management by

Mrs. Amruta Oke, Prof. Sunil Ujagare, Prof. Vilas Nandavadekar,Mrs. Gauri
kulkarni.

INTERNET INFORMATIONS

1. For Mechanistic and Organic organization--

http://www.valuebasedmanagement.net/ Theory of Mechanistic and
Organic Systems - Burns, Stalker.htm.

2. http://ollie.dcccd.edu/mgmt1374/book_contents/3organizing/pwr_auth/
Power and Authority.htm

3. opax.swin.edu.au/~388226/howto/it2/mstruct.htm

4. http://www.hp.com/hpinfo/newsroom/press/

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