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Administrative Office Management, 8/e
by Zane Quible
©2005 Pearson Education, Inc.
Pearson Prentice Hall
Upper Saddle River, NJ 07458

The Organizing Process

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Administrative Office Management, 8/e
by Zane Quible
©2005 Pearson Education, Inc.
Pearson Prentice Hall
Upper Saddle River, NJ 07458

Learning Points
Organizational principles/Basic guidelines.
Organizational structures.
Centralization vs. Decentralization.

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Administrative Office Management, 8/e
by Zane Quible
©2005 Pearson Education, Inc.
Pearson Prentice Hall
Upper Saddle River, NJ 07458

“Elements of organizational principles (Assumptions for management)?”

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Administrative Office Management, 8/e
by Zane Quible
©2005 Pearson Education, Inc.
Pearson Prentice Hall
Upper Saddle River, NJ 07458

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Administrative Office Management, 8/e
by Zane Quible
©2005 Pearson Education, Inc.
Pearson Prentice Hall
Upper Saddle River, NJ 07458

The Organization Chart

Identifies lines of authority.
Gives employees a better understanding of the
formal structure of the organization.
Helps identify areas of overlapping
responsibility that should be eliminated.
Identifies promotional opportunities for job
applicants and new employees.
Identifies areas suitable for training and
orientation.

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Administrative Office Management, 8/e
by Zane Quible
©2005 Pearson Education, Inc.
Pearson Prentice Hall
Upper Saddle River, NJ 07458

Organizing Function is Helpful By:
1. Assuring more efficient use of the organization’s
resources (Allocative efficiency).
2. Improving employee understanding of job duties
and responsibilities.
3. Improving employee morale (motivated employees).
4. Providing a sense of direction for each of the
organization’s functional areas.

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Administrative Office Management, 8/e
by Zane Quible
©2005 Pearson Education, Inc.
Pearson Prentice Hall
Upper Saddle River, NJ 07458

1. Organization’s Objectives
Should be written in context of outcomes,
understood and accepted by employees, be
measurable, contain a time reference, and
be challenging but attainable.
Unity of direction
Subordination of individual interests to
the common interest

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Administrative Office Management, 8/e
by Zane Quible
©2005 Pearson Education, Inc.
Pearson Prentice Hall
Upper Saddle River, NJ 07458

2. Span of Control
Refers to the number of subordinates
an individual is able to supervise.
Generally, 6 to 14 (<20) subordinates per manager. Division of Work * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 3. Interrelated Functions Organization’s functions have become so interrelated that when a problem arises in one functional area, other related functions are also likely to be affected. Centralization or Decentralization Esprit de corps (Group harmony) * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 4. Chain of Command Identifies who reports to whom within an organization. Two types: Vertical chain (Top-down, Bottom-up) Horizontal chain. Scalar Chain * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 5. Unity of Command States that each employee should be directly responsible to one supervisor. One-boss system vs. Two-boss system. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 6. Authority and Responsibility States that individuals who are given the responsibility to undertake a task must also be given an appropriate amount of authority to ensure task completion. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 7. Work Assignment States that each employee’s work assignments should be based on his/her special strengths and talents. Remuneration of personnel (Fair compensation) Stability of personnel tenure (Job Security) Order (Right person for right place) * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 8. Employee Empowerment States that empowered employees are encouraged to participate as much as possible in making decisions that affect all aspects of their job tasks. Initiative Discipline (Mutual agreement) ==== MBOs * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Line Line and Staff Functional Product division Committee Matrix Organizational Structures Start working on Ch2 worksheet! * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Line Structure Is the oldest and simplest of structures. Has direct authority flowing vertically from the top. Is generally found in small organizations because support staff is needed once they begin to grow. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Board President VP Marketing VP Production VP Service Promotion Sales Purchase Foreman Supervisor Purchase * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Advantages of Line Structure 2. Decision making is expedited. 3. Is a simple structure to understand. 1. Employees are fully aware of the boundaries of their jobs. 4. Employees can be held directly accountable when they fail to perform as expected. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Disadvantages of Line Structure 2. Line managers need to begin to perform specialized activities. 1. Fails to provide specialization needed when organization begins to grow. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Line and Staff Structure Has line authority similar to line structure. Staff employees assist the line function. Specialized staff activities are added that support line activities. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Board President VP Marketing VP Production VP Finance Promotion Auditing Foreman Comptroller Purchase VP Corp. Affairs Sales Office Service HR * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Line Employees Staff Employees Line employees are directly concerned with the organization’s primary objectives. Staff employees support the line employees. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Advantages of Line and Staff Structure 2. Staff employees can lend their specialized support. 1. Line employees have time to focus on those activities directly related to the organization’s primary objectives. 3. Flexibility of staff units facilitates undertaking new projects. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Disadvantages of Line and Staff Structure 1. Line and staff employees sometimes are in conflict with one another. 2. Line employees sometimes suppress the talents of staff employees. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Exercise Wilcox company (Equipment manufacturing) Founded and owned by Sean and David Cox) Market expansion (Increased sales volume) --- Marginal profits for years 6 employees are taking general management responsibilities 6 employees are involved in either marketing or production. Try to hire new managers. You are consultant for Wilcox company. You have to know the following issues. Current org. structure and recommended org. structure(s) Problems for current org. structures and management. Possible problems for new org. structures and management. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Exercise Current org. structure and recommended org. structure(s) Current: Poorly designed line structure. Recommendations: (1) Current structure with several temporary workers. (2)Well defined line structure (3) Line and Staff structure Problems for current org. structures and management. Poor definitions of authority and responsibility Poor structural design Poor operational design (Efficiency and Effectiveness) “Owner-Manager” issues in the stage of growth. Demand projections. Possible problems for new org. structures and management. Confusions (Efficiency and Effectiveness) of new structure Resistance to the new system and structure “Owner-Manager” issues as barriers for transformation and growth “Old boys” vs. “New comers” * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Division Structure Each major product is given division status. Incorporates line and staff structure into these divisions. Each product tends to operate independently of other divisions. Company’s products provide a basis for its structure. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Advantages of Division Structure 2. Divisions can coordinate their own activities without constraint from main unit. 1. Enables divisions to develop processes that best meet their needs. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Disadvantages of Division Structure 2. Problems of some divisions may eventually be felt throughout the entire organization. 1. Divisions can “go their own way” to the extent that they don’t work toward common goals. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Matrix Structure Is often used by organizations undertaking complex projects. Results in the formation of temporary new units to accommodate the undertaking of a new project. Involves temporarily borrowing employees from other areas of the organization and assigning them to the new temporary unit. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Advantages of Matrix Structure 2. Helps companies avoid having to hire new employees for a project. 1. Allows companies to assign employees on the basis of their expertise. 3. Enables companies to adapt quickly to new situations. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Disadvantages of Matrix Structure 2. Employees may experience job-related pressures. 1. Employees often have two supervisors. 3. Managers may have difficulties coordinating employee activities. * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Centralization Decentralization Places related activities under jurisdiction of one individual. Places related activities under jurisdiction of several individuals throughout the organization. Efficiency and Effectiveness (Cost-pressure and Local responsiveness) * * Administrative Office Management, 8/e by Zane Quible ©2005 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Factors That Determine Feasibility of Centralization 1. Nature of the organization. 2. Size of the organization. 3. Diversification of the organization. 4. Conformity to standardized processes. 5. Quality of personnel. 6. Distribution of operations. 7. Attitude of personnel. *

Worksheet 2

FULL NAME:

CWU Corporation:

CWU Corporation (thereafter CWU) is a specialized bicycle manufacturer. CWU’s headquarters is located in Ellensburg. Its product categories are (1) bicycles for professional athletes, (2) luxury bicycles, (3) sports bicycles, and (4) bicycle accessories.

CWU has used the franchising system. Each franchisee will sell products in the four product categories while the president of CWU is thinking that CWU will promote luxury bicycle category to the luxury bicycle division in the US market. The luxury bicycle division will directly control its retail stores in premier shopping malls in order to sell the luxury bicycles.

CWU has two regional headquarters in order to control US operations. The regional headquarters are (1) East coast headquarters and (2) West coast headquarters. The CWU headquarters must supervise the following items closely in order to maintain organizational efficiency. The items are respectively (1) human resources, (2) research and development, (3) design, (4) finance, and (5) corporate affairs*. It is CWU’s strategic policy to delegate sales and marketing functions to each regional headquarters so that each regional headquarters can make its best supporting effort for its franchisees.

CWU has exported their products to Europe from the East coast; therefore, the East Coast Headquarters has been in charge of the European sales. However, the president of CWU is thinking that CWU will control European operations separately since sales in the European markets has become very large and CWU will need to deal with specific requests in the European market in order to keep expanding the market. The possible location for the European Headquarters is Slovak Republic. The European Headquarters will take care of sales and marketing functions to make its best supporting effort for its European franchisees. While the US regional headquarters will not control luxury bicycles very soon, the European Headquarters will control all of four product categories.

CWU has assembled its own bicycles at their assembly factories. In order to take advantage of mass production, CWU built a large assembly factory in Yakima and all types of products are assembled in the factory and distributed to all franchisees. The Yakima factory is directly controlled by the CWU Headquarters. The factory controls purchasing, logistics, and factory supervisions. The president of CWU start thinking CWU may want to assemble bicycles in Slovakia so that European franchisees can receive their products from Slovak factory. This is a good idea to reduce transportation costs, therefore, strengthen its price competitiveness in the European market. The Slovak factory will be directly controlled by the European Headquarters. While the factory will control factory supervisions, logistics of assembled products and purchasing parts will be directly controlled by the European headquarters.

*Corporate affairs department is one of staff functions.

Your idea about the current organizational chart of CWU Corporation (Your home work)

Your team’s idea about the new organizational chart of CWU Corporation (Class activity)

See what will be different for the current organizational chart of CWU Corporation.