Reading: Lesson 7 - The Organizing Function

2.7.A - The Organizing Function

1. ORGANIZING WORK

1. Before a plan can be put into operation, the company must be organized 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 complete work. More specifically, it involves arranging resources and relationships between departments and employees and defining the responsibility each has for accomplishing 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 assigned activities so the work will be accomplished on a schedule that matches the work of the other departments.
   
2. An organization chart is an illustration of the structure of an organization, 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 are affiliated with, how it relates to other units, and to whom they are accountable, and (3) identify lines of authority and formal communication within the organization. 
   

   
   

3. 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through reorganization of work or when operating units are bought and sold, the company’s organization chart can become outdated. To be a useful management and communication tool, the chart should be revised when changes occur in the organizational structure.
   
4. As a new small business grows, the owner has the complicated task of organizing the entire structure of the business. However, 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 example from the beginning of the chapter, if Eldron Huntley is successful in developing an Internet sales department, he will have a very different organization than before the expansion. It is not likely 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 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. 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, and (3) the employees.
   
5. 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 buying 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 complete that work.
   
6. Major divisions of work vary with the type of industry and business. A small retailer will usually organize around the major activities of purchasing and selling. Manufacturing businesses will have purchasing, production, and marketing. Most businesses have departments or work units for administration, information technology management, and human resources. For effective management and control, even small businesses benefit from organizing work into related and manageable units.
   
7. 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 and (2) the amount of work to be done.
   
8. 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 clear. 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 authority should be clearly communicated to everyone.
   
9. For example, the owner of a retail business that sells and services home appliances 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 the work to 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.
   
10. 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 complete 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.
    
11. 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 automobile, for example, should have ready access to the needed tools and parts close to the work area. If special parts are needed, a system to quickly order and obtain the parts 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 service, an auto service specialist will consult with the customer to identify problems and write a service 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 and quickly filled.
    
12. 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 safe parking facilities and easy access to cafeterias and break rooms.
    
13. 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 productivity 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 complete the assigned tasks. If employees are members of work teams, the total skills of the team should match the work requirements.
    
14. 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 assignments among employees so 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.