Organizing

1. Elements of Organizing

An organization is a person or group of people intentionally organized to accomplish a common goal or set of goals. Business organizations can range in size from one person in a sole proprietorship to huge organizations, as you learned in an earlier Challenge. When you look at the POLC model, the function of organizing is to structure resources (like people) and tasks to achieve the goals the company has created.

Organizing is the second step in the POLC model. It’s about how a business sets up its people, resources, systems, and activities to carry out the plan effectively. After the goals are established during planning, organizing provides the answers:

• Who will do what?
• How will tasks be grouped?
• What resources are needed?
• Who reports to whom?

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In short, organizing involves creating the framework that supports daily activities and future objectives.

In order to meet the challenges of the organization and these tasks, companies must understand the best way to organize themselves to accomplish goals. Before we address specific types of ways companies can organize, let’s look at a few considerations when organizing people and processes.

A chain of command is the structure in which the command of a group is distributed from upper management to each employee. In this way, an organization can see how a command runs from the head of an organization at the top of the chain down to the person turning the wrench, sweeping the floor, and so on.

Job specialization is the practice of concentrating on a definitive area of knowledge in the workplace, allowing a worker to become very good at that particular job. Therefore, at least in theory, they can do that job more efficiently.

EXAMPLE

One person might focus on finance and another on marketing.

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Most people use an organizational chart to explain the chain of command. This includes people like the president and the vice president of the company, regional managers, and district managers.

There is also span of control, which dictates how or what each person in that chain of command is responsible for. The span of control helps visualize job specialization, or what job or area each person is specializing in within the organization. This allows companies to organize efficiency, based on an organizational chart. Think of span of control as the number of people each manager manages.

IN CONTEXT:
Organizing AmmA: Structure & Roles

To execute their vision, Amira (tech) and Mariam (growth) divided responsibilities based on their strengths. They built a lean team with key hires: front-end and back-end developers, a UI/UX designer, a content writer, and a part-time finance consultant.

They adopted a flat structure for agility, with Amira leading tech decisions and Mariam overseeing customer experience. Weekly stand-ups and clear deadlines ensured accountability.

Tools & Systems:

• Slack for communication
• Trello for task management
• Google Workspace for collaboration
• AWS for hosting
• Data viz tools for dashboard features

They also handled legal and operational setup: LLC registration, contracts, banking, and compliance with the California Consumer Privacy Act (CCPA)/General Data Protection Regulation (GDPR).

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It’s important to make sure you’re not getting too many people under your span of control; otherwise, things get incredibly busy.

You can also see the job specialization aspect of the AmmA organization chart. However, specializing in one job or one area can get a little boring after a while, basically, doing that one particular job all the time. Boredom and complacency can set in, and you may find that people suddenly don’t do that job quite as well. In this case, you may want to move people around or rotate those jobs to keep things more interesting for the employees.

With this information, we can now turn our attention to the concept of organizational charts.

2. Organizational Structures

Before we begin our discussion on organizational structures, it is important to understand the different levels of management in an organization. The fewest managers are found at the highest level of the pyramid. Called top management, they are the small group of people at the head of the organization (such as the CEO, president, and vice president). Top-level managers develop strategic plans and address long-range issues such as which industries to compete in, how to capture market share, and what to do with profits. These managers design and approve the firm’s basic policies and represent the firm to other organizations.

The second and third tiers of the hierarchy are called middle management and supervisory (first-line) management, respectively. Middle managers (such as division heads, departmental managers, and regional sales managers) are responsible for beginning the implementation of strategic plans. They design and carry out tactical plans in specific areas of the company. They begin the process of allocating resources to meet organizational goals, and they oversee supervisory managers throughout the firm. Supervisors, the most numerous type of managers, are at the bottom of the managerial pyramid. These managers design and carry out operational plans for the ongoing daily activities of the firm. They spend a great deal of their time guiding and motivating the employees who actually produce the goods and services.

Departmentalization is clustering employees into groups to work together in a specific division. Now, departmentalization can be split up among an organization in several different ways, and as we’re going to explore, there are pros and cons to each.

Product departmentalization is organized around a specific product, a group of products, or a product function.

EXAMPLE

A cosmetics company might structure itself based on product departmentalization of the skincare division, haircare division, makeup division, and fragrance division. As you can see, the company is divided based on the actual product sold. The pros to this structure include the fact that decision-making is easy where you only have to worry about that one product or area. The cons include duplication of effort. Imagine having a separate product department for bread, hot dog buns, hamburger buns, and rolls. As you can see, there is a duplication of effort among different products that essentially share the same process for getting made and sold.

In a process departmentalization structure, they are organized by the different processes that are performed.

EXAMPLE

A manufacturing plant might have a division focused on raw materials processing, the assembly line, and quality control. In other words, the departments are grouped by the step or stage in the workflow or process. The pros to this structure include the fact that the processes are streamlined, but a con is that it can lead to duplication of equipment, since everyone is focused on their own stage in the process.

A functional structure is probably the most common structure. This type is organized by different purposes or functions.

EXAMPLE

A university uses a functional structure, where there is an admissions department, academic departments, finance functions, and so on. A pro includes easy coordination. All the bread folks go in one spot, all the car folks go in another spot, and so on. It’s easy to coordinate among the people within that one functional department. A con is slow decision-making because now you have to consider everything within this big, functional department.

Customer departmentalization means the company is organized by different customer types, for instance, people with varying spending capacities. It could mean it is organized by business customers and individual consumers.

EXAMPLE

Microsoft sells software to large organizations, but also to individual people who buy it online. Or a bank might have a personal banking division, a high net-worth client division, and a small business banking division. The advantage is that you can focus efficiently on unique customer groups. These are people that are actually interested in a particular type of product, for instance. Cons include the fact that more administrative staff is needed to keep up with all those different types of customers for potentially fewer products.

There is also geographic departmentalization. This type is organized by geographic location, as the name suggests.

EXAMPLE

A hotel might use this method to organize based on North America, Europe, South America, and so forth. Pros include the ability to be more responsive to specific geographic needs. When you need a task to be done within that geographic area, you have people on the ground who can immediately respond to that need. Cons include the fact it is a more elaborate administration style because you’re trying to cover a lot of different—literal—ground within the organization.

As you can imagine, organizations don’t necessarily use one type of departmentalization exclusively. Some organizations use multiple types of departmentalization options. In some cases, one region of a company, for instance, will have functional departmentalization and customer departmentalization within that one department to make things more efficient and free-flowing within an organization. In addition, different types of departmentalization are used at various levels.

EXAMPLE

Top management may use one type, whereas middle managers or frontline managers may use another type of departmentalization.

All of this is important in the POLC model, because the organizing function is what supports and helps organizational goals to be met.