CHAPTER FOUR

ORGANIZING MANAGERIAL FUNCTION

An Overview of Organizing

 Specific Objective:
After completing this lesson, the trainee will be able
to give a general overview about the organizing
function.
The management process starts through planning i.e. in planning, objectives that
are going to be achieved are identified, established and courses of actions are
also determined. The managerial functions of planning and organizing are
intimately related. Organizing begins with and governed by plans, then the
manager continues his activity by:

- Giving practical shape to the activities/works to be performed

- Identifying the roles whereby workers are supposed to play in
- Making known to the group what their duties and responsibilities are.
Therefore to design & maintain such systems of roles is the managerial
function of organizing. Some of the definitions of organization and
organizing managerial activities are given below.
A primary focus of organizing is determining both what individual employees
will do in an organization and how their individual efforts should best be
combined to advance the attainment of organizational objectives. The end
result of the organizing process is an organization - a whole consisting of
unified parts (a system) acting in harmony to execute tasks to achieve goals
effectively and efficiently.
Organization: - can be defined as a group of individuals working together in a
coordinated manner to achieve the common stated objectives.
 Organizing is a function of management, which is concerned with developing
a frame work of how total work is divided into manageable components in
order facilitate accomplishment of objective.

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 Organizing defines the part which each member of an enterprise is expected
to perform and the relation between such member in order to achieve
objectives.
 Organizing is a part of managing that involves establishing an intentional
structure of roles for people to fill in an organization.
4.2 Differences Between Formal and Informal Organization

Formal Organization is a type of organization, which is established deliberately,

or consciously to achieve pre determined objectives. Some of the features of
formal organizations are

 Formal organization is consciously brought into existence for the achievement

of pre-determined objectives.
 Clearly defined duties, responsibility and authority exist in the formal
organization.
 Formalized line of communication (scalar chain) exists in the formal
organization.
 In the formal organization duties are provided in writing to all the
employees.
Informal Organization is an organization, which consists of small social groups
and friendly association of people. Some of the features of informal organizations
are

 It is not deliberate, rather it is voluntary and spontaneous relation which is

created based on status, interest, belief, background etc.
 It is undocumented and officially unrecognized relationship between
members.
 Informal organization can affect the organization positively or negatively.
 The management neither creates them nor destroys (abolish) informal
organization.
Differences between formal and informal organization

FORMAL INFORMAL
ORGANIZATION ORGANIZATION
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 Formation Consciously formed Spontaneous and
and tends to be stable dynamic based on
interest, belief,
background, etc

Goals Profit/service to the Members

society satisfaction

Communicatio Well defined flow of Unspecified channel

n communication which of communication,
is usually slow, which is very fast.

Documentatio Duties, responsibilities Commonly no such

n of workers are given in formal document
writings. will be used.

Stability Usually formal org is There is high lack of

permanent and stable stability

Growth It may grow to bigger It tends to remain

size small

Membership Formal Procedure to be Members can join

& Departure a member and to depart and leave the
from membership association based on

Motive To accomplish the To accomplish

objective social and friendly
activities
Therefore the management must know that within the formal organization, there
is also an informal organization that will be created based on different terms.
The informal organization is the result of the need of people’s need for social

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interaction and friendly associations in which the formal organization does not
provide.

Finally, the management should always give proper attention about the informal
organization that exists in the enterprise. The management should know the
effect of the informal organization on the enterprise performance and how to
influence the informal organization and how to direct their activities to the
accomplishment of the common objectives.

IMPORTANCE OF ORGANIZAING

 Facilitate growth and diversification: - If there is an existence of organized

effort in an organization, it creates a room for the growth and diversification
of an organization because of the coordinated group effort. Usually growth
refers to increase in the scale of production and diversification is starting
production of new type of product.

 Facilitate administration: - poor organizing function leads to waste in motion

and expensive overlap in work. Important work may be subordinated or
may be overlooked totally. Effective organizing function allows
management to relate resource to flow continually to overall objectives, it
provide an appropriate platform from where management can perform the
function of planning, directing and controlling etc in a smooth way.

 Provides optimum utilization of resources: - Organization identifies the

right job or position and assigns the right resources accordingly. Organizing
eliminates overlapping and duplication of work resources and human effort
with in the organization.
 Identifying the activities of employees: -In a formal organization the
employee will be given a clearly defined duties and responsibilities to
accomplish. Therefore each employee of the enterprise will be able to

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 accomplish his task easily. Every one will be in a position to know what to
do, what task and responsibility is expected from him, to whom to be
accountable to, etc which is clearly defined in organizing process

 Provides specialization: - Through the division of labor, the employee will be

assigned in their field of studies, therefore the employee gets the chance to
specialize upon the job and specialization provides individual to use their
talents profession and experience in an efficient and effective way.

 Brings better performance of an organization and achievements of goal: -

Under organizing there will be coordinated group activity which provides a
team spirit and better performance of the enterprise through group
activities.

 Stimulate creativity: - specialization provides individuals with well-defined

duties, clear lines of authority and responsibility. Sound organizing function
and organizational structure enables managers to turn over routine and
repetitive jobs to supporting position and concentrate on important issues
where they can exploit their potential better.

The Organizing Process

 Specific Objective:

After studying this lesson, the trainee will be able to

discuss the basic steps in the organizing process.
Hence organizing function involves identifying, grouping, assigning various
activities and prescribing authority relationships to accomplish predetermined
objective. As per the definition managers perform the organizing process by:
1) Identifying the work: - we organize to achieve the objectives, so it is essential
to identify the total work necessary to achieve the goals. The wok must then
be classified in a systematic way so that each person in the organization gets a

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 separate and distinct task. Work must be divided and distributed because no
one can handle the total work in an organization single-handed. Identification
of work enables managers to concentrate on important activities, avoiding
unnecessary duplications, overlapping and wastage of efforts.

2) Grouping of the work: - division of work creates the need for coordination. In
order to provide for a smooth flow of work, all closely related and similar
activities must be grouped together. Thus, departments and divisions are
created under the direction of a manager.
3) Establishing formal reporting relationships: - in order to secure compliance
to organizational directives, reporting relationships must be specified. Once
formal relationships are established, it would help individuals to know what
must be done, how it must be done, to whom the matters must be referred
and how particular jobs relate to one another etc. Without formal
relationships it would be difficult to process the total because there is no way
to know how the work is progressing, is supposed to handle the work, where
the work has to be coordinated so as to achieve enterprise objectives. As soon
as the formal relationships are established, they would provide a framework
for assigning duties and responsibilities to individuals in an unambiguous
fashion.

4) Providing for measurement, evaluation and control: - finally, the

manager should establish signposts and control points in the organization so
that the subordinates' performance can be measured, evaluated and
controlled at regular intervals. If deviations occur, they must be spotted early
and appropriate remedial actions taken immediately.

5) Delegating authority and responsibility: - authority is the right to act, to

issue order and exact obedience from others. Without authority a manager
may not be able to perform the tasks with confidence and show results. While
assigning duties the manager should clearly specify authority and

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 responsibility limits. So that the subordinate know well in advance as to what
type of work is expected of him by the superior.

One result of organizing is to create structure for organizational participants

where they can work for organizational goals. Taken together, the concepts of
structure and process can be viewed as the static and dynamic features of the
organization.

4.4 ORGANIZATIONAL STRUCTURE

Organizational structure is a formal pattern of interaction and coordination

designed by management to link the task of individuals and groups to achieve
organizational goal. It is used as a tool for creating a relationship among the
various functions, which make up the organization.

Organization structure refers to the net work of relationship among individuals

and positions in an organization. Organization structure describes the
organization's framework just as human beings have skeletons that define their
parameters, organizations have theirs. It is like the architectural plan of a
building. Just as the architect considers various factors like cost, space, special
features needed etc. while designing a good structure, the manager too must
look into factors like benefits of specialization, communication problem etc. some
of the main concepts of organizational structures are: -
 It is a purposive creation: - organizational structures are created deliberately
to achieve specific goals. Structure is the means for converting the
disorganized resources of men, machine and materials into useful, productive
enterprise.

 Structures should be understood easily: - usually structure takes the shape of

pyramid, it is traditional but it works reasonably well. Preparation of
organizational structure should be in a motive of providing a clear idea about
structures and flows.

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 Structures tend to be relatively permanent, with continuous, gradual change,
with major changes occurring at strategic time. Usually existence of
organizational structure is for a longer period of time. So design of
organizational structure must be taken after a careful examination of all
relevant factors.
 Structure has two dimensions, one horizontal and the other vertical. The
horizontal aspects define the basic departmentalization. Vertical aspects of
structure relates to the creation for a hierarchy of superiors and subordinates
leading to the establishment of management structure. Taken together, they
set the formal structure of the organization.

 Organizational structure is a means to a given end- a toll by which selected

goals are attained. It is a method of reducing the variability in behavior of
those who work for the organization. It is a method of regulating behavior in
order to achieve a common purpose in a coordinated manner.

Specialization and coordination are the main issues in the design of

organizational structure. The term specialization includes division of labor and
the usage of special machinery's, tools and equipment. Co ordination means an
orderly performance in operations to achieve organizational objectives.

The organizational structure of an organization differs from an organization to

another based on the nature of work, the managerial activities, the human
resource etc.

Major Organizational Concepts

Specific Objective:

After completing this lesson, the trainee will be able to describe the
following concepts as they apply to organizations: power and

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 authority, unity of command, delegation, span of control and
centralization vs. decentralization.

4.5.1 DIVISION OF LABOR & SPECIALIZATION

Classicists advocated fragmentation and routinization of work to reap the

advantages of specialization. Specialization is glamorous term because it
promises greater efficiency and productivity.

Organization performs a wide variety of tasks. A fundamental principle is that

work can be performed more efficiently if employees are allowed to specialize.
The essence of work specialization is that, rather than an entire job being done by
one individual, it is broken down into a number of steps, each step being
completed by a separate individual. In essence, individuals specialize in doing
part of an activity rather than the entire activity. Division of labor is the degree to
which organizational tasks are divided into separate jobs. Once the
organizational tasks are divided into parts, the professionals can be assigned to
such parts according to their profession and experience.

Division of labor allows for specialization of efforts and permits workers to

perform a manageable number of tasks. It creates groups of specialists. It
improves one's skill at performing a task through repetition. Division of labor
allows for specialization of efforts and permits worker to perform a manageable
number of tasks. It creates a group of specialists.

Benefits of division of labor

- Employees become efficient when they perform well-defined manageable

tasks.
- Employees can acquire expertise (specialize) in their tasks
- Employees with appropriate ability for tasks to be performed can be
selected.

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 - The organization achieves standardization across tasks.
- Managers can easily have control over performance and detect problems,
- The employees will be in a position to exploit a new technique or way of
performing repetitive task in order to make simplifications.
- There will be less wastage of materials and time while performing the task.
Etc

Disadvantages of division of labor

- Specialization makes workers to be unfit for other jobs, it produce workers

who are mental dull, frustrated, deprived and insecure.
- Performing repeated job will be very boring to the employees etc.
- The long-term proficiency of the employees will be decreasing and they
usually become passive.
Though division of labor is very necessary to an organization, but it should not
be carried to such an extreme that makes the employees bored and alienated. It
should be used wisely with employee motivation system.

4.5.2 DEPARTMENTATION

Departmentation is a part of organizing process, which divides and groups

different activities and employees of an enterprise into various departments.
Departmenration is establishment of a distinct area or sub-system with in the
organization (system) over which a manger has authority for performance of
specified activities and results. In large-scale organization it is very necessary to
divide the overall operation into sub activities and working group. Therefore,
Departmentation is done through specifying responsibilities and delegating the
necessary authority to accomplish the objective. Departmentation makes an
organization to expand and to have a wide control over resources.

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BASES OF DEPARTMENTATION

There are several keyways in which an organization may decide about the
pattern that will be used in grouping the various, similar activities performed.
The most common bases of department used by organizations are

I. Functional Departmentation

Functional departmentation is the most widely employed basis for organizing

activities. The basic aim of functionalization is to simplify complexity by
grouping all the work to be done into major functional departments. Few people
can understand to be proficient in all aspects of business. It is quite logical to
group the activities in the organization into such typical departments as
production, marketing, finance etc. therefore, It is grouping of activities in
accordance with the function of the organization. It involves grouping together
jobs that are similar in function. Functional departmentation is most commonly
used bases in an organization. One responsible person with sufficient authority
to have control over the department activities heads each department.

President

Vice president

Production Finance Personnel Marketing

Department Department Department Department

Advantages of functional departmentation

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 - It follows the principle of division of labor (specialization) i.e. specialists
can work in their field of training and skills.
- It makes supervision easier, since each manager is responsible to one
function, it will be easy to control the proper performance of the
department.
- It makes easy to hire workers according to their profession
- The system is easy to understand
- It is simple to train workers on a specific function etc

Disadvantages of functional departmentation

- Employees may tend to focus on the attainment of departmental goals and

often to the exclusion on organizational goals
- It does not create a good training ground for development of general
managers. It makes the manager to specialize in a single line. Functional
departmentation is not an ideal training ground for top level mgrs.
- If there is profit or loss at the end of the period, it is difficult to identify the
accountability behind the result
- Because of specialization work might be routine and non-motivating.
II. Territorial/Geographical Departmentation

Territorial departmentation is grouping of activities in area wise (geographical

location) and each area is in charge of a single person. This method of
departmentation may be suitable for large companies that distribute on a
massive scale nationally. It is difficult for them to co ordinate all regions from the
head quarter, because each region has distinct needs, tastes and facilities.
Geographic or territorial departmentation or helps in exploiting the local
advantages and reduces the transport cost. Decision regarding product design,
pricing and marketing may be left to the discretion of the territorial manger who
are close to customers and know their needs better, territorial departmentation

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reduces transport costs and provides an excellent opportunity to build
community good will.

President

Vice president

Western Eastern Southern Northern

division division division division
(Gambella (DireDewa (Nazareth (Bahirdar
branch) branch) Branch) Branch)

Advantages of territorial departmentation

- The firm will get the chance to have face to face communication with the
local customer
- It reduces heavy transport cost
- It provides the manager to improve their skill in various fields
- Usage of regional resources at reasonable cost is possible
- Accounts are prepared in area-wise, so the profitability of each area is
clearly known to the management etc.

Disadvantages of territorial departmentation

- Because of the distance, it is very difficult to have control over the branches
from the head quarter.
- It gives rise to the problem of communication
- Similar activities may be done in the various regional divisions, which leads
to duplication of works etc.
III. Departmetnation by product

Departmentation by product is adopted in the case of multi product enterprise. It

is a way of arranging activities associated with production and selling of a

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product under the direction of one manager. Most of the time functional units for
each product are created with in the general structure of the organization.

President

Vice president
(Production Manger)

Product 1 Product 2 Product 3 Product 4

manager manager manager manager
(Cadillac) (Chevrolet) (GMC truck) (Pontiac)

Advantages of departmentation by product

- It creates high brand establishment and product visibility.

- It enables an organization to develop executives who have broad
managerial experience in running the total organization.
- Attention can be directed towards specific product or service
- It is best well suited for large organization etc.

Disadvantages of departmentation by product

- It requires large number of professional personnel and resources, and hence

is costly.
- There is higher cost through duplication work and facilities. Sometimes
machines and equipment may not be used fully.
- Workers under each product line may tend to focus more on their product
and forget the other product of the organization etc.

IV. Departmentation by Customer

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Under the departmentation by customer, separate departments are created to
serve the needs of particular customer. The purpose is to respond and interact
with specific customers or groups of customer on an effective way. This type of
departmentation is preferred when the needs of customers are different in
nature, For example a bank or financial institution may divide its loan section
into number of heads and assign them to various departments, such as loans to
the business men, farmers, professionals and so on.

President

Vice president

Mortgage Commercial Agricultural Development

bank bank bank bank

Advantages of departmentation by customer

- It fulfills the expectations and needs of customers.

- It gives a great knowledge to the organization about the customers
- The organization can develop rapport (agreement) with attractive and
resourceful customer etc.

Disadvantages of departmentation by customer

- It is almost impossible to consider all the customers, their interests, habits

and customs
- Organization may discriminate the high potential buyer from the lower
ones etc.

V. Departmentation by Process

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Under the departmentation by process of equipment, activities are grouped on
the basis of various manufacturing processes. Similar types of labor and
equipment are brought together to achieve a common goal. It permits intensive
and economical usage of costly equipment.

President

Vice President
(Manufacturin

Drilling Grinding Welding Finishing

Advantages of departmentation by product

- It is advantageous when machines or equipment used require special
operating skills
- Highly advantageous to manufacturing companies.
- It allows specialization with in the organization.

Disadvantages of departmentation by product

- Co ordination becomes difficult in the organization

- Efforts may only focus on the unit goals of the organization. Etc

VI. Mixed Departmentation

In practice, an organization may use one or more basis of departmentation. For
instance a national multi product diversified corporation may adopt

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geographical and product wise departmentation at the same time. Within such
division it may have functional base like finance and marketing. This kind of
departmentation practice is known as mixed departmentation.

4.5.3 CENTRALIZATION AND DECENTRALIZATION

The concept of centralization and decentralization is more connected with
decision making and authority.

Centralization means that the authority to take for most decision is concentrated
at the top of the managerial hierarchy. Centralization is the systematic and
consistent reservation of authority at central points within the organization. In
centralization little delegation of authority is the rule; power and discretion are
concentrated at the top level. The control and decision making resides at the top.
Most organization starts out with centralization of authority; such an
arrangement helps the manager to be in touch with all operations. Centralization
is usually adopted by small scale organizations but as the organization becomes
more complex in terms of increasing size, diversification of activity etc then there
will be a need to move the decision making centers to the operating levels. Thus
the larger the size of an organization is the more urgent is the need for
decentralization. The advantages of centralization are power and prestige is
provided to the executives, uniformity of policies, practices and decisions are
fostered. Full utilization of the main office and information specialists is
promoted, due in large part to their proximity to the top management level,
highly qualified specialists can be utilized, the danger of actions and drifting and
getting off course is reduced etc.

Decentralization refers to the degree to which authority is delegated to the lower

level. Decentralization is an extension of the concept delegation and cannot exist
unless authority is delegated. The centers of decision-making are dispersed
throughout the organization. Decentralization in recent years has come to be
accepted as a golden calf of management philosophy. In decentralization a great

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deal of authority is delegated and more decisions are made at the lower level
management. “Every thing that goes to increase the subordinates role is
decentralization and everything which goes to reduce is centralization”.

Absolute cent (pure cent) is not practical except in very small firms. Absolute
power would mean that subordinates have no duties and authority.

ADVANTAGES OF DECENTRALIZATION

- Reduce the workload on overburdened executives: - the executive need not

bury himself in an endless routine, as he is not expected to look into the
affairs of a division from close quarters. Decentralization relives the top
managers from routine duties and enables them to concentrate on other
important issues of the organization.

- Decentralization creates a room for developing general managers: - if the

organization system allows decentralized performance, in the near future the
organization will be having a kind of employees equipped with managerial
ability of decision making and analyzing their surrounding.

- Helpful in adaptation to fast changing environment: - if an organization

becomes more centralized, by it self it creates delay of performance, in our
dynamic environment the organization cannot afford loosing valuable
resource of an organization which is time.

- It is a motivational method: - Decentralization gives an individual an

opportunity to learn by doing. When employees of an organization are
provided with an authority to take a decision, it creates self-esteem and sense
of belongings.

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- For the purpose of making quick decision on the spot: - Decentralization
brings the decision making process closer to the action area. Since decision do
not have to be referred up through the hierarchy. Acquaintance with local
conditions enables divisional heads to decide to solve problems more quickly
and more effectively than the higher level executives.

- It facilitates diversification and expansion: - it may be extremely difficult for

a multi product enterprise to provide a balanced and proportionate emphasis
on its profitable product line through centralization. In order to provide a
better service to the community decentralization is the only key.

DISADVANTAGES OF DECENTRALIZATION

- It results in duplication of effort and resources.

- It allows lack of uniformity of standards among organizational units because
different decisions will be taken by different managers at each division based
on different skills
- Creates problem of coordination among different departments and units and
makes it more difficult to have a uniform policy.
- It becomes difficult for the head quarter to control the different division.
- It increases the chances that the lower level manager will take undesirable
action

4.5.4 DELEGATION OF AUTHORITY

All of us have lived with the concept of authority since birth. First our parents
were authority figures, then schoolteachers, principals finally employers (bosses)
all remind us that we live in a society with distinct authority relationships exists.

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Authority is the right to give orders and the power to exact obedience. It is the
right to command others to act or not to act in a manner deemed by the possessor
of the authority.
Authority is vested in organizational position, not to individual, managers have
authority because of the position they hold, and if other people in the same
position would have the same position. Authority flows down the vertical
hierarchy; positions at the top of in the organizational structure are vested with
more formal authority.

Power and Authority

Many scholars argue that the concept of power and authority are synonymous,
while others contend that they are distinctly different. Authority may be viewed
as the right to do something. It is the formal right of decision and command. The
manager's authority turns him into a decision-maker on issues affecting the
business. Power is a broader concept than authority.

Power is a measure of a person's potential to get others to do what he or she

wants them to do, as well as to avoid being forced by others to do what he or she
does not want to do. Power can be derived from many sources. Not necessarily
from job position. Power can be intentional or unintentional. Power can be
thought of as a strong influence on the direction of an individual's behavior.
Some of the sources of power are

1) Legitimate Power: - which is derived from a person's official position in an

organization or person's position in the organizational hierarchy For example
a captain in the military has a power over lieutenants, sergeants and the
soldiers.

2) Coercive power: - which is derived from a person's ability to create fear in

another individual and is based on the individual's expectation that

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 punishment will be received for not agreeing or complying with the
superior's commands or beliefs. The personal characteristics of an individual
that make other people want to associate with the person.

3) Reward power: -is the opposite of coercive power in that it is derived from
the ability to grant rewards for compliance with the superior's wishes .e. good
grade,

4) Expert power: - is derived from the perception of belief of an individual that

the superior possesses outstanding skill, knowledge and expertise in certain
areas. Therefore the subordinate desires to fulfill the wishes and directions of
the superior for example, subordinate will want to follow the directions of a
manager with an impressive track record of project successes, high
profitability and good communication skills.

5) Referent power: - is based on the identification of an individual with a leader

who is held in high esteem. Often this leader is a person who is older and
perceived as wise, honest and consistent.

Fig: Differences between Authority and Power

Authority Power

 Right to do something  Ability to do something

 Legitimate power given by an  Derived from many formal and
organization to members holding informal sources
position
 Narrow them, authority is one of  Broad concept which creates action
the major sources of power when authority fails to achieve
results.

To promote the effective functioning of the formal organization, a number of

authority relationships are needed. The reasoning is different managers need

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different decision making power, in both type and amount to make the formal
group's efforts meaningful and effective in attaining specific goals. The types of
authority that commonly exist in a formal organization are

Line authority: - is a form of authority in which individuals in management

positions have the formal power to direct and control immediate subordinates. It
is represented by the chain of command, which links superiors and subordinates.
It is the superior-subordinate relationship whereby a superior makes decisions
and tells them to a subordinate, who in turn makes decisions and tells them to
the subordinate and so on, forms a line from the very top to the very bottom
level of the organizational structure.

Line authority is easily understood by the members of an enterprise. A superior

has a direct command over subordinates; this is the essence of line authority.
Each member knows from whom he/she receives orders and to whom he/she
reports. A person with line authority has charge of and is responsible for the
work of a unit and its direct contribution to the goals of the enterprise.

Staff authority: - is the authority/rights to advise recommend and counsel in the

staff specialists, areas of expertise. Or staff authority is the authority originally
meant to be used as a support provider to the line authority. This concept exists
today and is valid. Whereas a line officer has direct authority over other
individuals and can command that ideas be used, a staff person must usually sell
his or her ideas to the line personnel on the bases of their merit. Staff authority is
of many types like

Advisory staff authority: - they provide specialized counseling to line managers.

Advisories staff manager studies problems, offers suggestions and prepares
plans for the use and help of the line manager. For example personnel
department role include giving suggestions for interviewing format,
performance evaluation, special bonus plan, company benefit etc.

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Service staff authority: -these staff members have a service relationship with the
line members. Service units perform a service consisting of activities, which have
been separated from the line job. For example the maintenance department are
service department who will be providing services (e.g. to the production
department) when the need arises.

Functional staff authority: -is an authority delegated to an individual or

department over specific activities undertaken by personnel in other
departments. Staff departments may be given a functional authority to control
their systems.

Responsibility: - Responsibility is the obligation to perform the task or an

activity. It is the obligation of an individual to perform certain activities, which
are assigned to him. If an individual accepts the job or responsibility he should
see that the job is well completed to the best of his ability. Managers in
organizations possess authority and are therefore responsible for other people,
money and resources. It is what one is expected to do in order to carry out one's
prescribed job. Responsibility may be continuing or it may terminate with the
accomplishment of a single action.

Responsibility comes into existence when a person with authority or a manager,

accepts the obligation to perform work and starts to use authority. The viewpoint
taken here is that authority is the essential management entity in organizing. To
achieve goals, the use of authority gives rise to the acceptance of obligations for
these goal attainments and it is these obligations that give rise to responsibility.

Authority and Responsibility

It is common in organizations today to violate the parity principle. Which

suggest that the authority and responsibility of any manager should be equal.
Marketing managers are given the responsibility for increased sales, but they

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don't have the authority to spend for advertising, promotion or training etc.
office managers are given the responsibility for smooth operations, but they have
no authority to hire or fire key personnel or purchase important equipment. A
manager's authority should provide him or her with the power to make and
enforce decisions concerning assigned or defined duties. Responsibility places
the obligation on the person to perform these duties by using this authority.

Authority without responsibility has no ultimate purpose or justification for

existing; likewise, responsibility without authority to carry out the assigned
duties has a no meaning. A manager cannot perform assigned duties when the
necessary authority is lacking to see that the work is accomplished.

Therefore it should be noted that authority must be carefully tailored to fit the
responsibilities involved. Failure to strike a happy balance between the two may
be frustrating to superiors and subordinates as well.

Accountability: - means that the people with authority and responsibility are
subjected to reporting and justifying task outcomes to those above them in the
chain of command. It is a mechanism at which authority and responsibility
brought into alignment. Subordinates must be aware that they are accountable
for a task and must accept the responsibility and accountability for performing.

Delegation of authority: - delegation is the assignment of authority to others in

order to carry out certain tasks. To delegate means to grant authority from the
superior to subordinates to accomplish a particular assignment. It is a delivery
by one individual to another of the right to act, to make decisions, and to request
resources and to perform other tasks in order to fulfill job responsibilities.

Every manager must delegate some tasks or duties to subordinate, since

management means getting work done through others. Organization becomes
operational through delegation only. Effective managers will normally delegate

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as many operating tasks as possible to subordinates and concentrate their efforts
on (exceptional) management tasks.

Delegation is a two-sided relationship. It is a demanding function: it requires

sacrifices from both the assignor and the assignee. The superior must be willing
to sacrifice a portion of his authority and the subordinate must be prepared to
shoulder additional responsibilities. The major reasons why managers do not
delegate are Tendency of desiring to do things personally, fear of being exposed,
unconscious acceptance of power, desire to dominate, unwillingness to accept
risks, attitude that subordinate is incapable of using authority properly etc.

The process of Delegation

The process of delegation consists of three steps

1) Allocation of work duties to subordinates: - the first step in this process is to

determine clearly what the subordinates are supposed to do. Then the
capabilities of subordinates should be considered to match them with the
assigned duties. This would ensure the optimal utility of human resources.
However, the distribution and allocation of duties among subordinates must
be fair and well balanced. The tasks should be distributed in such a manner
that the subordinates are not unnecessarily overburdened and that each one
is capable of efficiently completing it. The total task can be divided into
identifiable parts so that the manager can handle some parts himself and
other parts can be handled either by skilled workers only or by any worker.
This way, the coordination and supervision would become easier.

2) Delegation of authority and extent of delegating: - the second step is to give

authority to subordinates to make and implement decisions regarding
procurement of resources and supervision of activities that are relevant to the
duties assigned to them. This authority must be clearly stated and if possible

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 in writing so that there is no ambiguity or indecision. This authority should
also be related to tasks so that, if the tasks change, so would the authority.
The subordinates have the authority to make decisions relative to their tasks
and implement them except those decisions that are not with in the scope of
their domain, then these should be referred to the higher authority.

3) Creation of obligation: - the third aspect is the obligation on the part of the
subordinates to perform their duties satisfactorily. The person assigned the
task is morally responsible to do his best since he has willingly accepted these
tasks. Obligation is a personal concern for the task. Even if the subordinate
gets part of the task done through other people, the obligation and the
accountability still lies with the subordinate. According to Newman, Summer
and Warren "By accepting an assignment a subordinate in effect gives his
superior a promise to do his best in carrying out his duties. Having taken a
job, he is morally bound to complete it. He can be held accountable for
results".

Advantages of delegation are:

 It reduces burden on the manager, It provides the manager with more time,
which can be spend in the external environment, It enables the manager to be
relieved from the operational work and to concentrate and expertise on other
important activities, It frees the top manager from operational issues

 Subordinate will get a chance to participate in managerial issues, Motivates

the subordinate, Creates sense of belongings and job satisfaction, It enlarges
the subordinate understanding and develop the capacity

 Delegation leads to better decision since the subordinates are closer to the
situation they have clear and complete information

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 Delegation speeds up decision making. Decision taken by the lower lever
managers are more timely than those that go through the formal scalar chain
process.

4.5.5 SPAN OF MANAGEMENT

Span of management refers to the number of people who are supervised by a

single manager effectively. It also shows the number of people who report
directly to a single manager. Span of management is also known as span of
control, span of supervision, span of authority etc.
How many subordinates will have to report directly to each manager? This is
the span of management question. Obviously, a manager cannot supervise
unlimited number of employees. There is a limit to one’s capacity to control the
work of different subordinate. A manager’s ability to supervise a large number
of subordinates depends upon different factors like knowledge, time, energy etc.
A wide span of control (organization) results in a large number of workers
reporting to one supervisor. Wide spans or a manager who has a relatively large
number of immediate subordinates usually results in few organization levels and
a "flattening out" of the structure. Usually wide span or management are
challenging to a manager and requires special consideration before assigning a
manger over large number of individuals.
A narrow span result in small number, therefore the principle of span of
management is a statement of the limitation of the number of people that a
manager can efficiently manage. Narrow spans, expedite more personalized
manager-subordinate relationships, which results "tall organizational structure"
i.e. one with relatively many levels.

It states that no single executive should have more people looking to him for
guidance and leadership than he can reasonably be expected to serve. To
overcome the biological limitations, every manager has to delegate work to as
many subordinates as he can effectively manage. Thus, span of management is

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the reason for departmentation and delegation of authority. It is not how many
people report to a manager that matters, but it is how many subordinates a single
manager can effectively control and handle, it is how many people report to a
manager, how many people who have to work with each other to report to a
manager, the number of relationships etc.

From this relationship it can be seen that with just three subordinates there are 18
relationships and with four subordinates, these relationship number 44, and
these relationships jump to 100 when the number of subordinates is increased to
five. Therefore, no executive should attempt to control over large number of
subordinates whose work interlocks.

Factors to be considered in determining the span of control (factors

affecting the span of management)

Different attempts and formulas were made in order to determine the span of
control but the modern approach has shifted away the finding of universally
acceptable magic formula. The current view is that span is more flexible, the
number of employees, which has to work under a manager, depends upon
different factors. Therefore in order to determine the span of control under a
manager these common factors should be considered.

 Nature of the work: - if the subordinates are involved in performing the

same or similar activities, then it is possible for the manager to supervise more
subordinates. In addition, if the work is standardized, the span of management
may be increased. But if the subordinates perform diversified and complex
operations, it will be more difficult for the manager to be effective in managing
large number of individuals.

 Capacity of the manager (supervisor

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  Capacity of the employees: - if the subordinates are well trained and
developed and experienced with the principle of division of labor (specialization)
the manager can supervise large number of employees.

 Geographical closeness of subordinates:- if all the people assigned to a

manager are located in one area and are with in eyesight, the manager can
supervise relatively more people than if the employees are dispersed at different
locations

 Availability of time for supervision: - if the manager spend too much time
in planning and organizing, then he will not be having enough time to supervise
large number of employees under him. Beside the above the degree of interaction
required, the extent of standardized etc should be considered while fixing the
span of control.

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