ORGANISING

MEANING OF ORGANISING
 ‘Organising translates plans into action’ by deciding
who will perform a particular task, how and where it
will be performed.
 ‘Organising is the process of defining and grouping the
activities of the enterprise and establishing authority
relationship among them’. ----- THEO HAIMMAN
 ‘To organize a business is to provide it with everything
useful to its functioning: raw materials, machines and
tools, capital and personnel’.– HENRI FAYOL
ORGANISING PROCESS
Identification & Division Of Work: –

 The total work to be done should be divided into specific

jobs as according to predetermined plans. –
Job = a set of related tasks that can be performed by an
individual.
 It should have specific and definite tasks to be performed.
As far as possible, it should define expected results along
with the job.
 Division of work → specialization of efforts and skills +
avoids duplication of work.
 Management must ensure that all the activities required to
achieve organizational objectives are identified.
Departmentalization
 Grouping similar and related jobs into larger units called
departments, divisions or sections and placing them under
a department head. It facilitates specialization.
 The departments are linked together and are
interdependent.
 Aims at achieving co-ordination and facilitate unity of
action.
 Departmentation can be done on the basis of:
•Functions: marketing, personnel, finance etc.
•Products: Textiles, chemical, power division etc.
•Territories: Western, northern, central, eastern etc.
Assignment Of Duties:
 Define the work of different job positions and allocate
work accordingly.
 Once departments are formed, the dept is placed under
the charge of an individual.
 Jobs are assigned to an individual best suited to perform
it.
 Qualifications, experience, ability and aptitudes of people
should be matched with duties.
 E.g. activities of finance should be assigned to persons
having qualifications and experience in finance e.g. C.A‘s
Establishing Reporting Relationships:

 Granting requisite authority to enable employees to

perform the job satisfactorily.
 Superior subordinate relations between different
people and job positions created, so that everybody
knows from whom he is to take orders and to whom
he can issue orders.
 Creates management hierarchy = a chain of
command from the top manager to the individual at
the lowest level.
 This helps in coordination.
Importance of Organizing

 Benefits of specialization: In organizing every individual is assigned apart

of total work and not the whole task. This division of work into smaller units
and repetitive performance leads to specialization. Thus organizing promotes
specialization which in turn leads to efficient & speedy performance of tasks.
 Clarity in working relationship: It helps in creating well defined jobs and
also clarifying the limits of authority and responsibility of each job. The
superior-subordinate relationship is clearly defined in organizing.
 Effective Administration: It provides a clear description of jobs and related
duties which helps to avoid confusion and duplication. Clarity in working
relationships enables proper execution of work which results ineffective
administration.
 Optimum utilization of resources: The proper assignment of jobs avoids
overlapping/duplication of work. This helps in preventing confusion and
minimizing the wastage of resources and efforts.
Importance of Organizing
 Adoption to Change: A properly designed organizational structure
is flexible which facilitates adjustment to changes in workload
caused by change in external environment related to technology,
products, resources and markets.
 Development of Personnel: Sound organization encourages
initiative and relative thinking on part of the employees. When
managers delegate their authority, it reduces their workload so they
can focus on more important issues related to growth & innovation.
This also develops the subordinates’ ability and helps him to realize
his full potential.
 Expansion and growth: It helps in growth & diversification of an
enterprise by adding more job positions, departments, products
lines, new geographical territories etc.
Meaning of Organizational Structure

 It seeks to establish relations among all the persons working

in the organization.
 Under the organizational structure, various posts are created to
perform different activities for the attainment of the
objectives of the enterprise.
 Relations among persons working on different posts are
determined.
 The structure provides a basis or framework for managers and
other employers for performing their functions.
 The organization structure can be defined as the frame work
within which managerial and operating tasks are performed.
Relation between Span of Management
and Organization structure:
 Span of management refers to the number of
subordinates that can be effectively managed by a
superior.
 The Span of management to a large extent gives
shape to the organization structure.
 This determines the levels of management in the
structure.
 Arrow span of management results in tall
structure whereas wider span of management
results in flat structure.
Functional Structure:
 In functional structure activities are grouped and
departments are created on the basis of specific
functions to be performed.
 For example, all the jobs related to production are grouped
under production department, sales departments etc.

 Suitability
 (1) Large organizations producing one line of product.
 (2) Organizations which require high degree of functional
specialization with diversified activities.
Functional Structure:
Advantages of functional structure

 Specialization: Better decision of labour takes place which

results in specialization of functions and its consequent
benefits.
 Coordination is established: All the persons working within a
departmental are specialists of their respective jobs. It makes
the co-ordination easier at departmental level.
 Helps in increasing managerial efficiency: Managers of one
department are performing same type of function again and
again which makes them specialized and improves their
efficiency.
 Minimizes cost: It leads to minimum duplication of effort
which results in economies of scale and thus lowers cost.
Disadvantages of functional structure

 Ignorance of organizational objectives: Each

departmental head works according to his own wishes.
They always give more weight to their departmental
objectives. Hence overall organizational objectives suffer.
 Difficulty in Inter-departmental Coordination: All
departmental heads work as per their own wishes which
leads to coordination within the department easier but it
makes inter-departmental coordination difficult.
 Hurdle in complete development – because each
employee specializes only in a small part of the whole job.
DIVISIONAL ORGANIZATION
STRUCTURE

 Dividing the whole enterprise according to the

major products to be manufactured (like metal,
plastic, cosmetics etc.) is known as divisional
organization structure.

 Suitability: This structure is suitable in

organizations producing multi product or different
lines of products requiring product specialization.
 Also growing companies which intend to add more
lines of products in future adopt this structure.
DIVISIONAL ORGANIZATION STRUCTURE
Advantages of Divisional organization structure

 Quick decision-making: Divisional manager can

take any decision regarding his division
independently which makes decisions quick and
effective.
 Divisional results can be assessed: Division results
(profit/loss) can be assessed easily. On this basis any
unprofitable division can be closed.
 Growth and Expansion: It facilitates growth and
expansion as new divisions can be added without
disturbing existing departments.
Disadvantages of Divisional organization
structure

 Conflicts among different divisions on allocation

of resources.
 Duplicity of Functions: Entire set of functions is
required for all divisions. It gives rise to duplicity
of efforts among divisions & increases cost.
 Selfish Attitude: Every division tries to display
better performance and sometimes even at the cost
of other divisions. This shows their selfish attitude.
Delegation of Authority

 Meaning: It means the granting of authority to

subordinates to operate within the prescribed
limits.
 The manager who delegates authority holds his
subordinates responsible for proper performance of
the assigned tasks.
 To make sure that his subordinates perform all the
works effectively and efficiently in expected
manner the manager creates accountability.
Elements of Delegation

 Authority: The power of taking decisions in order

to guide the activities of others. Authority is that
power which influences the conduct of others.
 Responsibility: It is the obligation of a subordinate
to properly perform the assigned duty. When a
superior issues orders, it becomes the responsibility
of the subordinate to carry it out.
 Accountability: When a superior assigns some
work to a subordinate, he is answerable to his
superior for its success or failure.
Principle of Absoluteness of Accountability:

 Authority can be delegated but responsibility/accountability

cannot be delegated by a manager.
 The authority granted to a subordinate can be taken back and re-
delegated to another person.
 The manager cannot escape from the responsibility for any default
or mistake on the part of his subordinates.
 For example, If the chief executive asks marketing manager to
achieve a sales target of sale of 100 units/day. The marketing
manager delegates this task to deputy sales manager, who fails to
achieve the target. Then marketing manager will be answerable
for the work performance of his subordinates. Thus,
accountability is always of the person who delegates authority.
 Difference between Authority, Responsibility and
Accountability

Basis Authority Responsibility Accountability

Accountability for the

Right to •bligation to perform an
1. Meaning outcome of the assigned
command assigned task.
task.
Arises from
Arises from delegated
2. Origin formal Arises from responsibility.
authority.
position.
Downward-
from superior Upward- from subordinate Upward- from subordinate to
3. Flow
to to superior. superior.
subordinate.
Can be
withdrawn Cannot be withdrawn once Cannot be withdrawn once
4. Withdrawl
anytime by created. created.
giving notice.
Importance of the Delegation of Authority

 Reduction of Executives’ work load: It reduces the work

load of officers. They can thus utilize their time in more
important and creative works instead of works of daily
routine.
 Employee development: Employees get more opportunities
to utilize their talent which allows them to develop those
skills which will enable them to perform complex tasks.
 Quick and better decision are possible: The subordinate
are granted sufficient authority so they need not to go to
their superiors for taking decisions concerning the routine
matters.
Importance of the Delegation of Authority

 High Morale of subordinates: Because of

delegation of authority to the subordinates they get
an opportunity to display their efficiency and
capacity.
 Better coordination: The elements of delegation –
authority, responsibility and accountability help to
define the powers, duties and answer ability related
to various job positions which results in developing
and maintaining effective coordination.
Decentralization

 Decentralisation of authority means dispersal of authority

to take decisions throughout the organization, upto the
lower levels.
 It implies reservation of some authority with the top level
management and transferring rest of the authority to the
lower levels of the organization.
 This empowers lower levels to take decisions regarding
problems faced by them without having to go to the upper
levels.
 According to Allen,‘ Decentralisation refers to systematic
efforts to delegate to the lowest level, all authority except the
one which can be exercised at central points.‟
Centralization vs
Decentralisation
 Centralization = authority retained at top level
and Decentralization = Systematic delegation of
authority at all levels and in all departments of a firm.
Firm needs to balance the two.
 In case of a decentralized firm, Top level retains
authority for:
 Policies and decisions w.r.t the whole firm
 Overall control and coordination
 Middle and lower levels have authority to take
decisions w.r.t tasks allocated to them
Centralization and Decentralization

 Centralization and Decentralization-represents the pattern of

authority among managers at different levels.
 Centralization of authority means concentration of power of
decision making in a few hands. In such an organization very
little authority is delegated to managers at middle and lower
levels.
 No organization can be completely centralized or
decentralized.
 They exist together and there is a need for a balance between
the two. As the organization grows in size, there is tendency to
move towards decentralization.
 Thus, every organization is characterized by both.
Importance of Decentralization

 Develops initiative amongst subordinates: It helps to promote

confidence because the subordinates are given freedom to take their own
decisions.
 Quick and better decisions: The burden of managerial decisions does
not lie in the hands of few individuals but gets divided among various persons
which helps them to take better and quick decisions.
 Relieves the top executives from excess workload: The daily
managerial works are assigned to the subordinates which leaves enough time
with the superiors which they can utilize in developing new strategies.
 Managerial Development: It means giving authority to the subordinates
up to the lower level to take decisions regarding their work. In this way the
opportunity to take decisions helps in the development of the organization.

Better Control: It makes it possible to evaluate performance at each level
which results in complete control over all the activities.