ORGANISING

It is the process of identifying and grouping the work to be performed, defining and delegating
responsibility and authority, and establishing relationships for the purpose of enabling people to
work most effectively together in accomplishing objectives.

According to Theo Haimann, "Organising is the process of defining and grouping the activities
of the enterprise and establishing the authority relationships among them."

Steps in Organizing

1. Identification and Division of work: The organizing function begins with the division
of total work into smaller units. Each unit of total work is called a job.
2. Grouping the Jobs and Departmentation: After dividing the work in smaller jobs,
related and similar jobs are grouped together and put under one department.
3. Assignment of Duties: After dividing the organization into specialized departments
each individual working in different departments is assigned a duty matching to his
skill and qualifications. Employees are assigned duties by giving them a document
called job description. This document clearly defines the contents and responsibilities
related to the job.
4. Establishing Reporting Relationship: In the fourth step of organizing process all the
individuals are assigned some authority matching to the job they have to perform. The
assignment of the authority results in creation of superior-subordinate relationship and
the question of who reports to whom is clarified.

Importance of Organizing

1. Benefits of specialization: Organizing leads to a systematic allocation of jobs amongst

the work force. This reduces the workload as well as enhances productivity because of
the specific workers performing a specific job on a regular basis. Repetitive performance
of a particular task allows a worker to gain experience in that area and leads to
specialization.
2. Clarity in working relationships: The establishment of working relationships clarifies
 lines of communication and specifies who is to report to whom. This removes ambiguity
in transfer of information and instructions.
3. Optimum utilization of resources: Organizing leads to the proper usage of all material,
financial and human resources. The proper assignment of jobs avoids overlapping of
work and also makes possible the best use of resources. Avoidance of duplication of
work helps in preventing confusion and minimizing the wastage of resources and efforts.
4. Effective administration: Organizing provides a clear description of jobs and related
duties. This helps to avoid confusion and duplication. Clarity in working relationships
enables proper execution of work. Management of an enterprise thereby becomes easy
and this brings effectiveness in administration.
5. Development of personnel: Organizing stimulates creativity amongst the managers.
Effective delegation allows the managers to reduce their workload by assigning routine
jobs to their subordinates. The reduction in workload by delegation is not just necessary
because of limited capacity of an individual but also allows the manager to develop new
methods and ways of performing tasks. Delegation also develops in the subordinate the
ability to deal effectively with challenges and helps them to realize their full potential.

Organisation Structure

An organisation structure explains the positions and official relationships between the various
individual working in organisation. The organization structure can be defined as the framework
within which managerial and operating tasks are performed. It specifies the relationships
between people, work and resources. The organisation structure can be classified as;

 Line Organisation Structure

 Line and Staff organisation structure
 Vertical Organisation structure
 Horizontal Organisation structure
 Functional Organisation structure
 Divisional Organisation structure
 Matrix Organisation structure
Line Organisation Structure: Line organisation is the simplest and the oldest type of
organisation. It is also known as scalar organisation or military type of organisation. In the words
of J.M. Lundy, “It is characterized by direct lines of authority flowing from the top to the bottom
of the organizational hierarchy and lines of responsibility flowing in an opposite but equally
direct manner”. Under this type of organisation authority flows downwards, responsibility moves
upwards in a straight line. Scalar principle and unity of command are strictly followed in line
organisation.

Line and Staff Organisation: In this kind of organisation, staff experts, who specialist in
specific areas assist the line personnel. These experts do not have the powers to command any
subordinate other than those who are under their direct control. They can only advice the line
personnel on certain matters. They also do not have the authority to take decisions on vital
issues. It is for the line manager to decide whether accept the suggestions of the staff specialists
or not.
Vertical (tall) Structure: Tall' structure has many leaders and layers of management, and
businesses with this structure often use a 'top-down' approach with a long chain of command . In
a hierarchical structure, managers will have a narrow span of control and a relatively small
number of subordinates or staff.

Horizontal (flat) structure: A horizontal or „flat' structure is an organisational structure with

only a few layers of management. In a flat structure, managers have a wide span of control with
more subordinates, and there is usually a short chain of command. The communication pathway
when using this structure is short and often results in quicker, more effective communication.
Smaller businesses or those adopting a more modern approach to management are most likely to
use a flat organisational structure.
Functional structure: This is the simplest & the most prevalent form of organizational
structure. Functional organizational structure refers to the structure in which different
departments are created on the basis of major functions (Finance, Production, HR, etc.)
performed in the organization. Each department is headed by a functional manager and
employees are grouped as per their role.

Divisional Structure: In a divisional structure, the various departments or divisions are created
on the basis of different products manufactured, or geographical are they are operating. In each
department or division, different functions like production, purchase, finance, sales etc. are
performed in order to achieve organizational goals. Each division has a divisional manager who
is responsible for the working of his division and has full authority over it. In each department,
functional structure automatically develops.

Matrix Structure: A matrix organization is a work structure where team members report to
multiple leaders. In a matrix organization, team members (whether remote or in-house) report to
a project manager as well as their department head. This management structure can help your
company create new products and services without realigning teams.

Principles of Organizing

1. Unity of Objectives: The goals and objectives must be clearly defined for the entire
organization, for each department and even for each position in the organization
structure. If there is contradiction among the various levels of objectives, then entire
goals of the organization cannot be achieved. There must be unity of objectives so that all
efforts can be concerned on the set goals.
2. Specialization: The total task in an organization should be divided in such a manner that
every person is confined to a single job. This leads to specialization. An employee
repeatedly performing a specific single job becomes an expert in that job. The work
assigned should be according to his abilities and aptitude.
3. Span of Control: Span of control represents a numerical limit of subordinates to be
supervised or controlled by a manager. As there is a limit to the number of subordinates
that can be supervised effectively.
4. Exception: Each manager should make all decisions within the limitation of delegated
authority. However, only exceptionally complex matters should be referred to the higher
levels for their decision. This will enable the executives at higher levels to devote time to
more important and crucial issue.
5. Scalar Principle: This principle sometimes known as the ''chain of command''. It is
unbroken line of authority from the top level to the bottom of an organization. It makes
 clear about who will work under whom. The chain of command (scalar chain) should be
short and clear which makes decision making and communication more effective.
6. Unity of Command: The principle of command suggests that an employee should have
one and only one boss. Each subordinate should have only one superior whose command
he has to be obey. Directions from several superiors may result in confusion, chaos,
conflict.
7. Delegation of Authority: Proper authority should be delegated at all levels of
management. The authority delegated should be equal to responsibility so as to enable
each manager to accomplish the task assigned to him.
8. Responsibility: According to this principle, the responsibility of all employees should be
made clear. The superior should not be allowed to avoid responsibility by delegating
authority to his subordinates.
9. Authority: Authority is the tool by which a manager is able to accomplish the desired
goals. Hence, the authority of each manager should be clearly defined and it should be
equal to responsibility. In the absence of adequate authority, responsibility leads to
frustration and ineffective performance.
10. Simplicity: The organizational structure should be simple with minimum numbers of
levels so that each member can understand his duties and authority relationships. An
organization with few levels in organization means difficulty of communication and
coordination.

Formal and Informal Organization

Formal Organization: Formal organisation is deliberately and consciously created for the
accomplishment of the enterprise objectives. In Formal Organization, job of each member is
clearly defined; authority, responsibility and accountability are fixed.

Features of Formal Organisation:

 1. The formal organisational structure is created intentionally by the process of organising.
2. The purpose of formal organisation structure is achievement of organisational goal
3. In formal organisational structure each individual is assigned a specific job.
4. In formal organisation every individual is assigned a fixed authority or decision-making
power.
5. Formal organisational structure results in creation of superior-subordinate relations.
6. Formal organisational structure creates a scalar chain of communication in the
organisation.

Merits of Formal Organisation:

1. It clearly defines objectives of the organisation and authority - responsibility relationships

amongst people to attain those objectives.
2. It results in optimum utilisation of scarce organisational resources.
3. Division of work and relationships amongst people develops effective system of
communication in the organisation.
4. Rules and regulations are followed
5. There is no duplication or overlapping of works.

Limitations of Formal Organisation:

1. There is loss of initiative and innovative abilities due to strict adherence to rules.
2. While following scalar chain and chain of command actions get delayed in formal
structure.
3. Formal organisational structure does not give importance to psychological and social need
of employees.
4. There is no personal consideration.
5. There is possibility of authority being misused.

Informal Organization: An organization formed within the formal organization as a network of

interpersonal relationship, when people interact with each other, is known as informal
organization. Informal organisation is the outcome of personal and social relationships between
the individuals in an organisation. It is not consciously or deliberately created.
Features of informal organisation

1. Informal organisational structure gets created automatically without any intended efforts of
managers.
2. Informal organisational structure is formed by the employees to get psychological
satisfaction.
3. Informal organisational structure does not follow any fixed path of flow of authority or
communication.
4. The membership of informal organisation is voluntary.
5. The communication system has no fixed path.
6. The existence of informal organisational structure depends on the formal organisation
structure.

Advantages of Informal Organisation:

1. Informal structure does not follow scalar chain so there can be faster spread of
communication.
2. Informal organization gives due emphasis to psychological and social needs of
employees which motivate the employees.
3. It serves as a faster channel of communication.
4. It helps in achieving organisational objectives by compensating the limitations of the
formal structure.

Disadvantages of Informal Organisation:

1. Sometimes informal organisation becomes a disturbing force, which can go against

organisational interests, e.g., spreading rumours in the organisation.
2. It may divert members‟ attention from organisational goals.
3. It may lead to groupism and ultimately results in conflicts.
 BASIS FOR
FORMAL ORGANIZATION INFORMAL ORGANIZATION
COMPARISON
Meaning An organization type in which the An organization formed within the
job of each member is clearly formal organization as a network of
defined, whose authority, interpersonal relationship, when
responsibility and accountability people interact with each other, is
are fixed is formal organization. known as informal communication.
Creation Deliberately by top management. Spontaneously by members.

Purpose To fulfill, the ultimate objective of To satisfy their social and

the organization. psychological needs.
Communication Official communication Grapevine
Control Rules and Regulations Norms, values and beliefs
mechanism

Delegation of Authority

Delegation refers to the downward transfer of authority from a superior to a subordinate.

Delegation of authority can be defined as subdivision and sub-allocation of powers to the
subordinates in order to achieve effective results.

According to Haimann,”Delegation of authority merely means the granting of authority to

subordinates to operate within prescribed limits”.

Elements of Delegation

Authority - in context of a business organization, authority can be defined as the power and
right of a person to use and allocate the resources efficiently, to take decisions and to give orders
so as to achieve the organizational objectives.

Responsibility - is the duty of the person to complete the task assigned to him. A person who is
given the responsibility should ensure that he accomplishes the tasks assigned to him.

Accountability - means giving explanations for any variance in the actual performance from the
expectations set.

Steps in Delegation
Delegation of authority is the base of superior-subordinate relationship, it involves following
steps:-

1. Assignment of Duties - The delegator first tries to define the task and duties to the
subordinate. He also has to define the result expected from the subordinates. Clarity of
duty as well as result expected has to be the first step in delegation.
2. Granting of authority - Every subordinate should be given enough independence to
carry the task given to him by his superiors. The managers at all levels delegate
authority and power which is attached to their job positions. The subdivision of
powers is very important to get effective results.
3. Creating Responsibility and Accountability - The delegation process does not end
once powers are granted to the subordinates. They at the same time have to be
obligatory towards the duties assigned to them. Responsibility is said to be the factor
or obligation of an individual to carry out his duties in best of his ability as per the
directions of superior.

Features of Delegation of Authority

1. Delegation means giving power to the subordinate to act independently but within the
limits prescribed by the superior.
2. Delegation does not mean that manager give up his authority, but certainly he shares
some authority with the subordinate.
3. Authority once delegated can be further expanded, or withdrawn by the superior
depending on the situation.
4. The manager cannot delegate the authority which he himself does not possess.
5. The delegation of authority may be oral or written, and may be specific or general.

Advantages/Importance of Delegation

1. Vital for every Organisation - Delegation of authority is indispensable for every

organisation. No individual, in any organisation, can perform all the tasks himself. He
needs the support of a team of individuals.
2. Relief to Managers - The manager of each department is able to divide the entire work of
 his department among his subordinates. After assigning work to every subordinate staff,
the manager also gives him the requisite authority. The manager, thus, is able to
concentrate on more important duties.
3. Prompt Decisions - Delegation of authority to subordinates enables them to make
decisions within the scope of their authority. For example, a foreman has the authority to
make certain decisions within his level of authority. It is, therefore, not necessary to refer
every matter to the superior and to await his decision.
4. Improvement of Job Satisfaction - Assignment of work and responsibilities to
subordinates gives them the feeling that they are being recognised. This would certainly
motivate them to put in greater efforts in order to show good results.
5. Scope for business expansion - As the subordinates of the organisation are well versed
in performing their tasks and also have the expertise in decision-making, the business can
successfully undertake expansion or diversification activities.

Decentralization

It refers to downward transfer of authority from one level to another level. Decentralisation of
Authority‟ refers to the dispersal of authority for decision-making in various levels of
organisational operations throughout the organisation.

“Decentralisation refers to the systematic effort to delegate to the lowest levels all authority
except that which can only be exercised at central points.”— Allen.

Importance / Advantages of Decentralisation of Authority

1. Relief to the Top Executives: Diminishing the work-load of the senior executives
who are already over-burdened, decentralisation helps to reduce the volume of their
routine affairs. They can devote greater time and attention to important policy matters
by decentralizing authority for routine operational decisions.
2. Motivation of the Subordinates: Decentralisation motivates the lower level
managers by increasing their chances of recognition, improving their status and
offering them a feeling of accomplishment.
3. Ensuring Quick Performance: The close contact and consequent greater
 understanding between the managers and the managed can cope successfully with
constant business changes. Thus, it provides a dynamic character to the business and
ensures quick decision and prompt action.
4. Developing Future Executives: When authority is decentralised, the subordinates get
the opportunity of exercising their own judgement. They learn how to decide and
develop managerial skills. Thus, decentralisation provides a better means of
developing future managers and executives.

Disadvantages of Decentralisation

1. Increase the administrative price: Now and again, decentralization may not be
conceivable by any stretch of the imagination. Outer factors make this troublesome,
for example, expansive strikes.
2. High Cost of operation: It builds the authoritative costs in light of the fact that
generously compensated administrators must be selected.

Difference between Delegation and Decentralization

BASIS FOR
DELEGATION DECENTRALIZATION
COMPARISON
Meaning Delegation means handing over Decentralization is the final
an authority from one person of outcome achieved, when the
high level to the person of low delegation of authority is
level. performed systematically and
repeatedly to the lowest level.
What it is? Technique of management Philosophy of management.
Accountability Superiors are accountable for the Department heads are accountable
acts done by subordinates. for the acts of the concerned
department.
Liberty of Work Subordinates do not have A substantial amount of freedom is
full liberty. there.

Departmentation

Departmentation refers to the grouping of operating tasks into jobs, the combining of jobs into
efficient work groups and combining of groups into divisions called as “Departments”. In simple
words, Departmentation is the way in which an organization groups its various activities.

“Departmentation is the process of grouping the various activities into separate units.” —Theo
Haimann

Bases of Departmentation

1. Functional basis.
2. Territorial basis.
3. Process basis.
4. Product basis.
5. Customer basis.
6. Time basis.
7. Number basis

Departmentation by Function

The most commonly accepted practice is the grouping of the activities in accordance with the
functions of an enterprise. The basic enterprise functions generally consist of production,
marketing, finance, etc. This method is more logical and hence present in almost all enterprises
at some level.

Departmentation by Territories

When the organization is large and geographically dispersed, departmentation on territorial basis
is the best. This is also considered suitable where the branches produce the same goods or
perform similar services at various locations.

Departmentation by Process

Activities can also be grouped according to the process involved or the equipment used, This
form of departmentation is often employed in manufacturing enterprises. It is also called
equipment departmentation. Large retail or marketing enterprises may also have process
departments for receiving goods in stores, transportation, wrapping and delivery.
Departmentation by process is usually decided on the basis of costs that is mainly on economic
considerations.

Departmentation by Product

This type of departmentation is desirable for large undertakings which deal with a variety of
products or product lines. To departmentalise on product basis means to establish each product
or group of closely related products in a product line as a relatively autonomous integrated unit
within the overall framework of the company. Under this method, an executive will be in charge
of and responsible for all the activities relating to a particular product from production to
distribution.

Departmentation by Customer

Departmentation can also be made on the basis of customers served that is customer
departmentation. In this case, the firm shows its paramount interest in the welfare of the
customer and attention given to them. Under this method, the customers are divided into separate
categories, such as distributors, retailers and consumers, and the task of satisfying the needs of
different categories of customers assigned to specific departments.

Departmentation by Time

It is a common practice to departmentalize activities on time basis. Enterprise engaged in

continuous process can follow this pattern. We are familiar with the second shift, third shift, or
night shifts, etc. Under this method, the activities performed in each shift are similar and almost
identical. But they are departmentalized on time basis. This kind of departmentation is generally
found in public utilities and manufacturing establishments.

Departmentation by Number:

In case of departmentation by number, activities are grouped on the basis of their performance by
certain number of persons. For instance, in the army, soldiers are grouped into squaders,
battalions, companies, brigades and regiments based on the number prescribed for each unit.
However, this type of departmentation is not found in business concerns.
 Span of Management

It is also known as span of control. The Span of Management refers to the number of
subordinates who can be managed efficiently by a superior. Simply, the manager having the
group of subordinates who report him directly is called as the span of management.

Factors Determining Span of Management

1. Capacity of Superior: Here the capacity means the ability of a superior to comprehend
the problems quickly and gel up with the staff such that he gets respect from all. Also, the
communication skills, decision-making ability, controlling power, leadership skills are
important determinants of supervisory capacity. Thus, a superior possessing such capacity
can manage more subordinates as compared to an individual who lack these abilities.
2. Capacity of Subordinate: If the subordinate is trained and efficient in discharging his
functions without much help from the superior, the organization can have a wide span.
This means a superior can manage a large number of subordinates as he will be required
just to give the broad guidelines and devote less time on each.
3. Nature of Work: If the subordinates are required to do a routine job, with which they are
well versed, then the manager can have a wider span. But, if the work is complex and the
manager is required to give directions, then the span has to be narrower.Also, the change
in the policies affects the span of management. If the policies change frequently, then the
manager needs to devote more time and hence the span would be narrow whereas if the
policies remain stable, then a manager can focus on a large number of subordinates.
Likewise, policies technology also plays a crucial role in determining the span.
4. Degree of Decentralization: If the manager delegates authority to the subordinates then
he is required to give less attention to them. Thus, higher the degree of decentralization,
the wider is the span of management. But in case, subordinates do not have enough
authority, then the manager is frequently consulted for the clarifications, and as a result
superior spends a lot of time in this.
5. Planning: If the subordinates are well informed about their job roles, then they will do
their work without consulting the manager again and again. This is possible only
because of the standing plans that they follow in their repetitive decisions. Through a
 proper plan, the burden of a manager reduces manifold and can have a wider span of
management.
6. Staff Assistance: The use of staff assistance can help the manager in reducing his
workload by performing certain managerial tasks such as collecting information,
processing communications and issuing orders, on his behalf. By doing so, the managers
can save their time and the degree of span can be increased
7. Supervision from Others: The classical approach to the span of management, i.e., each
person should have a single supervisor is changing these days. Now the subordinates are
being supervised by other managers in the organization such as staff personnel. This has
helped the manager to have a large number of subordinates under him.
8. Communication Techniques: The mode of communication also determines the span of
management. If in the manager is required to do a face to face communication with each
subordinate, then more time will be consumed. As a result, the manager cannot have a
wider span. But in case, the communication is in writing and is collected through a staff
personnel; the manager can save a lot of time and can have many subordinates under him.

Organisation Chart and Organisational Manual

Organisation Chart

Organisation Chart is the vital tool for providing information about organisational relationships.
Organisation chart is a diagrammatical form, which shows the major functions and their
respective relationships, the channels of formal authority and the relative authority of each
manager who is incharge of each respective function.

George R. Terry defines an organisation chart as a “diagrammatical form, which shows

important aspects of an organisation including the major functions and their respective
relationship, the channels of supervision and the relative authority of each employee who is in
charge of each respective functions.”

The organisation chart has the following characteristics:

 It is a diagrammatical presentation
  It shows principal lines of authority in the organisation
 It shows the interplay of various functions and relationships
 It indicates the channels of communication.

Advantages of Organisation Chart

1. Organisation chart gives a clear picture of the organisation structure and the relationships
that exist in an organisation.
2. It shows at a glance the lines of authority and responsibility. From it, the individuals can see
who their associates are, to whom they report and from whom they get instructions.
3. With the help of an organisation chart, outsiders can easily know the persons whom they
have to approach in connection with their work. This helps the outsiders to save their time
and also to form a better opinion of the concern.
4. By providing a clear picture of the lines of authority and responsibilities, they help to avoid
overlapping and duplication of authority and secure unity of command.
5. It serves as a valuable guide to the new personnel in understanding the organization and for
their training.

Disadvantages or Limitations of Organisation Chart

1. Organisation chart shows only the formal relationships and fails to show the informal
relations within the organisation. Informal relationships are also important in any
organisation.
2. Organisation charts, no doubt show the line of authority but they do not show the quantum
of authority vested in different managerial positions.
3. An organisation chart is incomplete. It is not possible to include all information affecting
the organisation.
4. It shows a static state of affairs and does not represent flexibility which usually exists in the
structure of a dynamic organisation.
5. Organisation chart gives rise to a feeling of superiority and inferiority which causes
conflicts in the organisation and affects team-spirit adversely.

Organisational Manual
Organisation manual is a small book containing information about the organisational objective,
authority and responsibility of various positions and methods and procedures followed. The
manual can be prepared either for the organisation as a whole or parts thereof.

The organisation manual consists the information such as organisational objectives and policies,
job descriptions of major positions, organisational procedures, methods and rules.

Good organisation manual has the following contents.

1. Nature of the enterprise

2. Objectives of the enterprise
3. Policies of the management
4. Job Descriptions
5. Duties and responsibilities of various personnel
6. Instructions relating to the performance of standard as well as non-standard jobs.

Advantages of Manuals

1. It contains in writing all-important decisions relating to internal organisation of the

enterprise.
2. It avoids conflicts and overlapping of authority.
3. It enables new employees to know the various procedure and practice in the shortest
possible time.
4. It enables quick decisions.
5. It contains rules and regulations which employees must follow.

Disadvantages of Manual

1. The preparation of manual is costly and time consuming and process.

2. Manuals bring rigidity to the organisation.
3. Manuals may put on record those relationships which no one would like to see exposed.