AFE BABALOLA UNIVERSITY, ADO-EKITI

COLLEGE OF SOCIAL AND MANAGEMENT SCIENCES

DEPARTMENT OF BUSINESS ADMINISTRATION

MAN 105: ELEMENTS OF MANAGEMENT

LECTURE NOTE III ON

ORGANIZING

Compiled by

Dr. Segun ILUGBUSI, FIMC, FNIPES, CMC

Introduction
People working together in groups to achieve some goal must have roles which are defined and
structured to contribute in a specific way a to group effort. The concept of a "role" implies that

what people do have definite purposes or objectives; they know how their job objective fits into
group effort, and they have the necessary authority, tools, and information to accomplish the
task.

Organizing is that part of managing that involves establishing an intentional structure of roles for
people to fill in an organization. It is intentional in the sense of making sure that all the tasks

necessary to accomplish goals are assigned and, it is hoped, assigned to people who can do them

best.

and distributed
Organising refers to the way in which the work of a group of people is arranged
function of organizing includes the determination of the activities to
among group members. The
be performed; creation of departments, sections and positions to perform those activities; and

establishing relationships among the various parts of an organization.

An organization is a consciously coordinated social entity with a relatively identifiable

boundary that functions: relatively continuous basis to achieve a common goal or a set of goals.

Characteristics of Organizations
Organizations, large, medium or small have four (4) common characteristics;

O They comprise people

(1) They exist in pursuit of a goal
(iüi) They have some status hierarchy i.e. status power (who reports to whom)
(iv) They have their own channel of communication
In order to accomplish any goal, we need to organize people and resources, activities must be
grouped logically and authority should be granted so that conflicts do not occur.

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Importance of organizing
1. It facilitates administration as well as operation of enterprise.

2. Through organizing work and people are properly grouped

3. Overload of work is checked
4. Wastage is reduced
5. Duplication of work is eliminated
6. Effective delegation becomes possible.
7. Organising facilitates growth and diversification of activities through clear division of
work.
8. It helps in developing a proper organization structure

9. The extent and nature of decentralization can be determined.

Steps in the process of organizing

The process of organizing consists of the following steps:

1. Determining the activities to be performed to achieve the objectives of the

organization: In a small business, all the activities are performed by the owner himself.
But when the owner employs someone to assist him, he has to determine the work to be
done by the employee and give him the right to use materials, machinery, equipment, etc.

This is the point when organizing becomes necessary.

2. Identification of major functions to which these activities relate. As more people are

appointed, there has to be further division and sub-division of work among them. (Division

of Labour)
3. Grouping and sub-dividing the activities within each function on the basis of similarity
or relatedness: When an organization becomes large, separate departments are created to
different functions. Each department has to be divided into a number a of smaller
perform
units. (Departmentalization)
4. Establishing relationship among individuals and groups: Ultimately, the work of the
organization is divided into a number of positions of employees and managers.
Relationships are then established among the different positions in the organization. The
outcome of the organizing process is a set of formal relationships which is known as

organization structure.

Organization Structure
The process of organizing culminates into an organization structure which constitutes a
framework of job positions and the authority relationships among the various positions. It is the

process by which managers establish the structure of working relationships among employees to
allow them achieve organizational goals efficiently and organizing is a process of grouping
resourced and activities to accomplish on end in an efficient and effective manner (Huges and

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 principles of division of
Kapoor, 1985). Organizing is basically trying to take advantage of the

labour in getting the work of managers done (Bello, 1988).

tasks and activities are assigned, who reports to whom,

An organizational structure defines how
and the formal coordinating mechanisms and interaction patterns that with be followed.
is the formal system of task and reporting relationships that determines
Organizational structure
how employees use resources to achieve organizational goals.

various factors that are usually taken into consideration for designing a good organization
The
structure are job specifications, departmentalization, authority-responsibility relationships, etc.

Features of Organizational Structure

Organizational structure has three basic features, namely; complexity, formalization and

centralization.
or division of labour. the
(i)
Complexity: This is concerned with the degree of specialization
number of levels in the organization hierarchy and the extent to which the organization's

units are dispersed geographical.

which an organization relies on rules and procedure to
Formalization: This is the degree to
(ii)
a minimum of such
direct the behaviour of employees. Some organizations operate with
others have all kinds of regulations instructing employees as to
standardized guidelines;
what they can and cannot do.
of decision making authority lies. In some
(iii) Centralization: This considers where the locus
organizations, decision making is highly centralized, while in other cases, decision making
therefore either centralized or decentralized. These
is decentralized. An organization is
placement of the organization on this
represent
two extremes on a continuum. The
of structure exists.
continuum is one major factor in determining what type

Based on the arrangement of activities, two most commonly used forms of organization structure
and (2) divisional structure.
are (1) functional structure,

1. Functional Structure
all activities into functional departments
An organization structure formed by grouping together
putting each department under one coordinating head is called functional structure. Thus, in
and
a typical production enterprise the functions like manufacturing, marketing, finance, personnel
enterprise; and in case of a large
the major separate units (departments) of the
may constitute It may be noted that the
purchasing, sales and warehousing may be the major units.
retail store
into sub-units. For example, the manufacturing department
major units use are further divided
may be sub-divided into stores, repairs, maintenance, production, etc.

Divisional Structure
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In large organizations dealing in multiple products and serving a number of distinctive markets,

the divisional structure is considered more suitable. Under such structure the organization is

divided into units entrusted with all activities related to different products on different territories

(markets). Each divisional head is required to look after all functions related to the product or

market territory.
be well
Under divisional structure, most activities associated with a product or product group can

coordinated and its profitability easily ascertained. Moreover, it provides opportunity to

divisional managers to take prompt decisions and resolve all sorts of problems without much

difficulty. However, this structure is expensive and gives rise to duplication of efforts.

Functional structure

Chief Executive

Marketing Finance Personnel

Production

Workshops Stores Repairs and Accounting Debt collection

maintenance

Production Sales Training and Remuneration

Sub units Development
Sub units

Divisional structure

(Product based)

Chief Executive

Refrigerators Marketing
Personnel Automobile Finance

Personnel Production Marketing Accounting

Personnel Production Marketing Accounting

Advantages of organizational Chart

organizational chart means that a preliminary study a of
(1) Rationalization: Preparation of an
the organizational structure is essential. This in itself can lead to greater efficiency;
 responsibilities are clearly defined; lines of authority are shown and each manager knows
where he stands in relation to other managers.
(ii) Blueprint: An organizational chart acts as blueprint and is therefore useful for showing
existing staff and newcomers the nature of the organization. In addition, it may be used as a
basis for reorganizing or making any modifications in the structure of the business.
(iii) Relationships: Segments of a business can be conveniently grouped either in relation to
other parts or separately. This means that the relationships between divisions or
departmental can be clearly shown for the business as a whole or other suitable groupings.
Alternatively, a detailed breakdown of a single division may be carried out.
(iv) Reference: An organizational chart tends itself to easy reference. It can be It displayed in an
office or on a notice board in a corridor or other suitable place so that all staff may see the
structure and note any changes which take place.
(v) Information: It gives additional information which supplements the details available in an
organisation's manual or which is known by convention as being part of the informal
structure of the business.

Disadvantages of organizational charts

(1) Quickly become outdated: Only slight ingenuity is needed to devise a method for revising
organizational charts with little trouble or effort.
(ii) May encourage red tapes: A chart shows definite channels through which information must
flow. In strict adherence to such structure, too much formality could hinder flow of
communication. In practice, short cuts are often taken which can result in improved
efficiency.
(iii) They show static picture, whereas a business is a dynamic organism always changing its
form. This is true, but does not entirely invalidate the use of organizational charts.

(iv) Human relationships are very difficult to portray on a chart. There is some truth in this
statement but nobody pretends that charts are perfect representations of the many complex
relationships which exist in a modern business.
(v) Responsibilities cannot be clearly defined as shown on an organizational chart. One of the
assumptions made is that managers on the same horizontal line are of equal status. In
practice, this is very rarely the case. The manager of one key department may be much
more important than his fellow departmental head.

Principle of Organizing

These are some principles which are common to classical organization, where there is a
hierarchy of power and responsibility.
(i) The lines of authority should be clearly stated and should run from the top to the bottom of
the organizations. This principle is known as scalar principle.
Unity of command each person in the organization should report to only one boss.
(in)
(iii) Unity of objective each subordinate unit the organization must contribute to the attainment
of the objective of the organization.

(iv) The higher authorities are responsible for the acts of subordinate.

(v) Delegation: authority and responsibility should be delegated as for down the hierarchic line

as objectively as possible.

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 control determines the number of positions that can be effectively
Span of control: span of
The number varies, but a figure quoted is that six
(vi)
coordinated by a single supervisor.
subordinates are the convenient number an executive should supervise.
and the staff function should be kept separate: The line functions
(vii) The line functions and offer assistance
auxiliary to the line functions
organizational goals. Staff functions are
and advice e.g. accounting function, illegal form etc. in a manufacturing organization.

Delegation
This is the process of entrustment of a part of work or responsibility and authority to another and
three elements of delegation as follows:
the creation of accountability for performance. There are

(i) Responsibility: Responsibility is the obligation of a subordinate to perform the assigned

those duties in the manner desired
duties.
When a subordinate accepts duties, he has to perform
to subordinates when a manager has to share the work with
by the superior. Duties are assigned

them.

person is given certain duties to perform, he must be given necessary

(ii) Authority: When a
not be able to do the work. Authority includes the right to take
authority also. Otherwise, he will
issue orders and the right to take action if orders are not carried out. No person
decision, right to
been assigned to him. Authority should
should be given any authority unless certain duties have
always follow responsibility.

means answerability. That is, each person has to report to

(it) Accountability: Accountability
is
been done and how authority has been used. Accountability
his superior how the work has
always upward. Each subordinate is accountable to his superior who in turn is accountable to his

own superior. In this way, every to person becomes accountable to top management. Accountability

ensures that the work is done as planned and authority is properly used. An important principle
be accountable to one
of accountability is the principle of single accountability. A person should
superior only. If a person is accountable to two or more persons, he may avoid the work or he

may be in difficulty to decide whom to obey first.

Importance of delegation
work is successfully shared by the
1. Delegation reduces the load on managers as
subordinates.
This improves the managerial effectiveness because by delegating a good a part of work to
2.
on important matters which require
the subordinate the managers are able to concentrate

them personal attention.

No manager can claim to have all the skills and expertise to handle all kinds of jobs
3.

himself.

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 branches and units,
4. Organization's activities are spread over a larger area with several
activities personally at all
which makes it difficult for him to look after and supervise

places.
a good workable
5. The delegation of responsibility with commensurate authority offers

solution for the subordinates.

It also provides an opportunity for subordinates to develop; as well as motivates and
6.

prepares them for taking up higher responsibilities in future.

7. it leads to creating a healthy work environment and harmony among the employees.

Decentralization
Decentralization refers to a systematic effort to delegate authority at all levels of management
power of decision making to lower level under a well-
and in all departments. This shifts the
structured plan. In an organization, the heads of departments have the authority to take decisions
The top management is limited to
on most matters relating to the functioning of their department.
whole organization.
policy and strategic decisions making for the

Advantages of Decentralization

It reduces the workload of the top level management as it is freed from the routine jobs and
1.
crucial areas and plans for growth and expansion
it enables them to concentrate on

2. It motivates the employees and gives them more autonomy.

3. It promotes initiative and creativity.

process the top
4.
It also helps employees to take quick and appropriate decisions. In the

management

Distinction between delegations and decentralization

Decentralization is not same as delegation. The points of differences are -

/ Decentralization
Delegation
This is the process of assigning responsibility | This is the ultimate outcome of planned

and thereby creating delegation

and authority

accountability
and his This involves the entire organization, and is
This takes place between the manager
between top management and
subordinates
divisions/departments
This is optional and is usually done in large
This is done to speed up the work
scale organizations
This is not so easy in case of decentralization
Responsibility and authority delegated may be

withdrawn by the superior or delegator

Authority relationship
When a person is given certain duties to perform, he must be given necessary authority to carry

on the activity successfully. Thus, on the basis of nature, authority may be of three types.

(a) Line authority;

(b) Staff authority; and

(c) Functional authority.

(a) Line Authority

This is command-based, direct authority and responsibility over the activities of subordinates (e.g.

chain of command within organization). Line authority is the authority of a manager over his
immediate subordinates. A line manager gets the authority from his supervisor and shares it with

it his subordinates. So it flows from top to bottom.

(b) Staff Authority

This is advisory-based, indirect authority whose purpose is to provide input/counsel to line
authority for the purpose of assisting with line authority decisions. When the work of line
managers increases, staff officers are appointed to help them. Final authority lies with that of line

managers. Staff people can only advice. Their advice can be accepted or rejected by line

managers.

(c) Functional Authority

Functional authority is similar to line authority, but it is exercised over a person who is not the

immediate subordinate of a manager. The main reason of using functional authority is to take
advantage of the special knowledge and skill of functional specialists. In practice, however,
is functional authority is restricted to specialized persons. If too much functional authority is used

the position of line managers becomes weak and they are not able to perform their managerial

duties properly.

Sources of authority
1. Formal: This authority is related to formal management position within the
organization. Such power/authority is derived from legitimate, reward, and coercive

sources.
2.
Informal: This is authority that is not related to formal management position within the
organization. It is more related to an individual's expertise and their influence on other

workers

Departmentalization

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 for division of labor as well as the need for
This is the organizational response to need
coordination of labour activities among discrete organizational units.

Criteria for Departmentalization

Departmentalization has traditionally been based on any of a number of criteria; which

include:
1. Common knowledge and skills of workers

2. Common processes/functions, time within which work is accomplished

3. Type of output produced

4. Client group being served
5. Physical location within which work is accomplished.

Importance of departmentalization
1. Allows for the facilitation of work processes by management

2. Provides for the sharing of resources

3. Allows for common performance measures

4. Facilitates communication within and between departments.

Span of Control
Span of control refers to the numbers and types of workers that a manager has direct line
of span of control include executive
authority over (number of direct reports). Different types
span of control and operational span of control.

Factors influencing span of control

subordinates: The more professional/highly trained
1. Professionalism/training of
subordinates are, the greater the SOC can be (supervise more workers).
tasks require closer supervision than repetitive tasks,
2. Complexity of work: Complex
thus necessitating smaller SOC's, other factors being equal.
Degree of work standardization: Routine, non-specialized types of work require less
3.
supervision, and thus sOC can be larger for these types of managers.
workers; the greater the amount
4. Degree of required interaction: between managers and
of interaction required, thesmaller the SOC must be.
more integration required of work
5. Degree of task integration required: the
processes/outputs, the greater the amount of interaction/supervision required, and the

smaller the SOC must be.