Organizing

Organizing - Nature and purpose - Principles of Organization -

Types of Organization - Organisational Structure and Design – Line,
Staff and functional authority – Conflict between Line and Staff –
Overcoming the Line-Staff Conflict. Committees, Departmentation -
Span of control – Authority, Responsibility and Accountability -
Principles of Delegation - Steps - Centralization Vs Decentralization
– Factors determining the degree of Decentralization of authority.
Organizing

– Organizing is the second function of management.

– Organizing refers to is the process of establishing the orderly use of
resources by assigning and coordinating tasks.
– Organizing is the establishment of effective authority relationships
among selected work, persons and work places in order for the group
to work together efficiently.
– It is the process of defining the essential relationships among people,
tasks and activities
– A way to integrate and coordinate all the organization's resources so
as to accomplish its objectives efficiently and effectively.
…Organizing…

– Organising refers to a dynamic process and a managerial activity by

which different elements or parts of an enterprise are brought
together to obtain a desired result.
– This process places the enterprise into working order by defining
and allocating the duties and responsibilities of different employees
and provides it with everything useful to its functioning—raw
material, tools, capital and personnel.
– ‘Organising’ implies co-ordination and arrangement of men and
materials of an undertaking in order to achieve a certain purpose.
…Organizing

– Organising is understood as the creation of a structure of

relationships among various positions and jobs for the realisation
of the objectives and goals of the enterprise.
– ‘Organisation’ is the vehicle through which goals are sought to
be attained.
– It is a blueprint of how the managers will assign the various
activities and connect them together.
– It is a social system, consisting of human relationships existing
among the people performing different activities.
Components of Organization

Consists of 2 important components:

1. Process

2. Structure
Organization as a Process

– Organisation is a process of defining, arranging and grouping the

activities of an enterprise and establishing the authority relationships
among the persons performing these activities. It is the framework within
which people associate for the attainment of an objective.
– The framework provides the means for assigning activities to various
parts and identifying the relative authorities and responsibilities of those
parts. In simple term, organisation is the process by which the chief
executive, as a leader, groups his men in order to get the work done.
 Processes in Organization

As a process, organising consists of two processes:

(1) Differentiation:
Differentiation means division of work into smaller units and its
assignment to individuals according to their skills and abilities.
(2) Integration
Integration refers to coordination of different activities towards a
common goal. It provides unity of action towards organisational
activities.
Organization as a Structure

– Organising is a set of relationships that defines vertical and

horizontal relationships amongst people who perform various
tasks and duties.
– The organisational task is divided into units, people in each unit
(departments) are assigned specific tasks.
– The relationship is defined in a way that maximises
organisational welfare and individual goals.
– The relationship amongst people is both vertical and horizontal.
Structure in Organizations

– Vertical relationships is defined as the authority-responsibility

structure of people at different levels in the same department.
– Horizontal relationships is defined as authority-responsibility
structure of people working in different departments at same levels.
– Organising as a structure is a network of relationships (authority-
responsibility structure) amongst all those who are part of the
organisation, working at any level in any department.
 Purpose of Organizing

– Divides work to be done into specific jobs and departments

– Assign tasks and responsibilities associated with individual jobs
– Coordinate diverse organisational tasks
– Clusters jobs into units
– Establishes relationships among individuals, groups and departments
– Establishes formal lines of authority
– Allocates and deploys organisational resources
Importance of Organising…

– Facilitates Administration
Top managers cannot perform all the organisational tasks as they will be
overburdened to concentrate on strategic matters. It is essential that part of the
workload is shared by middle and lower level managers. Top executives will be
relieved of managing routine affairs and concentrate on effective administration.
– Growth and Diversification
A well-organised institution is adaptive to change and responsive to growth and
diversification. It can multiply its operations.
– Creates Synergies
Division of work provides the benefits of synergies, that is, total task achieved by a
group of people is more than the sum total of their individual achievements.
People coordinate their tasks in the same and different departments.
…Importance of Organising…

– Establishes Accountability
When every person knows his superiors and subordinates, the organisation
can function efficiently. Establishing limitations in the area of operations
defines people’s accountability to their immediate boss which gears the
organisation towards its broader goals.
- Optimum Use of Technology
It is the age of technological developments. Organisations not having well-
developed technology will not be able to compete in the market. Well-
organised structures enable the organisations to optimally use and update
their technology and remain competitive in the dynamic market conditions.
…Importance of Organising…

– Facilitates Communication
Communication is the essence of organisation. Efficiency of organisation
depends upon how well organisational members communicate with each
other. A well-designed system of communication (vertical and horizontal)
is facilitated through effective organising efforts of top executives.
– Facilitates Creativity
Creativity means creating something new. It develops new ways of doing
the things. A sound organisation enables the top management to improve
the ways of doing things by delegating routine affairs to people down the
scalar chain. It creates a sense of achievement amongst managers that
provides moral boost for further creative thinking.
…Importance of Organising…

– Improves Inter-personal Relationships

A sound organisation structure ensures that workload is divided into well-defined jobs
and assigned to people according to their abilities and skills. Placing the right person at
the right job ensures job satisfaction and morale boost of employees. This improves inter-
personal relationships amongst people working in the organisation
- Facilitates Coordination
Well-defined objectives and plans can fail if organisational activities are not coordinated
in a unified direction. A well designed organisation structure promotes order and system
in its activities. It coordinates work of people at different levels in different departments.
People work along pre-defined dimensions and align individual goals with organisational
goals, internal organisational environment with the external environment and financial
resources with non-financial resources.
…Importance of Organising

– Facilitates Teamwork
Though people are responsible for specific tasks assigned to them, they work
collectively as a team and optimise the use of scarce organisational resources to
achieve the organisational goals. Organisation, thus, facilitates teamwork.
Rather than viewing organisational goals from personal perspectives, they view
them from group perspectives. Organisational goals satisfy individual goals.
- Facilitates Control
Organisation provides sound direction to activities and ensures that people work
according to plans. This facilitates control and promotes organisational goals.
Objectives are determined and regular feedback ensures conformance of actual
performance to targeted performance.
 Principles of Organising

(i) Principle of Unity of Objectives

All organisational activities are geared towards organisational objectives.
Objectives are framed for each level (top, middle and low) and each functional
area. The objectives must be clearly understood by all. They should support each
other at each level to attain objectives at higher levels.
(ii) Organisational Efficiency
Organisational goals should be achieved efficiently. It means optimum (efficient)
use of resources, that is, maximum output should be achieved with minimum
inputs. The resources should be spread over activities in various functional areas
that collectively result in maximum output through their optimum use.
…Principles of Organising…

(iii) Division of Labour

Division of labour means breaking the main task into smaller units. The major
task is broken into sub-tasks. This makes each person concentrate on his part of
the job and perform it efficiently thereby, increasing the total output. Work
should be divided and assigned to workers according to their skills. This leads to
specialisation and contributes to organisational output.
(iv) Authority ~ Responsibility
Authority and responsibility must go hand-in-hand. Responsibility means
obligation to carry out the assigned task. To carry out this task, authority should
be delegated to every person. Conversely, given the authority, the tasks assigned
(responsibility) should be within the scope of authority. Authority without
responsibility will result in misuse of authority; and responsibility without
authority will result in poor performance.
 …Principles of Organising…

(v) Delegation:
The total work load is divided into parts. A part is assigned to subordinates and
authority is given to efficiently carry out that task. Top managers delegate part of
their duties to lower levels and concentrate on important organisational matters.
This speeds up the organisational tasks and enables the organisation to grow in
the dynamic, competitive business environment.
(vi) Scalar Chain:
Scalar chain is the line of authority running from top to lower levels. Authority
flows from top to bottom in this chain and responsibilities flow from bottom to
top. This chain promotes communication amongst people at different levels and
facilitates decision making. Every person in the chain knows his superior and
subordinate.
…Principles of Organising…

(vii) Span of Control:

Span of control means the number of subordinates that a superior can
effectively supervise. Exact number of employees that a manager can
supervise cannot be determined. It depends upon competence of managers,
nature of work, system of control, capacity of subordinates etc.

However, if manager can supervise less number of workers, there will be

more levels in the organisation structure and vice-versa. Supervising few
subordinates creates tall structures and supervising large number of workers
creates flat structures.
…Principles of Organising…

(viii) Unity of Command:

One subordinate should have one boss. People should receive orders from
their immediate boss only. This brings discipline and order in the
organisation. Receiving orders from two or more bosses can create
confusion and indiscipline.
(ix) Balance:
There must be balance between different principles of organising. Balance
should be maintained between centralisation and decentralisation, narrow
and wide span of control etc.
…Principles of Organising…

(x) Flexibility:
Organisation should be flexible. Changes in structure should be made according
to changes in the environmental factors.
(xi) Continuity:
Organisation should adapt to the environmental changes for its long-run
survival, growth and expansion.
(xii) Exception:
Every matter should not be reported to top managers. Only significant
deviations should be reported up the hierarchy. Routine matters should be dealt
by middle and lower-level managers. It develops lower-level managers as they
deal with simple and routine problems.
 …Principles of Organising…

(xiii) Simplicity:
Organisation structure should be simple that can be understood by everyone.
People can work efficiently in a simple structure as they are clear of various jobs
and authority/responsibility associated with those jobs. A simple structure
promotes co-operation, coordination and effective communication in the
organisation.
(xiv) Departmentation:
It means dividing activities into specialised groups (departments) where each
department performs specialised organisational task. All activities of similar
nature are grouped in one department headed by the departmental manager.
Departments can be created on the basis of geographical locations, customers,
products etc.
 …Principles of Organising…

(xv) Decentralisation:
It means delegation of authority to lowest-level managers. It increases the decision-
making authority of lower-level managers and increases organisational efficiency.
(xvi) Unity of Direction:
All activities of similar nature are grouped in one unit (production or marketing),
headed by the departmental manager. He/She directs the efforts of departmental
members towards a single objective; the departmental objective.
(xvii) Co-Operation:
All individuals and departments should co-operate and help the organisation
achieve its goals. Cooperation leads to teamwork and focus on a unified goal.
NATURE OF ORGANISATION

Organisation can be classified into two

categories: Formal organisations and Informal
organisations
  The formal organization is a goal-oriented entity that
exist to accurate the efforts of individuals and it refers
to the structure of jobs and positions with clearly
defined functions, responsibilities and authorities

o Formal Organization is a system of consciously coordinated

activities of two or more persons toward a common
objective.
- Chester Barnard

D.S
 1.Well defined rules and regulation

2.Arbitrary structure

3.Determined objectives and policies

D.S
 4.Limitation on the activities of the individual

5. Strict observance of the principle of coordination

6. Messages are communicated through vertical chain

D.S
  Limited Flexibility

 Slowness of processing

 Communication Barrier

 Quality of decision

 Slowness in Problem detection & processing

D.S
 .


The informal organization is the interlocking social structure that

governs how people work together in practice
– It
is the aggregate of behaviors, interactions, norms, personal and professional
connections through which work gets done and relationships are built among
people who share a common organizational affiliation or cluster of affiliations.

– o“Informal organization is a network of interpersonal relationship

that arise when people associate with one another
– - Keith Davis

D.S
  Work group satisfaction

 Lighter workload for management

 Practice Better Total System

 A safety valve for emotions

 Fill up gaps

 Channel of employee communication

 Encourage improved management

D.S
 1. Resistance to change

2. Role conflict

3. Rumor

4. Conformity

5. Undermine discipline

6. Power politics

7. Interpersonal and intergroup conflicts

D.S
 Point of comparison Formal organization Informal organization

1. Origin Created deliberately Arise spontaneously

2. Nature Planned and official Unplanned and

unofficial
3. Size Large small

4. Continuity Stable Instable and dynamic

5. Focus Built around jobs Build around people

and their roles
6. Goals Profit and service to Satisfaction of
society members
7. Influence process Legitimate authority Power

D.S
 Point of comparison Formal organization Informal organization
Control process Rigid rules and Group norms and
regulations values
communication Official and well- Unspecific channels .
defined paths . One Two way and fast flow
way and slow flow of of information
information
authority Positional flow , top to Personal flow , bottom
bottom to up

D.S
A social unit of people, systematically structured
and managed to meet a need or to pursue
collective goals on a continuing basis.
All Organizations have a management structure
that determines the relationships between
functions and positions and subdivides and
delegates roles, responsibilities and authority
to carry out defined tasks.
It is a framework within which an Organization
arranges it’s lines of authorities and
Communications, and allocates rights and
duties.
• Determines the manner and extent to which
roles, power and responsibilities are
delegated.
• Depends on objectives and strategies.
• Acts as a perspective through which
individuals can see their organization and it’s
environment.
• Impacts effectiveness and efficiency.
• Reduces redundant actions.
• Promotes teamwork.
• Improves communication.
• Contributes to success or failure.
  An organization is a collection of people working
together in a coordinated and structured fashion to
achieve one or more goals.

 Organisation is a system of conscioualy coordinated

activities or force of two or more persons
- Chester . I . barnard

D.S
 Importance/Significance of
Organising an Organisation
 Benefits in specialisation

 Role Clarity

 Optimum utilization of resources

 Co-ordination and effective administration

 Adoption to change

 Expansion and Growth

D.S
 Traditional perspectives
of Organizing
The continuous line of
authority that extends from upper level of
organization to lowest level of organization
and clarifies who reports to whom.
The rights inherent in a managerial
position to tell people what to do and expect
them to do it.
 Traditional perspectives
of Organizing
The obligation or expectation
to perform. Responsibility brings with it
accountability.
The concept that a person
should have one boss and should report only
to him.
The assignment of authority to
another person to carry out specific duties.
• Large, complex organizations often require a
taller hierarchy.
• In its simplest form, a tall structure results in one
long chain of command similar to the military.
• As an organization grows, the number of
management levels increases and the structure
grows taller. In a tall structure, managers form
many ranks and each has a small area of control.
VERTICAL / TALL ORGANISATIONS

• Tall organization is an organization that has many levels of

hierarchy.
• Government organizations were the first to introduce tall
organization structures and is still followed.
• Offers various levels of authorization for different actions taken
by managers.
• Assumes that lower level employees lack the experience and
knowledge to make good decisions for the company.
• Incorporates a level of internal control by not allowing lower
level employees to make certain decisions.
VERTICAL / TALL ORGANISATIONS

• Example: the defense.

• All the unicorns in

manufacturing industry
followed tall organization
structure like HUL, Tata, IBM,
Boeing, Walmart,
Volkswagen, Toyota Motors…
HORIZONTAL / FLAT ORGANIZATIONS

– A flat organization structure has fewer levels of management

and therefore a short chain of command.
– Flat structures tend to empower the employees more and
allow them a greater sense of responsibility and autonomy.
– Employees in a flat structure are encouraged to work together
to solve company issues.
– Ex: Google, Amazon
HORIZONTAL / FLAT ORGANIZATIONS
APPROACHES TO
ORGANISATION STRUCTURE
1) Entrepreneurial structure
2) Functional organisation structure
3) Product organisation structure
4) Geographical organisation structure
5) Decentralized business division
6) Strategic Business Unit [SBU]
7) Matrix organizational structure
8) Team structure
9) Virtual structure
10) Learning organizations
11) Line and staff organisation structure
1) ENTREPRENEURIAL STRUCTURE

The small business when they are started consist of an owner-manager alone or
also with few employees. These type of organisation do not require an
organizational chart and formal assignment of responsibility.
2) FUNCTIONAL
ORGANISATION STRUCTURE

Most widely used structure . Each functional department consists of those jobs in
which employees perform similar jobs at different levels.
• When a company expands to
Supply goods or services
Produces variety of different products
Engage in several different markets
In such conditions the company can adopt
Departmentalization.
• Functional
• Product
• Customer
• Geographic
• Process
• Arranging the business according to what each
section or department does.
• Organizing according to the different types of
products produced.
3) Product Organization Structure

– Companies producing more than one product structure their organizations, based
on product structures.
– Activities are divided on the basis of individual products, product line, services &
are grouped into departments in product organisation structure.
 4) GEOGRAPHICAL
ORGANISATION STRUCTURE

Companies operating in various geographical

regions of the country and/or world structure their
organisation based on geographical structure.
• It’s based on geographical or regional
structure.
• Where products have to go through stages as
they are made.
• Department can be staffed with specialized
training.
• Shared management responsibility.
• Supervision is facilitated.
• Coordination within the department is easier.
• Inter department documentation of activities
is not possible.
• Decision-making becomes slow.
• Delays when there are problems.
• Accountability and performance are difficult
to monitor.
 5) DECENTRALISED
BUSINESS UNIT
STRUCTURE

Grouping activities based on product lines has been among diversified

companies since 1920.
In a diversified firm , the basic organizational building blocks are its
business unit , each business is operated as a stand alone profit center.
 6) STRATEGIC BUSINESS
UNIT STRUCTURE

• A single chief executive cannot control a number of

decentralized units of a broadly diversified company.
• The business can be effectively controlled if the related
businesses are grouped into strategic unit and the efficient and
senior executive is delegated with the authority and
responsibility for its management.
7) MATRIX ORGANISATION STRUCTURE

Functional and project managers exercise authority over organisation

activities in a matrix structure.
 8) TEAM ORGANISATION
STRUCTURE
Strategies of business are not always static.
They go on changing depending upon interest and external
environmental factors.
Hence a single type of organisation structure is not suitable for all
times and situations.
9) VIRTUAL ORGANISATION
STRUCTURE

– It is a social network in which all the horizontal and vertical

boundaries are removed.
– It consists of individuals working out of physically dispersed
workspaces.
 10) LEARNING
ORGANISATION

– Organizations learn by creating conducive environment for knowledge creation and

development through discussion, interview, brainstorming etc.
• A boundary less Organizational structure is a
contemporary approach in Organizational design.
• It is an organization that is not defined by, or
limited to the horizontal, vertical or external
boundaries imposed by a pre-defined structure.
• It behaves more like an organism encouraging
better integration among employees and closer
partnership with stakeholders.
• It’s highly flexible and responsive and draws on
talent wherever it’s found.
 Flat organisation

– In a purely flat organization, everyone is equal.

– Individuals may hold an expertise, hierarchy and job titles are not stressed among
general employees, senior managers, and executives.
– Flat organizations are also described as self-managed.
– The idea behind this organizational structure is to reduce bureaucracy and
empower employees to make decisions, become creative problem solvers, and
take responsibility for their actions.
– There are minimal or no levels of middle management.
– Can speed up the decision-making processes.
Functional Organization

– Also referred to as a bureaucratic structure, a functional organization is

one that divides a firm’s operations based on specialities.
– It’s like any typical business that consists of a sales department, HR, and
a marketing department.
– There’s a total specialization of work
– Work is performed more efficiently since each manager is responsible for
a single function.
– Adopting a functional organization is the fact that there’s a delay in
decision-making.
 AUTHORITY

 Authority is the right and power to use

company’s resources or make decision.

 It guides actions of the staff and helps to

attain organisational goals.

 If there is no authority the work or tasks are

done late.
RESPONSIBILITY

 Responsibility is an obligation to
perform duties and tasks

 Along with authority it is necessary

to give responsibility else there is
carelessness in the work done.
 DELEGATION

 Delegation refers to transferring authority and creating

responsibility between superior and subordinate to complete a
certain task.

 If the superior does not delegate his work he will be overloaded

with work and loose efficiency.

 Delegation is between two people i.e. superior and subordinate

Delegation of Authority

– “Delegation of authority means assigning work to others and giving them

authority to do it.”
– Delegation of authority merely means the granting of authority to subordinates
to operate within prescribed limits
Elements of Delegation of
Authority
– Responsibility
– Authority
– Accountability
RESPONSIBILITY

– Responsibility is the obligation of a subordinate to properly perform the

assigned duty. When a superior assigns a job to his subordinate it becomes the
responsibility of the subordinate to complete the job.
Features :-
– Responsibility can be assigned to some other person
– The essence of responsibility is to be dutiful
– It gets originated because of superior-subordinate relationship.
AUTHORITY

– It means the power to take decisions. Decision can be related to the use of
resources and to do or not to do something.
Features:-
– Authority can be assigned to some other person.
– It is related to the post (with the change of post, even authorities change).
– It makes implementation of decisions possible.
– It is the key to a managerial job, because a post without authority cannot be a
managerial post.
ACCOUNTABILITY

– Accountability means the answerability of the subordinate to his superior for

his work performance.
– Features:-
– Accountability cannot be delegated.
– It originates because of delegation of authority.
– Its base is senior – subordinate relationship
Food for Thought

Can Accountability be Delegated ?

Process of Delegation of Authority

– Assigning responsibility
– Granting Authority
– Fixing Accountability
Importance of Delegation of
Authority :
– Effective Management
– Employee Development
– Motivation of Employees
– Facilitation of Growth
– Better Coordination
PROJECT MANAGEMENT
STRUCTURE
– Who is a project manager?
A project manager is a professional in the field of project management.
Project managers have the responsibility of the planning, procurement and
execution of a project, in any undertaking that has a defined scope, defined
start and a defined finish; regardless of industry.
Centralization &
Decentralization
– “Centralization” is the systematic and consistent reservation of authority at central
points in the organization.
– “Decentralization” is a systematic delegation of authority at all levels of management
and in all of the organization.
CENTRALIZATION Vs
Decentralization
– “Everything that increasing the role of subordinates is decentralization and that
decreases the role is centralization”
– Authority in retained by the top management for taking major decisions.
– Decentralization pattern is wider is scope.
Advantage of Centralized Organizational Structure

– Uniformity in action
– Personal leadership
– Results in Quick Decisions
– Improved quality of work
– Better co-ordination
– Top Management Can Take Vital Decisions
– Uniform Policy and Coordination of All Activities
Disadvantage of Centralized Organizational Structure

– Delay in work- Lower and middle-level management will not have interest and initiative
in the job
– Remote control- Decisions not taken by people who face the situation
– No loyalty
– No Secrecy
– No special attention
Advantage of Decentralized Organizational Structure

– Distribution of burden of top executive

– Increased motivation and morale
– Greater efficiency and output
– Diversification of Activities
– Better Co-ordination
– Maintenance of Secrecy
– Facilitate effective control and quick decision
Disadvantage of De Centralized Organizational Structure

– More cost
– No specialization
– Need more specialists
– No uniform action
– No equitable distribution of work
– Control Systems
– Types of Business
– Branches of organization
– Type of organization