UNIT 3

Organizing
 Organizing

As a As a
Structure Process
Organization as a structure

BOD

MD

Production Managing Finance

Manager Manager Manager

Factory Purchase Sales Advertising Chief Internal

Manager Manager Manager Manager Accountant Auditor

Foreman Store Sales Media Section

Sub Auditor
Keeper Officers Officers Officers

It is merely a structure of relationships between various positions of the

enterprise. It is the structural framework of duties and responsibilities required of
the personnel in performing various functions within the company.
Organization as a Process
• The process of organizing involves bringing
together physical, financial and human
resources and establishing productive
relationship among them so as to achieve the
common objectives.
 Importance Of Organization
• Effective Administration
• Growth and Diversification
• Adaptation of new technology
• Optimum use of resources
• Specialization
• Security and Support
• Coordination and Communication
• Training and Development
Formal and Informal Organizations
• Formal Organization: It refers to the structure
of well-defined jobs each having a definite
authority and responsibility.
• Informal Organization: It is the network of
personal and social relationships not
established or required by formal
organization.
 Principles of Organization
• Principles of Objectives
• Principle of Functional Definition
• Principle of Division of Labour
• Unity of Command
• Principle of Authority & Responsibility
• Principle of Balance
• Principle of Coordination
• Principles of Exception
• Principles of Simplicity
• Principles of Flexibility
• Principles of Efficiency
• Principle of Scalar Chain
• Principles of Span of Control
 Delegation of Authority
• “Delegation is that part of the organizing process by
which an executive makes it possible for other to
share the work for carrying out the company’s
purpose. It also includes the process of assigning
duties, responsibilities and authority to those who he
expects will aid him in doing the work.”
-D.E.McFarland

• Delegation of authority takes place when a manager

assigns a part of his work to others and gives them
the authority to perform the assigned tasks.
 The Process of Delegation
• Assignment of Duties
• Granting of Authority
• Creating of Responsibility
Authority
• It implies the right and power of a person to exercise
discretion to make decisions, to issue orders, to use
organizational resources and to hire and fire employees.

• It is the sum of rights and powers entrusted to a person to

enable him to perform the assigned tasks.

• “Authority is the legal or rightful power, a right to command

or to act.”
-Koontz & O’Donnell
Responsibility:
• It refers to the obligation to perform the given
task to the best of one’s ability.
Accountability
• It is the obligation of a subordinate to report
back to his superior that the job entrusted to
him has been completed.
Centralisation:
• In a centralised organization top management
has the absolute authority for making almost
all the decisions.
Decentralization
• It means systematic dispersal of authority in
all departments and at all levels of
management.
Organization Structure
It is also known as scalar, military, or vertical organisation
and perhaps is the oldest form
1. PURE LINE ORGANISATION
2. DEPARTMENTAL LINE ORGANISATION
 Characteristics:
Line authority and instructions
are vertical, that is, they flow
• The from
unity ofthe top istomaintained
command the bottom.
in a straight
line.
•All persons at the same level of organisation are
independent of each other.
•This structure specifies responsibility
Merits: Demerits: and
Simplic Lack of Specialisation
authority
ity
for all the positions limiting the area of
Absence of Conceptual
action.
Discipli Thinking
ne Autocratic Approach
Prompt Decisions Problems of
Orderly coordination
Communication
It is suitable to small – scale organizations where the number of
subordinates is quite small.
 grouping the activities on the basis of
functional required for the
achievement of organisational
objectives
For this purpose all the functions
Features:
required are classified into basic,
The whole activities of an organisation are
secondary
divided and
into various supporting
functions functions
Each functional area is put under the charge of
one executive For any decision, one has to
consult the functional specialist Limited span of
control is there.
 Merits: Demerits:
High Specialisation Calls for more coordination
Clarity in functioning Clear line of authority
No duplication Slow decision making
Satisfactions
Control and
Coordinate
Suitability:
The establishment of functional organisation structure becomes
necessary as a small organisation grows and business
activity becomes more and more complete
Characteristics:
It refers to a pattern in which staff specialists advise line
managers to perform their duties.
Line people will give advices
The staff people have the right to recommend, but have no
authority to enforce their preference on other departments

FEATURES:-
This origin structure clearlydistinguishes between
two aspects of administration viz., planning and
execution.
Staff officers provide advice only to the line officers; they do
not have any power of command over them.
The staff supplements the line members.
ADVANTAGES:-
It adds functional specialists to the pure line organisation and
thus aims at combining the merits of the two.
It brings expert knowledge to bear upon management.
Functional specialists provide expert advice to
the management on wide-ranging matters.
It provides for better placement and utilization of
personnel and leads to more skill development

DEMERITS:-
The line and staff relationship often lead to many frictions
and Jealousies
Line mangers may depend too much on staff experts and
thus lose much of their judgment and initiatives
The staff experts may remain ineffective because they do not
get the authority to implement their recommendation.
 More frequently line and staff relations become potent
sources of friction, inefficiency and organisational ill health.
Rivalry between them very often takes the form of animosity.
Both line and staff have their own view points to offer relating
to this problem.
Line View point:
Staff undermines line
authority Staff think in
vacuum
Staff steals Credit
Staff fails to keep the line
informed
Staff fails to give the sound
advice to line
Staff Point of View:
Lack of authority to command line
subordinates Resistance to change by
the line
Inability to make proper use of staff
Allured by the special skill and ability in a particular field
the staff is tempted to think that the solution to the
problem recommended by him is best and needs be
enforced on the line manger. Line is also charged with
being short-sighted and resistant to change

How to minimise:
Line and Staff should understand their proper
position in the organsiation
Line should be educated and encouraged to use staff
effectively Staff should render complete advice on the
problem concerned staff should constantly strive to
SUITABILITY:
It can be followed in large organizations where
specialization of activities is required, because it
offers ample opportunities for specialization
 Matrix organisation structure is essentially a violation of unity
of command
Matrix structure is the realisation of two-dimensional
structure
which emanates directly from two dimensions of authority.
In matrix organization structure, a project manager is appointed
to co-ordinate the activities of the project.
Personnel are drawn from their respective functional
departments.
Each functional staff has two bosses his administrative head
and his project manager.
Merits:-
It offers operational freedom & flexibility
It focuses on end results.
It maintenance professional Identity.
It holds an employee responsible for management of resources
Demerits:-
It calls for greater degree of
coordination, It violates unity of
command.
Difficult to define authority &
responsibility. Employee may be de
motivated.
Suitability
It can be applicable where there is a pressure for dual focus,
pressure for high information processing, and pressure for shred
resources.
Ex:- Aerospace, chemicals, Banking, Brokerage, Advertising
 A committee does not represent a separate type of
organization like line and staff, or functional.
A committee may be defined as a group of people
performing
some aspects of Managerial functions.

Definitions:
“A committee consists of a group of people specifically
designated
to perform some administrative work”
W.H. Newman

“ A committee is a body of persons appointed or elected to

meet on
an organised basis for the consideration of matters brought
before it”. Allen
 MERITS DEMERITS
Pooling of Knowledge Slow decisions
Effective co-ordination is available Most Expensive
Effective Communication Difficult to maintain secrecy
Motivation through participation of Compromise
employees
 The process of grouping the activities is commonly
known as “Departmentation”
Departmentation is useful for
specialisation and fixation of responsibility
Departmentation conceptis arise based
on the organisation functions. These functions
are two types. They are
Basic functions
and Secondary
functions.
 Function
Departmentation by
Product or services
Grouping by location
or Territories
Departmentation by
time
Grouping by process
and equipment
Patterns used in Departmentation:
Departmentation
By Function
Patterns used in Departmentation:
Departmentation by
Product or services
Patterns used in Departmentation:
Departmentation by time
Grouping by process and
equipment
 Patterns used in Departmentation:
Grouping by location
or Territories