ORGANIZING

Concept of an Organization

Organization can be conceived as:

– Group of people

– Structure

– Process
 As Process

It is the process:

– Through which organization structure is created

 Elements of organizing as process

– Departmentation - creation of various

departments / divisions

– Linking departments

– Defining authority and responsibility

– Prescribing authority relationships

 Basics of Organizing

◦ Division of labor

◦ functional processes –
Departmentation, coordination by hierarchy, Unity of
command, Delegation of authority , Line and staff
relationships

◦ Structure

◦ Span of control
 Departmentation

◦ Departmentation is done basing on:

1. Functions (production, marketing, finance,
personnel etc)
2. Products( cars, trucks, buses etc
3. Geographical / territorial division
4. Processes ( eastern , western, northern
southern etc)
5. Customers / markets ( retail, wholesale, NRI, SME etc)
 Basis for Choice in Departmentation

– Specialization
– Co ordination
– Control
– Economy
– Focus on results
– Local conditions
– Human consideration
 Span of Control

It refers to Number of subordinates who can be

managed effectively by a superior
 Span of Control
Narrow Span of Control
 Management determines the span of control.
 If performing similar tasks a wide span of control
CEO may be employed.

President

CFO Wide Span of Control

CEO/President
Sales Manager

Salesperson 1 Salesperson 2 Salesperson 3 Salesperson 4 Salesperson 5

Salesperson
 Factors Affecting Span of Control

◦ Capacity of the superior

◦ Capacity of the subordinates

◦ Nature of work

◦ Degree of decentralization

◦ Degree of planning

◦ Communication techniques
 Need for Formal Organizational
Structure
– Facilitating management action
– Encouraging efficiency
– Communication
– Optimum use of resources
– Simulating creativity
– Job satisfaction
 Factors Affecting Organization
Structure
– Environment

– Strategy

– Technology

– Size

– People
 Features of Good Structure

◦ Simplicity
◦ Flexibility
◦ Clear line of authority
◦ Application of ultimate responsibility
◦ Proper delegation of authority
◦ Minimum number of managerial levels
◦ Unity of direction and command
◦ Emphasis on staff
 Forms of Organization Structure

– Tall & flat structure

– Formal and informal structure
– Line and staff structure
– Functional structure
– Divisional structure
– Project structure
– Matrix structure
– Free form structure
– Task force structure
 Organizational structures

Tall Structures – Features

– Fosters narrow span of control -closer
supervision

– Large number of management levels – close

control of subordinate’s activities

– More centralized decision making – faster

communication between superior and
subordinate
 Organizational Height
The number of layers from the top to the bottom of the organization.
Tall Organization
Short Organization
CEO
CEO/President
President

CFO General Manager General Manager General Manager

Executive V-P
Marketing Finance R& D
V-P Manager Manager Manager
Vice-President Vice-President
Finance Marketing R& D

Marketing
Director

Marketing Marketing
Manager Manager
 Flat Structure - Advantages

– Reduces levels of management

– Widens span of control of managers at various
levels
– More decentralized with regard to decision
making – more delegation of authority , decision
making faster
– Leads to higher employee morale and
productivity
 Formal Versus Informal
Organizations
 Spontaneous
◦ Has well set goals and
 Objectives basing on Social
objectives
interactions
◦ Well structured
 Unstructured
◦ Official
 Unofficial
◦ Has focus on positions
 Focus is on individuals
◦ The superior is the
 Anyone can become
leader
leader
◦ Power comes through
 Power is given by group
delegation
 Introduction
Line functions are those which have direct
responsibility for accomplishing the objectives
of the enterprise

Staff refers to those elements of the

organization that help the line to work most
effectively in accomplishing the primary
objectives of the enterprise.

Given by:
“koontz and o’donnell”
Comparison of Line and Line and Staff Organization
CEO/President
Line and Staff Legal Administrative
Department Assistant

Vice-President Vice-President Vice-President

R&D Marketing Manufacturing
Line Organization
President Administrative
Assistant

CFO VP of Marketing VP of Operations

Marketing Marketing Marketing
Manager Manager Research
Account Manager Sales Manager Assembly Line
Supervisor Line positions Staff positions

Sales Rep Assembly Line Line positions:

Workers
• Make decisions that achieve specific
Simplest form: business goals.
May be appropriate for businesses that Staff positions:
cannot afford to hire support staff
positions. • Support the efforts of line positions
 Advantages V/S Disadvantages

Specialization  Conflict Between Line

Better Decisions And Staff Authorities
 Problems Of Line And
Lesser Burden On Staff Authority
Line Officers
 Lack Of Responsibility
Advancement Of
Research
Training For Line
Officer
 AUTHORITY
Authority means the power to take decision.
It moves from top to bottom and it can be
assigned to others. It gives legitimate power
to the manager or supervisor to give
directions to subordinates.
CHARACTERISTICS OF AUTHORITY
• Formal right of a manager to take decisions
and issue orders.
• Allocate resources to achieve organizational
desired outcomes.
• Authority is vested in the organizational
positions, not in the people.
• Authority is accepted by subordinates.
 SOURCES OF AUTHORITY
• Legal authority
• Traditional authority
• Acceptance theory
• Competence theory
• Charismatic authority
 LEGAL AUTHORITY
According to this theory authority is based
upon the rank or position of the person.
Example -
A C.E.O of a company may take an
action against an employee for not complying
with rules because company rules has given
this authority to him.
 TRADITIONAL AUTHORITY
In traditional form of authority there is no
formal law or structured discipline and
relationships are governed by personal loyalty
and faithfulness.
 ACCEPTENCE THEORY
This type of authority has its source in the
acceptence of the subordinates. It means that
authority of the superior has no meaning
unless it is accepted by the subordinates.
 COMPETENCE THEORY
According to this theory , autority has its
source in the technical competence of the
superior. Here managers words are heard &
ordered because of his knowledge, experience
& skill.
 CHARISMATIC AUTHORITY
The charismatic authority rests on the
personal charisma of a leader who commands
respect of his followers.
Example –
film star may easy influence others.
 RESPONSIBILITY
Responsibility refers to an obligation to do
something. Authority and responsibility go
side by side.
According to “Knootz and o’ Donnel”
“Responsibility is the
obligation of a subordinate to carry out the
duties assigned to him”.
 FEATURES OF RESPONSIBILITY
• Responsibility comes from superior-
subordinate relationship.
• It arises from duty assigned.
• It cannot be delegated.
• It is the obligation to complete the job as per
instructions.
AUTHORITY & RESPONSIBILITY
There should be balance between authority
and responsibility. There should be proper
authority for getting the things done.
 DIFFERENCE BETWEEN AUTHORITY
AND RESPONSIBILITY
DIFFERENCE AUTHORITY RESPONSIBILITY

1.MEANING It is right of a superior. It is an obligation of a

subordinate.
2.BASIS It arises from legal It arises from superior-
provision. subordinate relationship.
3.DELEGATION Authority can be It cannot be delegated.
delegated from superior
to subordinate.
4.DURATION It may continue for a long It stops when assigned
time. task is completed.
 Concept of delegation
Delegation is the process of sharing of responsibilities
b/w superior and subordinates. As manager cannot
perform all the tasks himself so he must pass some work
to his subordinates.

Along with work some powers and rights are also

transferred from superior to subordinate and the
subordinate becomes accountable for performing the work
in desired manner

.
 Meaning of delegation

A process of entrusting responsibility and

authority to the subordinates and creating
accountability on those employees who are
entrusted responsibility and authority.
 Importance of delegation

 Effective management.
 Employees development.
 Motivation of employees.
 Facilitates organizational growth.
 Basis of management hierarchy.
 Better coordination.
 Reduces the work load of manger.
 Basis of superior-subordinate Relationship.
 DELEGATION PROCESS

SHARING OF SHARING OF CREATION OF

RESPONSIBILITY AUTHORITY AOOOUNTABILITY
Decentralisation
Decentralisation

Decentralisation is concerned with

systematic distribution of authority at
every level of management & every
employee working at different level gets
some share in authority & responsibility
Defination of Decentralisation

According to Newman, Summer & Warren

“Decentralisation is simply a matter of
dividing up the managerial work and
assigning specific duties to the various
executive skills”
Advantages of Decentralisation
 Develope Initiate among subordinate.
Quick Decision-making.
 Relief to Top Level management.
 Facilitates growth.
 Better Control.
 Promotes Initiative & Creativity.
Disadvantages of decentralisation

 No uniform Policies & Standard procedures.

 Creates problem in co-ordination.
 Involves more Finance.
 No Qualified & competent personnel.
Factors determining degree of
Decentralisation
 Costliness of decision
 Uniformity of policy
 Economic size
 Availability of size
 History of the enterprise
 Management philosophy
 Decentralisation of performance
 Environmental influence
How to Decentralise
 Establishing appropriate centralisation
 Developing manager
 Communication and co ordination
 Establishing adequate controls
 Providing appropriate dispersion
Centralisation
Centralisation means concentration of
power or authority in few hands i.e Top
Level.
Defination of centralisation

According to Henry Fayol “ it is that

organisation where the role of the
subordinate is reduced”
Advantages of centralisation
 Reduced cost
 Uniformity in action
 Personal leadership
 Flexibility
 Better co-ordination
 Less skilled subordinates
 Improved quality of work
Disadvantages of centralisation
 Delay in work
 Reduce scope of specialisation
 No secrecy
 Slow down the operation
 No special attention
 Distinction b/w Centralisation
& Decentralisation
Basis of Centralisation Decentralisation
Difference
Concentration of power Distribution of power &
Meaning or authority at higher authority at every level of
level only. management.
Authority at Top management retains The authority is divided at
different levels maximum authority. every level.
Suitable Suitable for small scale & Suitable for large scale
small size Organisation. organisation.
Freedom of Managers have less Managers have more
Action freedom of action. freedom of action.
 Co-ordination
• Coordination as a function of management
refers to the task of integrating the activities of
separate units of an organization to accomplish
the goals efficiently. It infuse all levels and all
departments of management. Hence, it is
regarded as the essence of management.
 Authors on Coordination

• According to Henry Fayol

• Coordination harmonizes, synchronizes and unifies individual
efforts for the better action and for the achievement of the
business objective´

• According to Koontz & O’Donnell,

• Coordination as the essence of Management, for the
achievement of harmony of individual efforts towards the
accomplishment of group goals is the purpose of management.
 Importance of Coordination

• Increases efficiency – It helps in optimum use of

organizational resources whether these are human or non-
human resources. Activities follow in a specific direction.
Over lapping and duplication of efforts, misuse of resources
are thus prevented.

• Improves human relations – Coordination brings unity of

action and direction. Members begin to work in an orderly
manner appreciating the work put in by others. They
understand and adjust with each other by developing mutual
trust, cooperation and understanding.
 Importance of Coordination (Cont.)

• Harmony – According to Fayol activities if are well

coordinated, will result in organizational harmony in which
each department works in harmony with the rest.

• Key to other functions – The importance of coordination, lies

in the fact that it is the key to other function of management
like planning, organizing, staffing, directing and controlling.
 Barriers

1. Threat to autonomy (real or perceived)

Example
Members of organizations fear that coordination will reduce their
freedom to make decisions and run programs.

2. Professional staff fears - Professionals fear loss of

freedom
Example
coordination agreements may
require ways of working that are different from staff preferences.
3. Disagreement among resource providers
Example
People or groups providing resources disagree about needs to be met, services to
be provided, and programming approaches.

4. Multiple local government, private sector and non-

governmental organizations
Example
Coordination is complicated by the presence of too many actors,slowing the
process and losing focus.
5. Coordination viewed as low priority
Example
Members of some organizations think that coordination is not really
necessary and do not follow through with commitments.

6. Costs and benefits are viewed as unsatisfactory

Example
Staff of some organizations think the costs of coordination or the
program costs will be higher than the benefits.
7. Resources are not available
Example
Some organizations which may want to participate in a coordinated effort
have inadequate resources to contribute to the effort

8. Diffusion of "credit“
Example
Sometimes recognition is the only form of personal reward that
members of organizations receive. In a coordinated effort, however,"credit"
for or acknowledgement of individual contributions may get lost or
diffused.
9. Lack of trust
Example
Participating agencies may have a history of poor relations leading
them to see each other as threats, competitors.

10. Unilateral donor actions

Example
When donors act unilaterally, politicize aid, or earmark funds for
specific populations, they may undermine the efforts of established
international coordinating mechanisms.
 TECHNIQUES TO ENSURE EFFECTIVE
COORDINATION

 Sound planning: Unity of purpose

 Simplified organization:
 A simple and sound organization
 The line of authority and responsibility from top to the bottom of the
organization structure should be clearly defined.
 Clear cut definition of authority and responsibility of each department
and individual helps to avoid conflicts.
 Effective communication: open and regular communication
 Effective leadership and supervision
Chain of command:

General staff: in large organizations, a centralized pool staff

experts is used for coordination. A common staff group serves as the
clearing house of information and specialized advice to all the
departments of the enterprise. Such general staff is helpful in
achieving inter-departmental or horizontal coordination.