Unit - 3

The Process of Management

3.1 Planning

Just as management is a never-ending activity, so is planning. In fact, business planning is one of the main functions of management. It sets the stage for all subsequent management functions like organizing, leading, etc. Let's understand the concept of planning.

We already know what planning is, it is deciding in advance what to do. It is the basis for all future plans of the organization. Planning bridges the gap between where the organization currently is and where it wants to be.

So, in essence, business planning comprises setting goals for the organization and developing an idea of action to realize these goals. Once goals are set, managers and workers can have a clear vision of what to work towards.

Managers are a very important part of the business planning function. Planning requires innovation, creativity, and multitasking on the part of managers. And planning is a function that managers at all levels must perform, that is, upper, middle and lower management.

Planning is one among the foremost important and essential functions of management. It is an activity that managers at all levels must carry out. So, depending on the level of management, the type of plan will be different. Let's look at the different types of management plans.

Plan types

Planning is a ubiquitous management function; it has an extensive scope. So, all managers at all levels participate in planning. However, the plans made by the higher-level manager will be different from those made by the lower managers.

Plans also differ in what they seek to achieve and the methods that will be used to achieve them. So, let's look at the types of plans managers are faced with.

Goals

This is the first step in planning the organization's action plan. Goals are the foundation of any business and the desired goal / outcome that the business plans to achieve, thus they are the end point of all planning activity.

For example, one of the goals of an organization might be to increase sales by 20%. The manager will then plan all the activities of the organization with this ultimate goal in mind. When framing your organization's goals, a few points should be kept in mind.

1. Goals should be framed for a single activity in mind.
2. They must be results oriented. The objective must not frame any action
3. The objectives must not be vague, they must be quantitative and measurable.
4. They should not be unrealistic. The objectives must be achievable.

Strategy

Obviously, this is the next type of plan, the next step that follows the objectives. A strategy is a complete and comprehensive plan to achieve these objectives. A strategy may be a plan that has three specific dimensions

Set long-term goals

Select a specific course of action

Allocate the necessary resources for the plan.

The training strategy is generally reserved for the top level of management. In fact, it defines all future decisions and the long-term scope and general direction of the company.

Politics

Policies are generic statements, which are basically a guide to channel energies towards a specific strategy. It is the general way for an organization to understand, interpret and implement strategies. Like for example, most companies have a return policy or a hiring policy or a pricing policy, etc.

Policies are set at all levels of management, from primary policies at the highest level to secondary policies. Managers must formulate policies to assist employees navigate a situation with predetermined decisions. They also help employees make decisions in unexpected situations.

Procedure

Procedures are the following types of plans. They are a step-by-step guide to the routine to perform the activities. All employees must follow these staggered sequences so that activities can be carried out in an organized manner.

The procedures are described in chronological order. So, when employees follow the instructions in order and completely, the success of the activity is practically guaranteed.

Take, for example, the procedure for admitting a student to a university. The procedure begins with the completion of an application form. It will be followed by a collection of documents and the classification of applications accordingly.

Rules

Rules are very specific statements that define an action or a non-action. Also, the rules do not allow any flexibility, they are final. All employees of the organization must follow and enforce the rules. Not following the rules can have serious consequences.

The rules create an environment of discipline in the organization. They guide the actions and behaviour of all employees in the organization. The "no smoking" rule is an example.

Program

Programs are a detailed statement that describes policies, rules, objectives, procedures, etc. of a company. These programs are important in the implementation of all kinds of plans. They create a link between the objectives, procedures and rules of the company.

Primary programs are conducted at the top level of management. To support the primary program, all managers will undertake other programs at the middle and lower levels of management.

Methods

The methods prescribe the ways in which the specific tasks of a procedure must be performed. Additionally, the methods are very specific and detailed instructions on how employees should perform each task in the planned procedure. So, managers form methods to formalize routine jobs.

Methods are very important types of plans for an organization. They help in the following ways

1. Give clear instructions to employees, eliminate any confusion
2. Ensures uniformity in employee actions
3. Standardize routine jobs
4. It acts as a general guide for employees and managers.

Budget

A budget is a statement of the expected results that managers expect from the company. Budgets are also a significant statement, so they are expressed in mathematical terms. A budget quantifies the prognosis or future of the organization.

There are several means to prepare budgets that managers make. There is the obvious financial budget, which forecasts the profit of the company. Then there are the operating budgets generally prepared by lower-level managers. Cash budgets control the cash inflows and outflows of the business.

Importance of business planning

Planning is an important function of management; it tells the manager where the organization should go. It also helps the organization reduce uncertainty. Let's take a look at some important planning functions.

1] Planning provides a sense of direction

Planning means drawing up a predetermined plan of action for the organization. Actually, it establishes in advance what and how the work should be done. This helps provide workers and managers with a sense of direction, a guide in some way. Without planning, your actions would be uncoordinated and disorganized.

2] Planning reduces uncertainty

Planning not only sets goals, but also anticipates any future changes in the industry or organization. So, it allows managers to prepare for these changes and allows them to deal with uncertainties. Planning takes into account past events and trends and prepares managers for any uncertain events.

3] Planning reduces waste

The detailed plans made take into account the needs of all departments. This ensures that all departments are in tune with the plan and that all their activities are coordinated. There is clarity in thought that leads to clarity in action. All work is done without interruptions or loss of time or resources,

4] Planning invokes innovation

Planning actually involves a lot of innovation on the part of managers. Being the first management function is a very difficult activity. It encourages the manager to broaden his horizons and forces him to think differently. That is why managers must be creative, insightful and innovative.

5] Make decisions = Facilitate

In business planning, the objectives of the organization have been set, an action plan has been developed and predictions have even been made for future events. This makes it easy for all managers at all levels to make decisions with some ease. The decision-making process also becomes faster.

6] Sets standards

Once business planning is done, managers have now established goals and standards. This provides the manager's standards against which he can measure actual performance. This will help the organization to measure whether the objectives have been met or not. Therefore, planning is a prerequisite for control.

Planning limitations

While business planning is mandatory and a need for every organization, it has some restrictions. Let's take a look at some of it:

1] Stiffness

Once the planning function is completed and the action plan is established, the manager tends to just follow the plan. The manager may not be in a position to change the plan depending on the circumstances. Or the manager may not be willing to change the plan. This type of rigidity is not ideal for an organization.

2] Not ideal in dynamic conditions micas

In an economic environment, something is rarely stagnant or static. Economic, political, environmental and legal conditions continue to change. In such a dynamic environment, it becomes difficult to predict future changes. And if a manager cannot forecast accurately, the plan can fail.

3] Planning can also reduce creativity.

While making a plan requires creativity, managers blindly follow the plan. They don't change the plan according to the dynamic nature of the business. Sometimes they don't even make the right suggestions to top management. Work becomes routine.

4] Planning is expensive

Planning is an expensive process. Because it is an intellectual and creative process, it is necessary to hire specialized professionals for the job. Also, it involves a lot of research and data collection and number processing. At times, the cost of the planning process can outweigh its benefits.

5] Not completely accurate

When planning, we have to predict the upcoming and forecast certain future events in the organization and the industry. So, of course, there cannot be one hundred percent certainty in such cases. So, it can be said that business planning lacks precision.

Key takeaways:

1. A business plan is a written document that describes the core business activities and objectives of a company and how it plans to achieve its goals.
2. Start-ups use business plans to get off the ground and attract outside investors.
3. Companies can submit a longer traditional business plan or a shorter lean-start business plan.
4. Planning is an important function of management; it tells the manager where the organization should go.
5. While business planning is mandatory and a need for every organization, it has some restrictions.

3.2 Decision Making

An overview

Decision making is that the act of selecting between the available alternatives. There are countless decisions that humans make on a day-to-day basis. In business enterprises, decisions are made at every step. It's also considered one among the important functions of management.

Decision making concept

Decision making is that the act of selecting between the available alternatives. There are countless decisions that humans make on a day-to-day basis. In business enterprises, decisions are made at every step. It's also considered one among the important functions of management. Management functions like planning, organizing, staffing, directing, coordinating and controlling are administered through decisions. Deciding is feasible when there are two or more alternatives to unravel one problem or difficulty. If there's just one alternative, it's not about making decisions. Management without decision is believed to be a person without a backbone. Therefore, deciding may be a problem-solving approach by choosing a selected course of action among several alternatives.

Decision making is that the selection, supported some criteria, of two or more possible alternatives. "- George R. Terry

In conclusion, we will say that call making is that the process of selecting a selected course of action among several alternatives to unravel organizational problems or difficulties.

Goal / Objectives Achievement:

Decision-making is vital to realize organizational goals / objectives within the given time and budget. Find the simplest alternative, use resources appropriately, and satisfy employees within the workplace. As a result, the goals or objectives of the organization are often achieved supported the specified result.

1. Employee motivation:

Decision making is vital to motivate employees within a corporation. Provides a general operating framework and guidelines for the operational level of staff. It also provides different sorts of facilities and benefits on time. As a result, employees are motivated for his or her job or work consistent with the wants of the organization.

b.    Appropriate use of resources:

An organization has various resources like man, money, method, material, machine, market and knowledge. Of these resources are used correctly without leakage or waste with the assistance of the proper decision at the proper time. As a result, a corporation can operate at minimal cost.

c.     Selection of the simplest alternative:

As we know, the matter has multiple solutions. Deciding is vital to pick the simplest alternative among several alternatives analysing them one by one using various financial, statistical and accounting tools / techniques.

d.    Management performance evaluation:

Decision-making isn't only important in selecting the simplest alternative, but also essential in evaluating a manager's performance. The standard / success of the manager depends largely on the number of correct decisions that he can bring the success of the organization. Therefore, deciding is vital in judging the performance of the highest level of management.

Essential element / component:

Decision making is an important element / component for organizational success because without making the proper decision at the proper time, nothing is often accomplished consistent with plan.

1. Generalized function:

Decision making may be a generalized function of managers whose objective is to realize organizational objectives. Decisions must be made altogether management functions, like planning, organization, motivation, direction, and control, and altogether functional areas like production, marketing, finance, personnel, and research and development. It indicates that call making extends to several areas of the organization.

b.    Steps within the decision-making process

For the rationality, reliability, and applicability of selections, managers must follow a sequential set of steps. a choice is claimed to be rational if the acceptable means are chosen to realize the specified ends.

c.     Develop an alternate course of action:

As we know, a drag has multiple solutions. Therefore, the choice maker must develop the varied possible alternatives for a far better decision. While developing the choice course of action, he / she will also use his / her own knowledge, skills, experiences and technical support from the professional planner and experts.

d.    Identification of the problem:

The initial stage of the decision-making process is identifying the precise problem. The matter can occur thanks to the gap between thinking and doing the method. The rationale for the issues is often internal or external. Decision makers must identify the right issues before making any decisions. It’s not employment or a simple task. Therefore, you'll use your own knowledge, skills, experience, and gather information from internal and external sources. Identifying the right problem is believed to be almost half the decision-making process.

e.     Problem analysis:

After identifying the right problem, the choice maker must analyze the matter systematically and scientifically in terms of cost, time, legality, organizational resources, and therefore the short- and long-term impact of the matter. In analysing the matter, she will use various financial, accounting, and statistical tools or techniques.

f.       Selection of the best alternative:

After analysing the various alternatives, the decision maker has to select the best alternative among the various alternatives considering both the short and long-term impact. For this purpose, he / she can use her knowledge, skills and experiences. She may also worry about other stakeholders to make a better decision.

g.    Decision review:

The last step in the decision-making process is to get responses or feedback from other stakeholders in the organization. If the answer is positive, the decision-making process is completed successfully. If the answer is no, then you must go through the first step to make a new organizational decision.

Key takeaways:

1. Decision making is that the act of selecting between the available alternatives.
2. Decision making is that the act of selecting between the available alternatives.
3. Decision making is that the selection supported some criteria, of two or more possible alternatives. "- George R. Terry
4. Decision making is vital to motivate employees within a corporation.
5. Decision-making isn't only important in selecting the simplest alternative, but also essential in evaluating a manager's performance
6. Decision making may be a generalized function of managers whose objective is to realize organizational objectives.
7. The initial stage of the decision-making process is identifying the precise problem.
8. After analysing the various alternatives, the decision maker has to select the best alternative among the various alternatives considering both the short and long-term impact.

3.3 Organising: Basic Consideration, Departmentation – Functional, Project, Delegation and Decentralization of Authority

Meaning of organizing:

Organizing may be a "process of defining the essential relationships between people, tasks and activities in such how that each one the organization's resources are integrated and coordinated to realize its objectives efficiently and effectively". - Pearce and Robinson

Organizing is thus:

(i) A structure, and

(ii) A process.

As structure:

The organization is a set of relationships that defines the vertical and horizontal relationships between people who perform various tasks and duties. The organizational task is divided into units, the people in each unit (departments) are assigned specific tasks and their relationship is defined in a way that maximizes organizational well-being and individual goals. The relationship between people is both vertical and horizontal.

As vertical relationships, the authority-responsibility structure of people at different levels in the same department is defined and as horizontal relationships, the authority-responsibility structure of people who work in different departments at the same levels is defined.

The organizational structure specifies the division of labor and shows how the different functions or activities are linked; to a certain extent it also shows the level of specialization of work activities. It also indicates the hierarchy and authority structure of the organization, and shows its subordinate relationships. - Robert H. Miles

The organization as a structure is a network of relationships (authority-responsibility structure) among all those who are part of the organization, working at any level in any department. It defines the relationships between jobs at various levels and the people who work in those positions. Emphasize positions more than people.

As a process:

While the structure designs the system and its subsystems, the process defines the way this structure is designed. The structure is the static concept that establishes relationships between various components of the organization. You first design the component and then establish relationships between these components.

These relationships are generally permanent. They do not change often unless hampered by outer environmental forces. Process is the dynamic concept that redefines the structure whenever necessary.

While the structure defines how the work of the organization will be divided into various positions, groups and departments, the process defines the sequence from which the structure is designed. Define relationships between people in such a way that organizational goals are achieved efficiently.

As a process, the organization consists of two processes:

1) Differentiation,

(2) Integration.

Differentiation means the division of labor into smaller units and its assignment to individuals according to their abilities and capacities. Integration refers to the coordination of different activities towards a common goal. Provides unity of action towards organizational activities.

It implies:

(i) Job identification,

(ii) Grouping of work into smaller groups,

(iii) Assign work to each individual at all levels in each department,

(iv) Define the authority and responsibility thereof, and

(v) Establish relationships between people so that they contribute to the objectives of the organization in an integrated manner.

The structure and process of the organization are not independent concepts. They are complementary to each other. Once the organizational process is defined, the organizational structure is the end result or the result of that process. The organization structure is the result of the organization process. The organization is, in fact, a structured and continuous process that defines how to achieve the defined goals.

Organization process:

The organizing process involves the following steps:

(i) Determination of objectives:

Every organization is established by some objective or goal. Various tasks are determined to achieve this goal. For example, if the organization is established to export goods, it determines the nature and type of goods to be exported, the sources from which the raw material will be obtained, the countries where the goods will be exported, it will coordinate with foreign buyers, etc. Organizing workload is the first step in the organizing process.

(ii) Division of Activities:

Since one person cannot manage all activities, the entire task is split into smaller units and assigned to members. Work is assigned according to the qualification and ability of each person.

The division of labor leads to specialization which has the following benefits:

(a) Higher production:

Adam Smith illustrated a study in which a person could fabricate

Carry 20 pins a day if she worked alone. The production of pins was divided into sub-activities where each person performed the following specialized tasks: Stretching the wire - straightening the wire - cutting the wire - grinding the point - polishing it - putting the head of the pin and so on. It was observed that compared to the 20 pins produced by one person in a day, the division of labor and their specialization allowed 10 people to produce 48,000 pins in one day. See the wonders of specialization!

(b) Efficiency:

Performing the same task over and over again increases the skill and efficiency of workers.

(c) Facilitates the training of less qualified workers:

Since the complex task is divided into smaller units, less skilled workers can be trained to carry out those activities.

(iii) Grouping of activities:

Once work is divided to people, those who have same activities are divided into branches. Various departments like sales, finance, accounting, etc. are filled with people who have different skills and experience, but perform similar activities.  Departmentalization is grouping of activities into departments and each department is controlled by a set of rules, procedures, and standards.

(iv)  Define authority and responsibility:

Each department is headed by a person responsible for its efficient operation. The department heads are designated to carry out the activities of their respective departments. The competence of the department head is guaranteed to match the job requirements of the department.

Each boss has the authority to do the work of the departmental members of him. He divides work to be done and commands to members of his department. This creates a relationship structure where each individual knows his superiors and subordinates and their subordinate relationships.

(v) Coordination of activities:

When departments work toward their objectives, conflicts can develop between departments that can obstruct the achievement of organizational goals. For example, the finance department wants to reduce costs, but the marketing department needs additional funds to market its products; This conflict can be resolved by coordinating so that all departments share common resources optimally. Work can be coordinated by defining relationships between various departments and people working in different positions.

(vi) Review and reorganization:

There is a constant evaluation of the organizational process so that changes can be made in the structure as a result of changes in environmental factors. Constant evaluation and reorganization are an integral part of the organizing process.

Importance of the organization:

Organization is important for the following reasons:

(i) Facilitates administration:

Senior managers cannot perform all organizational tasks as they will be overloaded to focus on strategic matters. It is essential that a part of the workload is shared by middle and lower-level managers. Senior executives will be relieved of routine business management and will focus on effective administration.

The basic elements of organization (division of labor, grouping of activities, distribution of authority and coordination) facilitate better management by senior management.

(ii) Growth and diversification:

A well-organized institution adapts to change and responds to growth and diversification. You can multiply your operations.

(iii) Create synergies:

The division of labor provides the benefits of synergies, that is, the total task accomplished by a group of people is more than the sum total of their individual achievements. People coordinate their tasks in the same department and in different departments which is beneficial.

(iv)  Establishes responsibility:

When each person knows his superiors and subordinates, the organization can function efficiently. Establishing limitations in the area of operations defines people's responsibility to their immediate boss, which guides the organization towards its broader objectives.

(v) Optimal use of technology:

It is the era of technological developments. Organizations that do not have a well-developed technology will not be able to compete in the market. Well-organized structures allow organizations to optimally use and upgrade their technology and remain competitive in dynamic market conditions.

(vi) Facilitates communication:

Communication is the essence of the organization. The efficiency of the organization depends on how well the members of the organization communicate with each other. A well-designed communication system (vertical and horizontal) is facilitated through the effective organizational efforts of senior executives.

(vii) Facilitates creativity:

Creativity means creating something new. Develop new ways of doing things. A strong organization enables top management to improve the ways of doing things by delegating routine matters to people in the scale chain. C

(viii) Improve interpersonal relationships:

An organizational structure ensures that the workload is divided into well-defined jobs and assigned to people according to their abilities and skills. Placing the right person in the right job ensures job satisfaction and increased employee morale. This improves interpersonal relationships between people who work in the organization.

Ix) Facilitates Coordination:

Well-defined goals and plans can fail if the organization's activities are not coordinated in a unified direction. A well-designed organizational structure promotes order and system in your activities. Coordinate the work of people at different levels in different departments.

People work in predefined dimensions and harmonize individual objectives with the objectives of the organization, the internal organizational environment with the external environment, and financial resources with non-financial resources.

(x) Facilitates teamwork:

Although people are responsible for the specific tasks assigned to them, they work collectively as a team and optimize the use of scarce organizational resources to achieve organizational goals. The organization, therefore, facilitates teamwork. Rather than viewing the organization's goals from personal perspectives, they view them from group perspectives. Organizational goals satisfy individual goals.

(xi) Facilitates Control:

The organization provides strong direction to activities and ensures that people work according to plans. This facilitates control and promotes organizational goals. Goals are determined and periodic feedback ensures compliance of actual performance with target performance.

(xii) Increase in production:

A strong organization divides activities into several departments (production, marketing, etc.). These departments specialize in their tasks and increase organizational production. Specialization is an important contribution of the organization that promotes greater production.

(xiii) Optimal allocation of resources:

The organization promotes the optimal allocation of resources. Resources are assigned to different departments (production, marketing, personnel, etc.) in order of priority. People are assigned jobs for which they are best suited. All activities are assigned to everyone in the organization. There is no duplication of work. The organization, therefore, avoids overlapping activities to ensure that collectively people working in different departments carry out activities that contribute to the organization's goals.

Different types of Authority

Authority is that the right to execute or order. It also allows its owner to allocate the organization's resources to realize organizational goals.

Authority at work:

Barnard defines authority because the character of communication by which a private accepts an order as governing the actions the individual takes within the system.

Barnard maintains that authority is going to be accepted only under the subsequent conditions:

1. The individual can understand the order being communicated.
2. The individual believes that the order is according to the aim of the organization.
3. The individual sees order as compatible together with his personal interests.
4. The individual is mentally and physically capable of complying with the order.
5. The fewer of those 4 conditions are present, the less likely authority are going to be accepted and obedience are going to be required.

Barnad offers some guidelines for what managers can do to extend the likelihood that their orders are going to be accepted and obeyed. He maintains that more and more orders from a long-term manager are going to be accepted if:

1. The manager uses formal channels of communication and these are familiar to all or any members of the organization.
2. Each member of the organization is assigned a proper channel through which orders are received.
3. The line of communication between the manager and therefore the subordinate is as direct as possible.
4. The entire chain of command is employed to issue orders.
5. The manager possesses the acceptable communication skills.
6. The manager uses formal lines of communication just for organizational business.
7. A command is authenticated as coming from an administrator.

Types of authority:

There are often 3 main sorts of authority within an organization:

1. Line authority
2. Staff authority
3. Functional authority

Each type exists only to permit people to hold out the various sorts of responsibilities that are entrusted to them.

The most fundamental authority within a corporation reflects the prevailing relationships between superiors and subordinates. It consists of the right to make decisions and provides order on behaviour related to production, sales or finances of subordinates.

Line authority

In general, line authority refers to matters that directly involve production, sales, finance, etc. of the management system and, as a result, with the achievement of objectives.

People directly liable for these areas within the organization have delegated line authority to assist them perform their required activities.

Personnel authority:

Staff authority consists of the proper to advise or assist those in line authority, also as other staff personnel.

Personnel authority enables managers to enhance the effectiveness of force to perform required tasks.

Line and staff personnel must work closely together to stay the organization efficient and effective. To make sure that force and staff work together productively, management must make sure that both groups understand the organization's mission, have specific goals, and realize that they're partners in helping the organization achieve its goals.

Size is probably the foremost important think about determining whether or not a corporation will have staff. The larger the organization, the greater the need and skill to use staff.

Functional authority:

Functional authority consists of the right to supply orders within a segment of the organization during which this right doesn't normally exist.

This authority is usually assigned to individuals to supplement the road or personal authority they already possess.

The functional authority generally covers only specific task areas and is operational only for designated periods of some time. It's given to people that, so as to satisfy responsibilities in their own areas, must be ready to exercise some control over members of the organization in other areas.

Decentralization

Decentralization means decentralizing decision-making authority to the lowest levels of the marginal hierarchy. In other words, when the power to make decisions and formulate policies is not in a single person at the top, but is transmitted to different people at various levels, it is called decentralization. However, the decision to make at a lower level should be important, otherwise it will not be a case of decentralization.

Advantage of decentralization

i. Reduces the burden of the senior executive:

Decentralization frees the top executive from the border to perform various functions. This also reduces the time available to senior executives to focus on other important managerial functions. So, the only way to hear his burden is to decentralize his decision-making power to subordinates.

Ii. Facilitates diversification:

Under decentralization, products, activities and markets, etc., are facilitated, a centralized company with the neutralization of authority at the top level will have difficulties in diversification after a certain level because decision-making is taken back by one man. The organization will become more and more complete with the addition of new products and the establishment of more units. So, the decentralized system will be more suitable for expanding companies.

Iii. Quick decisions:

In the decentralized system, decision-making powers are delegated to the actual execution level. Therefore, it is not necessary to refer to the top level for most of the work. Speeds up the decision-making process.

Iv. Risk division:

The company is divided into several departments under decentralization management that can experiment with new ideas in one department without mistrusting the others. This will reduce your risk if things turn bad.

v. Effective control and supervision:

With the delegation of authority, the scope of control will be effective. Under decentralization, lower-level executives also have full authority to make important decisions. So, they will recommend rewards or punishments according to their performances. This will improve supervision and control.

Disadvantages of decentralization: -

Decentralization suffers from a number of drawbacks and some of them are discussed below: -

i. Lack of coordination: -

Under decentralization, each department, section, or unit enjoys substantial powers. They have the power to formulate their own policies and programs. This is why it is sometimes difficult to coordinate the activities of various departments.

Ii. Difficult to control: -

Under decentralized conditions, different units operate independently, making it difficult to control their activities. Senior management will not be able to exercise effective control because; does not stay in touch with the daily activities of various departments.

Iii. Expensive: -

The decentralization system involves large overhead costs. Each department in decentralization has to be self-sufficient for its activities such as production, marketing, accounting, personnel, etc. For this reason, the decentralized system is suitable for large-scale organizations.

Iv. Qualified Manager Lake: -

Decentralization will only be successful if qualified or competent people are employed to manage various jobs in different departments. Sometimes competent people are not available as required. The system will fail if competent people are not available.

Delegation of authority

Have you ever wondered why one restaurant fares so much better than another even if they serve the same quality of food and provide a similar dining experience?

The answer lies in better customer service that often sets a restaurant apart from the rest. So, what is the core of that?

Restaurant staff known for their customer service is often able to serve each customer with the same attention. Often times, this is because the managers of these restaurants delegate responsibilities so that none of the customers feel left out.

Delegation helps divide the workload and encourages employees to be more productive because they are not overloaded. Let's see how delegation of authority makes teamwork more efficient.

Meaning of delegation of authority

To define delegation of authority, we must understand the meaning of the term. Delegation of authority is a process that allows one person to assign a task to others. As a manager or leader, you are expected to multitask and meet various deadlines. To make sure you achieve your goals on time, you delegate responsibility to your team members. In short, the meaning of delegation of authority is to entrust tasks to someone and share the overall responsibility.

Elements of delegation of authority

There are three core elements involved in the delegation of authority process.

1. Authority

In the context of business organizations, authority is the right and power of an individual to efficiently allocate resources, make decisions, and give instructions to achieve organizational goals. This authority must be well defined and must not be misused. There is a co-dependent relationship between authority and responsibility, so authority must always be accompanied by an equal amount of responsibility to complete tasks successfully. However, the ultimate responsibility always rests with the person with the highest authority.

2. Responsibility

Responsibility refers to the scope or duty of an individual to complete the task assigned to him. Someone entrusted with responsibility must take responsibility for her tasks. It is better not to make excuses or give explanations if tasks are not completed. Responsibility without the proper authority can lead to dissatisfaction and discontent. It is best not to give someone too much authority and too little responsibility. Ultimately, managers and leaders may be held accountable for overall performance, but the most important responsibilities are in the hands of the employees.

3. Accountability

What is a delegation of authority without accountability? It is a component that differentiates between the performance of an individual and the expectations that were established in advance. Unlike authority and responsibility, accountability cannot be delegated to others. Anyone who sets out to complete a task is responsible for the efforts and results of it. For example, if Madan is assigned a task with the appropriate authority and delegates the task to Mohan, the responsibility rests with Mohan, but Madan remains responsible for the task.

Characteristics of the delegation of authority

1. There are a few key things that managers and leaders need to keep in mind when delegating authority.
2. You should not give up your authority completely. In other words, you must define the scope of your authority.
3. You must always comply with the provisions of the organization's policies, rules and regulations.
4. Once delegated, the authority can be further expanded or withdrawn, depending on the situation.
5. You cannot delegate an authority that you do not possess yourself.
6. The delegation of authority can be written or oral and specific or general.
7. Not all team members are capable of assuming responsibilities, so you must consider the individual capabilities of your employees.

Types of delegation of authority

There are several types of delegation of authority. Let's analyze each type through different examples of delegation of authority:

1. Full delegation

Often times, recurring and repetitive jobs in organizations are fully delegated. For such tasks, there is minimal interference from managers and leaders, and team members have the highest authority. Imagine that you are the director of Human Resources for your organization. He surveys employees every quarter and reuses a set of standard questions and follows a particular protocol for circulating the surveys. If new members join your team, you can turn in that task in full. You can communicate goals in advance, and your team can present the final results after they collect the information.

2. Half delegation to do wonders.

Let's take these two examples of delegation of authority and see how half delegation can work:

Imagine that the "marketing" and "sales" teams are working toward the same goal. You can choose to delegate all marketing-related tasks to the marketing team and all partners and vendors.

Goals related to hip to the sales team. They can collaborate and help each other, but would be responsible for their respective goals and deadlines. Ultimately, you can monitor your performance and make sure each team has met your expectations.

Suppose you want to hire new employees. Going through hundreds of job applications is not easy, so you can delegate the preliminary task of reviewing resumes and short listing them to your team members. You can then view the shortlisted resumes. You can set certain expectations for your team to select candidates with the necessary skills and experience.

3. Outdoor delegation

The outdoor delegation is more useful in case of collaborations with another organization. For example, if you work with an outside agency, you can send in your best negotiators to develop a collaborative strategy. Once you receive a brief on the new business strategy with the necessary details, you can make the final decision without spending hours on travel or negotiations.

4. Intervention

When you have limited time on your hands, intervention is the way to go. After delegating tasks, you can communicate with your team members from time to time. It's a good way to keep track of individual signs of progress. It is especially beneficial when you have to work with new employees who do not have many years of experience behind them. For example, you can use the intervention method when you want to launch a new initiative. Ask your team to come up with ideas and submit them for your approval. Intervention is a time-saving technique.

5. Creative delegation

Projects that require innovation must be delegated. When more people are involved, the chances of suggesting unique ideas are greater. One person's creativity can boost team creativity. For example, if you are organizing Diwali celebrations in your office, you can create a plan and delegate responsibilities for implementation or ask your team to present their ideas. Both ways are good examples of creative delegation.

Importance of delegation of authority

The delegation of authority process is to ensure a productive and well-functioning workplace. The process can benefit you, your employees, and the overall organization, if done correctly. These are some of the benefits that highlight the importance of delegation of authority.

1. Higher productivity

Delegation helps employees finish tasks faster because work is spread over a group of people and everyone is accountable for their respective goals.

2. Personal development

When you delegate tasks, your team members have the opportunity to showcase their skills and experience in a particular area. With proper guidance, they can also improve their knowledge and skills.

3. Continuity

If you are busy or absent from work, your team can help you complete some of your work and ensure continuity and productivity.

4. Motivation of employees

When you assign new responsibilities, you show that you trust your employees to take control. They are motivated and motivated to use their full potential.

5. Professional growth

The more you delegate tasks to different members of your team, the more they understand your business goals and objectives. This leads to potential promotion within the organization.

Conclusion

Delegation of authority can be difficult if it is not executed correctly. Harappa Education's Navigating Workplaces course will teach you how to manage conflict effectively and adopt different perspectives. The Culture Fit framework will guide you in your assessment of workplace culture. Also, the Thomas Kilmann model will teach you the five essential ways to deal with conflict. Master the ability to lead and influence others and let your team prosper under your guidance!

Formal organization:

When managers are completing the organizing process, as a result of the organizing process, an organizational structure is made to realize systematic work and efficient use of resources. This sort of structure is understood as a proper organizational structure.

The formal organizational structure clearly details the work to be performed by each individual, the authority, the responsibility assigned to every individual, the superior-subordinate relationship and therefore the designation of every individual within the organization. This structure is made intentionally by managers to realize the organizational goal.

Characteristics of the formal organization:

(1) The formal organizational structure is made intentionally through the organizing process.

(2) the aim of the formal organizational structure is that the achievement of the organizational goal.

(3) within the formal organizational structure, each individual is assigned a selected job.

(4) within the formal organization, each individual is assigned a hard and fast authority or decision-making power.

(5) The formal organizational structure leads to the creation of superior-subordinate relationships.

(6) The formal organizational structure creates a scalar communication chain within the organization.

Advantages of the formal organization:

1. Systematic work:

The formal structure of the organization leads to a smooth and systematic operation of a corporation.

2. Achievement of organizational objectives:

A formal organizational structure is established to realize organizational objectives.

3. No work overlap:

Distribution of work is in systematic manner and then divided among various departments and employees in formal structure. Therefore, there's no possibility of duplication or overlapping of jobs.

4. Coordination:

The formal organizational structure leads to the coordination of the activities of varied departments.

5. Creation of the chain of command:

It clearly underlines the work of top subordinate and their relationship, that is, who reports to whom.

6. More emphasis on work:

The formal organizational structure places more emphasis on work than interpersonal relationships.

Disadvantages of the formal organization:

1. Delay in action:

By following the scalar chain and chain of command, actions lag behind the formal structure.

2. Ignore the social needs of employees:

The formal organizational structure doesn't give importance to the psychological and social needs of the workers which may cause demotivation of the workers.

3. Emphasis on work only:

It lays emphasis to numbers only; ignores relationships of mankind, creativity, talents, etc.

Informal organization:

In the formal organizational structure, individuals are assigned various jobs. While working in those jobs, people interact with one another and develop some social and friendly groups within the organization. This network of social and friendly groups forms another structure within the organization called the informal organizational structure.

The informal organizational structure is made automatically and therefore the main objective of this structure is to get psychological satisfaction. The existence of a casual structure depends on the formal structure because people working in several jobs interact with each other to form a casual structure and jobs are created during a formal structure. So, if there's no formal structure, there'll be no job, there'll be no people working in jobs and there'll be no informal structure.

Characteristics of the informal organization:

(1) The informal organizational structure is made automatically with none intentional effort from managers.

(2) The informal organizational structure is made by employees to get psychological satisfaction.

(3) It doesn’t have permanent path of control or communication flow.

(4) The source of data can't be known under an off-the-cuff structure, since a person can communicate with a person within the organization.

(5) The existent of an off-the-cuff organizational structure relies on the formal organizational structure.

Advantages of informal organization:

1. Fast communication:

The informal structure doesn't follow a scalar chain, so there could also be a more rapid spread of communication.

2. Satisfies social needs:

It lays emphasis to the emotional and social needs of person working which motivate employees.

3. Correct comments:

Through the informal structure, top-level managers can get real feedback from employees on various policies and plans.

Strategic use of informal organization. Informal organization are often wont to gain benefits in formal organization as follows:

1. Knowledge of the informal group are often used to gain support from employees and improve their performance.

2. Through the vine, important information is often transmitted quickly.

3. By collaboration with informal groups, executive can artfully take merit of both formal and informal organizations.

Disadvantages of informal organization:

1. Spread rumours:

According to a survey, 70% of the knowledge disseminated through the informal organizational structure are rumours which will mislead employees.

2. Without systematic work:

The informal structure doesn't form a structure for the right functioning of a corporation.

3. It can bring negative results:

If the informal organization opposes the policies and management changes, then it becomes very difficult to implement them within the organization.

4. More emphasis on individual interest:

The informal structure gives more emphasis to the requirements of the individual person as compared to the organizational interest.

Organization principles:

The principles are the guidelines that promote managerial thinking and action. The principles help managers to perform the organizational function effectively.

These principles are as follows:

(i) Principle of unity of objectives:

All the activities of the organization are oriented towards the objectives of the organization. The objectives are framed for each level (upper, middle and lower) and each functional area. The objectives must be clearly understood by everyone. They must support each other at each level to achieve goals at higher levels.

(ii) Organizational efficiency:

Organizational goals must be achieved efficiently. It means an optimal (efficient) use of resources, that is, maximum performance must be achieved with minimum inputs. Resources must be distributed among activities in various functional areas that collectively result in maximum performance through optimal use.

(iii) Division of labor:

Division of labor means dividing the main task into smaller units. The main task is divided into subtasks. This makes each person focus on his part of the job and perform it efficiently, thus increasing total production. The work should be divided and assigned to the workers according to their skills. This leads to specialization and contributes to organizational production.

(iv) Authority - Responsibility:

Authority and responsibility must go hand in hand. Responsibility means obligation to perform the assigned task. To carry out this task, authority must be delegated to everyone. Rather, given the authority, the assigned tasks (responsibility) should be within the scope of the authority. Authority without responsibility will result in misuse of authority, and responsibility without authority will result in poor performance.

(v) Delegation:

The total workload is divided into parts. Subordinates are assigned a share and given authority to carry out that task efficiently. Senior managers delegate some of their duties to lower levels and focus on important organizational matters. This speeds up organizational tasks and enables the organization to grow in a dynamic and competitive business environment.

(vi) Scalar chain:

The scalar chain is the line of authority that runs from the upper to the lower levels. Authority flows from the top down in this chain and responsibilities flow from the bottom up. This chain promotes communication between people at different levels and facilitates decision-making. Each person in the chain knows his superior and subordinate.

(vii) Scope of control:

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

However, if the manager can supervise a smaller number of workers, there will be more levels in the organization structure and vice versa. Supervision of a few subordinates creates tall structures and supervision of a large number of workers creates flat structures.

(viii) Unity of command:

A subordinate must have a boss. People should take orders only from their immediate boss. This brings discipline and order in the organization. Taking orders from two or more bosses can create confusion and indiscipline.

(ix) Balance:

There must be a balance between the different organizing principles. A balance must be maintained between centralization and decentralization, narrow and broad control, etc.

(x) Flexibility:

The organization must be flexible. Changes in the structure must be made in accordance with changes in environmental factors.

(xi) Continuity:

The organization must adapt to environmental changes for its long-term survival, growth and expansion.

(xii) Exception:

Not all matters should be reported to senior managers. Only significant deviations in the hierarchy should be reported. Routine matters should be handled by middle and lower-level managers. Develop lower-level managers as they deal with simple, routine problems.

(xiii) Simplicity:

The structure of the organization should be simple, that everyone can understand. People can work efficiently in a simple structure as they are free from various jobs and authority / responsibility associated with those jobs.

(xiv) Department:

It means dividing activities into specialized groups (departments) where each department performs a specialized organizational task. All activities of a similar nature are grouped into a department headed by the departmental manager. Departments can be created based on geographic locations, customers, products, etc.

(xv) Decentralization:

It means delegation of authority to lower-level managers. It becomes answerable to the authority of subordinates and increases organizational efficiency.

(xvi) Management unit:

All activities of a similar nature are grouped into a single unit (production or marketing), headed by the departmental manager. Directs the efforts of departmental members towards one objective; the departmental objective.

(xvii) Cooperation:

All people and departments must cooperate and help the organization achieve its objectives. Cooperation leads to teamwork and focuses on a unified goal.

Key takeaways:

1. An organizational structure describes how certain activities are directed to achieve the objectives of an organization.
2. Successful organizational structures define each employee's job and how it fits into the overall system.
3. A centralized structure has a defined chain of command, while decentralized structures give almost all employees receiving a high level of personal agency.
4. An organization chart graphically represents the structure of an organization, highlighting the different jobs, departments, and responsibilities that connect the company's employees to each other and to the management team.
5. Organizational charts can be broad-based, representing the overall company, or they can be department or unit specific, focusing on a wheel radius.
6. Most organizational charts are structured using the "hierarchical" model, which shows management or other senior officials at the top and lower-level employees below them.
7. Authority is that the right to execute or order. It also allows its owner to allocate the organization's resources to realize organizational goals.
8. Barnad offers some guidelines for what managers can do to extend the likelihood that their orders are going to be accepted and obeyed.
9. Each type exists only to permit people to hold out the various sorts of responsibilities that are entrusted to them.
10. In general, line authority refers to matters that directly involve production, sales, finance, etc. of the management system and, as a result, with the achievement of objectives.
11. Staff authority consists of the proper to advise or assist those in line authority, also as other staff personnel.
12. Functional authority consists of the right to supply orders within a segment of the organization during which this right doesn't normally exist.
13. Decentralization means decentralizing decision-making authority to the lowest levels of the marginal hierarchy.
14. Delegation helps divide the workload and encourages employees to be more productive because they are not overloaded.
15. Delegation of authority is a process that allows one person to assign a task to others.
16. The delegation of authority process is to ensure a productive and well-functioning workplace.
17. The process can benefit you, your employees, and the overall organization, if done correctly.
18. When managers are completing the organizing process, as a result of the organizing process, an organizational structure is made to realize systematic work and efficient use of resources.
19. This sort of structure is understood as a proper organizational structure.
20. In the formal organizational structure, individuals are assigned various jobs. While working in those jobs, people interact with one another and develop some social and friendly groups within the organization.
21. The principles are the guidelines that promote managerial thinking and action.
22. The principles help managers to perform the organizational function effectively.

References:

1. Tripathi, P.C., Principles of Management, Tata McGraw Hill, New Delhi
2. Barry, Jim, Chandler, John Clark, Heather, Organization and Management, Thompson Learning, New Delhi.