UNIT 3

Organising

3.1 Definition and nature of Organising

Organising is a process of co-coordinating employee’s activities in an orderly manner. It is a managerial job. It specifies how work or duties shall be divided among the departments in the company, the policies to be followed while accomplishing the objectives, the scope and limits of responsibilities and the relationship of one job to another etc.

Organising is a “process of defining the essential relationships among people, tasks and activities in such a way that all the organisation’s resources are integrated and coordinated to accomplish its objectives efficiently and effectively”. — Pearce and Robinson

Organising is, thus:

1. A structure
2. A process.

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 and their relationship is defined in a way that maximises organisational welfare and individual goals. The relationship amongst 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, authority-responsibility structure of people working in different departments at same levels is defined.

As a process-

While the structure designs the system and its sub-systems, process defines the way this structure is designed. Structure is the static concept that establishes relationships amongst various components of the organisation. It first designs the component and then establishes relationships amongst these components.

These relationships are by and large permanent. They do not change frequently unless disturbed by external environmental forces. Process is the dynamic concept that redefines the structure whenever required. It defines change in the system over time.

Nature of organisation

The term organization can also be defined in two ways:

i.e. as dynamic process & as a structure.

As a dynamic process it is the managerial responsibility to bring people together to attain the objectives. It includes determining the authority & responsibility grouping of activities & arranging various activities for accomplishment of objectives. It also includes delegation of authority.

As a structure it established the relationship between various positions & jobs. This relationship builds to attain common goals. It is a blue print of how management will link functions & activities to be assigned & connected.

Key Takeaways

1. Organising is a set of relationships that defines vertical and horizontal relationships amongst people who perform various tasks and duties.
2. As a structure it established the relationship between various positions & jobs. This relationship builds to attain common goals.
3. Organising is a process of co-coordinating employee’s activities in an orderly manner.

3.2 Process of organisation

Organising as a function begins with identifying all activities that are planned for a business based on their mission, goals and objectives. The process then involves ‘division of labour’ that divides the work process into a certain number of tasks, with each task performed separately by employees or groups of employees. These separate tasks are classified into separate business units. Each unit of the total work will be a ‘job’.

The jobs identified from the previous step are further grouped together and put into separate departments. These departments can be either functional or divisional where in functional departments are related to common functions grouped into one department or divisional departments are created for businesses on the basis of either types of products, geographical location of the business or the targeted customer groups. From the previous banking example, all jobs related to managing car loans, home loans and business loans will come under the ‘Loans Department’.

Subsequent to containing all activities into specialised departments, employees working in these departments are assigned with only one job in that department that suit their skills, qualifications and capabilities.

The final step involves the establishment of authority that creates a chain of command. This implies that employees will have to report to an authority like the top management or superiors who manage, guide, supervise and oversee the work and responsibilities of their subordinate reporting to them.

Key Takeaways

1. The final step involves the establishment of authority that creates a chain of command. This implies that employees will have to report to an authority like the top management or superiors who manage, guide, supervise and oversee the work and responsibilities of their subordinate reporting to them.

3.3 Principles of organisation

The enterprise should set up certain aims for the achievement of which various departments should work. A common goal so devised for the business as a whole and the organization is set up to achieve that goal. In the absence of a common aim, various departments will set up their own goals and there is a possibility of conflicting objectives for different departments. So there must be an objective for the organization.

The organization should be set up in such a way that every individual should be assigned a duty according to his skill and qualification. The person should continue the same work so that he specialises in his work. This helps in increasing production in the concern.

The co-ordination of different activities is an important principle of the organization. There should be some agency to co-ordinate the activities of various departments. In the absence of co-ordination there is a possibility of setting up different goals by different departments. The ultimate aim of the concern can be achieved only if proper co-ordination is done for different activities.

The authority flows downward in the line. Every individual is given authority to get the work done. Though authority can be delegated but responsibility lies with the man who has been given the work. If a superior delegates his authority to his subordinate, the superior is not absolved of his responsibility, though the subordinate becomes liable to his superior. The responsibility cannot be delegated under any circumstances.

The scope of authority and responsibility should be clearly defined. Every person should know his work with definiteness. If the duties are not clearly assigned, then it will not be possible to fix responsibility also. Everybody’s responsibility will become nobody’s responsibility. The relationship between different departments should also be clearly defined to make the work efficient and smooth.

Span of control means how many subordinates can be supervised by a supervisor. The number of subordinates should be such that the supervisor should be able to control their work effectively. Moreover, the work to be supervised should be of the same nature. If the span of control is disproportionate, it is bound to affect the efficiency of the workers because of slow communication with the supervisors.

The principle means that assignment of work should be such that every person should be given only that much work which he can perform well. Some person is over worked and the other is under-worked, then the work will suffer in both the situations. The work should be divided in such a way that everybody should be able to give his maximum.

The organization should be amendable according to the changing situations. Every day there are changes in methods of production and marketing systems. The organization should be dynamic and not static. There should always be a possibility of making necessary adjustments.

The organization should provide for the distribution of work in such a manner that the uniformity is maintained. Each officer should be in-charge of his respective area so as to avoid dual subordination and conflicts.

There should be a unity of command in the organization. A person should be answerable to one boss only. If a person is under the control of more than one person then there is a like-hood of confusion and conflict. He gets contradictory orders from different superiors. This principle creates a sense of responsibility to one person. The command should be from top to bottom for making the organization sound and clear. It also leads to consistency in directing, coordinating and controlling.

This principle states that top management should interfere only when something goes wrong. If the things are done as per plans then there is no need for the interference of top management. The management should leave routine things to be supervised by lower cadres. It is only the exceptional situations when attention of top management is drawn. This principle relieves top management of many botherations and routine things. Principle of exception allows top management to concentrate on planning and policy formulation. Important time of management is not wasted on avoidable supervision.

The organizational structure should be simple so that it is easily understood by each and every person. The authority, responsibility and position of every person should be made clear so that there is no confusion about these things. A complex organizational structure will create doubts and conflicts among persons. There may also be over-lapping’s and duplication of efforts which may otherwise be avoided. It helps in smooth running of the organization.

The organization should be able to achieve enterprise objectives at a minimum cost. The standards of costs and revenue are pre-determined and performance should be according to these goals. The organization should also enable the attainment of job satisfaction to various employees.

This principle refers to the vertical placement of supervisors starting from top and going to the lower level. The scalar chain is a pre-requisite for effective and efficient organization.

Key Takeaways

1. The organization should be able to achieve enterprise objectives at a minimum cost.
2. The organizational structure should be simple so that it is easily understood by each and every person.
3. The organization should provide for the distribution of work in such a manner that the uniformity is maintained.

3.4 Formal and Informal organization

Formal organization- When the managers are carrying on organising process then as a result of organising process an organisational structure is created to achieve systematic working and efficient utilization of resources. This type of structure is known as formal organisational structure.

Formal organisational structure clearly spells out the job to be performed by each individual, the authority, responsibility assigned to every individual, the superior- subordinate relationship and the designation of every individual in the organisation. This structure is created intentionally by the managers for achievement of organisational goal.

Features of Formal organisation:

1. The formal organisational structure is created intentionally by the process of organising.
2. The purpose of formal organisation structure is achievement of organisational goal.
3. In formal organisational structure each individual is assigned a specific job.
4. People exercise authority by virtue of their position in the organisational hierarchy. Authority is linked to position and through it, in the person occupying the position. It involves the right to command, to perform, to make decisions and spend resources.
5. Formal organisation is based on formal principles of organising, that is, unity of objectives, organisational efficiency, division of labour, authority – responsibility, delegation, scalar chain, span of control, unity of command, balance, flexibility, continuity, exception, simplicity, departmentation, decentralisation, unity of direction and co-operation.
6. It focuses more on jobs than people. It allocates jobs to people and defines the structure of relationships to achieve the formal organisational objectives.

Advantages

1. No Overlapping of Work- In formal organisation structure work is systematically divided among various departments and employees. So there is no chance of duplication or overlapping of work.
2. Co-ordination- Formal organisational structure results in coordinating the activities of various departments.
3. Creation of Chain of Command- Formal organisational structure clearly defines superior subordinate relationship, i.e., who reports to whom.
4. More Emphasis on Work- Formal organisational structure lays more emphasis on work than interpersonal relations.

Disadvantages

1. Delay in Action- While following scalar chain and chain of command actions get delayed in formal structure.
2. Ignores Social Needs of Employees- Formal organisational structure does not give importance to psychological and social need of employees which may lead to demotivation of employees.
3. Emphasis on Work Only- Formal organizational structure gives importance to work only; it ignores human relations, creativity, talent etc.

Informal organization- In the formal organization structure individual are assigned various job positions. While working at those job positions, the individuals interact with each other and develop some social and friendly groups in the organisation. This network of social and friendly groups forms another structure in the organisation which is called informal organisational structure.

The informal organisational structure gets created automatically and the main purpose of such structure is getting psychological satisfaction. The existence of informal structure depends upon the formal structure because people working at different job positions interact with each other to form informal structure and the job positions are created in formal structure. So, if there is no formal structure, there will be no job position, there will be no people working at job positions and there will be no informal structure.

Features of Informal organisation:

1. Informal organisational structure gets created automatically without any intended efforts of managers.
2. Informal organisational structure is formed by the employees to get psychological satisfaction.
3. Source of information cannot be known under informal structure as any person can communicate with anyone in the organisation.
4. The existence of informal organisational structure depends on the formal organisation structure.
5. The basic purpose of informal organisation is fulfillment of social and personal needs of people. People share common thoughts, feelings and interests different from formal organisational goals. Their social needs of friendship, love and support are strengthened by informal organisations.
6. Leaders are informally elected by group members. They strongly influence group activities and contribute to formal goals positively or negatively.

Advantages

1. Fast Communication- Informal structure does not follow scalar chain so there can be faster spread of communication.
2.   Informal communication gives due importance to psychological and social need of employees which motivate the employees.

Disadvantages

1. Spread Rumours- According to a survey 70% of information spread through informal organisational structure are rumors which may mislead the employees.
2. No Systematic Working- Informal structure does not form a structure for smooth working of an organization.

Key Takeaways

1. In the formal organization structure individual are assigned various job positions.
2. When the managers are carrying on organising process then as a result of organising process an organisational structure is created to achieve systematic working and efficient utilization of resources.

3.5 Departmentation and Delegation

Departmentation means grouping of activities into sections, departments, and higher administrative units. Departmentation is the process of analyzing, diving and arranging work or activities into manageable portions for individuals, sections and departments. Departmentation is an integral part of the overall process of organizing.

It involves the horizontal expansion of the organization. It creates smaller units of administration being called as departments. A department is a work group combined together for performing certain functions of similar nature. These departments may be called as sections, units, branches and divisions.

Process of departmentation-

1. Identification of task- When scope of function is determine division into different department is easy.
2. Analysis of task- It helps in assessment of responsibility.
3. Description of function- Under this process, the different functions are to be performed by different individuals and the groups.
4. To appoint head section- The head of the department is expert in the specific field. He supervises the work done by groups.
5. Responsibility and authority- The ultimate responsibility for the performance of whole department is with the departmental head.

Delegation-

Meaning-

Delegation of Authority means assigning the work to other & giving them authority. In simple word delegation of authority is the process of dividing the job & trust on others. Within the organisation delegation of authority become simple with the help of departmentation & grouping of similar activities.

Definition-

According to Luis Allen delegation is the instrument of responsibility & authority to another and creation of accountability for performance.

Importance-

As a business enterprise grows, a manager has to delegate part of his work to others in the process of delegation. It helps the manager to free from routine work. It helps to develop the ability of subordinate when the volume of work to be done increases beyond the capacity of an individual with the help of delegation, duties are assigned to individuals and authority can be passed forward. Without delegation existence of organisation cannot have any sense. It is a key to organisation. A manager after delegation cannot remain silent person. He still ultimately is liable to supervise the performance. That is why he delegates authority along with duty but not whole responsibility.

Advantages-

1. Delegation is effective function of an organisation. With effective delegation proper relationships are establish in the organisation. It will lead to better cooperation and co-ordination.
2. Delegation helps the enterprise to grow, expand and diversify activities.
3. Delegation helps the executive to concentrate on managerial function and relieving them from routine work.
4. With proper delegation not only co-ordination is possible but control is made easier as authority & responsibility is clearly defined.

Key Takeaways

1. Delegation of Authority means assigning the work to other & giving them authority.
2. Departmentation means grouping of activities into sections, departments, and higher administrative units.

3.6 Centralisation and decentralisation- factors, merits and demerits

Centralisation and decentralisation are the terms concerned with the authority or degree of power withhold. Centralisation and decentralisation refer to the degree of delegation of authority to lower level of management.

Centralisation- Centralisation indicates minimum delegation. It indicates limited delegation and leads to narrow span of control and tall structure of organization. It may be described as the tendency to withhold the decision making power at higher levels of management. In the centralisation, decision making authority is concentrated in a few hands at the top which results in better integration and co-ordination. More centralisation is desirable when top management wishes to exercise more direct control over organizational activities. In this, communication channels are longer and are suitable when organization is small.

Advantages of Centralisation

• A clear chain of command

An incorporated association profits by an unmistakable hierarchy of leadership in light of the fact that each individual inside the association realizes who to answer to. Junior workers likewise realize who to approach at whatever point they have worries about the association. Then again, senior officials pursue a reasonable arrangement of appointing expert to representatives who exceed expectations in explicit capacities. The officials likewise gain the certainty that when they delegate obligations to mid-level supervisors and different workers, there will be no cover. A reasonable level of leadership is useful when the association needs to execute choices rapidly and in a brought together way.

• Centered vision

At the point when an association pursues a brought together administration structure, it can concentrate on the satisfaction of its vision easily. There are clear lines of correspondence and the senior official can convey the association’s vision to workers and guide them towards the accomplishment of the vision. Without an incorporated administration, there will be irregularities in transferring the message to workers in light of the fact that there are no reasonable lines of power. Coordinating the association’s vision from the best takes into consideration a smooth execution of its dreams and procedures. The association’s partners, for example, clients, providers, and networks likewise get a uniform message.

• Decreased expenses

A brought together association holds fast to standard strategies and techniques that control the association, which help decrease office and authoritative expenses. The fundamental chiefs are housed at the organization’s head office or home office, and accordingly, there is no requirement for conveying more offices and gear to different branches. Likewise, the association does not have to cause additional expenses to enlist experts for its branches since basic choices are made at the head office and after that imparted to the branches. The reasonable levels of leadership lessen duplication of obligations that may result in extra expenses to the association.

Disadvantages of Centralisation

• Deferrals in work

Centralization results in postponements in work as records are sent to and from the head office. Workers depend on the data imparted to them from the best, and there will be a misfortune in worker hours if there are delays in handing-off the records. It implies that the representatives will be less profitable in the event that they have to hold up extensive stretches to get direction on their next activities.

• Absence of representative devotion

Representatives end up faithful to an association when they are permitted individual activities in the work they do. They can present their imagination and recommend methods for playing out specific assignments. Be that as it may, in centralization, there is no activity in work since representatives perform errands conceptualized by best administrators. It constrains their inventiveness and faithfulness to the association because of the unbending nature of the work.

• Remote control

The association’s administrators are under enormous strain to define choices for the association, and they need command over the execution procedure. The disappointment of administrators to decentralize the basic leadership process adds a ton of work to their work area. The officials experience the ill effects of an absence of time to manage the execution of the choices. It prompts hesitance with respect to workers. Subsequently, the administrators may wind up settling on an excessive number of choices that are either ineffectively actualized or overlooked by the workers.

Decentralization- Decentralisation means extensive delegation. It means the delegation and distribution of authority from the superior to lower levels. There is a dispersal of decision making authority. It indicates flat organization structure. Decentralisation is the systematic effort to delegate to the lower levels, all authority except that which can be exercises at central points. In decentralisation, communication lines are shorter and span of control is wider. As management levels are few, top executives are less burdened and so employees’ morale is high. When an organization is large and complex and where the work is not standardized or routine decentralization is suitable. Complete decentralization is not possible because a manager cannot delegate all his authority without surrendering his position as a manager whereas, complete centralization is also not possible except in one man enterprise.  

Advantages of Decentralisation

• Advancement of the Managerial Personnel

As the business develops in size, it requires the administrations of countless and here decentralization gives a preparation ground to the future supervisors. The supervisors learn by understanding inside the association concerned.

• Successful Control and Supervision

Decentralization prompts compelling control and supervision. Since concerned chiefs appreciate full expert to make changes in work task, to take disciplinary activities, to change generation plans or to prescribe advancements, they are in a situation to oversee the subordinates’ exercises.

• Enhancement of Management

Decentralization helps enhancement of administrative capacity which prompts an expansion in their spirit and this outcomes in a higher efficiency.

Disadvantages of Decentralisation

• External Factors

Decentralization expands the issues of coordination among the different units.

• Increase the administrative price

Now and again, decentralization may not be conceivable by any stretch of the imagination. Outer factors make this troublesome, for example, expansive strikes.

• High Cost of operation

It builds the authoritative costs in light of the fact that generously compensated administrators must be selected.

Differences between delegation and decentralization

The following are the major differences between delegation and decentralization:

1. When an authority or responsibility is entrusted to the subordinate by a superior is known as Delegation. Decentralization refers to the final result which is attained when the authority is delegated to the lowest level, in an organised and consistent manner.
2. Delegation is the technique of management. On the contrary, decentralisation is the philosophy of management.
3. In delegation, only authority and responsibility are transferred but not the accountability. However, in decentralization, all the three are transferred.
4. In delegation, there is less liberty of work to the subordinates whereas, in the decentralization, a substantial amount of liberty can be seen.
5. Delegation of authority creates superior-subordinate relationship in the organization. conversely, decentralisation is a step towards creation of semi autonomous units.
6. A delegation of authority is a must for every organisation, as no person can alone do each and every task. Conversely, Decentralization is discretionary, in the sense that top management may or may not disperse authority.

Key Takeaways

1. Decentralisation is the systematic effort to delegate to the lower levels, all authority except that which can be exercises at central points.
2. Decentralization may not be conceivable by any stretch of the imagination. Outer factors make this troublesome.
3. Centralisation indicates minimum delegation. It indicates limited delegation and leads to narrow span of control and tall structure of organization.

References-

1. Principles & Practices of Management: L. M. Prasad
2. Principles of Management: P. C. Tripathy & P.N. Readdy