Unit 3
Organising
Concept
The working connections vertical and flat relationship among people and gatherings that exist inside an association influence how its exercises are refined and facilitated. Compelling getting sorted out relies upon the dominance of a few significant ideas: work specialization, levels of leadership, authority, assignment, length of control, and centralization versus decentralization. A large number of these ideas depend on the standards created by Henri Fayol. Degree to which hierarchical assignments are isolated into discrete positions. Representatives inside every division perform just the undertakings identified with their particular capacity.
The main characteristics of an organizing are as follows:
1) Process: Organizing is a process undertaken to accomplish objectives. The process of organizing consists of the following steps:1) Defining goals/objectives of the organization 2) Identifying and grouping of activities 3) Defining and delegating authority and responsibility 4) Establishing relationships in the organization 5) Co-coordinating activities.
2) Goal oriented: Every organization has its own objectives and goals. Organizing is the function employed to achieve the individual goals of the employees with overall objectives of the firm.
3) Group of individual: Individuals form a group and the groups form an organization. Thus, organization is the composition of individuals and groups. Individuals are grouped into departments and their work is co-ordinate directed towards achievement of organization goals.
4) Integration: The organization divides the entire work and assigns the tasks to individuals in order to achieve the organizational objectives. Each one has to perform a different tasks of one individual must be co-ordinated with the tasks of others. Collectively these tasks at the final stage are called integration.
5) Continuity: An organization is a group of people in which they work together to achieve the goals of that organization. This relationship does not come to an end after completing the task. Organizing is a never ending process.
6) Decision Making: Top management has a right and power to take decisions. It is a task of a manager to get the things done from the subordinates in the most efficient and effective manner.
7) Common Targets: To level management set the overall goals for an organization. It is an integrated and collective effort from all the employees towards the achievement of common targets or goals setup by an organization.
8) Authority: Authority is the power to take decisions and to get the work done from the subordinates. Every manager in the organization must be given adequate authority so that he can take the right decisions to get the work done.
9) Responsibility: The manager who is provided with authority must made responsible. There must be a balance between authority and responsibility.
Process Of Organisation:
Process of organization, for sake of clarity of discussion and a far better comprehension of those, are classified in the following manner:
(I) Overall Principles:
- Principle of unity of objective
- Principle of simplicity
- Principle of flexibility
(II) Structural Principles:
- Principle of division of work
- Principle of functional definition
- Principle of optimum departmentation
- Principle of unity of direction
- Span of management principle
(III) Operational Principles:
- Principle of adequate delegation
- Scalar chain principle
- Principle of unity of comment
- Authority-level principle
Following may be a brief discuss each of the above-stated principles of organisation under appropriate categories:
(I) Overall Principles:
Under this classification, a number of the very fundamental principles of organization are included i.e. principles which are absolutely essential for an efficient and logical functioning of the organization.
A brief explanation of the principles under this category is as follows:
- Principle of unity of objective:
Very simply stated, this principle requires that individual and departmental objectives throughout the enterprise must be perfectly harmonized; which all objectives must be mutually supportive and collectively contributing to overall common objectives.
- Principle of simplicity:
The observance of this principle requires that the management must, as far as possible, design a simple organizational structure. a straight forward structure facilitates a far better understanding of superior- subordinate relationships; and provides background for better co-operation among people.
- Principle of flexibility:
While designing the organizational structure, the management must provide for in-built devices within the structure itself; which might facilitate changes within the organizational structure to be effected as and when environmental factors-internal and/or external- so demand.
(II) Structural Principles:
Structural principles of organization relate to those aspects of the organization, which have an impact on the structuring (or the development) of the organization; its fundamental design and shape.
Some of the important principles, during this context, could be the subsequent ones:
- Principle of division of work:
Since the total work of the enterprise can't be performed by just one person; it's imperative that such work must be suitably divided among variety of persons. In fact, the total managerial work need to be divided among variety of managers; and the total operational work being divided among variety of operating personnel.
- Principles of functional definition:
The above stated principle implies that the role (or job) of each individual and of every department of the enterprise must be suitably defined, in terms of the-work content, the authority and facilities required for job performance and the relationship of the job with those of others, within the enterprise.
- Principle of optimum departmentation:
There are some ways and bases for creating departments within an organization. Consistent with the principle of optimum departmentation, departments in an organization must be so created and maintained-as to facilitate the simplest attainment of the common objectives of the enterprise.
- Principle of unity of direction:
The principle implies that every group of activities having the same objective must have just one overall head and just one overall or master plan.
As a principle of organization, this concept of unity of direction must be so embedded in designing the organizational structure that for every group of similar activities, there's a provision for only one overall head-having authority over all personnel performing a similar function, anywhere, in the organization.
- Span of management principle:
The span of management principle is variously called as- the span of control or the span of supervision. However, the phrase ‘span of management’ is that the widest; including also the notions of span of control and span of supervision.
The span of management principle implies that there's a limit to the number of subordinates; whose work might be effectively managed (controlled or supervised) by a superior.
(III) Operational Principles:
Operational principles of organization can be suggested to be those which have a bearing on the running or functioning of the organization.
Some important principles, under this category, are as follows:
- Principle of adequate delegation:
By the principle of adequate delegation, we mean that every managerial position be given adequate (or necessary or requisite) authority-to enable the holder of the position i.e. the manager to cope successfully with the wants of his job.
- Scalar chain principle:
Scalar chain implies a chain of superiors-ranging from the highest rank to the lowest rank-in a corporation . The scalar chain forms the base of authority-responsibility relationships among managers and subordinates, within the organisation; thus promoting mutual understanding among superiors and subordinates at different levels of the organization.
As a principle of organization, scalar chain principle requires its incorporation into the design of the organisation, for ensuring smooth running of the enterprise life.
- Principle of unity of command:
The above-sated principle implies that an employee must receive orders and instructions, only from one superior, at a time. The observance of this principle is desirable for reasons of removing doubts and confusions from the mind of the employees; and for facilitating exact fixation of responsibility on individuals for the results expected of them.
- Authority-level principle:
The authority-level principle implies that managers at particular levels within the management hierarchy must decide only those matters which fall within the purview of the authority vested in their managerial positions.
A natural extension of this principle is that if a manager at any level of the management hierarchy comes across a matter not covered by his authority; the matter must either be referred upwards within the hierarchy or pushed down the hierarchy at the acceptable level for decision.
The span of management principle is variously called as- the span of control or the span of supervision. However, the phrase ‘span of management’ is that the widest; including also the notions of span of control and span of supervision.
The span of management principle implies that there's a limit to the number of subordinates; whose work might be effectively managed (controlled or supervised) by a superior.
The Span of Management refers to the number of subordinates who can be managed efficiently by a superior. Simply, the manager having the group of subordinates who report him directly is called as the span of management.
The Span of Management has two implications:
- Influences the complexities of the individual manager’s job
- Determine the shape or configuration of the Organization
The span of management is related to the horizontal levels of the organization structure. There is a wide and a narrow span of management. With the wider span, there will be less hierarchical levels, and thus, the organizational structure would be flatter. Whereas, with the narrow span, the hierarchical levels increases, hence the organizational structure would be tall.
Both these organizational structures have their advantages and the disadvantages. But however the tall organizational structure imposes more challenges:
- Since the span is narrow, which means less number of subordinates under one superior, requires more managers to be employed in the organization. Thus, it would be very expensive in terms of the salaries to be paid to each senior.
- With more levels in the hierarchy, the communication suffers drastically. It takes a lot of time to reach the appropriate points, and hence the actions get delayed.
- Lack of coordination and control because the operating staff is far away from the top management.
The major advantage of using this structure is that the cross communication gets facilitated, i.e., operative staff communicating with the top management. Also, the chance of promotion increases with the availability of several job positions.
In the case of a flatter organizational structure, where the span is wide leads to a more complex supervisory relationship between the manager and the subordinate. It will be very difficult for a superior to manage a large number of subordinates at a time and also may not listen to all efficiently.
However, the benefit of using the wider span of management is that the number of managers gets reduced in the hierarchy, and thus, the expense in terms of remuneration is saved. Also, the subordinates feel relaxed and develop their independent spirits in a free work environment, where the strict supervision is absent.
Factors influencing Span of Management
The span of management can be determined on the basis of a number of relationships that a manager can manage. These are:
Factors
- Capacity of Superior: Here the capacity means the ability of a superior to comprehend the problems quickly and gel up with the staff such that he gets respect from all. Also, the communication skills, decision-making ability, controlling power, leadership skills are important determinants of supervisory capacity. Thus, a superior possessing such capacity can manage more subordinates as compared to an individual who lack these abilities.
- Capacity of Subordinate: If the subordinate is trained and efficient in discharging his functions without much help from the superior, the organization can have a wide span. This means a superior can manage a large number of subordinates as he will be required just to give the broad guidelines and devote less time on each.
- Nature of Work: If the subordinates are required to do a routine job, with which they are well versed, then the manager can have a wider span. But, if the work is complex and the manager is required to give directions, then the span has to be narrower.Also, the change in the policies affects the span of management. If the policies change frequently, then the manager needs to devote more time and hence the span would be narrow whereas if the policies remain stable, then a manager can focus on a large number of subordinates. Likewise, policies technology also plays a crucial role in determining the span.
- Degree of Decentralization: If the manager delegates authority to the subordinates then he is required to give less attention to them. Thus, higher the degree of decentralization, the wider is the span of management. But in case, subordinates do not have enough authority, then the manager is frequently consulted for the clarifications, and as a result superior spends a lot of time in this.
- Planning: If the subordinates are well informed about their job roles, then they will do their work without consulting the manager again and again. This is possible only because of the standing plans that they follow in their repetitive decisions. Through a proper plan, the burden of a manager reduces manifold and can have a wider span of management.
- Staff Assistance: The use of staff assistance can help the manager in reducing his workload by performing certain managerial tasks such as collecting information, processing communications and issuing orders, on his behalf. By doing so, the managers can save their time and the degree of span can be increased
- Supervision from Others: The classical approach to the span of management, i.e., each person should have a single supervisor is changing these days. Now the subordinates are being supervised by other managers in the organization such as staff personnel. This has helped the manager to have a large number of subordinates under him.
- Communication Techniques: The mode of communication also determines the span of management. If in the manager is required to do a face to face communication with each subordinate, then more time will be consumed. As a result, the manager cannot have a wider span. But in case, the communication is in writing and is collected through a staff personnel; the manager can save a lot of time and can have many subordinates under him.
The span of management is also called as the span of supervision or span of control, which influences the complexity of the individual manager’s job and determine the shape or configuration of the organization.
Line and Staff
Line and staff organization is a modification of line organization and it is more complex than line organization. According to this administrative organization, specialized and supportive activities are attached to the line of command by appointing staff supervisors and staff specialists who are attached to the line authority. The power of command always remains with the line executives and staff supervisors guide, advice and council the line executives. Personal Secretary to the Managing Director is a staff official.
MANAGING DIRECTOR
↓ ↓ ↓
Production Manager Marketing Manager Finance Manager
↓ ↓ ↓
Plant Supervisor Market Supervisor Chief Assistant
↓ ↓ ↓
Foreman Salesman Accountant
Features of Line and Staff Organization
- There are two types of staff :
- Staff Assistants- P.A. To Managing Director, Secretary to Marketing Manager.
- Staff Supervisor- Operation Control Manager, Quality Controller, PRO
2. Line and Staff Organization is a compromise of line organization. It is more complex than line concern.
3. Division of work and specialization takes place in line and staff organization.
4. The whole organization is divided into different functional areas to which staff specialists are attached.
5. Efficiency can be achieved through the features of specialization.
6. There are two lines of authority which flow at one time in a concern :
- Line Authority
- Staff Authority
7. Power of command remains with the line executive and staff serves only as counselors.
Merits of Line and Staff Organization
- Relief to line of executives- In a line and staff organization, the advice and counseling which is provided to the line executives divides the work between the two. The line executive can concentrate on the execution of plans and they get relieved of dividing their attention to many areas.
- Expert advice- The line and staff organization facilitates expert advice to the line executive at the time of need. The planning and investigation which is related to different matters can be done by the staff specialist and line officers can concentrate on execution of plans.
- Benefit of Specialization- Line and staff through division of whole concern into two types of authority divides the enterprise into parts and functional areas. This way every officer or official can concentrate in its own area.
- Better co-ordination- Line and staff organization through specialization is able to provide better decision making and concentration remains in few hands. This feature helps in bringing co-ordination in work as every official is concentrating in their own area.
- Benefits of Research and Development- Through the advice of specialized staff, the line executives, the line executives get time to execute plans by taking productive decisions which are helpful for a concern. This gives a wide scope to the line executive to bring innovations and go for research work in those areas. This is possible due to the presence of staff specialists.
- Training- Due to the presence of staff specialists and their expert advice serves as ground for training to line officials. Line executives can give due concentration to their decision making. This in itself is a training ground for them.
- Balanced decisions- The factor of specialization which is achieved by line staff helps in bringing co-ordination. This relationship automatically ends up the line official to take better and balanced decision.
- Unity of action- Unity of action is a result of unified control. Control and its effectivity take place when co-ordination is present in the concern. In the line and staff authority all the officials have got independence to make decisions. This serves as effective control in the whole enterprise.
Demerits of Line and Staff Organization
- Lack of understanding- In a line and staff organization, there are two authority flowing at one time. This results in the confusion between the two. As a result, the workers are not able to understand as to who is their commanding authority. Hence the problem of understanding can be a hurdle in effective running.
- Lack of sound advice- The line official get used to the expertise advice of the staff. At times the staff specialist also provide wrong decisions which the line executive have to consider. This can affect the efficient running of the enterprise.
- Line and staff conflicts- Line and staff are two authorities which are flowing at the same time. The factors of designations, status influence sentiments which are related to their relation, can pose a distress on the minds of the employees. This leads to minimizing of co-ordination which hampers a concern’s working.
- Costly- In line and staff concern, the concerns have to maintain the high remuneration of staff specialist. This proves to be costly for a concern with limited finance.
- Assumption of authority- The power of concern is with the line official but the staff dislikes it as they are the one more in mental work.
- Staff steals the show- In a line and staff concern, the higher returns are considered to be a product of staff advice and counseling. The line officials feel dissatisfied and a feeling of distress enters a concern. The satisfaction of line officials is very important for effective results.
Functional Authority:
This concept was devised by F.W. Taylor. It is based on the functional foremanship. Under this method, the structure of the enterprise is classified into different functional areas. Each functional area is headed by a specialist who has full control of that function over the organization and gives instructions direct to the personnel, rather than through the chain of command.
Each chief manager is in charge of a particular activity. For example, chief finance manager is in charge of finance function of all the three units. Thus, he enjoys functional authority over the employees of other departments also.
Merits of Functional Authority:
1. It helps to reap the benefits of specialization
2. Subordinates can make use of the expertise of functional experts
3. The burden of top executive is reduced as each expert looks after only one function.
4. It leads to joint supervision by different experts
5. There is expert and better control can be exercised by functional experts
6. It provides better scope for expansion and diversification
Demerits of functional Authority:
1. It is against the principle of unity of command as the subordinate is responsible to a number of superiors
2. Lower level people are not given an opportunity for all round experience and hence they do not fit into top level positions.
3. The complex nature of functional organization with its cross relationship creates a confusion among workers
4. The decision making is very slow as involvement of many experts is required
5. There is a scope of lack of coordination as each specialist thinks of only his function and ignores other functions.
Suitability:
It is suitable to all kinds of organization provided applied at higher levels. At lower levels too many cross relationship creates confusion throughout the organization.
Decentralization is a systematic delegation of authority at all levels of management and in all of the organization. In a decentralization concern, authority in retained by the top management for taking major decisions and framing policies concerning the whole concern. Rest of the authority may be delegated to the middle level and lower level of management.
Decentralization is not the same as delegation. In fact, decentralization is all extension of delegation. Decentralization pattern is wider is scope and the authorities are diffused to the lowest most level of management.
It refers to the dispersal of decision making power to the lower level of the organization.
‘Decentralization refers to the systematic effort to delegate to the lowest levels all authority except that which can only be exercised at central points’. – Louis A. Allen
‘When authority is dispersed decentralization is present.’ – George Terry.
In large organizations it is not always possible for all activities to be organized from the centre. Hence, a certain amount of decentralization becomes necessary.
Advantages of Decentralization (Importance of Decentralization):
1. It is a good philosophy to motivate the mangers so that it results in better job satisfaction.
2. It increases the morale of lower level managers by satisfying their need for participation and independence.
3. It helps to meet the challenges and complexities of big enterprises and provides scope for growth and development.
4. It promotes quick decision making and avoids confusion
5. It provides training for future managers by giving them an opportunity to develop their skills.
6. It facilitates effective communication, because in decentralization set up span is wider with a few levels of organization.
7. It ensures effective control and supervision. As all activities are coordinated at the lower level, any sort of adjustment can be made at lower level itself. Thus, it gives complete freedom of action.
8. It gives a relief to the top management from concentrating on day-to-day affairs and permits them to concentrate on developmental activities.
Disadvantages of Decentralization:
a. It is costly because it requires competent people to be employed to accept authority. The success of a unit depends on the ability and capability of the head.
b. It may lead to inconsistencies, when every department or division does not adopt procedures uniformly.
c. It creates a problem of among various units or departments.
d. Differences of opinions of top management and unit head often lead to conflicts.
e. Among the departments hostility may be developed due to severe competition. This will hamper the sharing of knowledge and resources.
f. Economies of scale may not be realized as each unit becomes small and independent.
By and large, decentralization is suitable for large scale organizations operating in different geographical areas or dealing with multiple products.
Key Takeaways
- Decentralization refers to the systematic effort to delegate to the lowest levels all authority except that which can only be exercised at central points.
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the manager should delegate authority. Delegation of Authority means division of authority and powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of your job. Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.
Elements of Delegation
- Authority - in context of a business organization, authority can be defined as the power and right of a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. Authority must be well- defined. All people who have the authority should know what is the scope of their authority is and they shouldn’t misutilize it. Authority is the right to give commands, orders and get the things done. The top level management has greatest authority.
Authority always flows from top to bottom. It explains how a superior gets work done from his subordinate by clearly explaining what is expected of him and how he should go about it. Authority should be accompanied with an equal amount of responsibility. Delegating the authority to someone else doesn’t imply escaping from accountability. Accountability still rest with the person having the utmost authority.
2. Responsibility - is the duty of the person to complete the task assigned to him. A person who is given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was held responsible are not completed, then he should not give explanations or excuses. Responsibility without adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows from bottom to top. The middle level and lower level management holds more responsibility. The person held responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.
3. Accountability - means giving explanations for any variance in the actual performance from the expectations set. Accountability can not be delegated. For example, if ’A’ is given a task with sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task is done well, responsibility rest with ’B’, but accountability still rest with ’A’. The top level management is most accountable. Being accountable means being innovative as the person will think beyond his scope of job. Accountability, in short, means being answerable for the end result. Accountability can’t be escaped. It arises from responsibility.
For achieving delegation, a manager has to work in a system and has to perform following steps : -
- Assignment of tasks and duties
- Granting of authority
- Creating responsibility and accountability
Delegation of authority is the base of superior-subordinate relationship, it involves following steps:-
- Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He also has to define the result expected from the subordinates. Clarity of duty as well as result expected has to be the first step in delegation.
- Granting of authority - Subdivision of authority takes place when a superior divides and shares his authority with the subordinate. It is for this reason, every subordinate should be given enough independence to carry the task given to him by his superiors. The managers at all levels delegate authority and power which is attached to their job positions. The subdivision of powers is very important to get effective results.
- Creating Responsibility and Accountability - The delegation process does not end once powers are granted to the subordinates. They at the same time have to be obligatory towards the duties assigned to them. Responsibility is said to be the factor or obligation of an individual to carry out his duties in best of his ability as per the directions of superior. Responsibility is very important. Therefore, it is that which gives effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted. Accountability, on the others hand, is the obligation of the individual to carry out his duties as per the standards of performance. Therefore, it is said that authority is delegated, responsibility is created and accountability is imposed. Accountability arises out of responsibility and responsibility arises out of authority. Therefore, it becomes important that with every authority position an equal and opposite responsibility should be attached.
Therefore every manager,i.e.,the delegator has to follow a system to finish up the delegation process. Equally important is the delegatee’s role which means his responsibility and accountability is attached with the authority over to here.
Barriers to delegation
Though delegation enhances efficiency of the organisation by dividing work amongst organisational members (according to their capabilities), it is not free from obstacles.
Various barriers to delegation can be grouped in three main headings.
These are:
I. Barriers related to superiors or delegator,
II. Barriers related to subordinates or delegate, and
III. Barriers related to organisation.
I. Barriers related to Superiors:
Despite knowing how important it is to delegate, superiors sometimes do not delegate work to subordinates.
This is because of the following reasons:
1. Wanting to do things personally:
Some managers do not delegate because they feel they can do the work better than others. Since ultimate responsibility is that of the delegator, they prefer doing the work themselves rather than getting it done through others. This also helps in maintaining control over the activities assigned to subordinates. The delegator enjoys doing the work and makes his importance felt in the organisation by showing his busyness in the office.
2. Insecurity:
If managers feel that subordinates perform better than them, they avoid delegation. The exposure of their inabilities to take good decisions creates a feeling of insecurity and, therefore, they fear to delegate. This happens in organisations where work procedures and methods are not sound. A weak operating system usually stops the managers from revealing their shortcomings to the subordinates.
3. Retention of power:
Some managers like to take responsibility, make their importance felt by everyone in the organisation and want the subordinates to come to them to get their problems solved. Their desire to retain power and dominate is a hindrance to the effective delegation process. Such managers are usually autocratic in nature. They abstain from delegation and prefer to direct people personally.
4. Lack of confidence in subordinates:
The reward for risk is return. Unless managers assume the risk of subordinates not performing well, they cannot contribute to the development of skilled managers in future. A manager who does not take risk in subordinates and lacks confidence in them will not be able to delegate effectively. Delegation is based on trust between superior and subordinates. Negative attitude towards subordinates obstructs delegation as superior lacks confidence in the ability of subordinates.
5. Unwillingness to set standards of control:
Having delegated the duties, managers remain accountable for overall performance of the work. They supervise the activities of subordinates to ensure that actual performance is in conformity with planned performance. A manager who fails to establish standards of control will not be able to effectively delegate to subordinates.
6. Personal factors:
Autocratic managers usually do not delegate to keep tight control over the activities of subordinates. Democratic leaders prefer to delegate as they believe in participation of employees in the decision-making process.
Managers usually follow past precedents in creating an environment friendly to delegation. If their managers delegate to them, they also trust their subordinates in making delegation effective. If their managers did not trust them in delegating the tasks, they also do not delegate the tasks further.
II. Barriers Related to Subordinates:
Subordinates present the following barriers to effective delegation:
1. Lack of confidence:
Some subordinates do not want to take responsibility for the fear of not being able to perform well. They lack confidence and do not want to take any risk. They prefer to depend on their bosses to make decisions.
2. Fear of making mistakes:
Some subordinates fear that if they make mistakes in carrying out the delegated responsibilities, their superiors will criticize them for unfavourable outcomes. This fear dissuades them from taking added responsibility.
3. Lack of incentives:
Motivation (through financial and non-financial incentives) makes delegation effective. Subordinates are reluctant to accept delegation in the absence of incentives.
4. Absence of access to resources:
If subordinates do not have access to resources (financial and non-financial) to carry out their work, they will not accept delegation of responsibilities. This happens when there is delegation of responsibility without commensurate authority.
5.Convenience:
Sometimes subordinates prefer the work is done by superiors rather than assuming responsibility for the same, for the sake of convenience. They simply want their bosses to make the decisions.
III. Barriers Related to Organisation:
The barriers related to organisation structure are as follows:
1. Size of the organisation:
A small-sized organisation will not have too many jobs to delegate to subordinates. It is, thus, not responsive to delegation of tasks.
2. No precedent of delegation:
Merely because organisations have not earlier been following the practice of delegation sometimes makes them continue with the practice of not delegating the jobs.
3. Degree of centralisation or decentralisation:
Efficient delegation is affected by the degree to which organisation distributes the decision-making power to various organisational units. A highly centralised organisation is obstructive to the process of effective delegation.
WAYS TO OVERCOME BARRIERS TO DELEGATION:
Barriers to delegation can be overcome through the following measures:
1. Accept the need for delegation:
When superiors are reluctant to delegate because they want to do everything themselves rather than allowing subordinates to do, they should realise the need for delegation. In fact, more the delegation, more successful will be an organisation.
Delegation multiplies the capacity of managers. What can be delegated must be delegated. Managers should do things which subordinates cannot do. This develops their core competence and also the organisation.
2. Develop confidence in subordinates:
Rather than feeling that subordinates are not capable of accepting responsibilities so that delegator does not take the risk of delegation, the delegator should understand that a man learns through mistakes and if he commits mistakes, he shall try to find out solutions to the problem also. If subordinates make mistakes, superiors should guide them rather than not delegate at all.
Trust towards subordinates develops their commitment towards superiors. Committed subordinates develop loyalty, dedication and positive contribution towards organisational growth. Delegation should be a continuous process.
Managers should appreciate the work of subordinates when they perform well. They should delegate them more tasks and express trust and confidence in them. This will boost their morale to perform better in future. Delegation will be effective in the system of rewards, not penalties.
3. Communication:
Where delegation becomes ineffective because subordinates do not have the information for making decisions, an effective system of communication should be developed so that information flows freely from superiors to subordinates. Well informed subordinates are an asset for the organisation. They can contribute to effective organisational decisions.
4. Motivation:
Subordinates should be motivated to accept the responsibilities by providing rewards (financial and non-financial) like recognition, status etc. Assigning the whole job to one person can be motivating as it reflects confidence in the subordinate. It also gives a sense of pride and satisfaction to the subordinate who works to earn the credit for successful completion of that task. Non-commitment towards work has to be converted into commitment through motivation — creating zeal, enthusiasm, ability and willingness to work.
5. Effective system of control:
Since ultimate responsibility for the work assigned is that of the delegator, he must ensure that subordinates perform well by setting achievable standards of performance against which actual performance shall be measured. Delegator should keep check on the activities of delegates rather than not delegate at all.
Though control helps in monitoring the activities of subordinates, it should not be strict in nature. Moderately lenient control system helps to achieve standards by control through exceptions. Major deviations should be spotted by managers and minor deviations should be corrected by the subordinates themselves. Control helps in avoiding misuse of delegated authority.
6. Choose the right person for the right job:
Lack of confidence in subordinates should be overcome by dividing the workload into sub-units and assigning each sub-unit to persons most suitable for performing them. The person selected should be able to perform the task assigned. If required, training facilities can be provided to increase their understanding of the work. Wrong selection of delegates can put the organisational operations to halt.
7. Freedom to subordinates:
When managers accept the need for delegation, they must also give freedom to make decisions with respect to the delegated tasks. Rather than not delegating at all or delegating less responsibility, for the fear of subordinates making mistakes, managers should give them authority to find solutions to their problems and learn not to make mistakes in future.
8. Clarity of tasks:
The responsibilities or the tasks delegated must be clearly defined in terms of results expected out of those tasks. Knowing what is exactly expected of them will enable the subordinates perform the delegated tasks better. Delegation is not done without purpose. It has to be properly planned to the objectives desired to be achieved through delegation. Delegation should be done to achieve specific results.
9. Match job with the abilities of subordinates:
‘Round pegs in the round holes’ makes delegation effective as the right job will be given to the right person. The task assigned should match the ability and the capacity of subordinates.
10. Open communication:
Though delegatees are given the authority to solve problems related to the assigned tasks, yet, they should be allowed to freely discuss the problems with their delegators. Open communication promotes delegation as both delegator and delegatees can trust each other, explain their reservations, develop confidence and security and make the need for delegation felt important for both. Work is delegated and also performed well — to the best of subordinate’s ability.
11. Monitor the critical deviations:
Subordinates may make mistakes, however efficient they are at work. The superiors should overlook minor deviations and monitor only major deviations in the tasks assigned. This promotes a sense of responsibility amongst the employees.
Principles of Effective Delegation
There are a few guidelines in form of principles which can be a help to the manager to process of delegation. The principles of delegation are as follows: -
- Principle of result excepted- suggests that every manager before delegating the powers to the subordinate should be able to clearly define the goals as well as results expected from them. The goals and targets should be completely and clearly defined and the standards of performance should also be notified clearly. For example, a marketing manager explains the salesmen regarding the units of sale to take place in a particular day, say ten units a day have to be the target sales. While a marketing manger provides these guidelines of sales, mentioning the target sales is very important so that the salesman can perform his duty efficiently with a clear set of mind.
- Principle of Parity of Authority and Responsibility- According to this principle, the manager should keep a balance between authority and responsibility. Both of them should go hand in hand.
According to this principle, if a subordinate is given a responsibility to perform a task, then at the same time he should be given enough independence and power to carry out that task effectively. This principle also does not provide excessive authority to the subordinate which at times can be misused by him. The authority should be given in such a way which matches the task given to him. Therefore, there should be no degree of disparity between the two.
3. Principle of absolute responsibility- This says that the authority can be delegated but responsibility cannot be delegated by managers to his subordinates which means responsibility is fixed. The manager at every level, no matter what is his authority, is always responsible to his superior for carrying out his task by delegating the powers. It does not means that he can escape from his responsibility. He will always remain responsible till the completion of task.
Every superior is responsible for the acts of their subordinates and are accountable to their superior therefore the superiors cannot pass the blame to the subordinates even if he has delegated certain powers to subordinates example if the production manager has been given a work and the machine breaks down. If repairmen is not able to get repair work done, production manager will be responsible to CEO if their production is not completed.
4. Principle of Authority level- This principle suggests that a manager should exercise his authority within the jurisdiction/framework given. The manager should be forced to consult their superiors with those matters of which the authority is not given that means before a manager takes any important decision, he should make sure that he has the authority to do that on the other hand, subordinate should also not frequently go with regards to their complaints as well as suggestions to their superior if they are not asked to do. This principle emphasizes on the degree of authority and the level upto which it has to be maintained.
Key Takeaways:
- Delegation of Authority means division of authority and powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of your job.
- Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.
Formal Organization
By the term formal organisation, we mean a structure that comes into existence when two or more people come together for a common purpose, and there is a legal & formal relationship between them. The formation of such an organisation is deliberate by the top level management. The organisation has its own set of rules, regulations, and policies expressed in writing.
The basic objective of the establishment of an organisation is the attainment of the organisation’s goal. For this purpose, work is assigned, and authorities are delegated to each member and the concept of division of labour and specialisation of workers are applied and so the work is assigned on the basis of their capabilities. The job of each is fixed, and roles, responsibilities, authority and accountability associated with the job is clearly defined.
In addition to this, there exists a hierarchical structure, which determines a logical authority relationship and follows a chain of command. The communication between two members is only through planned channels.
Types of formal organization structure
- Line Organization
- Line and Staff Organization
- Functional Organization
- Project Management Organization
- Matrix Organization
Definition of Informal Organization
An informal organisation is formed within the formal organisation; that is a system of interpersonal relationships between individuals working in an enterprise, that forms as a result of people meet, interact and associate with one another. The organisation is created by the members spontaneously, i.e. created out of socio-psychological needs and urge of people to talk. The organisation is featured by mutual aid, cooperation, and companionship among members.
In an informal organisation, there are no defined channels of communication, and so members can interact with other members freely. They work together in their individual capacities and not professional.
There is no defined set of rules and regulations that govern the relationship between members. Instead, it is a set of social norms, connections, and interaction. The organisation is personal i.e. no rules and regulations are imposed on them, their opinions, feelings, and views are given respect. However, it is temporary in nature, and it does not last long.
Key Differences Between Formal and Informal Organization
The difference between formal and informal organisation can be drawn clearly on the following grounds:
- Formal Organization is an organisation in which job of each member is clearly defined, whose authority, responsibility and accountability are fixed. Informal Organization is formed within the formal organisation as a network of interpersonal relationship when people interact with each other.
- Formal organisation is created deliberately by top management. Conversely, informal organisation is formed spontaneously by members.
- Formal organisation is aimed at fulfilling organisation’s objectives. As opposed to an informal organisation is created to satisfy their social and psychological needs.
- Formal organisation is permanent in nature; it continues for a long time. On the other hand, informal organisation is temporary in nature.
- The formal organisation follows official communication, i.e. the channels of communication are pre-defined. Unlike informal organisation, the communication flows in any direction.
- In the formal organisation, the rules and regulations are supposed to be followed by every member. In contrast to informal communication, there are norms, values, and beliefs, that work as a control mechanism.
- In the formal organisation, the focus is on the performance of work while in the case of an informal organisation, interpersonal communication is given more emphasis.
- The size of a formal organisation keeps on increasing, whereas the size of the informal organisation is small.
- In a formal organisation, all the members are bound by the hierarchical structure, but all the members of an informal organisation are equal.
Conclusion
An informal organisation is just opposite of a formal organisation. The principal difference between these two is that all the members of a formal organisation follow a chain of command, which is not in the case of an informal organisation. Moreover, there exists a superior-subordinate relationship (status relationship) in the former, whereas such relationship is absent in the latter because all the members are equal (role relationship).
Key Takeaways:
- Organizing is a process undertaken to accomplish objectives.
- A structure stands for the parts that are held together as a single whole on the basis of some relationship. In the context of strategic management, the term “structure” signifies a design that helps him to formulate and implement the strategies in an effective way.
Principles of organization, for sake of clarity of discussion and a far better comprehension of those, are classified in the following manner:
(I) Overall Principles:
(i) Principle of unity of objective
(ii)Principle of simplicity
(iii)Principle of flexibility
(II) Structural Principles:
(iv)Principle of division of work(v)Principle of functional definition
(vi)Principle of optimum departmentation
(vii) Principle of unity of direction
(viii) Span of management principle
(III) Operational Principles:
(ix) Principle of adequate delegation
(x) Scalar chain principle
(xi) Principle of unity of comment
(xii) Authority-level principle
Following may be a brief discuss each of the above-stated principles of organisation under appropriate categories:
(I) Overall Principles:
Under this classification, a number of the very fundamental principles of organization are included i.e. principles which are absolutely essential for an efficient and logical functioning of the organization.
A brief explanation of the principles under this category is as follows:
(i) Principle of unity of objective:
Very simply stated, this principle requires that individual and departmental objectives throughout the enterprise must be perfectly harmonized; which all objectives must be mutually supportive and collectively contributing to overall common objectives.
(ii) Principle of simplicity:
The observance of this principle requires that the management must, as far as possible, design a simple organizational structure. a straightforward structure facilitates a far better understanding of superior- subordinate relationships; and provides background for better co-operation among people.
(iii) Principle of flexibility:
While designing the organizational structure, the management must provide for in-built devices within the structure itself; which might facilitate changes within the organizational structure to be effected as and when environmental factors-internal and/or external- so demand.
(II) Structural Principles:
Structural principles of organization relate to those aspects of the organization, which have an impact on the structuring (or the development) of the organization; its fundamental design and shape.
Some of the important principles, during this context, could be the subsequent ones:
(iv) Principle of division of work:
Since the total work of the enterprise can't be performed by just one person; it's imperative that such work must be suitably divided among variety of persons. In fact, the total managerial work need to be divided among variety of managers; and the total operational work being divided among variety of operating personnel.
(v) Principles of functional definition:
The above stated principle implies that the role (or job) of each individual and of every department of the enterprise must be suitably defined, in terms of the-work content, the authority and facilities required for job performance and the relationship of the job with those of others, within the enterprise.
(vi) Principle of optimum departmentation:
There are some ways and bases for creating departments within an organization. Consistent with the principle of optimum departmentation, departments in an organization must be so created and maintained-as to facilitate the simplest attainment of the common objectives of the enterprise.
(vii) Principle of unity of direction:
The principle implies that every group of activities having the same objective must have just one overall head and just one overall or master plan.
As a principle of organization, this concept of unity of direction must be so embedded in designing the organizational structure that for every group of similar activities, there's a provision for only one overall head-having authority over all personnel performing a similar function, anywhere, in the organization.
(viii) Span of management principle:
The span of management principle is variously called as- the span of control or the span of supervision. However, the phrase ‘span of management’ is that the widest; including also the notions of span of control and span of supervision.
The span of management principle implies that there's a limit to the number of subordinates; whose work might be effectively managed (controlled or supervised) by a superior.
(III) Operational Principles:
Operational principles of organization can be suggested to be those which have a bearing on the running or functioning of the organization.
Some important principles, under this category, are as follows:
(ix) Principle of adequate delegation:
By the principle of adequate delegation, we mean that every managerial position be given adequate (or necessary or requisite) authority-to enable the holder of the position i.e. the manager to cope successfully with the wants of his job.
(x) Scalar chain principle:
Scalar chain implies a chain of superiors-ranging from the highest rank to the lowest rank-in a corporation . The scalar chain forms the base of authority-responsibility relationships among managers and subordinates, within the organisation; thus promoting mutual understanding among superiors and subordinates at different levels of the organization.
As a principle of organization, scalar chain principle requires its incorporation into the design of the organisation, for ensuring smooth running of the enterprise life.
(xi) Principle of unity of command:
The above-sated principle implies that an employee must receive orders and instructions, only from one superior, at a time. The observance of this principle is desirable for reasons of removing doubts and confusions from the mind of the employees; and for facilitating exact fixation of responsibility on individuals for the results expected of them.
(xii) Authority-level principle:
The authority-level principle implies that managers at particular levels within the management hierarchy must decide only those matters which fall within the purview of the authority vested in their managerial positions.
A natural extension of this principle is that if a manager at any level of the management hierarchy comes across a matter not covered by his authority; the matter must either be referred upwards within the hierarchy or pushed down the hierarchy at the acceptable level for decision.
Organizational Structure – Meaning and Definitions
A structure stands for the parts that are held together as a single whole on the basis of some relationship. In the context of strategic management, the term “structure” signifies a design that helps him to formulate and implement the strategies in an effective way.
Structure is very closely related to strategy and the environment, it is because the structure is a sub-mechanism or frame-work of relations or a sub-system that works under a supra system namely environment.
“Corporate Structure” or an “Organisational Structure” stands for the formal configuration between individuals and the group with regard to the allocation of tasks, responsibilities, and authority well within the organisation. An organisation structure is the way the tasks and sub- tasks needed to implement a strategy are arranged.
Organisation as a ‘Structure’ is the network of horizontal and vertical dimensions designed to accomplish the common objectives. It is the mechanism or the frame-work whereby people function and facilities are integrated to achieve preset goals. It is a group of people working together towards attaining the given goals.
Organizational Structure – Need and Importance
Sound organisation structure can contribute greatly to the survival continuity and stability of the enterprise.
The need and importance of organising and organisational structure can be understood more precisely on the basis of the following points:
1. Facilitates Administration:
Sound organisation helps in the performance of management functions like planning, staffing, directing and controlling. Inadequate organisation may result in duplication of work and efforts and some of the important operations may be left out. Sound organisation facilitates the performance of various managerial functions by division of labour, consistent delegation or job definition and clarity of authority and responsibility relationship.
2. Promoters Growth and Diversification:
Sound organisation designed on scientific principles can create conditions conductive to planned expansion and diversification of the activities of the enterprise. It can help in keeping the various activities under control and increase the capacity of the enterprise to undertake more activities.
3. Co-Ordination:
Organisation is an important means of bringing co-ordination among the various departments of the enterprise. It creates clear-cut relationship between the departments and helps in laying down balanced emphasis on various activities. It also provides for the channels of communication for the coordination of the activities of different departments.
4. Optimum Use of Technological Innovations:
A sound organisational structure is flexible to give adequate scope for the improvement in technology. It facilitates introducing changes in the enterprise by modifying the authority and responsibility relationship in the wake of new developments.
5. Optimum Use of Human Resources:
Sound organisation matches the jobs with the individuals and vice-versa. It ensures that every individual is placed on the job for which he is best suited. This helps in the better use of individuals working in the enterprise.
6. Stimulates Creative Thinking:
An organisational structure based on clear-cut demarcation of authority, higher range of responsibility, discretionary freedom granted to personnel, incentives offered for specialised work, etc. will certainly foster the spirit of constructive and creative thinking. Such an atmosphere will give an opportunity for the staff to display their hidden creative talents which, in turn, will lift the enterprise to achieve higher goals of business.
7. Training and Development:
An effective organisation facilitates delegation of authority which is an important device for training and developing the personnel. Delegation of authority is also an important means of directing the subordinates. It prepares them to take more responsibilities whenever need arises.
Peter Drucker has rightly remarked, “Good organisation structure does not by itself produce good performance, but a poor organisation structure makes good performance impossible, no matter how good the individual managers may be…. A good organisation structure… is not the only thing that matters in managing…. But the right organisation structure is necessary foundation; without it the best performance in all other areas of management will be ineffectual and frustrated.”
It may be noted that there is no single organisation structure that works best in all kinds of situations. While designing an organisation structure, the management must consider external environment, objectives and strategies of the enterprise, types of human resources and the nature of technology.
Organizational Structure – Top 3 Forms: Functional and Multidivisional, Geographical and Matrix Structure (With Advantages and Disadvantages)
1. Functional and Multidivisional Structure:
A functional structure consists of a CEO who is supported by functional managers belonging to production, marketing, purchase, finance, personnel, R&D, etc. This structure enables the achievement of functional excellence, efficiency and specialisation, but suffers from problems, such as, lack of product focus, long channels of communication, coordination problems, lack of importance given to overall corporate missions and objectives, and excessive involvement of the CEO in integrating decisions and actions across various functions.
As against this, the multidivisional structure (also called M – Form) consists of more than one operating division, each of which is a distinct business area. Here, the CEO delegates responsibilities for formulation and implementation of business-level strategies and managing day-to-day affairs to the respective divisional heads, thereby making the corporate office responsible for the development and implementation of the corporate-level strategy and for exercising strategic and financial controls.
Strategic control, as exercised by the corporate office, is defined as the process of target-setting and monitoring in relation to the key operating areas pertaining to each business division, which are otherwise autonomous. To do an effective job in this regard, the corporate office must have a proper understanding of the environment, strategy and operational issues relating to each distinct business area.
The financial controls, exercised by the corporate office ensure that each division achieves the target profit, cash-flows and ROI. Interdependence between the operating divisions (a normal feature in a company which has grown through a related diversification strategy) makes it difficult to exercise financial control, since attributing financial performance correctly to one or the other divisions may involve subjective discretion. This implies that there is a possibility of dilution of internal control when a firm pursues extensive product diversification using the resources of various divisions.
Of all the options available in the organisational structure, an M-Form is the one most used. Chandler identified this form of structure as an innovative response to problems of coordination and control which are normally faced in a functional structure. Other advantages include ease in evaluating business performance, less complexity in allocating financial resources, improved coordination, and availability of more time to the top management for concentrating on long-term strategic issues.
For diversified businesses (both related and unrelated), the M-Form structure is more useful vis-a-vis the functional structure, which works well when the firm is implementing single or dominant business strategies. Once an M-Form structure is put in place, a firm’s potential to enter a large number of diversified businesses (related/unrelated) increases.
Johnson and Scholes have listed the following advantages and disadvantages of functional and multidivisional structures:
FUNCTIONAL STRUCTURE:
Advantages:
a. The CEO in touch with entire operations,
b. Reduction/Simplification of control mechanisms,
c. Clarity of roles and responsibilities,
d. Specialists at senior and middle management levels, and
e. Efficiency and specialization.
Disadvantages:
i. Senior management overburdened with operational matters,
Ii. Lack of attention to strategic issues,
Iii. Difficulty in coping with diversity,
Iv. Coordination between different departments and functions become difficult, and
v. Inability to adapt to changes.
MULTIDIVISIONAL STRUCTURE:
Advantages:
a. Focus on each business area (product-market),
b. Ease of evaluation of unit performance,
c. Facilitates acquisition/divestment of units,
d. Helps in drawing attention of the senior management to strategic issues, and
e. Facilitates development of general management competencies.
Disadvantages:
i. Possible confusion with regard to the extent of centralisation and decentralization.
Ii. Inter-divisional conflict and resulting sub-optimisation.
Iii. Problems of setting transfer prices for inter-unit trading.
Iv. Duplication of resources.
v. Difficulty in coordination if there are too many divisions.
GEOGRAPHICAL STRUCTURE:
In a geographical structure, a firm’s overall geographical spread is divided into a certain number of homogeneous regions or territories, each headed by a regional or territorial head responding to the CEO. Each region, which deals with all the products of the company, is made by and large independent with the required resource support and is expected to pursue region specific strategies. Sometimes, a geographical structure is built-in within a functional or M-Form structure. For example, in cases where there are one or two centralised manufacturing facilities, the firm can have a functional structure below the CEO, but within the overall sales function, it can have a geographical structure.
MATRIX STRUCTURE:
A matrix structure is a combination of the structural options covered in (1) and (2) above. Such structures are chosen when there is a need for more than one consideration for designing the organisational structure (for example, there is no clear-cut preference for either functional specialisation or product-market focus or geographical thrust). Normally a matrix structure reflects the need to recognise the simultaneous importance of at least two dimensions, such as, (i) product focus as well as geographical thrust, or (ii) product focus as well as functional specialisation.
While there are certain advantages of a matrix structure, there are also certain disadvantages, as can be seen from the following:
Advantages:
a. Better quality of decision making since multiple perspectives are allowed to be built-in.
b. Face-To-Face contact helps in reducing the impact of bureaucracy.
c. Improved managerial motivation and development.
Disadvantages:
i. Dilution of priority, lack of ownership.
Ii. Confused/unclear job and task responsibilities.
Iii. Lack of focus in cost and profit responsibilities.
Iv. Potential for conflict within the teams.
If managed well, by clearly spelling out which arm of the matrix should lead, and duly supported by the right managerial mind set and competencies (for example, the managers should be capable of collaborating across the matrix and they should be comfortable to work under ambiguity), a matrix structure can deliver the desired results. It can improve the quality of decision making in situations where exclusive emphasis on one dimension (be it product, function or geographical) is likely to undermine the overall interest of the organisation.
Combination of Structural Forms:
Very few companies adopt one or the other of the above alternatives in their pure form. Further, no organisation adheres strictly to one particular type of structure for all times to come.
A host of factors, such as:
(i) The strategy the company wishes to follow,
(ii) Its history, tradition and culture,
(iii) The profile of people and their skill level,
(iv) Managerial competencies and motivation,
(v) Requirements of planning, evaluation and control,
(vi) The need for collaboration/liaison between various functional/product/geographical groups for optimum decision making, etc., determine what kind of structure will be appropriate for the firm.
Experience shows that in most cases, the organisation structure chosen after taking into account the just mentioned factors tends to be a mixed one, reflecting the features of more than one of the three types of structure described before.
References
- Principles & Practices of Management: L. M. Prasad
- Principles of Management: P. C. Tripathy & P.N. Reddy
