Unit III
Organizing
- Explain the characteristic and importance of organizing
In the words of Louis Allen “The process of identifying and grouping of the work to be performed, defining and delegating responsibility and authority and establishing a pattern of relationship for the purpose of enabling people to work most effectively together in accomplishing objectives.”
The main characteristics of organizing are as follows:
1) 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.
2) Group of individuals: 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.
3) 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 task of one individual must be co-ordinated with the tasks of others. Collectively these tasks at the final stage are called integration.
4) 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.
5) 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.
6) 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.
7) 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.
8) Responsibility: The manager who is provided with authority must made responsible. There must be a balance between authority and responsibility.
The importance of organizing:
1) Ensures co-ordination: Due to good organization structure, co-ordination is possible in the organization. Co-ordination refers to interlinking of actions of the subordinates by the superior. The activities of the various individuals, and departments are combined together to accomplish company goals.
2) Optimum utilization of resources: Organization ensures optimum utilization of resources – human, financial and physical resources. The resources are put to best possible use.
3) Facilitates effective management: A properly designed organization facilitates effective management. It avoids confusion, delays and duplication of work. The work is systematically divided and grouped into several sections or units, so as to achieve desired results.
4)Motivates personnel: A sound organization avoids confusion, misunderstandings and overlapping of functions, and as such employees are motivated to produce better results. This is mainly because of good relations existing between the superiors and their subordinates in the organization.
5) Facilitates delegation of authority: A good organization structure enables the superiors to delegate authority to the subordinates. The superiors are in a position to delegate the proper degree of authority to the right subordinates. Without proper delegation, it would not be possible to conduct the activities of the organization smoothly and quickly.
6) Encourages initiative and innovation: Due to effective delegation of authority, there is freedom of self-expression. The subordinates are encouraged to show their initiative, which helps the organization to excel and grow.
7) Technological improvements: Sound organizations have contributed to the technological developments. Through research and development, the organizations come with new methods, new machines, and techniques, which can be effectively used for business activities.
8) Facilitates growth: Sound organizations achieve good success. This enables the organization to grow and diversify. Large progressive firms are the direct outcome of the success of effective organizing.
2. Explain different types of authority
Line and Staff Organisational Structure:
Most large organisations belong to this sort of organisational structure. These organisations have direct, vertical relationships between different levels and also specialists liable for advising and assisting line managers. Such organisations have both line and staff departments. Staff departments provide line people with advice and assistance in specialized areas (for example, quality control advising production department).
Exhibit 10.5 illustrates the line and staff organisational chart. The line functions are production and marketing whereas the staff functions include personnel, quality control, research and development, finance, accounting etc. The staff authority of functional authority organisational structure is replaced by staff responsibility in order that the principle of unity of command isn't violated.
Three sorts of specialized staffs are often identified:
(I) Advising,
(ii) Service and
(iii) Control.
Some staffs perform only one of those functions but some may perform two or all the three functions. The primary advantage is that the use of expertise of staff specialists by the line personnel. The span of control of line managers are often increased because they're relieved of the many functions which the staff people perform to help the line.
Some advantages are:
(I) Even through a line and staff structure allows higher flexibility and specialization it's going to create conflict between line and staff personnel.
(ii) Line managers might not like staff personnel telling them what to do and how to do it even though they recognize the specialists’ knowledge and expertise.
(iii) Some staff people have difficulty adjusting to the role, especially when line managers are reluctant to simply accept advice.
(iv) Staff people may resent their lack of authority and this might cause line and staff conflict.
Features:
1. Line and staff have direct vertical relationship between different levels.
2. Staff specialists are accountable for advising and assisting line managers/officers in specialized areas.
3. These sorts of specialized staff are (a) Advisory, (b) Service, (c) Control e.g.,
(a) Advisory:
Management information system, Operation Research and Quantitative Techniques, industrial engineering, Planning etc
(b) Service:
Maintenance, Purchase, Stores, Finance, Marketing
(c) Control:
Quality control, Cost control, Auditing etc. Advantages
(I) Use of experience of staff specialists.
(ii) Span of control are often increased
(iii) Relieves line authorities of routine and specialized decisions.
(iv) No need for all round executives.
Disadvantages:
(I) Conflict between line and staff should arise.
(ii) Staff officers may resent their lack of authority.
(iii) Co-ordination between line and staff may become difficult.
Committee Organizational Structure Features:
(a) Formed for managing certain problems/situations
(b) Are temporary decisions.
Advantages:
1. Committee decisions are better than individual decisions
2. Better interaction between committee members results in better co-ordination of activities
3. Committee members are often motivated to participate in group decision making.
4. Group discussion may result in creative thinking.
Disadvantages:
1. Committees may delay decisions, consume more time and hence costlier.
2. Group action may result in compromise and indecision.
3. ‘Buck passing’ may result.
Staff or Functional Authority Organisational Structure:
The jobs or positions in an organization are often categorized as:
(i) Line position:
A position within the direct chain of command that's responsible for the achievement of an organisation’s goals
(ii) Staff position:
A position intended to produce expertise, advice and support for the line positions.
The line officers or managers have the direct authority (known as line authority) to be exercised by them to attain the organizational goals. The staff officers or managers have staff authority (i.e., authority to advice the line) over the line. This is often also called functional authority.
An organization where staff departments have authority over line personnel in narrow areas of specialization is understood as functional authority organization. Exhibit 10.4 illustrates a staff or functional authority organizational structure.
In the line organization, the line managers can't be experts in all the functions they're required to perform. But within the functional authority organisation, staff personnel who are specialists in some fields are given functional authority (The right of staff specialists to issue orders in their own names in designated areas).
The principle of unity of command is violated when functional authority exists i.e., a worker or a group of workers may need to receive instructions or orders from the line supervisor also as the staff specialist which can result in confusion and therefore the conflicting orders from multiple sources may result in increased ineffectiveness. Some staff specialists may exert direct authority over the line personnel, instead of exert advice authority (for example, quality control inspector may direct the worker also as advise in matters related to quality).
While this sort of organisational structure overcomes the disadvantages of a pure line organisational structure, it's some major disadvantages. They are:
(i) the potential conflicts resulting from violation of principle of unity of command and
(ii) the tendency to stay authority centralized at higher levels within the organisation.
3. Explain decentralization
Merits of Decentralization:
1) Light Burden on Top Management –
Under decentralisation, there's light burden on top management; as much of the management work is passed on to lower levels of management.
2) Organisational Growth Facilitated –
Decentralisation facilities organisational growth. Dynamic and talented managers at lower levels coupled with power, can easily conceive of and implement growth strategies, of course, in consultation with top management. In fact, a trend towards decentralisation has gained momentum to deal with requirements of growth.
3) Higher Status of Lower Level Managers –
Decentralisation adds to the status of lower level managers. In fact, everything which goes to extend the status of lower level managers may be a measure of decentralisation. With enhanced status, lower level managers have more motivation to work.
4) Democratic Management –
Decentralisation results in democratic features in organisational functioning. In fact, under decentralisation, management decision-making power gets divided among a large number of lower rank managers. This phenomenon puts restraints over the dictatorial use of powers by the top management.
5) Initiative Encouraged –
Decentralisation encourages the exercise of initiative on a part of lower level managers. They can plan and execute their innovative plans, for the overall betterment of organisational life. Their creativity and innovative skills have full scope within the organisation. That's why; many decentralised enterprises have progressed plenty, in some cases.
6) Quick Decision-Making –
In decentralizations, there's quick decision-making. For one thing, lower level managers have comparatively limited managerial work, as they need to attend to only their own departmental problems. And for another, they have not sought approval of upper management for decision-making on issues, that authority has been decentralised to them.
7) Superior Decision-Making –
Under decentralisation, decision-making is superior, within the sense that lower level managers are close to the situational factors, within the context of which decisions have to be made. In fact, they practically affect situational factors and develop a far better sense of their appreciation and tackling.
8) Managerial Development Facilitated –
Decentralisation, may be a systematic way of training and developing managers for higher managerial positions. This philosophy more or less does away with the problem of managerial succession.
9) Management by Exception Facilitated –
Decentralisation facilitates the policy of management by exception. By retaining authority for strategic decision-making with itself, top management can decentralize substantial authority for operational management purposes to lower level managers.
10) Rational Planning –
Under decentralisation, rational planning is completed by lower level managers. They have comparatively little ambition and ego and care more for attainment of their departmental objectives through designing and implementing rational plans.
Limitations of Decentralisation:
1) Lack of Consistency in Decision-Making –
In decentralisation, there's a lack of consistency in decision-making; because an outsized number of managers at lower levels may decide an equivalent issue in diverse manners – despite operating within the organisational policy framework. Accordingly, problems of co-ordination are accentuated.
2) Weak Top Management –
Under decentralisation, top management is quite weak; as most of its powers are given away among lower levels of management. It's not during a position to provide outstanding leadership to the organisation, due to its reduced powers.
3) Higher Costs of Administration –
In a decentralised set-up, the cost of administration is higher; because to control the decentralised units, a large number of managers is necessitated.
4) Narrow Approach to Managing –
In decentralisation, the managers of decentralised units have, usually, a narrow outlook to managing. For them, their own departmental interests are supreme – as against the overall interests of the entire organisation.
5) Encouraging Inter-Departmental Conflicts –
Decentralisation encourages inter-departmental conflicts; because different departmental managers take decisions in their own unique manners and styles, by virtue of, their vast powers and hell look after departmental co-ordination and co-operation.
6) Risky Decision-Making –
In decentralisation, lower level managers, due to their less experience, wisdom and narrow outlook are less mature in decision-making. Sometimes, under decentralisation such risky decisions could be taken as might endanger the very survival of the business enterprise.
7) Loss of Control by Top Management –
In decentralisation, top management’s control over the organisation is loosened; as its substantial powers are passed on to the lower levels of management.
8) Less than Optimum Utilisation of Resources –
Under decentralisation, there may be, at times, but optimum utilisation of resources; because the same set of activities may be duplicated in various decentralised units – resulting in wastage of precious organisational resources.
9) Inefficient Handling of Emergencies –
In decentralisation, lower level management could also be frightened by emergencies and run to hunt the shelter and guidance of top management for handling emergency situations. Failure to effectively affect emergencies by lower level management, may tell upon the survival and prosperity of the entire enterprise.
10) Unsuitable within the Present-Day Environmental Scenario –
Present-day environmental scenario makes decentralisation impractical. For taking sound decisions under these circumstances, top management cannot provide specialists to each Tom, Dick or Harry manager at lower levels within the organisation, due to financial implications.
4. Explain delegation
It is a vital managerial practice of getting things done through others by sharing authority with them.
In any typical organisation, the policy and strategic decisions are taken by Board of Directors and actual implementation of those is entrusted to the Chief Executive.
However, the chief executive alone cannot do the whole work.
He cannot even supervise the work of all individuals working in several departments. He can pass on some portions of his authority to different departmental managers and commit them to specific tasks of supervision and operation. This process is known as delegation of authority.
“Delegation means in short the passing on the opposite of a share within the four elements of the management.” —E. F. L. Brech
“Delegation means assigning work to others and giving them authority to do it.” —F. G. Moore
“Delegation is an act of comparing authority by some higher source of authority.”
“Delegation means conferring authority from one executive or organisational unit to another so as to accomplish particular assignment.” —George R. Terry
Process of Delegation of Authority:
Delegation process involves the subsequent three steps (Fig. 7.1):
STEP-I: Assignment of Work:
The first step in delegation is that the assignment of work or duty to the subordinate i.e., delegation of authority. The superior asks his subordinate to perform a particular task during a given period of time. It's the outline of role assigned to the subordinate. Duties in terms of functions or tasks to be performed constitute the basis of delegation process.
STEP-II: Granting of Authority:
The grant of authority is Fig. 7.1 Process of delegation the second element of the dele authority to the subordinate in order that the assigned task is accomplished. The delegation of responsibility without authority is meaningless. The subordinate can only accomplish the work when he has authority required for completing that task. Authority comes from responsibility.
STEP-III: Creation of Accountability:
Accountability is that the obligation of a subordinate to perform the duty assigned to him. The delegation creates an obligation on the subordinate to accomplish the task assigned to him by the superior. When a work is assigned and authority is delegated then the accountability is that the by-product of this process. The authority is transferred in order that a particular work is completed as desired. This suggests that delegator has got to ensure the completion of assigned work. Authority flows downward whereas accountability flows upward.
Importance of Delegation:
Delegation of authority is widely recognised as an art of getting best results. It reduces the burden on top executives by relieving them of the both elation of taking routine decisions. This may help them in concentrating on vital aspects of management.
Delegation enables quick decisions concerning various matters because the authority of decision making has been distributed to numerous people. Granting of authority to subordinates motivates the superiors to perform their duties well. Delegation helps in maintaining healthy relationship between the executives and his subordinates by clearly defining the authority and responsibility of subordinates.
In general, the importance of delegation is often summarized as:
(a) Delegation results in better decisions.
(b) Delegation relieves the manager from heavy work load.
(c) Delegation helps to boost the motivation and morale of subordinates.
(d) Delegation accelerates decision making.
(e) Delegation facilitates training of subordinates.
(f) Delegation creates a proper organization structure
5. Explain formal and informal structure
Formal Structure:
Definition
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 shows the job to be performed by every individual, the authority, responsibility assigned to every individual, the superior- subordinate relationship and the designation of every individual in the organisation. The managers created this structure for achievement of organisational goal.
Features of formal structure
- The process of organising created the formal structure intentionally
- The purpose of formal organisation structure is achievement of organisational goal.
- Each individual is assigned a specific job in formal structure
- Formal organisational structure results in creation of superior-subordinate relations
- Formal organisational structure creates a scalar chain of communication in the organisation
Informal Structure:
An informal organisation is that the set of evolving relationships and patterns of human interaction within an organisation which aren't officially presented. Alongside the formal organisation, an informal organisation structure exists which consists of informal relationships created not by officially designated managers but by organisational members at every level. Since managers cannot avoid these informal relationships, they need to be trained to deal with it.
The informal organisation has the subsequent characteristics
(i) Its members are joined together to satisfy their personal needs (needs for affiliation, friendship etc.
(ii) It's continuously changing: The informal organisation is dynamic.
(iii) It involves members from various organisational levels.
(iv) It's affected by relationship outside the firm.
(v) It's a pecking order: certain people are assigned greater importance than others by the informal group.
Benefits of Informal Organisation:
(i) Assists in accomplishing the work faster.
(ii) Helps to remove weakness within the formal structure.
(iii) Lengthens the effective span of control.
(iv) Compensation for violations of formal organisational principles.
(v) Provides a further channel of communication.
(vi) Provides emotional support for workers.
(vii) Encourages better management.
Disadvantages of informal organization:
(i) May work against the purpose of formal organisation.
(ii) Reduces the degree of predictability and control.
(iii) Reduces the number of practical alternatives.
(iv) Increases the time required to finish activities.
6. Explain principles of organizing and network organizing structure
Principles of Organizing
- Work specialisation – it is also called as division of labour. This principle of organising implies that if the workers are given a specialized task to do, they will become more skilful and efficient rather than in broader range of task. This promotes efficiency of workforce and increases productivity. Division of work helps in increasing the speed and accuracy of the workforce.
2. Authority - Management should be given authority to give orders to the subordinates, in order to get things done in an organization. Without any authority managers would lack the ability to get the work carried out. The responsibility can be traced back from performance and it is therefore necessary to make agreements about this. In other words, authority and responsibility go together and they are two sides of the same coin.
3. Delegation - Authority is said to be delegated when discretion is vested in a subordinate by a superior. Delegation is the downward transfer of authority from a manager to a subordinate. Superiors or managers cannot delegate authority they do not have, however, high they may be in the organizational hierarchy.
4. Chain of command - It is based on the two principles of Unity of command and Scalar Principle. Unity of command - This principle states that every individual employee should receive order from one manager and they are answerable to that manager. If more managers give task to the employees than this may create confusion which leads to conflicts for employees and will hamper the smooth functioning of the organization. Saclar chain –
This principle states the hierarchy of an organization. Hierarchy represents the clear line of authority from top to bottom and all managers at all levels. This leads to clear chain of communication existing between employees and superiors.
5. Span of control - Span of control refers to the number of employees who report to one manager. It is the number of direct reporters that a manager has and whose results he is accountable for.
Network Organization Structure
A network structure is the one in which more than one organization combine to produce a good or provide a service.
These organizations can either get into a partnership for a particular venture, or one organization can hire others to handle one or more of its functions (outsourcing), for example, marketing, production, sales and so on.
Benefits of network structure
- Setting up a department and running it is much more expensive than outsourcing that function.
- By outsourcing work, an organization is in a flexible position.
- By outsourcing work, an organization can have a clearer focus on what it does the best.
Drawbacks
- When a firm indulges in a network structure, it gets more spread out. As the network of an organization grows, it gets more and more difficult to control such a widespread network
- The organisation might be sacrificing profit that you could have earned by yourself if you had done that outsourced work yourself.
7. Explain line and staff organizing structure
Line and Staff Organisational Structure:
Most large organisations belong to this sort of organisational structure. These organisations have direct, vertical relationships between different levels and also specialists liable for advising and assisting line managers. Such organisations have both line and staff departments. Staff departments provide line people with advice and assistance in specialized areas (for example, quality control advising production department).
Exhibit 10.5 illustrates the line and staff organisational chart. The line functions are production and marketing whereas the staff functions include personnel, quality control, research and development, finance, accounting etc. The staff authority of functional authority organisational structure is replaced by staff responsibility in order that the principle of unity of command isn't violated.
Three sorts of specialized staffs are often identified:
(I) Advising,
(ii) Service and
(iii) Control.
Some staffs perform only one of those functions but some may perform two or all the three functions. The primary advantage is that the use of expertise of staff specialists by the line personnel. The span of control of line managers are often increased because they're relieved of the many functions which the staff people perform to help the line.
Some advantages are:
(I) Even through a line and staff structure allows higher flexibility and specialization it's going to create conflict between line and staff personnel.
(ii) Line managers might not like staff personnel telling them what to do and how to do it even though they recognize the specialists’ knowledge and expertise.
(iii) Some staff people have difficulty adjusting to the role, especially when line managers are reluctant to simply accept advice.
(iv) Staff people may resent their lack of authority and this might cause line and staff conflict.
Features:
1. Line and staff have direct vertical relationship between different levels.
2. Staff specialists are accountable for advising and assisting line managers/officers in specialized areas.
3. These sorts of specialized staff are (a) Advisory, (b) Service, (c) Control e.g.,
(a) Advisory:
Management information system, Operation Research and Quantitative Techniques, industrial engineering, Planning etc
(b) Service:
Maintenance, Purchase, Stores, Finance, Marketing
(c) Control:
Quality control, Cost control, Auditing etc. Advantages
(I) Use of experience of staff specialists.
(ii) Span of control are often increased
(iii) Relieves line authorities of routine and specialized decisions.
(iv) No need for all round executives.
Disadvantages:
(I) Conflict between line and staff should arise.
(ii) Staff officers may resent their lack of authority.
(iii) Co-ordination between line and staff may become difficult.
Committee Organizational Structure Features:
(a) Formed for managing certain problems/situations
(b) Are temporary decisions.
Advantages:
1. Committee decisions are better than individual decisions
2. Better interaction between committee members results in better co-ordination of activities
3. Committee members are often motivated to participate in group decision making.
4. Group discussion may result in creative thinking.
Disadvantages:
1. Committees may delay decisions, consume more time and hence costlier.
2. Group action may result in compromise and indecision.
3. ‘Buck passing’ may result.
8. Explain line and staff and functional structure
Line and Staff Organisational Structure:
Most large organisations belong to this sort of organisational structure. These organisations have direct, vertical relationships between different levels and also specialists liable for advising and assisting line managers. Such organisations have both line and staff departments. Staff departments provide line people with advice and assistance in specialized areas (for example, quality control advising production department).
Exhibit 10.5 illustrates the line and staff organisational chart. The line functions are production and marketing whereas the staff functions include personnel, quality control, research and development, finance, accounting etc. The staff authority of functional authority organisational structure is replaced by staff responsibility in order that the principle of unity of command isn't violated.
Three sorts of specialized staffs are often identified:
(I) Advising,
(ii) Service and
(iii) Control.
Some staffs perform only one of those functions but some may perform two or all the three functions. The primary advantage is that the use of expertise of staff specialists by the line personnel. The span of control of line managers are often increased because they're relieved of the many functions which the staff people perform to help the line.
Some advantages are:
(I) Even through a line and staff structure allows higher flexibility and specialization it's going to create conflict between line and staff personnel.
(ii) Line managers might not like staff personnel telling them what to do and how to do it even though they recognize the specialists’ knowledge and expertise.
(iii) Some staff people have difficulty adjusting to the role, especially when line managers are reluctant to simply accept advice.
(iv) Staff people may resent their lack of authority and this might cause line and staff conflict.
Features:
1. Line and staff have direct vertical relationship between different levels.
2. Staff specialists are accountable for advising and assisting line managers/officers in specialized areas.
3. These sorts of specialized staff are (a) Advisory, (b) Service, (c) Control e.g.,
(a) Advisory:
Management information system, Operation Research and Quantitative Techniques, industrial engineering, Planning etc
(b) Service:
Maintenance, Purchase, Stores, Finance, Marketing
(c) Control:
Quality control, Cost control, Auditing etc. Advantages
(I) Use of experience of staff specialists.
(ii) Span of control are often increased
(iii) Relieves line authorities of routine and specialized decisions.
(iv) No need for all round executives.
Disadvantages:
(I) Conflict between line and staff should arise.
(ii) Staff officers may resent their lack of authority.
(iii) Co-ordination between line and staff may become difficult.
Committee Organizational Structure Features:
(a) Formed for managing certain problems/situations
(b) Are temporary decisions.
Advantages:
1. Committee decisions are better than individual decisions
2. Better interaction between committee members results in better co-ordination of activities
3. Committee members are often motivated to participate in group decision making.
4. Group discussion may result in creative thinking.
Disadvantages:
1. Committees may delay decisions, consume more time and hence costlier.
2. Group action may result in compromise and indecision.
3. ‘Buck passing’ may result.
Staff or Functional Authority Organisational Structure:
The jobs or positions in an organization are often categorized as:
(iii) Line position:
A position within the direct chain of command that's responsible for the achievement of an organisation’s goals
(iv) Staff position:
A position intended to produce expertise, advice and support for the line positions.
The line officers or managers have the direct authority (known as line authority) to be exercised by them to attain the organizational goals. The staff officers or managers have staff authority (i.e., authority to advice the line) over the line. This is often also called functional authority.
An organization where staff departments have authority over line personnel in narrow areas of specialization is understood as functional authority organization. Exhibit 10.4 illustrates a staff or functional authority organizational structure.
In the line organization, the line managers can't be experts in all the functions they're required to perform. But within the functional authority organisation, staff personnel who are specialists in some fields are given functional authority (The right of staff specialists to issue orders in their own names in designated areas).
The principle of unity of command is violated when functional authority exists i.e., a worker or a group of workers may need to receive instructions or orders from the line supervisor also as the staff specialist which can result in confusion and therefore the conflicting orders from multiple sources may result in increased ineffectiveness. Some staff specialists may exert direct authority over the line personnel, instead of exert advice authority (for example, quality control inspector may direct the worker also as advise in matters related to quality).
While this sort of organisational structure overcomes the disadvantages of a pure line organisational structure, it's some major disadvantages. They are:
(iii) the potential conflicts resulting from violation of principle of unity of command and
(iv) the tendency to stay authority centralized at higher levels within the organisation.
9. Explain the advantages of decentralization
Merits of Decentralization:
11) Light Burden on Top Management –
Under decentralisation, there's light burden on top management; as much of the management work is passed on to lower levels of management.
12) Organisational Growth Facilitated –
Decentralisation facilities organisational growth. Dynamic and talented managers at lower levels coupled with power, can easily conceive of and implement growth strategies, of course, in consultation with top management. In fact, a trend towards decentralisation has gained momentum to deal with requirements of growth.
13) Higher Status of Lower Level Managers –
Decentralisation adds to the status of lower level managers. In fact, everything which goes to extend the status of lower level managers may be a measure of decentralisation. With enhanced status, lower level managers have more motivation to work.
14) Democratic Management –
Decentralisation results in democratic features in organisational functioning. In fact, under decentralisation, management decision-making power gets divided among a large number of lower rank managers. This phenomenon puts restraints over the dictatorial use of powers by the top management.
15) Initiative Encouraged –
Decentralisation encourages the exercise of initiative on a part of lower level managers. They can plan and execute their innovative plans, for the overall betterment of organisational life. Their creativity and innovative skills have full scope within the organisation. That's why; many decentralised enterprises have progressed plenty, in some cases.
16) Quick Decision-Making –
In decentralizations, there's quick decision-making. For one thing, lower level managers have comparatively limited managerial work, as they need to attend to only their own departmental problems. And for another, they have not sought approval of upper management for decision-making on issues, that authority has been decentralised to them.
17) Superior Decision-Making –
Under decentralisation, decision-making is superior, within the sense that lower level managers are close to the situational factors, within the context of which decisions have to be made. In fact, they practically affect situational factors and develop a far better sense of their appreciation and tackling.
18) Managerial Development Facilitated –
Decentralisation, may be a systematic way of training and developing managers for higher managerial positions. This philosophy more or less does away with the problem of managerial succession.
19) Management by Exception Facilitated –
Decentralisation facilitates the policy of management by exception. By retaining authority for strategic decision-making with itself, top management can decentralize substantial authority for operational management purposes to lower level managers.
20) Rational Planning –
Under decentralisation, rational planning is completed by lower level managers. They have comparatively little ambition and ego and care more for attainment of their departmental objectives through designing and implementing rational plans.
10. Explain the limitation of decentralization
1) Lack of Consistency in Decision-Making –
In decentralisation, there's a lack of consistency in decision-making; because an outsized number of managers at lower levels may decide an equivalent issue in diverse manners – despite operating within the organisational policy framework. Accordingly, problems of co-ordination are accentuated.
2) Weak Top Management –
Under decentralisation, top management is quite weak; as most of its powers are given away among lower levels of management. It's not during a position to provide outstanding leadership to the organisation, due to its reduced powers.
3) Higher Costs of Administration –
In a decentralised set-up, the cost of administration is higher; because to control the decentralised units, a large number of managers is necessitated.
4) Narrow Approach to Managing –
In decentralisation, the managers of decentralised units have, usually, a narrow outlook to managing. For them, their own departmental interests are supreme – as against the overall interests of the entire organisation.
5) Encouraging Inter-Departmental Conflicts –
Decentralisation encourages inter-departmental conflicts; because different departmental managers take decisions in their own unique manners and styles, by virtue of, their vast powers and hell look after departmental co-ordination and co-operation.
6) Risky Decision-Making –
In decentralisation, lower level managers, due to their less experience, wisdom and narrow outlook are less mature in decision-making. Sometimes, under decentralisation such risky decisions could be taken as might endanger the very survival of the business enterprise.
7) Loss of Control by Top Management –
In decentralisation, top management’s control over the organisation is loosened; as its substantial powers are passed on to the lower levels of management.
8) Less than Optimum Utilisation of Resources –
Under decentralisation, there may be, at times, but optimum utilisation of resources; because the same set of activities may be duplicated in various decentralised units – resulting in wastage of precious organisational resources.
9) Inefficient Handling of Emergencies –
In decentralisation, lower level management could also be frightened by emergencies and run to hunt the shelter and guidance of top management for handling emergency situations. Failure to effectively affect emergencies by lower level management, may tell upon the survival and prosperity of the entire enterprise.
10) Unsuitable within the Present-Day Environmental Scenario –
Present-day environmental scenario makes decentralisation impractical. For taking sound decisions under these circumstances, top management cannot provide specialists to each Tom, Dick or Harry manager at lower levels within the organisation, due to financial implications.
