Organisation is the detailed arrangement of

work and working conditions in order to

perform the assigned activities in an effective

manner.

Meaning

Definition

• “it is the process of identifying and grouping

of the works to be performed, defining and

delegating responsibility and authority and

establishing relationships for the purpose of

enabling people to work most efficiently"

- Louis A. Allen

Purpose of organising

• Coordinates activities

• Cluster job into units

• It ensure optimum use of resource

• Establish relationship among individual groups

• It facilitates growth, creativity

CHARACTERISTICS OR FEATURES OF ORGANIZING OR ORGANIZATION

• Organisation is a process

• Organisation is a group of individuals

• Organisation is a “means” not an “end”

• Important function of management

• Related to objectives

NATURE OF ORGANIZING

• Division of work

• Common objectives

• Cooperative effort

• Communication

• Rules and regulations

• Dynamic element

IMPORTANCE OF ORGANIZING

• Specialization.

• Role clarity.

• Clarifies authority and power.

• Avoid duplication of work.

• Coordination.

• Source of support and security.

• Adaptation.

• Promotes human relations.

STEPS IN THE PROCESS OF ORGANIZING

1.Division of work

2.Grouping of jobs into departmentation

3.Assigning duties

6.Effective communication

5.Delegation of authority

4.Establishing authority and responsibility.

7.Coordination of activities

Steps of organizing

ORGANIZATION STRUCTURE

LINE ORGANIZATION

GENERAL MANAGER

PRODUCTION MANAGER

FINANCE MANAGER

MARKETING MANAGER

SUPERINTENDENT ASST.FINANCE MANAGERASST.MARKETING MANAGER

FOREMAN ACCOUNTANTSSALE

SUPERVISORS

WORKERS CLERKS SALESMAN

ADVANTAGES OF LINE ORGANIZATION

Easy to establish

Facilitates unity of command

Clear cut identification of authority & responsibility relationship

Ensures excellent discipline

DISADVANTAGES

Makes the superiors too overloaded with work Concentration of authority at the top Not suitable to big organizations Lack of communication

LINE & STAFF ORGANIZATIONS

BOARD OF DIRECTORS

Managing Director

Manager Division B

Manager Division C

Manager Division A

Executive committee Controller of

finance

Assistant to managing director

Advantages of line & staff organizations

• Specialized knowledge

• Reduction of burden

• Proper weightage

• Better decisions

• Flexibility

• Unity of command

Disadvantages • Conflict between the line & staff executives

• Allocation of duties

• Not accountable

• Difference between the orientation of the line & staff men

Line organization vs. Line & Staff organization

Line organization Line & staff organization

• Refers to those positions which have the responsibility for providing advice & service to the line in attainment of organizational objectives

• Have experts to assist & advice

• Always a risk of friction between line & staff

• Loose discipline

• Based upon planned specialization

• Refers to those positions which have the responsibility of achieving the primary objectives of the organization

• No experts to assist & advice

• No scope of friction between line & staff

• Strict discipline

• Not based upon planned specialization

Functional organization

Advantages

Specialization

Executive development

Reduction of workload

Scope for expansion

Better control

Disadvantages

• Violates the principle of unity of command

• Operation is complicated

• Los of overall perspective

• Lack of coordination

LINE organization VS.FUNCTIONAL organization

LINE organization

• The line of authority is vertical as it follow the principle of scalar chain

• Line managers are generalists

• Unity of command is followed

• Strict discipline

• It is suitable for small scale operations

FUNCTIONAL organization

• Line of authority is functional or diagonal. The functional manager has authority over his function wherever it is performed

• Functional managers are specialists

• Unity of command is not followed

• Loose discipline

• It is suitable for large scale operations

COMMITTEE structure

A committee structure is were a group of persons are entrusted in a task.

Types of committee structure :

1. Standing or permanent committee.2. Temporary or ad hoc committee.3. Executive committee.4. Advisory committee.5. Formal committee.6. Informal committee.

Merits of committee structure :

Proper control and coordination among individuals and departments.

Motivation through participation.

Check against misuse of power.

Demerits of committee structure :

Expensive to constitute a committee.

Time consuming and slow decision making.

Compromise decision.

Suppression of ideas.

Project structure

A project structure is one were various projects are undertaken. It varies from organisation to organisation depending on the project adopted. The time period also depends on the project as more time period is required for long term projects and vice versa. The team leader organises and coordinates all the actions and activities.

Merits of project structure :

Maximum utilisation of knowledge and skills.

Unity of command exists.

Fixation of individual responsibility.

Focuses attention on specific projects.

Ensures better coordination.

Demerits of project structure :

Pressure and uncertainity due to several opinions.

Difficulty in decision making.

Evaluation of performance is difficult due to difference in performance, work, and ability.

Matrix structure

A matrix structure is suitable where there are large number of small projects.Also called : - Multiple command system.- Linking pins.

Merits of matrix structure :

Best utilisation and allocation of resources.

Benefits coordination under each projects.

Promotes communication.

Permits high degree of flexibility and adaptability.

Demerits of matrix structure :

Is against the unity of command.

Quick decision making is not possible.

Gives scope for conflicts.

CONCEPTS OR PRINCIPLES OF ORGANIZING

Chain of command

• The order in which authority and power in an organization is wielded and delegated from top management to every employee at every level of the organization.

• Instructions flow downward along the chain of command and accountability flows upward.

• Henry Fayol is the main contributors.

ADVANTAGES

• Existence of clear reporting relationships

• Solve the problem of multiple masters

• Responsibility & accountability are clearly assigned

CHALLENGES

• This is not suitable where, the organisation needs faster decision making.

• Time consuming.

Work Specialization

Work specialization, refers to the degree to which an organization divides individual tasks into separate jobs.Job is broken down into steps, and a different person completes each step.

Individual employees specialize in doing part of an activity rather than the entire activity.

Advantages of specialization

• Each employee can be an expert to some degree.

• Task refinement by the specialist leads to higher levels of productivity.

• Work can be completed faster and more efficiently due to specialization.

• Gives employees a sense of pride and job security due to their specialized skills.

• All of the previously stated could lead to higher profit potential.

AUTHORITY

“ Authority is the right to order or command and is delegated from the superior to the subordinate his responsibilities.”

† Right or power to command and control.

† Granted to a position for achieving objectives.

† Exercised through persuasion or sanctions.

SOURCES OF AUTHORITY

The Formal Authority Theory

The Acceptance Theory

The Competency Theory

The Formal Authority Theory :-Authority is viewed as originating at the top of an organization and flows downward by the process of delegation.

The Acceptance Theory :-The authority is the power which is accepted by others.

The Competence Theory :- An individual derives authority because of his personal competence.

DELEGATION OF AUTHORITY

Delegation means devolution of authority on subordinates to make them perform the assigned duties or tasks.

COMPONENTS OF DELEGATIONi. Entrustment of Responsibility or Duty :-

Responsibility means the work or duties assigned to a person by virtue of his position in the organization.

ii. Granting of Authority :- Authority is the right or power granted to an individual to make possible the performance of work assigned.

iii. Creation of Obligation or Accountability :-Accountability is the obligation to carry out responsibility and exercise authority in terms of performance standards established.

ADVANTAGES OF DELEGATION

• Sharing of work-load

• Quick decision-making

• Motivation

• Training

• Better performance

• Better relations

WEAKNESS OF DELEGATION

WEAKNESS

SUPERIOR

Lack of trust in subordinates

Lack of Ability to Direct

Ineffective controls

SUBORDINATE

Lack of self confidence

Lack of incentives

Overburden with duties

ORGANIZATION

Inadequate planning

Lack of effective control mechanism

Defective organization structure

PRINCIPLES OF DELEGATION

• Assignment of Duties in terms of result Expected

• Clarification of Limits of Authority

• Parity of Authority and Responsibility

• Absoluteness of Accountability

• Authority Level Principle

• Unity of Command

• Scalar Chain

• Effective Communication

SPAN OF MANAGEMENTIt is also called as

span of control or span of supervision.

It refers to the number of employees that can be handled and controlled effectively by a single manager.

TWO TYPES OF SPAN

NARROW SPAN OF MANAGEMENT Tall organization. Manager oversees “few” subordinates. better communication. example : handicraft , ivory work , etc.

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WIDE SPAN OF MANAGEMENT Flat organization . Manager oversees “large” number of

subordinates. Less overhead cost of supervision . less personal contact example: repetitive jobs.

Narrow span wide spanof control of control

THEORY OF GRAICUNA’S

He was a French management consultant.

He followed a different path and distinguished three types of relationships between superior and subordinates.

THREE TYPES OF RELATIONSHIP

Direct relationship (superior has direct link with subordinates).

Direct group relationship(arises between manager and group of subordinates ).

Gross relationship ( relationship among subordinates).

DIRECT SINGLE RELATIONSHIP

DIRECT GROUP RELATIONSHIP

GROSS RELATIONSHIP

FACTORS DETERMING SPAN OF MANAGEMENT

Nature of work

Type of technology

Ability of the manager

Ability of subordinates

Degree of decentralization

Quality of planning

Rate of change

Communication techniques

CENTRALIZATION AND DECENTRALIZATION

CENTRALIZATION

According to Allen, “Centralization” is the systematic and consistent reservation of authority at central points in the organization”

The implication of centralization can be :-

• Reservation of decision making power at top level.

• Reservation of operating authority with the middle level managers.

• Reservation of operation at lower level at the directions of the top level.

DECENTRALIZATION

• According to Allen “Decentralization refers to the systematic effort to delegate to the lowest level of authority except that which can be controlled and exercised at central points”

• “Everything that increasing the role of subordinates is decentralization and that decreases the role is centralization”

DEPARTMENTATIONIt is a process of grouping individual

jobs into departmentation.

TYPES:

Departmentation by function.

Departmentation by products.

Departmentation by territory.

Departmentation by customers.

Departmentation by process.

Departmentation by time and numbers.

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Departmentation by FUNCTIONS

Deparmentation done by the functions.

Provides scope of specialization.Effective control over performance.Facilitates delegation of authority.

Interdepartmental conflicts.Difficulty in coordination of activities

MERITS & DEMERITS

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DEPARTMENTATION BY PRODUCTS

It is suitable for different lines of products.

MERITS & DEMERITS

Reduces problem of coordination.Performance evaluation can be done easily.It is flexible and adaptable to change .

There may be underutilization of plant capacity when the demand of product is not adequate.

TERRITORIAL DepartmentationUsed for large scale enterprises whose

activities are geographically spread over.

MERITS & DEMERITS

Better coordination of activities.Facilitates expansion of business to various regions

Due to geographical distance problem of communication.Coordination and control becomes less effective.

Departmentation By Customers

Each department will serve the particular type or class of customers.

MERITS & DEMERITS

Offer scope of specialization.

Enterprise gain ultimate knowledge about needs of various categories of customers.

Lead to duplication of activities.

DEPARTMENTATION BY PROCESS OR EQUIPMENT

The activities are grouped according to process or equipment.It is generally used in manufacturing industries.Lead to specialization.

No confusion.Proper utilization of manpower and machine engaged in

proper way.

TIME AND NUMBER DEPARTMENTATION

TIME:The activities or group on basis of time

EXAMPLE: Call centers or any factory.

NUMBER:The activities or group on basis of performance by certain number of persons.

Formal Organization

• The Formal Organization is a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability.

Louis Allen

• Formal Organization is a system of consciously coordinated activities of two or more persons toward a common objective.

Chester Barnard

Formal Organization

• The formal organization is a goal-oriented entity that exist to accurate the efforts of individuals and it refers to the structure of jobs and positions with clearly defined functions, responsibilities and

authorities

Formal Organization

Objectives of Formal Organization

• To facilitate the accomplishment of the goals of the organization

• To facilitate the co-ordinationof various activities

• To aid the establishment oflogical authority relationship

• To aid the establishment ofdivision of labor

• Create group cohesiveness

Characteristics of Formal Organization:

1. Well defined rules and regulation.

2. Determined objectives and policies.

3. Limitation on the activities of the individual.

cntd…

4. Strict observance of the principle of coordination.

5. Messages are communicated through vertical chain.

6. Status symbol.

Functions of FormalOrganization:

• Set specific Goals for organization

• Establishing working relationship

• Create group cohesiveness

• Organizational Development

• Discipline

• Human Resource Development

Advantages of Formal Organisation

• Systematic Working

• Achievement of Organisational Objectives

• No Overlapping of Work

• Co-ordination

• Creation of Chain of Command

• More Emphasis on Work

Limitations of FormalOrganization:

• Limited Flexibility

• Slowness of processing

• Communication Barrier

• Quality of decision

• Slowness in Problem

detection & processing

Types Of Formal Organisation

coercive organization• which maintains control through

force.

• Once you enter a coercive organization, you cannot leave without permission.

• The culture is one of strict obedience and order, and members are typically stripped of individuality and forced to conform.

• Eg. Prison and military

Utilitarian Organizations

• which maintains control through bartering.

• People join utilitarian organizations because they have something to gain.

• The culture is one of productivity and purpose.

• Members are compensated for their contributions.

• Colleges and universities are also examples of utilitarian organizations.

Normative Organizations

• which maintains control through shared moral commitment.

• Membership in normative organizations is purely voluntary.

• People join because they want to or because of a strong, positive sense of obligation.

• Members work together to promote an important social cause.

• Churches, political parties, and fraternities are examples of normative organizations.

An Informal organization is an aggregate of interpersonal relationships without any conscious purpose but which may contribute to joint results.

Chester Barnard

Informal organization is a network of interpersonal relationship that arise when people associate with one another .

Keith Davis

• The informal organization is the interlocking social structure that governs how people work together in practice. It is the aggregate of behaviors, interactions, norms, personal and professional connections through which work gets done and relationships are built among people who share a common organizational affiliation or cluster of affiliations.

Informal Leader-

• The leader of an informal organization is elected by the members of the groups for different reasons such as age, seniority, technical, competence, work location, and responsive personality, etc. depending upon the work situation.

Role of Informal Leader:

a) To help the group reach its goals, andb) To maintain and enhance group life.

Characteristics of Informal Organization:

• Evolving constantly

• Excellent at motivation

• Treats people as individuals

• Flexibility

• Difficult to pin down

• Essential for situations that change quickly orare not yet fully understood

Functions of InformalOrganization:

• Perpetuate the cultural and social values.

• Provide social status and satisfaction.

Functions of InformalOrganization:

• Provide social control

• Promote communication among members

Benefits of InformalOrganization:

• Better Total System

• Lighter workload for management

• Work group satisfaction

• A safety valve for emotions

• Cohesiveness

• Channel of employee communication

• To plan and act more carefully

• Encourage Cooperation

• Encourage improved management practice

Problems Associated withInformal Organization:

1) Resistance to change

2) Role conflict

3) Rumor

4) Conformity

5) Undermine discipline

6) Power politics

7) Interpersonal and

intergroup conflicts

Difference between.....BASIS FORMAL INFORMAL

Definition •has its own rules and regulation that must be followed by the members (employees and managers)• has a system of co-ordination and authority.

•does not have its own rules and regulation.•has no system of co-ordination and authoritydoesn't have any superior-subordinate relationship.•communication is done through the grapevine

Formed by formed by the top level management

formed by social forces within the formal organization

Rules and regulations The members have to follow certain rules and regulations. These rules are available in writing . They are made by a formal authority (superiors).

do not have to follow any rules and regulations

Cntd...BASIS FORMAL INFORMAL

Duties and responsibilities the duties, responsibilities, authority and accountability of each member is well-defined

there are no fixed duties, responsibilities, authority, accountability, etc. for the members

Goals or objectives The objectives or goals are specific and well-defined The main objectives includeproductivity, growth, and expansion

The objectives are not specific and well-defined They want to achieve friendship, security, common interest, individual and group satisfaction, etc

Benefits The members get financial benefits and perks like wages or salaries, bonus, travelling allowances, health insurance, etc.

The members get social and personal benefits like friend circle, community, groups, etc.

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