UNIT 5: ORGANISING

TOPICS AS PER CBSE SYLLABUS

I. Organizing: Concept and importance
II. Organizing Process
III. Structure of organization- functional and divisional concept. Formal and informal organization – concept. Advantages,
disadvantages, suitability.
IV. Delegation: concept, elements and importance
V. Decentralization: concept and importance. Differentiate between delegation and decentralization.

I. MEANING
Organising can be defined as a process that initiates implementation of plans by clarifying jobs and working relationships and
effectively deploying resources for attainment of identified and desired results (goals).
IMPORTANCE
(i) Benefits of specialisation: Organising leads to a systematic allocation of jobs amongst the work force. Repetitive
performance of a particular task allows a worker to gain experience in that area and leads to specialization
(ii) Repetitive performance of a particular task allows a worker to gain experience in that area and leads to specialization
(iii) Optimum utilisation of resources: Avoidance of duplication of work helps in preventing confusion and minimising the
wastage of resources and efforts.
v) Effective administration: Organising provides a clear description of jobs and related duties. This helps to avoid confusion
and duplication
vi) Development of personnel: Organising stimulates creativity amongst the managers. Delegation also develops in the
subordinate the ability to deal effectively with challenges and helps them to realise their full potential.
vii) Expansion and growth: Organising helps in the growth and diversification of an enterprise by enabling it to deviate from
existing norms and taking up new challenges.
II. ORGANIZING PROCESS
(i) Identification and division of work: The work is divided into manageable activities so that duplication can be avoided and
the burden of work can be shared among the employees.
(ii) Departmentalisation: Once work has been divided into small and manageable activities then those activities which are
similar in nature are grouped together. Such sets facilitate specialisation. This grouping process is called departmentalisation.
(iii) Assignment of duties: Jobs are then allocated to the members of each department in accordance to their skills and
competencies. It is essential for effective performance that a proper match is made between the nature of a job and the
ability of an individual.
(iv) Establishing authority and reporting relationships: Each individual should also know who he has to take orders from and to
whom he is accountable.
STRUCTURE OF ORGANIZATION
An organisation structure provides the framework which enables the enterprise to function as an integrated unit by regulating
and coordinating the responsibilities of individuals and departments.
Types of Organisation Structures
The type of structure adopted by an organisation will vary with the nature and types of activities performed by an
organsation.
The organisational structure can be classified under two categories which are as follows:
(i) Functional structure and (ii) Divisional structure
FUNCTIONAL STRUCTURE
A functional structure is an organisational design that groups similar or related jobs together. Grouping of jobs of similar
nature under functional and organising these major functions as separate departments creates a functional structure. All
departments report to a coordinating head.
Advantages:
(a) A functional structure leads to occupational specialisation since emphasis is placed on specific functions. This promotes
efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve
performance.
(b) It promotes control and coordination within a department because of similarity in the tasks being performed.
(c) It helps in increasing managerial and operational efficiency and this results in increased profit.
(d) It leads to minimal duplication of effort which results in economies of scale and this lowers cost.
(e) It makes training of employees easier as the focus is only on a limited range of skills.
(f) It ensures that different functions get due attention.
Disadvantages:
(a) A functional structure places less emphasis on overall enterprise objectives than the objectives pursued by a functional
head.
(b) It may lead to problems in coordination as information has to be exchanged across functionally differentiated
departments.
(c) A conflict of interests may arise when the interests of two or more departments are not compatible Interdepartmental
conflicts can also arise in the absence of clear separation of responsibility.
(d) It may lead to inflexibility as people with same skills and knowledge base may develop a narrow perspective and thus,
have difficulty in appreciating by other point of view.
SUITABILITY
It is most suitable when the size of the organisation is large, has a diversified activities and operations require a high degree of
specialization
DIVISIONAL STRUCTURE
In a divisional structure, the organisation structure comprises of separate business units or divisions. Each unit has a divisional
manager responsible for performance and who has authority over the unit.
Advantages:
(a) Product specialisation helps in the development of varied skills in a divisional head and this prepares him for higher
positions.
(b) Divisional heads are accountable for profits, as revenues and costs related to different departments can be easily identified
and assigned to them. This provides a proper basis for performance measurement. It also helps in fixation of responsibility
in cases of poor performance of the division and appropriate remedial action can be taken.
(c) It promotes flexibility and initiative because each division functions as an autonomous unit which leads to faster decision
making.
(d) It facilitates expansion and growth as new divisions can be added without interrupting the existing operations by merely
adding another divisional head and staff for the new product line.
Disadvantages:
(a) Conflict may arise among different divisions with reference to allocation of funds and further a particular division may seek
to maximise its profits at the cost of other divisions.
(b) It may lead to increase in costs since there may be a duplication of activities across products. Providing each division with
separate set of similar functions increases expenditure.
c) It provides managers with the authority to supervise all activities related to a particular division. In course of time, such a
manager may gain power and in a bid to assert his independence and may ignore organisational interests.
SUITABILITY:
Divisional structure is suitable for those business enterprises where a large variety of products are manufactured using
different productive resources. When an organisation grows and needs to add more employees, create more departments
and introduce new levels of management, it will decide to adopt a divisional structure.
FORMAL ORGANIZATION
Formal organisation refers to the organisation structure which is designed by the management to accomplish a particular task.
FEATURES (Read once)
(a) It specifies the relationships among various job positions and the nature of their interrelationship. This clarifies who has to
report to whom.
(b) It is a means to achieve the objectives specified in the plans, as it lays down rules and procedures essential for their
achievement.
(c) Efforts of various departments are coordinated, interlinked and integrated through the formal organisation.
(d) It is deliberately designed by the top management to facilitate the smooth functioning of the organisation.
(e) It places more emphasis on work to be performed than interpersonal relationships among the employees.
Advantages:
(a) It is easier to fix responsibility since mutual relationships are clearly defined.
(b) There is no ambiguity in the role that each member has to play as duties are specified. This also helps in avoiding
duplication of effort.
(c) Unity of command is maintained through an established chain of command.
(d) It leads to effective accomplishment of goals by providing a framework for the operations to be performed and ensuring
that each employee knows the role he has to play.
(e) It provides stability to the organisation. This is because behaviour of employees can be fairly predicted since there are
specific rules to guide them.
Limitations:
(a) The formal communication may lead to procedural delays as the established chain of command has to be followed which
increases the time taken for decision making.
(b) Poor organisation practices may not provide adequate recognition to creative talent, since it does not allow any
deviations from rigidly laid down polices.
(c) It is difficult to understand all human relationships in an enterprise as it places more emphasis on structure and work.
Hence, the formal organisation does not provide a complete picture of how an organisation works.
INFORMAL ORGANISATION
Informal organisation emerges from within the formal organisation when people interact beyond their officially defined roles.
When people have frequent contacts they cannot be forced into a rigid formal structure. Rather, based on their interaction
and friendship they tend to form groups which show conformity in terms of interest.
FEATURES (Read once)
(a) An informal organisation originates from within the formal organisation as a result of personal interaction among
employees.
(b) The standards of behaviour evolve from group norms rather than officially laid down rules and regulations.
(c) Independent channels of communication without specified direction of flow of information are developed by group
members.
(d) It emerges spontaneously and is not deliberately created by the management.
(e) It has no definite strucure or form because it is a complex network of social relationships among members.
ADVANTAGES
(a) Prescribed lines of communication are not followed. Thus, the informal organisation leads to faster spread of information
as well as quick feedback.
(b) It helps to fulfill the social needs of the members and allows them to find like minded people. This enhances their job
satisfaction since it gives them a sense of belongingness in the organisation.
(c) It contributes towards fulfillment of organisational objectives by compensating for inadequacies in the formal organisation.
DISADVANTAGES
(a) When an informal organisation spreads rumours, it becomes a destructive force and goes against the interest of the formal
organisation.
(b) The management may not be successful in implementing changes if the informal organisation opposes them. Such
resistance to change may delay or restrict growth.
c) It pressurises members to conform to group expectations.
DIFFERENCES:

DELEGATION
Delegation refers to the downward transfer of authority from a superior to a subordinate. Delegation helps a manager to
extend his area of operations as without it, his activities would be restricted to only what he himself can do.
Elements of Delegation
(i) Authority: Authority refers to the right of an individual to command his subordinates and to take action within the scope of
his position.
(ii) Responsibility: Responsibility is the obligation of a subor-dinate to properly perform the assigned duty. It arises from a
superior– subordinate relationship because the subor-dinate is bound to perform the duty assigned to him by his superior.
(iii) Accountability: Accountability implies being answerable for the final outcome. Once authority has been delegated and
responsibility accepted, one cannot deny accountability. It cannot be delegated and flows upwards, i.e., a subordinate will be
accountable to a superior.
Importance of Delegation: -
a) Effective management: By empowering the employees, the managers are able to function more efficiently as they get more
time to concentrate on important matters.
b) Employees development: Employee development: As a result of delegation, employees get more opportunitiecs to utilise
their talent and this may give rise to latent abilities in them.
c) Motivation of employees: Responsibility for work builds the self-esteem of an employee and improves his confidence. He
feels encouraged and tries to improve his performance further.
d) Facilitates organisational growth: Delegation helps in the expansion of an organisation by providing a ready workforce to
take up leading positions in new ventures.
e) Better Coordination: The elements of delegation, namely authority, responsibility and accountability help to define the
powers, duties and answerability related to the various positions in an organisation. This helps to avoid overlapping of duties
and duplication of effort as it gives a clear picture of the work being done at various levels.
f) Reduces the work load of managers because the work gets divided amongst various competent employees.
DECENTRALIZATION
Decentralisation refers to delegation of authority throughout all the levels of the organisation. Decision making authority is
shared with lower levels and is consequently placed nearest to the points of action.
IMPORTANCE
(i) Develops initiative among subordinates: Decentralisation helps to promote self-reliance and confidence amongst the
subordinates. This is because when lower managerial levels are given freedom to take their own decisions they learn to
depend on their own judgment.
(ii) Decentralisation gives them a chance to prove their abilities and creates a reservoir of qualified manpower.
Difference:

_______________________________________________________________________________________________