Function of Management

Organising
Dhwani Gandhi
 Concept
Once the plans have been laid down and objectives
specified therein, the next step is to organise resources in
a manner which leads to the accomplishment of objectives.

It ensures that efforts are directed towards the attainment

of goals laid down in the planning function in such a manner
that :
resources are used optimally &
people are able to work collectively and effectively
for a common purpose.
 Organising is a means for translating plans into action.

It leads to the creation of an organisational structure

which includes the designing of roles to be filled by
suitably skilled people &
defining the inter relationship between these roles so that
ambiguity in performance of duties can be eliminated.

This is important for

productive cooperation between the personnel &
for clarification of extent of authority, as well as
responsibility
for results and logical grouping of activities
 Meaning
Organising essentially implies a process which coordinates
human efforts, assembles resources & integrates both into
a unified whole to be utilised for achieving specified
objectives.

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 & desired results (goals).
 Process
01 Identification and division of work
work is divided into manageable activities so that
duplication can be avoided & the burden of work
can be shared among the employees.

02 Departmentalisation
activities of similar nature are grouped together to
facilitate specialisation called departmentalisation
Departments can be created using several criteria as
a basis.
 Process
03 Assignment of duties
departments are placed under the charge of an individual,
work is allocated according to their skills and competencies to
various employees for effective performance
The work must be assigned to those who are best fitted to
perform it well.

04 Establishing authority & reporting relationships

Each individual should also know who he has to take orders
from and to whom he is accountable.
helps to create a hierarchal structure and
helps in coordination amongst various departments
 Importance of Organising

Clarity in working 01 Benefits of

specialisation
relationships
07
02 Adaptation to
change

Expansion and
growth
06 03 administration
Effective

Optimum utilisation Development of

of resources 05 04 personnel
 Importance of Organising
systematic allocation of jobs
Benefits of specialisation enhances productivity
specific workers perform specific
job on a regular basis

Adaptation to change
allows a business enterprise to accommodate
changes in the business environment.
paves the way for smooth transition
provides much needed stability

Effective administration
provides a clear description of jobs and related duties.
helps to avoid confusion and duplication
Clarity in working relationships enables proper
execution of work
 Importance of Organising
leads to the proper usage of all
material, financial and human
resources
Avoidance of duplication of work Optimum utilisation
helps in preventing confusion & of resources
minimising the wastage of
resources and efforts.

stimulates creativity amongst the Development of

managers personnel
reduction in workload by delegation
reduces workload of managers
This gives them the time to explore areas
for growth & the opportunity to innovate
 Importance of Organising
Clarity in working relationships
removes ambiguity in transfer of Clarity in working
information & instructions relationships
helps in creating a hierarchical order,
enabling the fixation of responsibility
& authority

helps in the growth & Expansion and

diversification growth
by enabling it to deviate from
existing norms and taking up new
challenges.
 Organisation Structure
It is outcome of the organising process
An effective structure will result in increased profitability
Need for an adequate organisation structure is felt by an
enterprise whenever it grows in size or complexity.
stagnancy in organisational structure may prove to be
detrimental

WHY???
Peter Drucker emphasises on the
importance of having an appropriate
organisation structure when he says,
“organisation structure is an
indispensable means; and the wrong
structure will seriously impair
business performance and even
destroy it.”
 Span of Management
The span of management, to a large extent gives shape to the
organisational structure.

It refers to the number of subordinates that can be effectively

managed by a superior.

A proper organisation
structure is essential to
ensure a smooth flow of
communication and better
control over the operations
 Let’s understand with an Example
Sunita opened her own travel agency.

Objective : harmonious relationship between the customer

and the employees of the travel agency.
She divided the entire work of the agency into three subheads
based on the functions:

operations: sales : administration:

travel counsellor, Accounts executive Book Keeper, Cashier

reservation and and utility personnel.
ticketing and
customer care. There are 2 Types of Organisational Structure:
There are 2 Types of Organisational Structure:

Functional Structure
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.
These departments may be further divided into sections.

Example: divsion of work in manufacturing

concern - production, purchase, marketing,
accounts and personnel
Thus, a functional structure is an organisational
design that groups similar or related jobs together.
 Advantages of Functional Structure
Attention to different function Occupational Specialisation
ensures that different 06 01 emphasis is placed on
functions get due specific functions
attention
Promotes control
Effective training
&Coordination within
as the focus is only 05 02 a department
on a limited range because of similarity
of skills. in tasks performed

Minimum duplication Increases efficiency

of effort which results in 04 03
economies of scale and this managerial & operational
lowers cost. efficiency = increased profit.
 DISADVANTAGES
FUNCTIONAL STRUCTURE
Problems in Conflict of
01 coordination interests 03
as information has to be when the interests of two
exchanged across or more departments are
functionally differentiated not compatible
departments.
Leads to
02 Less importance to
overall objective inflexibility 04
people with same skills
objectives pursued by a and knowledge base may
functional head is given develop a narrow
more importance perspective
 Note : Inter-departmental conflicts can also
arise in the absence of clear separation of responsibility.

Suitability: most suitable when

size of organisation is large,
has diversified activities and operations
require a high degree of specialisation.
There are 2 Types of Organisational Structure:

Divisional Structure
every organisation performs a set of homogenous functions, as it
diversifies into varied product categories, the need for a more evolved
structural design is felt to cope with the emerging complexity.

comprises of separate business units or divisions.

Each unit has a divisional manager responsible for performance and

who has authority over the unit.

Generally, manpower is grouped on the basis of different products

manufactured.

Each division is self-contained as it develops expertise in all

functions related to a productline.
 Each division is multifunctional. HOW??
Organisation

DiVision DiVision DiVision

production, production, production,
marketing, finance, marketing, finance, marketing, finance,
purchase, etc. purchase, etc. purchase, etc.

are performed together to achieve a common goal.

In other words, within each division, the functional structure tends to

be adopted. Each division works as a profit center where the divisional
head is responsible for profit or loss.
 ADVANTAGES
DIVISIONAL STRUCTURE

Accountability Expansion and growth

Divisional heads are as new divisions can
accountable for be added without
profits. This provides interrupting the
existing operations
a proper basis for by merely adding
performance Product another divisional Flexibility
measurement. specialisation head & staff
Helps in the promotes flexibility &
development of varied initiative because each
skills in a divisional division functions as
head.
an autonomous unit
He gains experience in which leads to faster
all functions related to decision making.
a particular product.
 DISADVANTAGES
DIVISIONAL STRUCTURE
Conflict may arise among
different divisions Provides managers with the
with reference to authority
allocation of funds
authority to supervise all
further a particular activities related to a
division may seek to particular division.
maximise its profits at
the cost of other He may gain power & may
divisions. ignore organisational
interests.

Increase in costs
there may be a duplication of activities across products.
Providing each division with separate set of similar functions
increases expenditure.
Suitable for 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 Organisation
refers to the organisation structure
which is designed by the management
To enable smooth to accomplish a particular task.
functioning of the enterprise,
job description & rules and clearly specifies the boundaries of
procedures related to work authority and responsibility
processes have to be laid
down. This is done through there is a systematic coordination
the formal organisation. among the various activities to
achieve organisational goals.
The structure in a formal
organisation can be
functional or divisional.
 Features : Formal
Organisation

01 Specifies working
relations 04 Created intentionally
deliberately designed by the
This clarifies who top management to facilitate
has to report to whom the smooth functioning

02 A means to achieve
objectives 05 Each individual is
assigned specific job
as it lays down rules and
procedures essential for places more emphasis on
their achievement work to be performed than
interpersonal relationships

03 Coordinates &
Integrates
among the employees

Efforts of various
departments
 Easier to fix since mutual
responsibility relationships are
clearly defined.

Provides stability No confusion in

working relations
behaviour of as duties are specified.
employees can be This also helps in avoiding
fairly predicted since duplication of effort
there are specific
rules to guide them.

Unity of command
Effective accomplishment maintained through an
of goals established chain of
command.
by providing a framework for the
operations to be performed
 Limitations : Formal
Organisation

does not allow any does not provide a

Procedural delays
deviations complete picture
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 Informal Organisation
Interaction among people at work gives rise to a ‘network of social
relationships among employees’ called the informal organisation.

It 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.
 Informal Organisation
Informal organisation:
has no written rules,
is fluid in form & scope and
does not have fixed lines of communication.

Example: groups formed with common interest may be

those who take part in cricket matches on

Sundays,
meet in the cafeteria for coffee,
are interested in dramatics, etc.
 Features : Informal
Organisation

01 Originates from within

the formal organisation 04 Emerges spontaneously
and is not deliberately
as a result of personal created
interaction among employees

02 standards of
behaviour evolve 05 Has no definite strucure

from group norms rather because it is a complex

than officially laid down rules network of social
relationships among
members.
03 Independent channels
of communication
without specified direction of
flow of information
 enhances their job
satisfaction

It helps to fulfill Contributes

the social needs
faster spread of of the members towards fulfillment
information & and allows of organisational
quick feedback them to find like objectives
minded people.
Prescribed lines of by compensating for
communication inadequacies in the
are not followed. formal organisation
 Limitations : Informal
Organisation

Spreading of May bring negative Group Objectives

rumours results over Organisation
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 Delegation
No matter how capable a manager is, he/she cannot mnage to
do every task on his own.
The volume of work makes it impractical for him to handle it all
by himself.

Manager must delegate authority in order to:

meet desired goals
focus on objectives
ensure all work is timely completed

Delegation refers to the downward transfer of authority from a

superior to a subordinate.
 Delegation
Pre-requisite to the efficient functioning of an organisation because
it enables a manager to use his time on high priority activities.

Helps a manager to extend his area of operations as without it, his

activities would be restricted to only what he himself can do.

It satisfies the subordinate’s

need for recognition and
provides them with
opportunities to develop &
exercise initiative.

Delegation does not mean abdication. The manager shall still be

accountable for the performance of the assigned tasks.
The authority granted
to a subordinate can
be taken back and
redelegated to
another person.

According to Louis Allen, delegation is

the entrustment of responsibility and
authority to another and the creation
of accountability for performance.
 Elements of Delegation
Authority
01

01 02 02
Accountability
03
Responsibility
03
 Meaning Authority features

Concept arises from In the formal

established scalar organisation
chain which links the
authority originates
various job positions
and levels of an
by virtue of an
organisation. individual’s position
highest
refers to the right to
take decisions inherent
in a managerial
position to tell people
what to do and expect reduces
them to do it. successively
 Meaning Responsibility features
Arises from a superior– Responsibility flows
subordinate upwards,
relationship because
the subor-dinate is
bound to perform the
duty assigned to him
by his superior.
subordinate
For effective delegation responsible to
the authority granted his superior.
must be commensurate
with the assigned Responsibility is
responsibility. derived from authority
 Meaning Accountability features
Delegation of authority, It cannot be delegated
undoubtedly empowers and flows upwards, i.e.,
an employee to act for a subordinate will be
his superior but the accountable to a
superior would still be superior for satisfactory
accountable for the performance of work.
outcome.

Authority = delegated
Responsibility =accepted
then accountability subordinate
cannot be denied. accountable
to his
superior.
 Importance of Delegation
Better Effective
coordination management
6 1
Employee
Management
hierarchy 5 2 development

Facilitation of 4 3 Motivation of
growth employees
Importance of Delegation
Effective management
managers are able to function more efficiently as they
get more time to concentrate on important matters.
1
Employee development
employees get more opportunitiecs to utilise their talent &
2 this may give rise to latent abilities in them.
Thus, delegation helps by preparing better future managers.

Motivation of employees
3
It also has psychological benefits. Superior entrusting
subordinate with a task involves trust on the superior’s
part and commitment on the part of the subordinate.
 Importance of Delegation
Better coordination
clarity in reporting relationships help in
developing & maintaining effective coordination
6

Management hierarchy
5
The extent of delegated authority decides power
that each job position enjoys in the organisation.
4 3
Facilitation of growth
helps in the expansion of an organisation by providing
a ready workforce to take up leading positions
 Decentralisation
The manner in which decision making responsibilities
are divided among hierarchical levels.
Organisations in which decision
making authority lies with the top
management are termed as

De
centralised organisations

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sa
Organisation in which such

ali

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authority is shared with lower levels

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on
are decentralised organisations.

ce
De
Decision making authority is shared
with lower levels and is consequently
placed nearest to the points of action
in decentralisation.
 Decentralisation
Decentralisation refers to delegation of authority
throughout all the levels. Decision making authority is
pushed down the chain of command.

Centralisation when decision-making authority is

retained by higher management levels

Complete centralisation would imply concentration of all decision

making functions at the apex of the management hierarchy.
This would obviate the need for a management hierarchy.

Decentralisation decision-making authority is delegated

Complete decentralisation would imply the delegation of all
decision making functions to the lower level of the hierarchy and this
would obviate the need for higher managerial positions.
 Both the scenarios are unrealistic
An organisation can never be completely
centralised or decentralised.
As it grows in size and complexity , there is a tendency to move
towards decentralised decision making.

In large organisations
employees who are directly and
closely involved with certain
operations
tend to have more knowledge about
them than the top management
which may only be indirectly
associated with individual operations.

Hence, there is a need for a balance between these co-existing forces.

 Decentralisation
There are also less chances of information getting distorted
because it doesn’t have to go through long channels.

Decentralisation must always be balanced with

centralisation in areas of major policy decisions.
Importance of Decentralisation
Quick decision making
helps to promote helps to identify
self-reliance those who may not
and confidence be successful in
amongst the assuming greater
subordinates responsibility.

since decisions are taken

at levels which are
nearest to the points of
action and there is no
requirement for
approval from many
Develops initiative levels, the process is Develops managerial
among subordinates much faster. talent for the future
 Importance of Decentralisation
Relief to top awards greater autonomy
management Better control
to the lower levels.
This allows them to
function in a manner best
suited to their department
and fosters a sense of
competition.

diminishes the amount of makes it possible to

direct supervision evaluate performance at
exercised by a superior each level and the
over the activities of a departments can be
subordinate because individually held
they are given the accountable for their
freedom to act and Facilitates growth results.
decide