CHAPTER 4: ORGANIZING

INTRODUCTION

Organization is used in two different senses, in the first sense; it is used to denote the process
of organization. In the second sense, it is used to denote the result of that process, namely the
organization structure.

Using it in the first sense, organization is the process of defining and grouping the activities of
the enterprise and establishing the authority relationship among them. In performing
organizing function, the manager differentiates and integrates the activities of his/ her
organization. By differentiation is meant the process of departmentalization or segmentation of
activities on the basis of some homogeneity. Integration is the process of achieving unity of
effort among the various departments.

4.1 Definitions of Organizing

What to do and how to do have already been determines in the planning process. The result of
a good planning process is a detailed program of what actions are to be taken to accomplish
predetermines objectives, how long it will take, and where it will take place.

The next task becomes that of organizing. Organizing is the process of identifying and grouping
tasks to be performed, assigning responsibility and delegating authority and establishing
relationships for the purpose of enabling to work most effectively together in the
accomplishment of objectives.

4.2 The organizing process

Organizing is an ongoing managerial process whether forming a new organization, or

reorganizing the existing one, managers do take five fundamental steps.
1. Identification of objectives:- to reconsider the objectives established during planning and
identify the specific objectives to be pursued.
2. Determine the work activities necessary to accomplish objectives
This is identifying/ knowing all jobs that are going to be performed. i.e. creating a list of tasks to
be accomplished.

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3. Grouping and classifying of activities: once managers know what tasks must be done, they
Classify and group these activities into manageable work units. When managers group jobs that
are similar in terms of tasks, process, or skills they are grouping them by the principle of
functional similarity or similarity of activity.
4. Assign work and delegate appropriate authority
Activities that are departmentalized has to be assigned to individuals by giving appropriate
authority to accomplish the tasks. The authority should be equivalent to the responsibility of the
unit. Authority doesn’t come first; assignment of activities establishes the basis for authority.
5. Design a hierarchy of relationships
This step requires the determination of both vertical and horizontal operating relationships of the
organization as a whole.
Vertical structuring of an organization results in decision making hierarchy showing who is in
charge of each task.
It creates the chain of command or hierarchy of decision making levels in the company.
4.3 Importance of Organizing
 Organizing promotes collaboration and coordination among individuals in a group.
 Organizing sets clear-cut lines of authority and responsibility for each individuals or
departments.
 Organizing improves the directing and controlling functions of managers.
 Organizing develops maximum use of time, human, and material resources.
 Organizing enables the organization to maintain its activities coordinated.

4.4 Types of Organizations

There are two types of organizations:

4.4.1 Formal organization

It is the intentional, deliberate or rational structure of roles in a formally organized enterprise.
Formal organization has consciously designed durable and inflexible structure.

Formal organization may have legal personality.

It is characterized by

 well-defined authority,

 reporting relationships,

 job titles, policies,

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  procedures,

 specific job duties and a host of other factors necessary to accomplish its respective
goals.

It is represented by a printed chart that appears in organizational manuals and other formal
company documents called organization chart. Organization chart is a diagram of formal
relationship which shows how departments are tied together along the principal lines of
authority.

4.4.2. Informal organization

It is a network of personal and social relationships that arises spontaneously as people
associate with one another in a work environment.

It is an unofficial network of personal and social relations developed as a result of association or

working together

It operates outside formal authority relationships although it develops within the formal
organization

It doesn’t have legal personality.

It is composed of all the informal groupings of people within a formal organization (it is not only
the domain of workers; managers form informal groups that cut across departmental lines).

Informal organization has a structure which is loosely designed, highly flexible and spontaneous.
In such an organization, the pattern of information flow, the exact nature of relationships among
the members, and the goals of the organization are unspecified. However, to identify the
existence of informal organizations and their composition we can use two tools: a Sociogram and
an Interaction Chart.

A Sociogram is a diagram of group attraction. The Sociogram is developed through a process

asking members whom they like or dislike and with whom they wish to work or not to work.

An Interaction Chart is a diagram that shows the informal interactions people have with one
another. For any specific person, the chart can show with whom the person spends the most time
and with whom the person communicates informally.

The informal organization presents a challenge for a manager because it consists of actual
operating relationships not prescribed by the formal organization and, therefore, not shown on
the company’s organizational chart.

Types of groups in informal organization:

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Horizontal Group- People who work at the same level in an organization belong to a horizontal
group. Such groups promote mutual support and information sharing among the members. It is
often found that people share the same problems, concerns, and interests. They solve problems
without depending on their bosses or higher or lower hierarchical members. For example, people
working for different departments like sales, operations, production, etc. but who are at the same
level in the organizational hierarchy form a horizontal group.

Vertical Group- People working at different levels in an organization belong to the vertical
group. Such groups are formed through skip-level relationships. For example, a top-level
employee may be associated with a first-level employee, or a group of first-level employees may
establish a group with their bosses. Such groups promote better communication and quick
access to the issues arising in the organization.

Mixed Group- People from different levels and different departments create a Mixed Group.
The groups are created based on common interests like club memberships, common interests or
their backgrounds. For example, the president of the sales department may bond with the director
of technology.

Reasons for the formation of informal organization are:

1. Need for satisfaction human needs: it offers the opportunity to fulfill security, affiliation,
esteem, and sometimes self-actualization needs can encourage people to look out and join
others in an informal group.

2. Proximity and interaction: This can be either through working in close proximity
physically or because of frequent interaction. Horizontal informal groups are prime examples
of proximity and interaction.

3. Similarity or for a sense of belonging: Several persons with the same attitudes or beliefs
may join one group. Other factors or similarity can be personality, race, sex, economic
position, age, educational background etc.

Why informal groups exist?

Informal groups remain in existence because they serve four major functions:

1. They maintain the social and cultural values of the group members: Individuals in the group
are likely to share the same beliefs and values as a result of background, education, or cultural
heritage. The many areas about which the group may have beliefs are reinforced and
maintained by the group environment. Such belief areas are, for example, the work ethic.

2. They provide group members the opportunity for status fulfillment and social interaction:
Individuals can receive what the formal organization cannot or has not chosen to provide. “I am

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just another figure” feeling (identity crisis) may be avoided by informal group. E.g. an individual
whose post is a technician may assume a position of head for a volleyball team.

3. They provide information for their members : The informal group develops its own system
and channels of communication parallel to management’s formal channels. The ability to
acquire access to information for members is a major function of informal groups. Crucial
information can be obtained through informal communications.

4. They influence the work environment: Informal groups regulate or influence the behavior,
dress, or work standards of their members through positive means-acceptance, support, and
affiliation or through negative methods – threats of ostracizing non-complying members. The
informal group can also regulate or influence the actions of management and other informal
groups.

negatively and positively Impacts of informal organization

The Negative Impacts

1. Resistance to change:In an effort to protect its values and beliefs, the informal group can
place roadblocks in the path to any modifications in the work environment.

2. Conflict: In an attempt to satisfy the informal group, the employee may come in conflict with
the formal organization. E.g. The Company may allow 15 minutes for coffee break; however,
the informal group may extend it to 30 minutes or more the employee’s social satisfaction.

3. Rumor: The informal communication system - the grapevine - can create and process false
information or rumors. The creation of rumors can upset the balance of the work environment.

4. Pressure to conform: The norms that the informal groups develop act as a strong
inducement toward conformity. The more cohesive the group, the more accepted are the
behavioral standards.

The Positive Impacts

1. Makes the total system effective: If the informal organization blends well with the formal
system, the organization can function more effectively. The ability of the informal group to
provide flexibility and instantaneous reactions will polish the plans and procedures developed
through the formal organization.

2. Provides support to management: The informal organization can provide support to the
individual manager. It can fill in gaps in the manger’s knowledge through advice or through
performing the work, for example, budgeting, and scheduling. By performing effectively and
positively, it can build a cooperative environment.

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3. Provides a useful communication channel: The informal organization provides employees
with the opportunity for social information, for discussing their work, and for understanding
what is happening in the work environment.

4. Encourages better management: Managers should be aware of the power of the informal
organization in what is actually a check and balance system.

5. Provides stability in the work environment: The informal organization can provide
acceptance and belonging. This feeling of being wanted by the group can encourage employees
to remain into environment, thus reducing turnover.

4.5. Division of Labor/specialization/

In small organizations, just having three or four employees, each of them do

a certain job at different time, for example, a tea room having an owner
manager and two waiters can make tea, wait on customers, treat them,
collect money and perform all duties required in a business. However, as the
business grows, people must be assigned specific tasks in which they
specialize. This process is called division of labor.

Advantage:

It enables a person performing a task to become highly

proficient at it in relatively short time and these results in
increasing efficiency in productivity.

It saves time that is always lost in changing from one job to
another.

There is less waste of materials in the learning process when

division of labor is used.

Disadvantage:

 The boredom (boring) and fatigue caused by monotonous, repetitive tasks.

 The specialist lacks job enrichment

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4.6. Departmentalization: Meaning and Bases

Departmentalization is the process of grouping/ combining jobs into groups or manageable

units. A manager must have basis for combining jobs. The main bases for departmentalization
are function; location or Geography; product; customer and process.

Hence the types of departmentalization are

4.6.1 Functional departmentalization

The common form where activities are grouped based on similarity in function or content. It is
grouping jobs according to the functions of an organization. It is common for business firms.
Within each department individuals perform specialized jobs.

Advantages

 It promotes specialization and organizational efficiency.

 Avoid overlap performing basic businesses

 It provides unity of direction. Among members of the department, there is job

interrelation.

 It facilitates staffing and training. If there are highly qualified staffs in a department,
other workers will be initiated or encouraged to fill the position.

 It promotes communication within departments.

 Create strong team sprit among people working in one department.

Disadvantages

 It has problems of horizontal coordination, i.e. Lack of understanding of

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 interrelationship and dependency between all functions

  The tendency of “empire building”. Unhealthy competition will occur between/

among departments. 8

 It frustrates the development of managerial talents from the organization as a whole to

top managerial position. There is a tendency for the manager who comes to the position
of organization’s to favor the workers in his department.

 focuses on departmental problems and objectives; and ignores organizational issues and
objectives, i.e. Narrows the understanding of employees about the organization at large

 Create communication barrier among people with different specialization

 Department managers can not develop general managerial skills to take up higher
managerial position

 Lack of generalize and internal destructive competition among different departments

reduces the success of the entire organization

4.6.2 Geographic departmentalization

It is also called location departmentalization or departmentalization by territory. It is grouping

of jobs on the bases of geographic areas. It is established when a company has different
branches that are geographically dispersed. The operations are similar from region to region

Advantages

 It helps in exploiting local advantages.

 It provides a training ground for new managers, i.e. to place managers out of territory
and then asses their progress.

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  It enables the firm to develop local market areas and adjust quickly to local customers’
needs

 It helps the company to reach close to raw materials.

 It saves a substantial amount of transport costs.

 It provides chance to local people employment opportunity.

 Create customers goodwill and awareness of local feeling and desire9

 Facilitate decision making

 It can provide a high level of service as employees know the local culture and language.

Disadvantage

 Difficulties in maintaining consistent adherence to company policy and practices

 Duplication of effort

 The necessity of having a relatively large number of managers

 It poses serious problems of coordination and control.

 It may create gaps between head offices and branch offices.

 It is costly to host many geographically dispersed departments.

A company uses territory as basis for departmentalization often needs a large head quarter’s
staffs to control dispersed operation.

4.6.3 Product based departmentalization

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It is grouping on the bases of products (goods/ services). Such kind of departmentalization is
best to large and multiple product organizations.

Fig, 3; departmentation by product

Advantages

 Allows workers to identify with a particular product and develop team sprit.

 It results in high product visibility.

 It facilitates innovation; and also enhances specialization of production.

 Stem from the need to create relatively independent division

 Each division has its appropriate personnel

Disadvantages

 Employees’ insecurity during time of turmoil.

 Pressure for highly qualified managerial resources.

 It results in poor coordination across the product lines10

 Duplication of efforts among divisions

4.6.4 Customer based departmentalization

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It is grouping of tasks based on the type of customers served. Customers are the key to the way
activities are grouped. Such forms of departmentalization are more common in banking, book
publishing and food industry.

Fig,
4;

departmentation by customer

Advantages

 Customers’ interest and priority is respected;

 Helps to meet customers’ special needs by setting up separate departments

 Indicate the willingness to understand the business of its clients

 Workers are identified with a particular group of customers that create team sprit

Disadvantages

 It is almost impossible to consider all the customers, their interests, habits and customs.

 In the period of no or little demand for goods and services of an organization,

some sections may not be profitable.

 There is a problem of duplication of resources

 Creates difficulty in coordination between departments

 High competition among departments may deter the overall organizational performance

 Requires manager and staff specialists similar with the customers’ situation

 Differentiation among the various customer groups might be difficult

4.6.5. Departmentalization by process

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It is appropriate when departmentalization by production is inflow. Under it activities are
grouped on the basis of various manufacturing process.

Fig, 5; departmentalization by process

Advantages

 It is appropriate for organizing certain types of work.

 It helps to group production facilities.

 It puts full responsibility of completing each stage of the job.

Disadvantages

 Failure in one of the process may adversely affect the whole job.

 Due to sub specialization a worker has, he cannot be shifted to another department, i.e.
it restricts flexibility.12

4.6.6. Departmentation on combined based

It is a base in which multiple bases are used at different organizational levels of a particular organization.
Authority

All managers in an organization have authority. They have different authorities based on the
management position they occupy. Authority is described as institutional power. It is the right
to act, or to give order/ command, or deploy resources in an organization. It is the power
derived from the rights that comes with position. Authority represents legitimate exercise of
power in the organization structure. Without authority a manager cannot perform tasks with
confidence and show results.

Essential features of authority

 It is the relationship between two individuals - one superior and the other subordinate.

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  It is the right to act.

 It is the power to make decisions and seeing that they are carried out.

 It is used to achieve organizational goals.

Delegation of authority

Every manager must delegate duties to subordinates since management means getting work
done through others. Effective managers normally delegate as many operation tasks as possible
to subordinates and concentrate their efforts on core managerial tasks.

4.7. Delegation, Centralization and Decentralization

# Delegation
Delegation is the process managers use to transfer authority and responsibility to positions below
them. Organizations today tend to encourage delegation from highest to lowest possible levels.
Delegation is the downward transfer of authority from a manager to a subordinate.

Delegation is authorizing subordinates to act in a certain manner independently.

Delegation occurs for two purposes

1. When managers are absent from their jobs - Subordinates act on behalf and exercise
authority.

2. To develop subordinates and facilitate decision making process

Process of delegation

Steps for delegation are:

1. Assignments of tasks - Kinds of tasks to be performed by subordinate are identified and

assigned to the subordinate

2. Delegation of authority - A subordinate to carry out the activity, the necessary authority
should be given by the manager. A guideline for authority is that “no more no less”. i.e.
It has to be adequate to complete the task.13

3. Acceptance of responsibility - When subordinates are assigned with duties and

delegated authority, then they will be responsible or obliged to perform the tasks to the
maximum ability they can perform.

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 4. Creation of accountability - When subordinates are assigned for certain tasks and are
delegated a certain authority, and then they will be accountable for the actions taken.

Importance of Delegation

1. It relieves the manager from his/her heavy workload: Delegation frees a manager from
some time consuming duties that can be adequately handled by subordinates and lets the
manager devote more time to problems requiring his/her full attention (lets the manager
concentrate on strategic issues). Enables managers to perform higher level work.

2. It leads to better decisions: Since subordinates are closer to real “firing line”activities and
problems than superiors, they have more realistic information and better understanding. The
realistic information that subordinates have may lead them to make better decisions.

3. It speedup decision-making: Decisions made by lower level managers usually are timelier
than those that go through several layers of management.

4. It helps subordinates to train and builds moral: Subordinate managers can reach their full
potential only if given the chance to make decisions and to assume responsibility for them.

5. It encourages the development of professional managers: Had there not been any
delegation, professional managers wouldn’t have been produced.

6. It helps to create the organization structure: If there were no delegation of authority is an

organization, there would exist only the president/CEO/ top-level manager. And an individual
cannot create an organization14

Factors Determining Delegation

Managers cannot ordinarily be for or against decentralization of authority. They may prefer to
delegate authority, or they may like to make all the decisions. Some factors that affect the
degree of centralization or decentralization- delegation of authority- are:

141. The history and culture of the organization: When centralized organization is changed
into decentralization and the vice-versa people feel discomfort.

2. The nature of the decision: Cost may be reckoned directly in birr and cents or in such
intangibles as the company’s reputation, its competitive position or employee morale.

3. Availability and ability of managers (Lower level managers): A real shortage of managers
would limit decentralization of authority, since in order to delegate, superiors must have
quantified managers to whom to give authority.

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4. Management philosophy: The character and philosophy of top executives have an important
influence on the extent to which authority is decentralized.

5. Size and character of the organization: The larger the organization, the more decisions to be
made, and the more places in which they must be made, the more difficult it is to coordinate
them.

6. Geographic dispersion of operations: It makes decentralization more necessary because top

executives frequently find it impossible to keep abreast of the details of what is going on at
various locations.

7. Environmental uncertainty: The fast pace of change interferes with top management’sability
to assess situations with the speed necessary to make timely decisions.15

Problems in Effective Delegation

Despite of the advantages, many managers are reluctant to delegate authority and many
subordinates are reluctant to accept it. Both these barriers hinder effective delegation.

Reluctance to delegate/Problems from Managers

There are a number of reasons that managers commonly offer to explain why they do not
delegate. Some are:

1. Fear of loss of power

2. “I can do it better myself” fallacy

3. Lack of confidence in subordinates

4. Fear of being exposed

5. Difficulty in briefing

Reluctance to Accept Delegation/problems from subordinates

1. Fear of failure and criticism.

2. Subordinate may believe that the delegation increases the risk of making mistakes.

3. Lack of adequate information and resources.

4. If subordinates are already overworked

5. Lack of self-confidence

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 6. Believing / Thinking that decision-making is the boss’s job.

Overcoming the barriers in effective delegation

willingness of managers to give their subordinates real freedom to accomplish delegated tasks.
Managers have to accept the fact that there are usually several ways to solve a problem and
that subordinates may legitimately choose a path differently from their own. And, subordinates
will make errors in carrying out their tasks. But they must be allowed to develop their own
solutions to problems and learn from their mistakes. The solution to subordinates mistake is
not for the manager to delegate less, but to train or otherwise support subordinate more.

Improved communication between managers and subordinates will increase mutual

understanding and thus help to make delegation more effective. Managers who know the
abilities of their subordinates can more realistically decide which tasks can be delegated to
whom. Subordinates who are encouraged to use their abilities and who feel their managers will
“back them up” will in turn be more accepting of responsibility

# Centralization

Centralization is a systematic and consistent reservation of authority at central point within the
organization. It is the concentration of authority for decision making within the hands of one or
few.

In centralization

 There is little delegation of authority

 Rules, power & discretion are concentrated at the top level

 Control & decision making reside at the top level of management

The more highly centralized the organization, the more control and decision making will be
exercised at the top.

Centralization is essential in case of small organizations to survive in a highly competitive world.

The larger the size of the organization, the more consent is the need for
decentralization.Special circumstances forcing managers to reserve/ keep authority and
centralize decision making power are16

1. To facilitate personal leadership16

2. To provide for integration16

3. To handle emergencies16

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Centralization is highly suitable in the time of emergency because it helps to mobilize resources
and information quickly. Centralization of decision making ensures prompt action necessary to
meet the emergencies.

Disadvantages of Centralization

 difficult for managers to process the bundles of data in time and take decision in an
appropriate manner

 the manager burdened with a great amount of detailed & exhaustive work

 managers to work painfully long hours

 forces top management to possess a broad view they may have beyond their capacity

 the vast amount of power given to a few people may be abused

 the organization is highly vulnerable to what happens to its dynamic and talented top
management people

Centralization floods communication lines to a few individuals at the top of the organization. As
a result the speed of communication upward and decision processes are slow. Centralization
kills the initiative; self reliance and judgment of lower level personnel.

#17Decentralization

Decentralization is a systematic effort to delegate all authority to the lowest levels except that
which can be exercised at central point. It is pushing down of authority and power of decision
making to the lower levels of organization. The essence of decentralization is the transfer of
authority from a higher level to the lower level. Nowadays decentralization has become to be
the fundamental principle of democratic management.

Some guidelines to identify the degree of decentralization in a company

1. The greater the number of decisions made at the lower level of management, the more the
company is decentralized.

2. The more important decisions are made at the lower level, the greater is the
decentralization.17

3. The more flexible the interpretation of the company policy at the lower levels, the greater
the degree of decentralization.

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4. The more widely dispersed the operations of the company geographically, the greater the
degree of decentralization.

5. The less the subordinate has to refer to his/her manager prior to decision, the greater the
decentralization.

Advantages and disadvantages of decentralization

Decentralization is extremely beneficial but also dangerous unless it is carefully constructed and
constantly monitored.

Advantages

 It reduces the work load on overburdened manager.

 It brings the decision making process closer to the scene of the action.

 It facilitates product diversification. i.e. treats each product lines as separate and
important.

 It gives individuals an opportunity to learn by doing.

 It facilitates effective control. i.e. often results in improved controls & performance
measurements.

 It ensures participative management.

Disadvantages

Conflict: Decentralization puts increased pressure on each heads to realize profit at any cost.
To meet this each deviate or veer away from corporate objective. i.e. leads to competition that
may ultimately result in bitter individual rivalries.

Cost or duplication: Decentralization results in duplication of staff effort. To be independent

each division should have access to purchasing, personnel, etc. hence each carry a large group
of specialists at numerous cos18

4.8. Line, staff and functional authority18

The process of accomplishing organizational objectives through people entails the

establishment of relationship among the members of the organization and different hierarchies
of the management. This results the presence of the two distinct types of authority in business
organization.

Line authority

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Line authority is the relationship between superior and subordinates. It is directed supervisory
relationship. It enables the manager to tell subordinates what to do. It is represented by the
chain of command. It flows downward in an organization. A manager supervising employees or
other managers has line authority19

Staff authority

Staff authority is the right to give advice. It is advisory in nature. Thus the people in the staff
position assist and advise the line manager. People in these positions have the authority to
offer advice and recommendations. e.g. legal service; public Relation service. It is an advisory
authority for manager. Advisory authority doesn’t provide any basis for direct control over
subordinates or activities of other departments.

 Staff authority is advisory and normally flows up

Line and staff positions/functions:

To classify a position as line or staff, it is related to the degree to which the function
in question contributes to the direct achievement of organizational objectives. The
line functions contribute directly to accomplishing to firm's objectives, while staff
functions facilitate the accomplishment of the major organizational objectives.

The line functions of an organization are those functions that contribute directly to
the creation and distribution of the goods or services of the organization.
People with line positions are responsible for physically producing the product or
service and for selling it.
Staffs people advice and assist line people. That is the only reason these positions
exist.
All staff positions are advisory, staff people may make recommendations, but line
managers retain formal authority and decide what to do with a staff person's advice.
Functional Authority
Functional Authority: The authority of staff department members to control
the activities of workers of other departments that are related to specific
staff responsibilities. This authority is exercised over people or activities in
other departments. Usually limited in scope and duration; it is exercised one
level below the person wholes it.

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 Functional authority is not restricted to managers of a particular type of department. It may be
exercised by line, derive or staff department heads, more often the latter two, because they are
usually composed of specialists whose knowledge becomes the basis for functional controls.

Example:

1. The Finance Manager can give direct command to the marketing manager of the same level about financial
affairs.

2. The Legal Advisor can give direct command to others concerning the legal affairs of the organization.

3. The Personnel Manager can give direct command to others regarding recruitment, selection, performance
appraisal systems

Benefits of Staff

1. Staff managers provide advice for line managers, i.e. the advice of well-qualified specialists in various
areas of an organization’s operations can scarcely be overestimated, especially as operations become more
complex.

2. These specialists may be allowed to the time to think, to gather data, and analyze, when their superiors,
busy managing operations, cannot do so.

3. As problems become more complex, staff analysis and advice becomes an urgent necessity.

Resolving Conflict

The line - staff problem is not only one of the most difficult that organizations face but also the source of
an extra ordinarily large amount of inefficiency, solving this problem requires great managerial skill,
careful attention to principles and patient teaching of personal. Some ways of resolving the conflict
include:

1. Understanding authority relationships: Managers must understand the nature of authority

relationships if they want to solve the problems of line and staff. Line means making decisions and
acting on them. Staff relationship, on the other hand, implies the right to assist and counsel. In
short the line may “tell”, but the staff must “sell” (its recommendations).

2. Making line listen to staff: Although line-staff friction may stem from ineptness or overzealousness
on the part of staff people, trouble also arises when line executives too carefully guard their
authority and resent the very assistance they need. Line manager should be encouraged or
required to consult with staff.

3. Keeping staff informed: Common criticisms of staff are that specialists operate in a vacuum, fail to
appreciate the complexity of the line manager’s job, or overlook important facts in making

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 recommendations. Specialists should take care that their recommendations deal only with part of a
problem.

4. Requiring completed staff work: Completed staff work implies presentation of a recommendation
based up on full consideration of a problem, clearance with persons importantly affected,
suggestions about avoiding any difficulties involved, and often, preparation of the paper work -
letters, directives, job 21descriptions, job specifications so that a manager can accept or reject a
proposal without further study, long conferences, or unnecessary work.

5. Clear areas of responsibility and accountability for results21

4.9. Span of Management

Span of Management /span of control/- refers to the number of subordinates that a single
manager can directly, immediately and effectively supervise. It is related to the levels. We can
have wide span, which is associated with few organizational levels; and a narrow span which
results in many levels.
Organizations with wide span
This means many subordinates report to a superior or a superior supervises many subordinates.
If the span of management is wide, we get:
 A flat organization structure with fewer management levels between top and lower level
 Many number of subordinates and decentralized authority
 Managers are overstrained and their subordinates receive too little guidance and control fewer
hierarchal level
Advantage: Disadvantage:
Supervisors are forced to delegate Tendency of overloaded superiors to become
Clear policies must be made decision bottlenecks.
Subordinates must be carefully selected Dangers of superior's loses of control
Requires exceptional quality of managers.

Organizations with narrow span

This means superior controls few numbers of subordinates or few subordinates report to a superior.
When there is narrow span of management in an organization, we get:
 Tall organization structure with many levels of supervision between top management and the
lowest organizational level.

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  More communication between superiors and subordinates.
 Managers are underutilized and their subordinates are over controlled.
 More trained managerial personnel and centralized author
Advantages: Disadvantage:
• Close supervision Close control • Superiors tend to get too much involved in subordinate's work
• Fast communication between • Many levels of management
Subordinates and superiors. • High costs due to many levels
• Easy to coordinate and control activities. • Excessive distance between lowest level and top level.

Factors Determining an Effective Span of Management

The principle of span of a management states that there is no any specific number of subordinates to be
supervised by a manager. Rather, it states, there are factors that affect the span of management. Some
are:
Ability of the manger: The ability of the manager (supervisor) who is responsible for supervising
subordinates affects the span of a management.
The abilities of subordinates: The amount of training, experience, and ability that subordinates have is
directly related to a manager’s span of control. Well - trained subordinates require not only less of their
manager’s time but also fewer contracts with them.
Motivation and commitment: motivated employees take initiative and responsibility, utilize and
develop their skills committed to their job, devote more time and effort and needs less of their
supervisor’s time.
Need for autonomy: subordinates with high need for autonomy prefer to make decisions by themselves
(wider span) and vise versa is true for those who take every problem to their superior for decision-
making.
Type of work: Routines and simplicity of work. Managers supervising people with simple and repetitive
jobs are able to manage more immediate subordinates than are those who supervise people with
complex, non-repetitive tasks.
Geographic dispersion of subordinates: Normally, there is an inverse relationship between a manager’s
span of control and the geographic dispersion of his/her subordinates. For example, a sales manager
whose sales people are scattered over a wide geographic region cannot supervise as many subordinates
as a manager can whose subordinates are in one building.

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The availability of information and control systems: If there are sophisticated information and control
systems, well-defined policies and plans, the manager can supervise many subordinates and hence the
span will be wide.
Levels of management: The size of the most effective span differs by organizational level.
At the top level of management the span is wide, because
The communication and conceptual skill that top level managers have.
The nature of their work they deal with: general/broad policy control rather than direct supervision.
Their subordinates are relatively skillful.
At the middle level of management the span is narrow, because they involve in policy supervision and
much more direct, personal contract with subordinates than top-level managers.
At the lower level of management the span is wide, because as managers of operating employees,
supervisors frequently supervise work that is not complex and that rarely requires policy decisions.
Economic Factor: Narrow spans of management require not only more supervisors (and their services)
but also the added expense of executive offices, secretaries and fringe benefits. However, the wide
spans of a management require few supervisors with their accessories. So, organizations should take
cost into consideration.
There are two major reasons why the choice of appropriate span is important.
1) Span of management affects the efficient utilization of managers and the effective

performance of their subordinates. Too wide a span may mean that managers are
overextending themselves and that their subordinates are receiving too little guidance
or control. Too narrow a span of management may mean that managers are under
utilized.
2) There is a relationship between span of management throughout the organization and

the organization structure. A narrow span of management results in a "tall"

organizational structure with many supervisory levels between top management and
the lowest level. A wide span for the same number of employees means fewer
management levels between the top and bottom. The concept of an "optimal" span of
management is the one that is neither too broad nor too narrow. The concept of an
optimal span of management suggested that spans could be too broad or too narrow in
specific instances. The wider the span of management, the less direct supervision there

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 is; the narrower the span, the greater the number of managers and, therefore, the
higher the cost in salaries.
Organizational Structure
Meaning
 Organization structure is the structural framework for carrying out the functions of
planning, decision-making, controlling, communication, motivation, etc.
 Organization structure is the formal pattern of interactions and coordination
designed by a manager to link the tasks of individuals and groups in achieving
organizational goals. The word “formal” in this content refers to the fact that
organization structures typically are created by management for specific purposes
related to achieving organizational goals, and, hence, are official, or formal
outcomes of the organizing function.

 Organization structure is the arrangement and interrelationship of the component

parts, and positions of an organization.

The formal structure of an organization is of two-dimensional: The horizontal dimension and

vertical dimension.

The horizontal dimension identifies departments, units, and divisions on the same level of a
management. Whereas the vertical dimension refers to the authority relationships between
superiors and subordinates and it also identifies who is responsible and accountable for whom.

24Reference
 Hahuzone. Com > organizing function.
 Fhs.pressbooks.pub/ com.
 Lecture note introduction to management, 2017

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