ORGANISING

#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).
● Organising essentially implies a process which coordinates human efforts, assembles resources and
integrates both into a unified whole to be utilised for achieving specified objectives.
● Eg. School fete or school library.
● The management function of organising 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 and people
are able to work collectively and effectively for a common purpose.
● The organising function leads to the creation of an organisational structure which includes the
designing of roles to be filled by suitably skilled people and defining the inter relationship between these
roles so that ambiguity in performance of duties can be eliminated. This is important for
(i)productive cooperation between the personnel
(ii)for clarification of extent of authority,
(iii)responsibility for results and logical grouping of activities.

#STEPS IN THE PROCESS OF ORGANISING

1.Identification and division of work
● The first step in the process of organising involves identifying and dividing the work that has to be done
in accordance with previously determined plans.
● The work is divided into manageable activities so that duplication can be avoided and the burden of
work can be shared among the employees.

2.Departmentalization
● 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.
● Departments can be created using several criteria as a basis.
● Examples of some of the most popularly used basis are territory (north, south, west, etc.) and products
(appliances, clothes, cosmetics etc).

3.Assignment of duties
● It is necessary to define the work of different job positions and accordingly allocate work to various
employees.
● Once departments have been formed, each of them is placed under the charge of an individual.
● 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.
● The work must be assigned to those who are best fitted to perform it well.

4.Establishing authority and reporting relationships

● Merely allocating work is not enough.
● Each individual should also know who he has to take orders from and to whom he is accountable.
● The establishment of such clear relationships helps to create a hierarchical structure and helps in
coordination amongst various departments.
#IMPORANTANCE OF ORGANISING:
Introduction: Performance of the organising function can pave the way for a smooth transition of the
enterprise in accordance with the dynamic business environment.
The significance of the organising function mainly arises from the fact that it helps in the survival and growth of
an enterprise and equips it to meet various challenges.
In order for any business enterprise to perform tasks and successfully meet goals, the organising function must
be properly performed.

1. Benefits of specialisation
● Organising leads to a systematic allocation of jobs amongst the workforce.
● This reduces the workload as well as enhances productivity because of the specific workers performing
a specific job on a regular basis.
● Repetitive performance of a particular task allows a worker to gain experience in that area and leads to
specialisation.

2. Clarity in working relationships

● The establishment of working relationships clarifies lines of communication and specifies who is to
report to whom.
● This removes ambiguity in transfer of information and instructions.
● It helps in creating a hierarchical order thereby enabling the fixation of responsibility and specification of
the extent of authority to be exercised by an individual.

3. Optimum utilisation of resources

● Organising leads to the proper usage of all material, financial and human resources.
● The proper assignment of jobs avoids overlapping of work and also makes possible the best use of
resources.
● Avoidance of duplication of work helps in preventing confusion and minimising the wastage of
resources and efforts.

4. Adaptation to change
● The process of organising allows a business enterprise to accommodate changes in the business
environment.
● It allows the organisation structure to be suitably modified and the revision of interrelationships amongst
managerial levels to pave the way for a smooth transition.
● It also provides much needed stability to the enterprise as it can then continue to survive and grow in
spite of changes.

5. Effective administration
● Organising provides a clear description of jobs and related duties. This helps to avoid confusion and
duplication.
● Clarity in working relationships enables proper execution of work.
● Management of an enterprise thereby becomes easy and this brings effectiveness in administration.

6. Development of personnel
● Organising stimulates creativity amongst the managers.
● Effective delegation allows the managers to reduce their workload by assigning routine jobs to their
subordinates.
● The reduction in workload by delegation is necessary because of (i)limited capacity of an individual (ii)
it allows the manager to develop new methods and ways of performing tasks (iii)It gives them the time
 to explore areas for growth and the opportunity to innovate thereby strengthening the company’s
competitive position (iv) develops in the subordinate the ability to deal effectively with challenges and
helps them to realise their full potential.

7. 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.
● It allows a business enterprise to add more job positions, departments and even diversify their product
lines.
● New geographical territories can be added to current areas of operation and this will help to increase
customer base, sales and profit.

Conclusion:Organising is a process by which the manager brings order out of chaos, removes conflict among
people over work or responsibility sharing and creates an environment suitable for teamwork.

#ORGANISATION STRUCTURE
The organisation structure can be defined as the framework within which managerial and operating
tasks are performed.
● It specifies the relationships between people, work
● and resources.
● It allows correlation and coordination among human,
● physical and financial resources and this enables a
● business enterprise to accomplish desired goals.
● The organisation structure of a firm is shown in an organisation chart.
● Organisation structure is the outcome of the organising process.
● An effective structure will result in increased profitability of the enterprise.
● The need for an adequate organisation structure is felt by an enterprise whenever it grows in size or
complexity.
● It is only those enterprises which do not focus on growth that can maintain a particular structure for a
long period of time.
● As an organisation grows, coordination becomes difficult due to the emergence of new functions and
increase in structural hierarchies.
● For an organisation to function smoothly and face environmental changes, it becomes necessary to pay
attention to its structure.
● 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.”
● 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.

#SPAN OF MANAGEMENT
● Span of management refers to the number of subordinates that can be effectively managed by a
superior. This determines the levels of management in the structure.
● The span of management, to a large extent gives shape to the organisational structure.
● A proper organisation structure is essential to ensure a smooth flow of communication and better
control over the operations of a business enterprise.
#TYPES OF ORGANISATION STRUCTURES
The type of structure adopted by an organisation will vary with the nature and types of activities performed by
an organisation.
The organisational structure can be classified under two categories which are as follows:
(i) Functional structure (ii) Divisional structure

1.FUNCTIONAL STRUCTURE
● Grouping of jobs of similar nature under functions and organising these major functions as separate
departments creates a functional structure.
● All departments report to a coordinating head.
● For example, in a manufacturing concern division of work into key functions will include production,
purchase, marketing, accounts and personnel.
● These departments may be further divided into sections.
● Thus, a functional structure is an organisational design that groups similar or related jobs together.

Advantages:
1. 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.
2. It promotes control and coordination within a department because of similarity in the tasks being
performed.
3. It helps in increasing managerial and operational efficiency and this results in increased profit.
4. It leads to minimal duplication of effort which results in economies of scale and this lowers cost.
5. It makes training of employees easier as the focus is only on a limited range of skills.
6. It ensures that different functions get due attention.

Disadvantages:
1. A functional structure places less emphasis on overall enterprise objectives than the objectives pursued
by a functional head. Such practices may lead to functional empires wherein the importance of a
particular function may be overemphasised. Pursuing departmental interests at the cost of
organisational interests can also hinder the interaction between two or more departments.
2. It may lead to problems in coordination as information has to be exchanged across functionally
differentiated departments.
3. A conflict of interests may arise when the interests of two or more departments are not compatible. For
example, the sales department insisting on a customer friendly design may cause difficulties in
production. Such dissension can prove to be harmful in terms of fulfillment of organisational interest.
Interdepartmental conflicts can also arise in the absence of clear separation of responsibility.
4. 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. Functional heads do not get
training for top management positions because they are unable to gather experience in diverse areas.

Suitability:
It is most suitable when the size of the organisation is large, has a diversified activities and operations require
a high degree of specialisation.
2. 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.
● Manpower is grouped on the basis of different products manufactured.
● Each division is multifunctional because within each division functions like production, marketing,
finance, purchase, etc., are performed together to achieve a common goal.
● Each division is self-contained as it develops expertise in all functions related to a product line.
● Within each division, the functional structure tends to be adopted. However, functions may vary across
divisions in accordance with a particular product line. Further, each division works as a profit center
where the divisional head is responsible for the profit or loss of his division.
● For example, a large company may have divisions like cosmetics, clothing, etc.

Advantages:
1. Product specialisation helps in the development of varied skills in a divisional head and this prepares
him for higher positions. This is because he gains experience in all functions related to a particular
product.
2. 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.
3. It promotes flexibility and initiative because each division functions as an autonomous unit which leads
to faster decision making.
4. 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:
1. 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.
2. 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.
3. 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 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.

CONCLUSION:Thus, it can be said that business operates in a dynamic environment and those enterprises
which fail to adapt to change are unable to survive. Hence, management must continuously review its plans
and objectives and accordingly the organisation structure of the enterprise should also be subjected to periodic
review to determine if modification is required. An organisation structure, at all times should contribute towards
the achievement of the enterprise’s objectives and should provide scope for initiative so that contribution of
personnel can be maximum and effective.
#FORMAL AND INFORMAL ORGANISATION
1.FORMAL ORGANISATION:
● In all organisations, employees are guided by rules and procedures. To enable smooth functioning of
the enterprise, job description and rules and procedures related to work processes have to be laid
down. This is done through the formal organisation.
● Formal organisation refers to the organisation structure which is designed by the management to
accomplish a particular task. It specifies clearly the boundaries of authority and responsibility and there
is a systematic coordination among the various activities to achieve organisational goals.
● The structure in a formal organisation can be functional or divisional.
The formal organisation can be better understood by a study of its features which are as follows:
1. It specifies the relationships among various job positions and the nature of their interrelationship. This
clarifies who has to report to whom.
2. It is a means to achieve the objectives specified in the plans, as it lays down rules and procedures
essential for their achievement.
3. Efforts of various departments are coordinated, interlinked and integrated through the formal
organisation.
4. It is deliberately designed by the top management to facilitate the smooth functioning of the
organisation.
5. It places more emphasis on work to be performed than interpersonal relationships among the
employees

Advantages:
● It is easier to fix responsibility since mutual relationships are clearly defined.
● 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.
● Unity of command is maintained through an established chain of command.
● 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.
● It provides stability to the organisation. This is because behaviour of employees can be fairly predicted
since there are specific rules to guide them.
#DELEGATION:
Concept:
● A manager, no matter how capable he is, cannot manage to do every task on his own ,volume of work
makes it impractical for him to handle it all by himself. As a consequence, if he desires to meet the
organisational goals, focus on objectives and ensure that all work is accomplished, he must delegate
authority.
● Delegation refers to the downward transfer of authority from a superior to a subordinate. It is a
pre-requisite to the efficient functioning of an organisation because it enables a manager to use his time
on high priority activities.
● It also satisfies the subordinate’s need for recognition and provides them with opportunities to develop
and exercise initiative.
● Delegation does not mean abdication.
● The manager shall still be accountable for the performance of the assigned tasks. Moreover, the
authority granted to a subordinate can be taken back and redelegated to another person.
● Thus, irrespective of the extent of delegated authority ,the manager shall still be accountable to the
same extent as before delegation.
● Delegation is the process a manager follows in dividing the work assigned to him so that he
performs that part which only he (because of his unique organisational placement) can perform
effectively and so that he can get others to help with what remains.
● Delegation of authority merely means the granting of authority to subordinates to operate within
prescribed limits.

#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 , arising from the established scalar chain which links the various job positions and
levels of an organisation.
● Italso refers to the right to take decisions inherent in a managerial position to tell people what to do and
expect them to do it.
● In the formal organisation authority originates by virtue of an individual’s position and the extent of
authority is highest at the top management levels and reduces successively as we go down the
corporate ladder.
● Thus, authority flows from top to bottom, i.e., the superior has authority over the subordinate.
● Authority relationships help to maintain order in the organisation by giving the managers the right to
exact obedience and give directions to the workforce under them , determine the superior subordinate
relationship wherein the superior communicates his decision to the subordinate, expecting compliance
from him and the subordinate executes the decision as per the guidelines of the superior.
● The extent to which a superior can exact compliance also depends on the personality of the superior. It
must be noted that authority is restricted by laws and the rules and regulation of the organisation, which
limit its scope.
● However, as we go higher up in the management hierarchy, the scope of authority increases.

(ii) Responsibility:
● Responsibility is the obligation of a subordinate to properly perform the assigned duty.
● It arises from a superior– subordinate relationship because the subordinate is bound to perform the
duty assigned to him by his superior.
● Responsibility flows upwards, i.e., a subordinate will always be responsible to his superior.
 ● When an employee is given responsibility for a job he must also be given the degree of authority
necessary to carry it out. Thus, for effective delegation the authority granted must be commensurate
with the assigned responsibility.
● If authority granted is more than responsibility (A>R) it may lead to misuse of authority, and if
responsibility assigned is more than authority (R>A)it may make a person ineffective.

(iii) Accountability:
● Delegation of authority, undoubtedly empowers an employee to act for his superior but the superior
would still be accountable for the outcome.
● 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 for
satisfactory performance of work.
● It indicates that the manager has to ensure the proper discharge of duties by his subordinates,through
regular feedback .
● The subordinate will be expected to explain the consequences of his actions or omissions.
● Authority is delegated, responsibility is assumed, accountability is imposed.
● Responsibility is derived from authority and accountability is derived from responsibility

Basis Authority Responsibility Accountability

Meaning Right to Obligation to Answerability

command. perform an for outcome
assigned task. of the
assigned task.

Delegation Can be delegated. Cannot be entirely Cannot be

delegated. delegated at
all.

Origin Arises from Arises from Arises from

formal position . delegated responsibility.
authority.

Flow Flows downward Flows upward Flows upward

from superior to from subordinate from
subordinate. to superior. subordinate to
superior
#Importance of Delegation
(i) Effective Management:
● By empowering the employees, the managers are able to function more efficiently as they get more
time to concentrate on important matters.
● Freedom from doing routine work provides them with opportunities to excel in new areas.
(ii) Employee development:
● Employees get more opportunities to utilise their talent and this may give rise to latent abilities in them.
● It allows them to develop those skills which will enable them to perform complex tasks and assume
those responsibilities which will improve their career prospects, making them better leaders and
decision makers.
● Delegation empowers the employees by providing them with the chance to use their skills, gain
experience and develop themselves for higher positions.
(iii) Motivation of employees :
● Delegation helps in developing the talents of the employees (psychological benefits).
● When a superior entrusts a subordinate with a task, it is not merely the sharing of work but involves
trust on the superior’s part and commitment on the part of the subordinate.
● Responsibility for work builds the self-esteem of an employee and improves his confidence. He feels
encouraged and tries to improve his performance further.
(iv) Facilitation of growth:
● Delegation helps in the expansion of an organisation by providing a ready workforce to take up leading
positions in new ventures.
● Trained and experienced employees are able to play significant roles in the launch of new projects by
replicating the work ethos they have absorbed from existing units, in the newly set up branches
(v) Basis of management hierarchy:
● Delegation of authority establishes superior-subordinate relationships, which are the basis of hierarchy
of management.
● It is the degree and flow of authority which determines who has to report to whom.
● The extent of delegated authority also decides the power that each job position enjoys in the
organisation.
(vi) 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.
● Such clarity in reporting relationships help in developing and maintaining effective coordination
amongst the departments, levels and functions of management.

#Decentralisation
● Decentralisation explains the manner in which decision making responsibilities are divided among
hierarchical level ie it 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.
● In other words decision making authority is pushed down the chain of command. When decisions taken
by the lower levels are numerous as well as important an organisation can be regarded as greatly
decentralised.

#Centralisation and Decentralisation

● Centralisation and decentralisation are relative terms, as seen from the existing status of various
business enterprises.
● An organisation is centralised when decision-making authority is retained by higher management levels
whereas it is decentralised when such authority is delegated.
● 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.
● On the other hand, 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 ie 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.
● This is because in large organisations those 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. Thus, it can be said that every
organisation will be characterised by both centralisation and decentralisation.

#Importance of Decentralisation
(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.
● It also keeps them in a state wherein they are constantly challenged and have to develop solutions for
the various problems they encounter.
● A decentralisation policy helps to identify those executives who have the necessary potential to
become dynamic leaders.

(ii) Develops managerial talent for the future:

● Decentralisation gives them a chance to prove their abilities and creates a reservoir of qualified
manpower who can be considered to fill up more challenging positions through promotions.
● It also helps to identify those who may not be successful in assuming greater responsibility.
● Thus, it is a means of management education as well as an opportunity for trained manpower to use its
talent in real life situations.
●
iii) Quick decision making:
● In centralised organisation because every decision is taken by the top management the flow of
information is slow as it has to traverse many levels (Response also takes time).
● Reducing the speed of decision making and makes it difficult for an enterprise to adapt to dynamic
operating conditions.
● In a decentralised organisation, however ,since decisions are taken at levels which are nearest to the
points of action and there is no requirement for approval from many levels, the process is much faster.
● There are also less chances of information getting distorted because it doesn’t have to go through long
channels.

(iv) Relief to top management:

● Decentralisation diminishes the amount of direct supervision exercised by a superior over the activities
of a subordinate because they are given the freedom to act and decide albeit within the limits set by the
superior.
● Personal supervision is generally replaced by other forms of control such as return on investment etc.
● Decentralisation also leaves the top management with more time which they can devote to important
policy decisions rather than occupying their time with both policy as well as operational decisions.
● In fact decentralisation is greatest when checking required on decisions taken by lower levels of
management is least.

(v) Facilitates growth:

● Decentralisation awards greater autonomy to the lower levels of management as well as divisional or
departmental heads.
● This allows them to function in a manner best suited to their department and fosters a sense of
competition amongst the departments.
● Consequently, with each department doing its best in a bid to outdo the other, the productivity levels
 increase and the organisation is able to generate more returns which can be used for expansion
purposes.

vi) Better control:

● Decentralisation makes it possible to evaluate performance at each level and the departments
can be individually held accountable for their results.
● The extent of achievement of organisational objectives as well as the contribution of each
department in meeting the overall objectives can be ascertained.
● Feedback from all levels helps to analyse variances and improve operations.
● In decentralisation, one of the challenges is the accountability of performance.
● In response to this challenge, better control systems are being evolved such as the balance
score card and management information system.
● Decentralisation compels the management to innovative performance measurement systems.

➔ It must be noted that in spite of its benefits decentralisation should be applied with caution as
it can lead to organisational disintegration
➔ if the departments start to operate on their own guidelines which may be contrary to the
interest of the organisation.
➔ Decentralisation must always be balanced with centralisation in areas of major policy
decisions.