Unit- 5: ORGANISING

Summary of the Chapter

Organising - “Identifying and grouping different activities in the organisation and
bringing together the physical, financial and human resources to establish most
productive relations for the achievement of specific goal of organisation.”

Organising Process- IDAE

1. I- Identification and Division of Work
2. D- Departmentalisation
I. Functional departmentation
II. Divisional departmentation
3. A- Assignment of duties
4. E- Establishing reporting relationship.

Importance of Organising – BADO CEED

1. B-Benefits of specialization
2. A-Adaptation to changes
3. D-Development of Personnel
4. O-Optimum utilisation of resources
5. C-Clarity in working relationship
6. E- Effective administration
7. E- Expansion and growth
8. D- Development of personnel

Organisation Structures (Skeleton of organisation)

 Outcome of organising function

 “ Network of job positions, responsibilities and authority at different levels”
 “ frame work within which management and operational tasks are
performed.”
 Span of Management:- Number of subordinates / workers under one superior

1. Functional Structure–Created on the basis of different functions.

Advantages of functional structure

 Benefits of specialisation
 Coordination is Established
 Managerial Efficiency is Increased
 Easy and effective training
 Due attention to different functions.

Disadvantages
 Problem in coordination
 Conflicts of interest
 Less emphasis of overall objectives
  Inflexibility
 Difficult to fix accountability
Suitability
 Division of work as per functions
 Specialisation in every function
 Grouping of similar nature of job
 Uniproduct of single or one type of product manufacturing company

2. Divisional Structure – Created on the basis of different products produced by

business

Advantages
 Fast decision making
 Product specialization
 Flexibility
 Easy to fix accountability
 It facilitates Expansion and Growth
Disadvantages
 Product focus department
 Increase in cost
 Ignore organizational interests

Suitability:
 Organisation producing multi-product or different line of products
 Requires product specialization
 Growing companies which plan to add more line of product in future.

Delegation of Authority-
 Transfer of authority from superiors to his subordinates.
 Includes two levels
 Routine activity
 Elements-

1. Authority (Power to take decision)

2. Responsibility (Obligation to perform a task)

3. Accountability. (Answerable for the output of assigned task)

Relationship between authority, Responsibility and Accountability:

 Authority is delegated, responsibility is assumed and accountability is imposed.
 Responsibility is derived from authority and accountability is derived from
responsibility.
Importance of Delegation
1. Effective management
2. Employees’ Development
3. Motivation of Employees
4. Facilitates organisational growth
5. Basis of Management hierarchy
6. Better coordination
7. Reduces the work load of managers
CENTRALISATION AND DECENTRALISATION

Centralisation Concentration of power in few hands

Decentralisation - It refers to the systematic transfer of authority throughout the

organisation on permanent basis.
Features:
1. Decentralisation is much more than a mere transfer of authority
2. Selective dispersal of authority
3. It shows belief that people are competent, capable and resourceful
4. Recognizes the need of authority for decision makers
5. The top management carefully selects those decisions which will be pushed down to
lower level and those that will be retained at higher level.

Relation between Delegation and Decentralisation:

 Decentralisation is extension of delegation. In delegation, we multiply the
authority with two, whereas in decentralisation the authority is multiplied by many
 Delegation is necessary but decentralisation is optional
Importance of decentralisation:
i) Relief to top management

ii) Develops initiative among subordinates

iii) Develops managerial talent for the future

iv) Facilitates growth

v) Quick decision making

vi) Better control

Differentiate between Delegation and Decentralisation

Types of organisation-(Not in syllabus)

1. Formal Organisation – An organization which is deliberately created to achieve

organizational objectives

2. Informal organisation – Natural grouping of people in organization to satisfy

personal and social needs of employees.

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