Nature of organization & management

1. 1. NATURE OF ORGANIZATION & MANAGEMENT Lav Nigam1

2. 2. Nature Of Organization What is an organization? An organization is a collection of people who
work together and coordinate their actions to achieve a wide variety of goals 2
3. 3. Nature Of Organization Formal & Informal Organization: Formal organization characterized by
intentional structure of Roles & Responsibilities coordinated towards achievement of common
goals. Informal organization is characterized by group of people within the organization having
common values, interests & desires. Eg the various clubs in organizations, employees meeting
together during tea & lunch time. Informal organization plays an important role in the formal
structure. Principles Of Organization:  Division of Labor  Unity Of Command  Authority &
Responsibility  Span Of Control 3
4. 4. Nature Of Organization Division Of Labor: Breaking down of jobs into simple & repetitive tasks.
Individual specialize in part of job. Eg: Assembly line production. Advantages: 1. Efficient use of
diversity of skilled / unskilled labor 2. Repetition improves performance skill. 3. No time wasted in
putting away tools & equipments while changing jobs. 4. Training for specialization is more
efficient from organization’s perspective. Disadvantages:  Leads to boredom, fatigue, stress, low
productivity, poor quality, absenteeism & high turnover. To overcome this, employees were given
variety of activities. Techniques like Job Enlargement & Job Enrichment are practised. 4
5. 5. Nature Of Organization Unity Of Command: No member of organization should report to more
than one superior. This is to ensure that conflicting demands & priorities are not received by the
employee. Modern organizations have employees reporting to more than one superior, eg in
matrix organization structure. Authority & Responsibility: Authority is the right inherent in a
manager to give orders & be obeyed. Required to coordinate activities in an organization. Can be
delegated to subordinates for proper functioning & efficient performance. Responsibility comes
with authority. Two types of responsibility: 1. Operating Responsibility – can be delegated to
subordinate 2. Ultimate responsibility – cannot be delegated. Remains with the manager who is
accountable for the actions & omissions of his subordinates. 5
6. 6. Nature Of Organization Span Of Control: Refers to the number of people the manager controls.
Difficult to determine the optimum number. Narrow span leads to many hierarchies and a tall
organization structure. Wide span will result in few hierarchies and a wider structure. Scalar
principle: Authority & responsibility should flow in a clear unbroken line from top to bottom. This
implies that organization is a hierarchy. Departmentalization: Breaking down activities into
specialized groups. Purpose is to specialize activities, simplify task of managers & maintain
control. Massie suggests following criterion for departmentalization:  Group simple activities
together based on likeness of persons, qualifications, or common purpose (medical etc)  Activity
may be grouped with other activities with which it is used ( safety & production).  Functions to be
assigned to executives most interested  6
7. 7. Nature Of Organization Departmentalization: (contd)  Activities to be grouped to encourage
competition among departments or avoid friction amongst departments.  When difficulty in
making definite distinctions in two activities, group them together.  Functions requiring close
coordination should be grouped together. Span Of Management: No ideal number for the
management span. Davis identified two spans: (1) Operative span of lower level managers & (2)
Executive span of middle & top management. Suggested that operative span should be around 30
and executive span not more than 6. Today, focus is on identifying factors that make span more
effective. 7
8. 8. Forms Of Business Organization Forms Of Business Organizations: Private Enterprise:  Sole /
Proprietary / Trader  Partnership  Company – Private Co or Public Co. Co-operative Sector
 Enterprise:  Co-operative Society  Co-operative Store Public Sector Enterprise:  Government
departments  Government Companies  Statutory Corporation  Statutory Board Or
Commissions 8
9. 9. SAMPLE ORGANIZATION STRUCTURE 9
10. 10. Definition Of Management Definition: “ Effective & Efficient integration & coordination of
resources to achieve the desired objectives”. Thus, management is a process by which managers
create a climate so that employee achieves both personal & organizational growth. This implies: 
Process by which personal & organizational goals achieved  Process implies planning,
organizing, staffing, leading & controlling – functions of management  Management process
influenced by environment – external & internal  Managers act as facilitators for achievement of
goals. 10
11. 11. Goals Of Management Goals Of Management: Ultimate aim of any business organization is to
make profit. Desirable aim is to create a surplus. Achieved by creating & maintaining an
environment in which individuals can achieve common organizational goals by spending
minimum amount of time, money, material & achieve maximum personal satisfaction. Thus, goal
is task related & maintenance related (maintaining personal satisfaction). Another perspective of
goal is to increase productivity. Productivity = Output / Input Productivity also implies
effectiveness & efficiency. Effectiveness gauged by attainment of objectives. Efficiency gauged by
attainment of objectives with judicious use of resources. Management concerned with not only
achieving objectives but achieving them efficiently. 11
12. 12. Functions Of Manager Functions Of A Manager: An individual who plans, organizes, staffs, leads
& controls resources effectively & efficiently to attain organizational goals. Planning: Futuristic
perspective. Setting goals to meet the organization objectives. Involves forecasting, identifying
threats & opportunities in external environment, strengths & weakness in internal environment,
setting objectives & taking decision on course of action to be taken to achieve the objectives.
Determines where we are & where we would want to be. How to bridge the gap. Manager plans to
identify the most appropriate course of action to meet the future conditions. Corporate Planning
department formulates strategic plan of organization – long term objectives, strategy, product /
services. Subsequently, operational plan, delegate authority & responsibility to various units. 12
13. 13. Functions Of Manager Organizing: Grouping of activities, allocating authority among members
so that they can achieve the organization goals. Function creates organization structure,
delegation of authority, creates hierarchy. Goals of organization determine type of structure. Ex:
Start-up require simple structure, manufacturing organization require classical organization,
government department require bureaucratic organization. Staffing: Involves manning & keeping
the different positions manned in the organization structure. Achieved by identifying the skills
required, recruiting, selecting, appraising, training and developing organization personnel.
Leading: Most important function of the manager. Influence the subordinates to direct efforts
towards achievement of organization goal – motivate and maintain an effective system of
communication. Manager should understand the needs of subordinates & help them in satisfying
them and coordinating them with organizational objectives. 13
14. 14. Functions Of Manager Controlling: Ensure that the actions of the subordinates are as per plan &
lead towards the organization goal. Involves setting of standards of performance at strategic point,
measuring actual performance (monitoring & reviewing activities of supervisor) & taking corrective
action where ever required. This helps manager to ensure that actions of subordinates are leading
the organization towards it’s stated goals. Managerial function performed at all levels – CEO to
supervisor in all organizations – small, large organization, hospital, manufacturing, service, NGO
etc. Top level managers spend more time in planning & organizing. First level manager (supervisor)
spend more time in leading. Top level manager function at the macro-level (organization), lower
level manager operate at micro-level (individual & work group). 14
15. 15. Time Distribution Of Management Function Time Distribution Of Manager Top-Level Managers
Planning Organizing Leading Controlling Middle-Level Managers Planning Organizing Leading
Controlling Activity Lower Level Managers Planning Organizing Leading Controlling Time
Distribution Of Managerial Function 15
16. 16. Types Of Manager Types Of Manager: Hierarchy: 1. First Level Manager: Lowest level of
managerial hierarchy. Supervisor, foreman, junior manager. Supervise & direct non- managerial
employees. 2. Middle Manager: Can be of more than one level. Manage & direct first level managers
& other operating employees. Major activity involve implementing policies of organization. 3. Top
Manager: Responsible for overall management of organization. Set long term goals for
organization by studying & forecasting the external environment. Functional: Like Production,
Marketing, Sales, HR etc. responsible for one functional area. General Manager responsible for all
the activities of the organization. 16

17. 17. Management Skills Management Skills:

Katz identified 3 basic skills: technical, human &
conceptual. Technical Skill: Ability to use tools,
procedures, techniques & knowledge of
specialized skills. Ex: Accountants, engineers &
doctors. Human Skill: Ability to work with,
understand and motivate other employees as
individual & groups. Conceptual Skill: Ability to
see the organization as a whole, to recognize
significant elements in a situation, and to
understand the relationship among the
elements. Cognitive ability to coordinate &
integrate all the activities of the organization. All
skills are required at any level. Technical skills at
lower levels, conceptual skills at higher level and
Human skill are important at all levels. 17
18. 18. Management Skills Top-Level Managers
Technical Human Conceptual Middle-Level
Managers Technical Human Conceptual Lower
 Level Managers Technical Human Conceptual
Management Skills 18
19. 19. Roles Of A Manager Roles Of Manager: Position that is acted by an individual in an organization.
Manager plays several formal & informal roles. Informal role not prescribed by organization. Same
person may have one role in one situation & another role in another situation. Mintzberg (1973)
proposed the managerial roles under three categories: 1. Interpersonal Role – managing through
people 2. Informational Role – managing by information 3. Decisional Role – managing through
action 19
20. 20. Mintzberg’s Managerial Role Formal Authority Interpersonal Roles FigureHead Leader Liaison
Informational Roles Monitor Disseminator Spokesperson Decisional Roles Entrepreneur
Disturbance Resource Allocator Negotiator Mintzberg's Managerial Role 20
21. 21. Role Of A Manager Interpersonal Role: Arises directly from Formal authority.  Figurehead:
Performs ceremonial role like greets visitors / clients, sign legal documents, eg. President /
Marketing manager. Sales manager goes for lunch with clients.  Leader: Encourage subordinates
to achieve organization objectives. Achieved by motivating subordinates, training, counseling,
communicating with subordinates & coordinating individual needs with that of organization. 
Liaison: Interacting with others outside organization like suppliers, clients, government officials,
business associates etc. Informational Role: Giving & Receiving Information.  Monitor: Seek &
receive information, scan periodicals & reports environment for information and maintain
personal contacts  Disseminator: Give some information directly to subordinates. 
Spokesperson: Send information to people outside the organization through speeches, reports,
memos, interviews etc 21 
22. 22. Role Of A Manager Decision Maker:  Entrepreneur: Initiates development of project, identify
new ideas, arrange for the resources.  Disturbance Handler: Acts as crisis manager reacting to
problems & pressures of the situation, resolve conflicts amongst subordinates.  Resource
Allocator: Decides who gets resources, scheduling , budgeting, setting priorities in his department.
 Negotiator: Represent department during negotiation with union, suppliers and generally
defends interests of unit / organization 22
23. 23. Role Of A Manager Another study by Luthans (Real Managers Study – 1988), managerial
activities noticed by trained observers. Four management activities observed: 1. Communication –
Exchanging information, handling paperwork, mails (29%). 2. Traditional Management – Planning,
decision making, controlling (32%) 3. Networking – Interacting with outsiders, socializing /
politicking (19%). 4. Human Resource Management – Motivating / Reinforcing, Disciplining /
punishing, Managing conflict, Staffing, Training / Development (20%). Research also indicated that
networking was an important activity for manager’s success. But it did not contribute to the
manager’s effectiveness. Human Resources management had a strong relationship to
effectiveness. 23
24. 24. Management Challenges Management Challenges: Modern business functions in a complex &
intricate environment due to liberalization of Indian economy opening entry of global market.
Resulted in new opportunities for growth & expansion , increased threat of competition. Survival in
the highly competitive industry a real challenge. Globalization: Phenomenon by which markets
and production in different country are becoming increasingly interdependent due to dynamics of
trade in goods & services & flow of capital & technology. Entry of MNC’s in India (Honda, Ford,
McDonald etc). Indian companies went global (Infosys, Aditya Birla etc). Indian companies linked
to global market. Had to follow regulations imposed by WTO, ISO, EU norms. Challenge for
organizations to re-invent themselves to meet global competition. 1. 24
 25. 25. Management Challenges Knowledge Management: Process of discovering & harnessing an
organization’s intellectual resources. Process of creating, capturing, sharing & using knowledge.
Knowledge managers identify these human assets & help them generate new ideas, harness these
ideas into successful innovations. Organization that fails to develop a framework for utilization will
not have a long term competitive advantage. Biggest challenge is managing intellectual capital.
Internet: Management influenced by growth of communication facilities. Virtual teams breaking
geographical boundaries, management must happen via the web. Internet helps managers keep in
touch with partners, suppliers & customers. Provides a challenge for identifying opportunities &
exploiting them quickly & more effectively than the competitor. 25
26. 26. THANK YOU 26

Organization Structure
An organization structure is a framework that allots a particular space for a particular department or
an individual and shows its relationship to the other.An organization structure shows the authority
and responsibility relationships between the various positions in the organization by showing who
reports to whom.

17  The structure of an organization is generally shown on an organization chart.

18  Principles of Organization Structure

Line and Staff Relationships:Line authority refers to the scalar chain, or to the superior-subordinate
linkages, that extend throughout the hierarchy (Koontz, O'Donnell and Weihrich).Line employees are
responsible for achieving the basic or strategic objectives of the organization, while staff plays a
supporting role to line employees and provides services.

19  Departmentalization:
Departmentalization is a process of horizontal clustering of different types of functions and activities
on any one level of the hierarchy. Departmentalization is conventionally based on purpose, product,
process, function, personal things and place.

20  Span of Control:This refers to the number of specialized activities or individuals supervised by

one person. Deciding the span of control is important for coordinating different types of activities
effectively.

21  De-centralization and Centralization:

De-centralization refers to decision making at lower levels in the hierarchy of authority. In contrast,
decision making in a centralized type of organizational structure is at higher levels. Every
organizational structure contains both centralization and decentralization, but to varying degrees.
The extent of this can be determined by identifying how much of the decision making is concentrated
at the top and how much is delegated to lower levels. Modern organizational structures show a
strong tendency towards decentralization.