UNIT -3

It entails defining jobs and working relationships, assigning different tasks associated with the
plans, arranging and allocating resources, design a structure which distinguishes duties,
responsibilities and authorities, scheduling activities, in order to maintain smoothness and
effectiveness in operations.

Characteristics/Nature of Organizing

Organizing has the following characteristics:

 Division of Labor: Work is assigned to the employee who is specialized in that work.
 Coordination: Different members of the organization are given different tasks to perform when
all the tasks are put together logically and sequentially, it results in the objectives, so
coordination is required.
 Objectives: Objectives need to be specifically defined.
 Authority-Responsibility Structure: For an effective authority responsibility structure,
the position of each manager and executive is specified, as per the degree of the authority
and responsibility assigned to them, while performing the duties.
 Communication: The techniques flow and importance of communication must be known to all
the members.

Process of Organizing

Organizing is the core function which binds all the activities and resources together in a
systematic and logical sequence. It encompasses a number of steps which are pursued to achieve
organizational goals. Now, we will discuss those steps in detail:

1. Identification and division of work: Organizing process begins with identifying the work
and dividing them as per the plans. Basically, the work is classified into different manageable
activities, to avoid redundancy, and sharing of work is encouraged.
2. Departmentalization: After classifying the work into different activities, the activities having a
similar nature are grouped together. This process is called as departmentalization which
facilitates specialization and forms the basis for creating departments.

3. Assignment of the task: After the formation of departments, employees are placed in different
departments under a manager, called as a departmental manager. Thereafter, employees are
assigned the jobs as per their skills, qualifications and competencies. For the effectiveness of
the performance, the manager must ensure that there is a proper match between the job and the
incumbent, i.e. the right person has to be placed at the right job.

4. Establishment of organizational hierarchy: Deployment of work is not all, the employees

must be aware of whom they have to report and who can give them orders. Hence, work
relationships need to be established clearly, which helps in the creation of a hierarchical
structure of the organization.

5. Provision of resources to the members: Arrangement and deployment of resources such

as money, materials, supplies, and machine, etc. which are important to carry out day to day
operations of the organization.

6. Coordination of efforts and scheduling of activities: The final step to this process is the
coordination of efforts and scheduling the activities in a logical and systematic manner so that
the common objectives can be achieved effectively.

Importance/Significance of Organizing

Organizing is integral to management as it facilitates the smooth functioning of the enterprise.

The importance of organizing is as under:
 Advantage of Specialization: Organizing helps in the classification of jobs systematically
amongst the workforce, which helps in the reduction of workload, as well as improved
productivity. This is because the organization will get the benefit of specialization
wherein workers will perform specific work on a regular basis, according to their
competency.

 Describes work relationships: The definition of work relationships describes the flow of
communication and determine the superior-subordinate relationship. This removes confusion
and chaos, in getting orders and instructions.

 Effective utilization of resources: Organizing function ensures the best possible utilization of
resources whether it is human, material, financial or technical. This is because jobs are
assigned to the employees who avoid overlapping and duplication of work.

 Adaptation to change: Organizing process helps the organization to survive and adapt
the changes, by making substantial changes in the strategies, hierarchy, relationships, etc.

 Development of personnel: Organizing encourages creativity in executives. Delegation of

authority reduces their workload and they get time to identify new methods to perform the
work. It also enables them to explore new areas for their growth and development.

In a nutshell, with organizing the manager brings order out of disorder, removes confusion with
respect to work and responsibility, and frames an ideal environment where all the members of
the organization can work in tandem.

Delegation of Authority

Delegation of Authority means division of authority and powers downwards to the subordinate.
Delegation is about entrusting someone else to do parts of your job. Delegation of authority can
be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve
effective results.
In other words, a delegation of authority involves the sharing of authority downwards to the
subordinates and checking their efficiency by making them accountable for their doings. In an
organization, the manager has several responsibilities and work to do. So, in order to reduce his
burden, certain responsibility and authority are delegated to the lower level, i.e. to the
subordinates, to get the work done on the manager‘s behalf.

Under the delegation of authority, the manager does not surrender his authority completely, but
only shares certain responsibility with the subordinate and delegates that much authority which
is necessary to complete that responsibility.
 Features of Delegation of Authority

1. Delegation means giving power to the subordinate to act independently but within the
limits prescribed by the superior. Also, he must comply with the provisions of the
organizational policy, rules, and regulations.

2. Delegation does not mean that manager give up his authority, but certainly he shares
some authority with the subordinate essential to complete the responsibility entrusted to
him.

3. Authority once delegated can be further expanded, or withdrawn by the superior depending
on the situation.

4. The manager cannot delegate the authority which he himself does not possess. Also, he can
not delegate his full authority to a subordinate.

5. The delegation of authority may be oral or written, and may be specific or general.

6. The delegation is an art and must comply with all the fundamental rules of an organization.

Importance of Delegation
1. Through delegation, a manager is able to divide the work and allocate it to the
subordinates. This helps in reducing his work load so that he can work on important areas
such as - planning, business analysis etc.
2. With the reduction of load on superior, he can concentrate his energy on important and
critical issues of concern. This way he is able to bring effectiveness in his work as well
in the work unit. This effectively helps a manager to prove his ability and skills in the
best manner.
3. Delegation of authority is the ground on which the superior-subordinate relationship
stands. An organization functions as the authority flows from top level to bottom. This in
fact shows that through delegation, the superior-subordinate relationship become
meaningful. The flow of authority is from top to bottom which is a way of achieving
results.
4. Delegation of authority in a way gives enough room and space to the subordinates to
flourish their abilities and skill. Through delegating powers, the subordinates get a feeling of
importance. They get motivated to work and this motivation provides appropriate results to
a concern. Job satisfaction is an important criterion to bring stability and soundness in the
relationship between superior and subordinates. Delegation also helps in breaking the
 monotony of the subordinates so that they can be more creative and efficient.
5. Delegation of authority is not only helpful to the subordinates but it also helps the managers
to develop their talents and skills. Since the manager get enough time through delegation to
concentrate on important issues, their decision-making gets strong and in a way they can
flourish the talents which are required in a manager. Through granting powers and getting
the work done, helps the manager to attain communication skills, supervision and guidance,
effective motivation and the leadership traits are flourished. Therefore it is only through
delegation, a manager can be tested on his traits.
6. Delegation of authority is help to both superior and subordinates. This, in a way, gives
stability to a concern‘s working. With effective results, a concern can think of creating
more
departments and divisions flow working. This will require creation of more managers which can be
fulfilled by shifting the experienced, skilled managers to these positions. This helps in both virtual as
well as horizontal growth which is very important for a concern‘s stability.

Elements of Delegation

1. Authority - in context of a business organization, authority can be defined as the power

and right of a person to use and allocate the resources efficiently, to take decisions and to
give orders so as to achieve the organizational objectives.

Authority must be well-defined. All people who have the authority should know what is the
scope of their authority is. Authority is the right to give commands, orders and get the things
done. The top level management has greatest authority.

Authority always flows from top to bottom. It explains how a superior gets work done from
his subordinate by clearly explaining what is expected of him and how he should go about it.
Authority should be accompanied with an equal amount of responsibility. Delegating the

authority to someone else doesn‘t imply escaping from accountability. Accountability still
rest with the person having the utmost authority.

2. Responsibility - is the duty of the person to complete the task assigned to him. A person
who is given the responsibility should ensure that he accomplishes the tasks assigned to him.
If the tasks for which he was held responsible are not completed, then he should not give
explanations or excuses. Responsibility without adequate authority leads to discontent and
dissatisfaction among the person.

Responsibility flows from bottom to top. The middle level and lower level management
holds more responsibility. The person held responsible for a job is answerable for it. If he
performs the tasks assigned as expected, he is bound for praises. While if he doesn‘t
accomplish tasks assigned as expected, then also he is answerable for that.

3. Accountability - means giving explanations for any variance in the actual performance
from the expectations set. Accountability can not be delegated. For example, if ‘A‘ is given
a task with sufficient authority, and ‘A‘ delegates this task to B and asks him to ensure that
task is done well, responsibility rest with ‘B‘, but accountability still rest with ‘A‘.

The top level management is most accountable. Being accountable means being innovative
 as the person will think beyond his scope of job. Accountability, in short, means being
answerable for the end result. Accountability can‘t be escaped. It arises from responsibility.

For achieving delegation, a manager has to work in a system and has to perform following steps:
-
1. Assignment of tasks and duties

2. Granting of authority

3. Creating responsibility and accountability

Delegation of authority is the base of superior-subordinate relationship, it involves
following steps:-

1. Assignment of Duties - The delegator first tries to define the task and duties to the
subordinate. He also has to define the result expected from the subordinates. Clarity of
duty as well as result expected has to be the first step in delegation.
2. Granting of authority - Subdivision of authority takes place when a superior divides and
shares his authority with the subordinate. It is for this reason, every subordinate should be
given enough independence to carry the task given to him by his superiors. The managers
at all levels delegate authority and power which is attached to their job positions. The
subdivision of powers is very important to get effective results.
3. Creating Responsibility and Accountability - The delegation process does not end once
powers are granted to the subordinates. They at the same time have to be obligatory
towards the duties assigned to them.

Responsibility is said to be the factor or obligation of an individual to carry out his duties in
best of his ability as per the directions of superior. Responsibility is very important.
Therefore, it is that which gives effectiveness to authority. At the same time, responsibility is
absolute and cannot be shifted.

Accountability, on the others hand, is the obligation of the individual to carry out his duties
as per the standards of performance. Therefore, it is said that authority is delegated,
responsibility is created and accountability is imposed.

Accountability arises out of responsibility and responsibility arises out of authority.

Therefore, it becomes important that with every authority position an equal and opposite
responsibility should be attached.
Principles of Delegation
The principles of delegation are as follows: -

1. Principle of result excepted

This principle suggests that every manager before delegating the powers to the subordinate
should be able to clearly define the goals as well as results expected from them. The goals
and targets should be completely and clearly defined and the standards of performance
should also be notified clearly.

For example, a marketing manager explains the salesmen regarding the units of sale to take
place in a particular day, say ten units a day have to be the target sales. While a marketing
manger provides these guidelines of sales, mentioning the target sales is very important so
that the salesman can perform his duty efficiently with a clear set of mind.

2. Principle of Parity of Authority and Responsibility

According to this principle, the manager should keep a balance between authority and
responsibility. Both of them should go hand in hand.

According to this principle, if a subordinate is given a responsibility to perform a task, then

at the same time he should be given enough independence and power to carry out that task
effectively. This principle also does not provide excessive authority to the subordinate
which at times can be misused by him. The authority should be given in such a way which
matches the task given to him. Therefore, there should be no degree of disparity between
the two.

3. Principle of absolute responsibility

This says that the authority can be delegated but responsibility cannot be delegated by
managers to his subordinates which means responsibility is fixed. The manager at every
level, no matter what is his authority, is always responsible to his superior for carrying out
his task by delegating the powers. It does not means that he can escape from his
responsibility. He will always remain responsible till the completion of task.

Every superior is responsible for the acts of their subordinates and are accountable to their
superior therefore the superiors cannot pass the blame to the subordinates even if he has
delegated certain powers to subordinates example if the production manager has been given
 a work and the machine breaks down. If repairmen are not able to get repair work done,

production manager will be responsible to CEO if their production is not completed.

4. Principle of Authority level

This principle suggests that a manager should exercise his authority within the
jurisdiction/framework given.

The manager should be forced to consult their superiors with those matters of which the
authority is not given that means before a manager takes any important decision, he should
make sure that he has the authority to do that on the other hand, subordinate should also not
frequently go with regards to their complaints as well as suggestions to their superior if they
are not asked to do.

This principle emphasizes on the degree of authority and the level up to which it has to be

maintained.

Process of Delegation of Authority

The process of delegation of authority comprises of four steps which are as follows:

1. Assignment of Duties to Subordinates: Before the actual delegation of authority, the delegator
must decide on the duties which he wants the subordinate or the group of subordinates to
perform. Here, the manager lists the activities to be performed along with the targets to be
achieved, and the same is spelled out to the subordinates. Thus, in the first stage, the duties
are assigned to the subordinates as per their job roles.
2. Transfer of Authority to perform the duty: At this stage, an adequate authority is delegated to
the subordinate who is essential to perform the duty assigned to him. A manager must make
sure; that authority is strictly delegated just to perform the responsibility, as more authority may
lead to its misuse by the subordinate.

3. Acceptance of the Assignment: At this stage, the subordinate either accepts or rejects the tasks
assigned to him by his superior. If the subordinate or the delegate, refuses to accept the duty
and the authority to perform it, then the manager looks for the other person who is capable of
and is willing to undertake the assignment. Once the assignment gets accepted by the
subordinate, the delegation process reaches its last stage.

4. Accountability: The process of delegation of authority ends at the creation of an obligation on

the part of the subordinate to perform his responsibility within the powers assigned to him. Once
the assignment is accepted by the subordinate, then he becomes responsible for the completion
of the duty and is accountable to the superior for his performance.

Thus, the process of delegation of authority begins with the duties assigned to the
subordinates and ends when the subordinate is obliged to carry out the operations as intended.

Span Of Control

Span of Control can be defined as the total number of direct subordinates that a manager can
control or manage. The number of subordinates managed by a manager varies depending on the
complexity of the work.

For example, a manager can manage 4-6 subordinates when the nature of work is complex,
whereas, the number can go up to 15-20 subordinates for repetitive or fixed work.
Factors affecting span of control

The span of control means the total number of employees that a manager or superior can
manage. Several factors are taken into consideration before allocating subordinates to a
supervisor.

1. Type of work to be managed

The most crucial factor that affects the span of control and management skills of a manager is
the type of work. If all the subordinates are doing the same job at the same time, then it is easy
for a manager or superior to manage all employees at the same time.
For example, it is easy for a supervisor to manage 50 call executives at the same time because
they are doing similar work at the same time. On the other hand, a professor can take two or a
maximum of four students pursuing a doctorate.

The reason being is that all students work on different research topics, and the professor
can‘t manage all of his students at the same time.

2. Geographical distribution
If the branches of business are located at far geographic locations, then it becomes difficult for a
manager to manage all the executives working at all the branches. Therefore, areas will be
divided into clusters, and different managers are hired to manage each cluster.
In this way, each manager can effectively manage all employees working in small areas. For
example, if a company has its branches all over the world, then all branches can be divided
country wise and country managers can be hired to manage all people working in that area.

3. Administrative tasks performed by a manager

The span of control of a manager reduces if he is required to complete several administrative
tasks daily. For example, an HR manager is required to conduct Face-to-face meetings with
employees, prepare appraisal development plans, prepare job descriptions, conduct interviews of
employees to be hired, preparing employment contracts, design policies, explaining changes in
policies, discussing remuneration benefits.
All of these tasks require efforts at a manager‘s end. Therefore, an HR manager can manage
employees working in one office. Because of this reason, different HR managers are required in
various branches of a company.
4. The capability of the Manager

An experienced manager with a good understanding of the work and having good relationships
with employees can manage a higher number of employees. Whereas, an inexperienced manager
with limited skills can handle a few employees.

5. Capabilities of employees
The span of control of a manager not only depends on the capabilities of a manager but also
depends on the capabilities of employees to be managed. A manager, no matter how much
experienced he is, can handle only a few inexperienced or new employees at one time.
Since employees are required to be trained to do their work efficiently, the manager is expected
to spend a lot of time with each employee. As a result, it becomes difficult for a manager to
manage many subordinates at one time.
On the other hand, a manager can manage fully-trained and experienced employees at the same
time because he is not required to teach every small task to them.

6. Responsibility for other tasks

The span of control of a manager will reduce if he has duties of different jobs on his shoulders.
That means he will be able to dedicate a limited time to manage his subordinates.

For example, a professor is not only required to handle and help his doctorate students, but it is
also necessary for him to dedicate time to his research work and to take theory classes of other
students.

7. Manager‘s value addition

A manager who is also providing training and skill development classes will need a small span
of control as compared to the manager who is exclusively managing his subordinates.

LINE AND STAFF AUTHORITY

Line Authority

Line authority is the type of authority that reflects superior-subordinate relationships. This is
the most fundamental authority in an organization characterized by power of decision making.
Line authority is the predominant component used in companies with a line organizational
structure where direct lines of authority flow from top management, and the lines
of responsibility flow in the opposite direction.

Line authority is a top-down approach to management where the decisions are made by the top
management and communicated to the lower level staff in a hierarchy (a system in which
employees are ranked according to relative status). Line managers are assigned to manage teams
that operate with the intention of achieving an intended result. Organizations with line authority
allow better exertion of unified control.

Line authority is a less complicated way of allocating responsibility since every employee is
clear regarding his or her position and clear lines of authority and responsibility is allocated to
them. However, since this is a top down approach, it often results in one-way communication.
Decisions are taken by the top management and complaints and suggestions of lower level staff
may not be communicated back to the top authority. Lower level staff are closer to the
customers. Thus, their experience and suggestions should be incorporated in decision-making.
Figure 01: Organizational hierarchy is directly linked with line authority

Staff Authority

Staff authority refers to the right to advice on improving the effectiveness for line employees in
performing their duties. Staff personnel are generally independent employees who do not
report to line managers, and they can be external staffs who are temporarily employed to
perform a particular task. These are highly specialized individuals, thus are employed for their
expert knowledge and the ability to add value to the company.

Staff personnel may not be employed by all types of organizations. Since they are highly
specialized, the cost of recruiting them is higher. Thus, they may not be affordable for small
organizations. However, the larger the organization, the greater the need and ability to employ
staff personnel since there is a need for expertise in diversified areas. Thus, the size of the
organization is a significant factor in determining whether staff personnel should be employed.
Types of Staff

The staff position established as a measure of support for the line managers may take the
following forms:
Personal Staff: Here the staff official is attached as a personal assistant or adviser to the line
manager. For example, Assistant to managing director.
 Specialized Staff: Such staff acts as the fountainhead of expertise in specialized areas like R &
D, personnel, accounting etc.
General Staff: This category of staff consists of a set of experts in different areas who are
meant to advise and assist the top management on matters called for expertise. For example,
Financial advisor, technical advisor etc.

Difference between Line Authority and Staff Authority

Line Authority vs Staff Authority
Line authority is the type of authority that reflects Staff authority refers to the right to advice on
superior-subordinate relationships characterized by improving the effectiveness for line employees
the power of decision making. in performing their duties.

Main Responsibility

Line managers are responsible for directing, Main responsibility of line staff is to provide
motivating and supervising employees towards expert advice and support to line staff to
achieving organizational goals. allow smooth flow of operations.

Specialization

Level of specialization is low in line authority. High specialization is seen in staff authority.

Adaptation to Environment

Line authority is mostly suitable for small and Staff authority can bring wider benefits for
medium scale organizations. large- scale organizations.

Centralization

Centralization refers to the process in which activities involving planning and decision-making
within an organization are concentrated to a specific leader or location. In a centralized
organization, the decision-making powers are retained in the head office, and all other offices
receive commands from the main office. The executives and specialists who make critical
decisions are based in the head office.
Similarly, in a centralized government structure, the decision-making authority is concentrated at
the top, and all other lower levels follow the directions coming from the top of the organization
structure.
Advantages of Centralization

An effective centralization offers the following advantages:

1. A clear chain of command

A centralized organization benefits from a clear chain of command because every person within
the organization knows who to report to. Junior employees know who to approach whenever
they have concerns about the organization.

On the other hand, senior executives follow a clear plan of delegating authority to employees
who excel in specific functions. The executives also gain the confidence that when they delegate
responsibilities to mid-level managers and other employees, there will be no overlap. A clear
chain of command is beneficial when the organization needs to execute decisions quickly and in
a unified manner.

2. Focused vision
When an organization follows a centralized management structure, it can focus on the fulfillment
of its vision with ease. There are clear lines of communication and the senior executive can
communicate the organization‘s vision to employees and guide them toward the achievement of
the vision.
In the absence of centralized management, there will be inconsistencies in relaying the message
to employees because there are no clear lines of authority. Directing the organization‘s vision
from the top allows for a smooth implementation of its visions and strategies. The
organization‘s stakeholders such as customers, suppliers, and communities also receive a
uniform message.

3. Reduced costs
A centralized organization adheres to standard procedures and methods that guide the
organization, which helps reduce office and administrative costs. The main decision-makers are
housed at the company‘s head office or headquarters, and therefore, there is no need for
deploying more departments and equipment to other branches.

Also, the organization does not need to incur extra costs to hire specialists for its branches since
critical decisions are made at the head office and then communicated to the branches. The clear
chain of command reduces the duplication of responsibilities that may result in additional costs
to the organization.

4. Quick implementation of decisions

In a centralized organization, decisions are made by a small group of people and then
communicated to the lower-level managers. The involvement of only a few people makes the
decision-making process more efficient since they can discuss the details of each decision in one
meeting.

The decisions are then communicated to the lower levels of the organization for implementation.
If lower-level managers are involved in the decision-making process, the process will take
longer and conflicts will arise. That will make the implementation process lengthy and
complicated because some managers may object to the decisions if their input is ignored.

5. Improved quality of work

The standardized procedures and better supervision in a centralized organization result in

improved quality of work. There are supervisors in each department who ensure that the outputs
are uniform and of high quality.

The use of advanced equipment reduces potential wastage from manual work and also helps
guarantee high-quality work. Standardization of work also reduces the replication of tasks that
may result in high labor costs.

Disadvantages of Centralization

The following are the disadvantages of centralization:

1. Bureaucratic leadership
Centralized management resembles a dictatorial form of leadership where employees are only
expected to deliver results according to what the top executives assign them. Employees are
unable to contribute to the decision-making process of the organization, and they are merely
implementers of decisions made at a higher level.

When the employees face difficulties in implementing some of the decisions, the executives will
not understand because they are only decision-makers and not implementers of the decisions.
The result of such actions is a decline in performance because the employees lack the motivation
to implement decisions taken by top-level managers without the input of lower-level employees.

2. Remote control
The organization‘s executives are under tremendous pressure to formulate decisions for the
organization, and they lack control over the implementation process. The failure of executives to
decentralize the decision-making process adds a lot of work to their desks.
The executives suffer from a lack of time to supervise the implementation of the decisions. This
leads to reluctance on the part of employees. Therefore, the executives may end up making too
many decisions that are either poorly implemented or ignored by the employees.
3. Delays in work

Centralization results in delays in work as records are sent to and from the head office.
Employees rely on the information communicated to them from the top, and there will be a loss
in man-hours if there are delays in relaying the records. This means that the employees will be
less productive if they need to wait long periods to get guidance on their next projects.

4. Lack of employee loyalty

Employees become loyal to an organization when they are allowed personal initiatives in the
work they do. They can introduce their creativity and suggest ways of performing certain tasks.
However, in centralization, there is no initiative in work because employees perform tasks
conceptualized by top executives. This limits their creativity and loyalty to the organization due
to the rigidity of the work.

Factors Determining Centralization of Authority:

The management of an undertaking may centralize decision-making for the following reasons:

1. Achieving Uniformity of Action:

Uniformity of action is possible when decision-making authority is centralized. The decisions

taken at the top will be implemented at every level. There may be more than one unit under the
same management and it may be desired to have same types of policies and procedures. If the
units take their independent decisions then uniformity of action will not be achieved. Under such
situations centralized decision-making will enable unity of action.

2. Facilitating Integration:

There may be a need to integrate all operations of the enterprise for achieving common
objectives. Centralized management will facilitate integration of activities by devising common
policies and programmes.

3. Promoting Personal Leadership:

The small enterprises grow on the strength and capability of their manager. Even big concerns
too depend upon the qualities of their managers during initial periods. The whole authority will
be in the hands of the chief executive. This will result in quick decisions and imaginative
actions.
The manager will acquire more and more skill and experience which will promote their personal
leadership.

4. Handling Emergencies:

Under uncertain business conditions there is a need to take emergency decisions. Sometimes the
existence of small- scale units is endangered if timely actions are not taken. Centralized authority
will enable quick and timely decisions from short-term as well long-term perspective.

Decentralization

Decentralization refers to a specific form of organizational structure where the

top management delegates decision-making responsibilities and daily operations to middle and
lower subordinates. The top management can thus concentrate on taking major decisions with
greater time abundance. Business houses often feel the requirement of decentralization to continue
efficiency in their operation. Today, we are going to take a look at the basic advantages and
disadvantages of decentralization from an organizational point of view.

Advantages of Decentralisation

Motivation of Subordinates

Decentralization improves the level of job satisfaction as well as employee morale, especially
amongst the lower level managers.
Furthermore, it strives to satisfy the varying requirements for participation, independence, and
status. Decentralization also promotes a spirit of group cohesiveness and spirit.

Growth and Diversification

Under decentralization, every single product division attains sufficient autonomy to exercise their
creative flair. In this way, the top-level management can create healthy competition amongst
different divisions.

While carrying out a discussion on the advantages and disadvantages of decentralization, it is

imperative to note that it aids subordinates in exercising their own judgment.
They even develop managerial skills and help in solving the succession problem which ultimately
ensures the growth and continuity of an organization.
Quick Decision Making

Another important pointer in the advantages and disadvantages of decentralization is that decisions
are taken and executed by authorized personnel. This, in turn, results in faster and
accurate decisions which are well aware of the real scenario.

Efficient Communication

The wider span of management under decentralization leads to fewer hierarchical level. This makes
the communication system more efficient as intimate relationships develop between superiors and
subordinates.

Ease of Expansion

Decentralization can add inertia to the expansion process of a growing business. This might often
result in the opening of new business units in varying geographical locations.

Decentralization unleashes the fullest potential of the organization and can react easily to area-
specific requirements.

Better Supervision and Control

Lower level managers can alter production schedules and work assignments with adequate
authority. They can even take disciplinary actions and recommend the promotion of their peers.

This, in turn, leads to greater efficiency in supervision. Performance evaluation of each

decentralized unit helps in exercising adequate control.

Satisfaction of Human needs

Decentralization serves as an important tool for satisfying our basic need of independence, power,
prestige, and status. A cadre of satisfied manager is build up by this satisfaction as they feel
responsible towards the company‘s betterment.
Relief to top executives

Top executives can focus more on more on the executive level work like planning and decision
making if the lower level employees take all the responsibilities on their own. This relieves their
workload which eventually is for the greater good of the organisation.
Disadvantages of Decentralization

Difficult To Co-Ordinate

While talking about the advantages and disadvantages of decentralization, it is imperative to note
that substantial autonomy is enjoyed by every single division. This, in turn, makes it difficult to
coordinate the overall activity.

External Factors

The trade union movement, market uncertainties, and government intervention might make it
impossible to benefit the most out of decentralization.

Narrow Product Lines

Decentralized product lines need to be adequately broad so that autonomous units can flourish
within the same. This might not be of much help in small business houses having narrow product
lines. Lower levels in the organization also lack competent managers thus adding to the difficulty
quotient.

Expensive

In decentralization, every employee takes responsibility for the better of the organisation so they
work harder to achieve all the organizational objective. In return, they have to be paid more which
sometimes proves to be very expensive for the company.

Factors affecting decentralization

Several factors explain why companies prefer decentralization over centralization.
Organizational size. Larger organizations are likely to need more decentralization. Operation is
more complex. Thus, it is impossible to rely solely on top management for decision-making.

Scope of operation. Companies with many different product lines are likely to delegate more
authority. Each line is managed by a separate division. And, each can make decisions about their
work area, which are independent of each other.
A similar case is a company with many business units in different geographic areas, such as a
multinational company. Individual business units in different geographies make relevant
decisions according to their local area.

Each often faces a different business environment, thus requiring a different approach. Thus,
decentralizing allows business units to make informed decisions.
 Control system. Decentralization requires an adequate control system. Thus, top management
can monitor performance and accountability at each level. In addition, it is important to
coordinate every decision. Thus, it is in line with the company‘s goals and strategies.

Manager quality. When management competencies are relatively uniform, and there are no gaps,
decentralization can be an option. Each has the capacity and ability to be an effective decision-
maker.

On the other hand, if lower managers have insufficient competence, upper managers are likely to
take on more roles. Delegating authority can lead to bad decisions, putting the company at risk.

Organization Structure
Organizational structure (OS) is the systematic arrangement of human resources in an
organization so as to achieve common business objectives. It outlines the roles and
responsibilities of every member of the organization so that work and information flow
seamlessly, ensuring the smooth functioning of an organization.Org

Purpose of Organizational Structure:

 Divides work to be done in explicit occupations and dept.

 Assigns undertakings and obligations related with singular employments.

 Coordinates assorted authoritative assignments.

 Establishes relationship people, gatherings and divisions.

 Established formal lines of power.

 Allocates hierarchical assets.

 Clusters occupations into units

anization Structure

Types Of Organisational Structure

1.Functional structures
Functional structures are those in which team members are grouped into departments based on
their shared skill sets, specializations, accountabilities, and goals. Communication and decision
making are improved by both physical proximity and sharing of tools and information. Examples
of functional structure include information technology (IT) and accounting-based organizations.
 Advantages:

 Employees who work in such a structure are well organized and grouped according to tasks
and functions

 Employees focus on specific work or mission

Disadvantages:

 This structure lacks teamwork, communication and discussion

 This structure also lacks creativity and it limits the employees‘ ability to develop and improve
 2. Divisional structures
Divisional structure focus their attention and activities around specific groups (e.g., markets,
goods and services, customer demographics, etc.). This type of organizational chart allows teams
to collaborate on broad, shared organizational goals while maintaining a primary focus on their
respective, specific goals. Examples of divisional structure include geographical (e.g., teams
develop similar products with localized customizations for different markets) and product-based
(e.g., different divisions all focus on a specific product within a broader product line).

Advantages:

 It allows employees autonomy

 Each department operates as an independent company that work on its own aspects &
divisions and specify budgets to control its own resources

 It offers flexibility by allowing each employee to operate as if its own company, reporting
to CEO, one or two upper supervisors

Disadvantages:

 Employees working in different departments, but the same function are unable to
communicate well

 Divisional structure may have tax implications by raising issues with accounting practices
3. Matrix structures
 Matrix structures combine functional structures with divisional structures in a grid
arrangement that combines vertical functions (e.g., organizational roles and titles) with
horizontal divisions (e.g., directors of various product lines, projects, etc.). A matrix
organization decentralizes decision-making and provides teams with increased autonomy
while simultaneously
improving cross-functional collaboration to boost overall productivity and encourage innovative
approaches to problem solving.

Advantages:

 Sharing knowledge between the employees across different functional divisions

 Attaining strong communicational skills & understanding roles

 Broadening employees‘ skills & knowledge, thus increasing professional company growth

Disadvantages:

 Creating confusion and conflict between supervisors and bosses about the issue to be reported

 Creating confusion regarding employees‘ job roles if not clearly defined

4. Hybrid structures

Hybrid structures are similar to matrix structures, but eschew the grid-style org chart in favor of
a hierarchical arrangement where business activities can serve either functional or divisional
purposes. This popular approach allows for collaborative sharing of data and resources while
preserving division-specific specializations.

While the ―big four‖ may be the most common, companies around the world also use four
other other types of organizational structure which are more organic in nature: Process,
Circular, Flat, and Network.
system of communication, decision-making and task-completion that matches the needs of the
organization.

A small company, for example, may only need a simple organizational design. As a company
grows and becomes more complex, the organizational structure might need to change. As such,
organizational design is often considered a continuous process.

Characteristics of an effective organizational structure including clearly defined roles of

authority, detailed job descriptions, objective benchmarks and effective two-way
communications between departments and between management and staff.

Organizing by Work Specialization

Work specialization, also referred to as the division of labor, is the degree to which specific
tasks within an organization are broken down into individual jobs. When work specialization is
extensive, a company may assign a single task to an individual as part of a larger project.

Often, this type of environment creates repetitive, narrow, smaller tasks. For example,
assembly line factories may designate a single task, such as running a machine or welding a
part, for the completion of an end product. On the other hand, companies may decide to
enlarge jobs for the purpose of challenging employees or giving them additional
responsibilities.

Using Traditional Departmentalization

Departmentalization describes the way in which an organization groups different jobs or

segments of its company together, explains Business Jargons. For example, a functional
organizational structure groups jobs according to function, such as marketing, sales, customer
service and manufacturing.

An organization that uses a divisional approach groups according to geography, such as a

western and eastern region. Other forms of departmentalization include product, customer or
market departmentalization.
Hierarchy of Authority

One of the most common forms of small-business management models use a hierarchical
organizational structure, which uses a top-down approach, according to Accounting Tools.
Hierarchy of authority–or chain of command–refers to an organization's line of authority and
describes who reports to whom. Related to hierarchy of authority is the span of control, which
refers to the number of subordinates over which managers have authority.

Organizational structures can either be flat or tall. Flat structures have fewer levels of authority
and wide spans of control. For example, a small startup company may position the CEO at the
top, who has authority over all other company employees. Tall organizational structures, such
 as larger companies and corporations, have many levels of authority and narrow spans of
control.

Line and Staff Relationships

Line and staff relationships extend throughout the organizational structure and describe the
way people are involved in the organization. Line managers are responsible for achieving
company objectives or goals and include those in the direct line or chain of command.

Staff employees or managers give advice or make recommendations to line managers and
support the overall operations. In retail corporations, for example, line employees may include
department managers, store managers, the vice president and president of operations, and the
board of directors.

In contrast, a scientific research organization may have scientists and researchers as line
managers and administrative employees as staff employees.

Decentralization and Centralization

Decentralized organizational structures spread decision-making responsibilities to lower-level

managers and some non-managerial employees. In contrast, a centralized organization
maintains control and decision-making responsibilities near the top of the company.

For example, companies that have franchise operations may centralize control at company
headquarters. Whether a company is decentralized or centralized, however, may depend on
several factors, such as how many hierarchical levels the organization has or the extent to
which a company is geographically dispersed.

Importance of Organizational Structure:

The following are the importance of organizational structure:

1. Away from of control, obligation relationship workplaces way better comprehension of

the targets and the procedures of the undertaking.
2. Various leveled structure sets down the two channels and the cases of correspondence.
It empowers suitable organization.

3. It helps with arranging works out of the portion parts so as to empower the affirmation of
the goals of the affiliation.

4. It makes a difference in advancement and broadening of the works out of an affiliation.

5. Laborers back in affiliation increase their support and move forward their will to work.
It enlivens graduation and inventive thinking.