Organizing (Unit-1)

Course: IEEE
Course Contents for IEEE
 The Units
• Unit 1:
Organizing (Management)

• Unit 2 & 3:
Work Study (Industrial Engineering)

• Unit 4 to 6:
Engg Economics (Financial Management)
 Books
• P.C. Tripathi and P.N. Reddy, Principles of
Management, Tata McGraw Hill, 3rd Ed.,
2006.
• ILO, Work Study, 4th Ed., 1992.
• James L. Riggs, David D. Bedworth and
Sabah U. Randhawa, Engineering
Economics, 4th Ed., Tata McGraw Hill,
2004.
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 Co-teaching

• For Unit-5 and 6 (Financial Management)

• Will be scheduled after Test-1.

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Unit-1: Organizing
 Functions of Management
Ref: Essentials of Management by Koontz & Weirich

• Planning
• Organizing
• Staffing (HRM)
• Leading
• Controlling
 The Manager
Technically, a manager is a
person who has at least one
subordinate.
 Organizing
To organize a business is to provide
everything useful to its functioning, i.e.,
• Personnel
• Raw material
• Tools and
• Capital
 Human & Material
Organization
All these resources may be divided
into two parts:
• Human organization (Human
Resource)
• Material organization (Physical
Resources)
Organization (Definition)
• No standard definition
• Several definitions in the literature
• According to Amitai Etozoni: An
organization is a social unit or human
grouping deliberately structured for the
purpose of attaining specific goals.

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 Examples
• Business enterprises (Tata Motors, Grocery shop, ...)
• Not-for-profit organizations: NGOs,
• Govt. Organizations (Central, State, Local)
• Schools, Colleges, Universities
• Hospitals
• Churches, Temples, ...
• Armies
• Prisons
• etc
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 Examples (contd...)
• However, following groups are not
organizations:
– Friendship groups
– Families
– Tribes
– etc.

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 Process of Organizing
• Organizing function involves:
– Differentiation of activities
– Integration of the activities
• Differentiation leads to:
Process of departmentalization or segmentation
• Integration: Achieving unity of efforts among
departments and segments

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Organizing: Six-step Procedure
1. Consideration of objectives
2. Grouping activities into departments
3. Deciding which departments will be key
departments
4. Determining levels at which various types of
decisions are to be made.
5. Determining “span of management”
6. Setting up a coordination mechanism
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 Consideration of Objectives
• The first step is to know the objectives of the
enterprise; which comes under the function of
planning.
• The function of organizing depends on the type of
objectives.
• Examples:
– Automobile company vs. Process equip mfg. company
– Product company vs. Services company
– Hospital vs. Educational Institute

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 Grouping activities into
departments
• This is the 2nd step.
• It involves identification of all the activities
necessary to achieve the objectives.
• Group the similar or closely related activities
into departments, sections and segments
(Departmentalization).
• Examples: Production, marketing, finance,
materials management, R&D 17
Deciding which departments
will be key departments
• Identify the key activities.
• Examples: R&D, Marketing,
Advertising, …
• Such departments may be directly
placed under the top management.

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 Grouping activities into
departments
• This is the 2nd step.
• It involves identification of all the activities
necessary to achieve the objectives.
• Group the similar or closely related activities
into departments, sections and segments
(Departmentalization).
• Examples: Production, marketing, finance,
materials management, R&D 19
 Determining decision-making
levels
• It involves deciding levels at which major or
minor decisions are to be made.
• That means, the extent of decentralization
• Too much decentralization may lead to loss
of control.
• On the other hand, extreme centralization
may lead to wrong decisions.
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 Determining the Span of
Management
• This step involves deciding the “Span
of Management”.
• Span of Management: No. of
subordinates.
• S.O.M. → Tall structure or flat
structure
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 Setting up a coordination
mechanism
• An organization should perform like
an orchestra.
• That means, it involves deciding roles
and responsibilities of each position
and relationships among various
positions.

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 Span of Management

• Also referred to as span of control or

span of supervision or span of
authority or span of responsibility.
• Definition: Number of subordinates
who directly report to the manager
(boss).

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 What should be the S.O.M.?
• Too narrow span leads to under-
utilization of managers and tall
structure.
• Too wide a span leads to overloading of
managers; flat structure.
• What is an optimum or appropriate span?

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 What is an Appropriate Span?
• No hard and fast guidelines.

• Lyndall Urwick: It should be less

than 5.

• Ian Hamilton: 3 to 6.
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 What is an Appropriate Span?
• James Worth: The manager can manage
as many as 20 subordinates.
• Study of 100 large companies by Ernest
Dale:
– Median value of 8 for the CEO
– in some cases the SOM for CEO is more
than 20.
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 Factors affecting Span of
Management
• Ability of the manager
• Ability of the employee
• Type of work
• Well-defined authority and responsibility
• Geographic location
• Sophisticated information and control system
• Level of management
• Economic considerations
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