ORGANIZING

COME TOGETHER FOR A PURPOSE

WHAT IS ORGANIZING?

"Organization is the process of

identifying and grouping of the
works to be performed, defining
and delegating responsibility
and authority and establishing
relationships for the purpose of
enabling people to work most
efficiently".
- Louis A. Allen

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 FUNDAMENTAL CONCEPT OF ORGANIZING

 DIFFERENTIATION: It means that an organization is

composed of units that work on specialized tasks using
different work methods and requiring employees with
unique competencies.

 INTEGRATION: It means that the various units must be put

back together so that work is coordinated.

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 NATURE OF ORGANIZING:

1. Group of Persons
2. Common Objectives
5. Communication
3. Division of Work
6. Central Authority
4. Cooperative Efforts
7. Rules & Regulations
8. Dynamic Element

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NATURE/ PRINCIPLE OF ORGANIZATION:
 Group of Persons: An organization is a group of people
working together for the achievement of common
objectives. The group may be large or small. An
organization is a system of cooperative relationships of
two or more persons.

 Common Objectives: Every organization has a common

objectives distinct from personal objectives of the
members. The common goal is the basis of cooperation
among the members. The objectives of the organization are
usually are made explicit

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CONTD:
 Division of Work: An organization comes into existence
when the total task is divided into the members of the
group. Division of work is necessary not only because one
individual cannot do all the work but specialization results
in efficiency and effectiveness.

 Cooperative Efforts: The members of an organization are

willing to help each other for the achievement of desired
goals. Cooperative relationships are stabilized both
vertically and horizontally among different units of the
organization:

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CONTD:
 Communication: People who form an organization
communicates with each other in order to integrate or
coordinate there efforts. The structure must be such that
people can perform together efficiently.

 Central Authority: In an organization, there is a central

directing authority which controls the concerted efforts
of the group. The chain of authority- responsibility
relationships is known as the chain of command.

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 Rules and Regulations: For the orderly and systematic
working of the members, rules and regulations are laid
down and enforced by the central authority.

 The Dynamic Element: An organization is not a mere

mechanical structure but a living organism arising out of
the sentiments, attitudes, and behavior of people. The
people are the material of construction that holds the
structure together and gives it vitality.

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Importance 9
 1. Facilitates

Administration

7. 2. Encourages
Coordination Growth &
Diversificatio
n

IMPORTANCE OF
ORGANIZING
6. Ensures 3. Optimum
Continuity of Use of
Enterprise
Technology

5. Encourages 4. Stimulates
Good Human Innovation
Relations &
Technology
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 IMPORTANCE OF ORGANIZING:
 Facilitates Administration: Achievement of the objectives
of an enterprise by providing a framework of coordination
and control. It provides a system of authority and network
for effective communication. Individual goals can be
coordinated towards group goals. A properly balanced
organization facilitated both management and operation of
the enterprise.
 Encourages Growth & Diversification: It has enabled
organizations to grow and expand to giant sizes. Systematic
division of work and consistent delegation of authority
facilitate taking up of new activities and meeting new
demands. It provides flexibility for growth without losing
control over various activities.
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CONTD
…
Optimum Use of New Technology: It is made through a
sound structure manned with competent employees. In
addition, Optimum use of technology permits optimum
utilisation of human resources. Sound organization ensures
that every individual is placed on the job for which one is
best suited.
 Stimulates Innovation & Creativity: It stimulates
creative thinking and initiative on the part of employees. It
provides for effective management of change and responds
favourably to changes in environment. It provides
recognition for the professional and the specialist in terms
of their achievement.
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 Encourages Good Human Relations: The assignment of
right jobs to right person improves job satisfaction and
inter-personal relations. Well-defined jobs and clear lines
of authority and responsibility ensure good human
relations.
 Ensures Continuity of Enterprise: It provides scope for
the training and development of future management. It
provides avenues for development and promotions through
delegation and decentralisation.
 Coordination: It facilitates order and cohesiveness in the
enterprise. Division of labor, better utility of technology
and human talent helps to improve the efficiency and
quality of work. Clear channels of communication among
the members of the organization leads to coordination.
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Process

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 PROCESS:

IDENTIFICATIO GROUPING OF
N OF ACTIVITIES
ACTIVITIES
2.

1. 3.

4.

ASSIGNMENT OF DELEGATION OF
DUTIES AUTHORITY

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 PROCESS OF ORGANIZING:
1. Identification of Activities: First step is to determine the
tasks that must be performed to achieve the established
objectives. Activities and jobs are building blocks of any
organization. The activities to be performed depends
upon the objectives, nature and size of the enterprise.

2. Grouping of Activities: The various activities are the

grouped into departments or divisions according to
similarity and common purpose. Such grouping is
necessary for the purpose of specialization, coordination
and control. It may be grouped on various basis i.e.
functions products, territories, customers etc depending
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3. Assignment of Duties: Groups of activities or
departments are then allotted to different positions. Every
position is occupied by an individual best suited for it.
The assignments of activities creates responsibility and
ensures certainty of work performance. The process
should be carried down to the lowest levels. It is basically
done to avoid duplication of work and over-lapping
efforts.
4. Delegation of Authority: Every individual is given the
authority required to carry out the responsibility assigned
to him. A chain of command is created through successive
delegation of authority. Different positions are linked
vertically and horizontally by establishing formal
authority. Every individual must know to whom he is
accountable and who are his subordinates.
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Insert or Drag and Drop your Photo Here

Elements

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SPAN OF MANAGEMENT
It is also called as
span of control or
span of
supervision.

It refers to the
number of
subordinates that
report directly to a
single manager or
supervisor.
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 TWO TYPES OF SPAN
NARROW SPAN OF MANAGEMENT
Tall organization.
Manager oversees “ few”
subordinates. better communication.
example : handicraft , ivory work ,
etc.

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WIDE SPAN OF MANAGEMENT
Flat organization .
Manager oversees “large” number of
subordinates.
Less overhead cost.
example: large firms .

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Narrow span Wide span of
of control control

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FACTORS DETERMING SPAN OF
MANAGEMENT
Nature of work
Type of technology
Ability of the manager
Capacity of subordinates
Degree of decentralization
Quality of planning
Staff assistant
Communication techniques
Time available for supervision
Geographical dispersion of
subordinates

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DEPARTMENTATION

It is a p rocess of grou ping

individual jobs into departmentation.

TYPES:
1.Departmentation by function.
2.Dep artmentation b y products.
3.Departmentation by territory.
4.Dep artmentation b y customers.
5.Departmentation by process.
6.Departmentation b y time and number.

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Departmentation by FUNCTIONS

Deparmentation done by the functions.

 MERITS & DEMERITS
• Provides scope of specialization.
• Eliminates cost of dupl i cat ion of work.
• Effective control over performance.
• Faci l itates del egation of aut hori ty.

• Interdepartmental conflicts.
• Difficulty in coordination of activities.
• Increases responsibi lity of departmental heads.

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D E PA R TM E N T AT I O N B Y PRODUCTS
It is suitable for d i f f e re n t l i ne s of p ro d u c t s .
 MERITS & DEMERITS
• Reduces problem of coordination.
• It leads to specialization.
• Performance evaluation can be done easily.
• It is flexible and adapt able to change .

• Chance of duplication is more.

• There may be underutilization of plant
capacity when the demand of product is not
adequate.

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 Territorial Departmentation
 used where large scale enterprise where activities are geographically spread
over.

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 Merits and Demerits

I t helps in achieving benefits of local operation.

 B e t t e r c o o r d i n a t i o n of a c t i v i t i e s .
 Provides effective span of control.
 O p p o r t u n i t y to tr a i n m a n a g e r s .
 F a c i l i t a t e s e x p a n s i o n o f b u s i n e s s t o v a r i o u s re g i o n s

D u e to geographical distance problem of communication.

C o o r d i n a t i o n and control becomes less effective.

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 Departmentation By Customers

Each department will s e r v e t h e p a r t i c u l a r type

or class of c u s t o m e r s .
 MERITS & DEMERITS
O f f e r s c o p e of s p e c i a l i z a t i o n .
 Enterprise gain ultimate k n o w l e d g e a b o u t n e e d s o f v a r i o u s
c a t e g o r i e s of c u s t o m e r s .

 Leads to duplication of activities .

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 Departmentation by Equipment

T h e a c t i v i t i e s a r e g r o u p e d a c c o r d i n g t o p ro c e s s or equipment.
I t
is generally used in manufacturing industries.
Lead to s p e c i a l i z a t i o n .
No c o n f u s i o n .

 P r o p e r u t i l i z a t i o n o f m a n p o w e r a n d m a c h i n e e n g a g e d in pro pe r way.

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 TIME AND NUMBER DEPARTMENTATION

TIME: The business activities are grouped together on the basis of the time of the performance. If the work
is not completed within the normal working hours, extra time will be given to complete it after the normal
working hours. Only interested persons are requested to do the job and one person is responsible to supervise
them. Whatever be the work performed after the normal working hours, a separate department will be in charge
of this type of activity. This type of departmentation is known as departmentation by time.
E X A M P L E : C a l l c e n t e r s o r any factory.

NUMBER: Similar types of duties are performed by small groups. Each group is controlled by a
supervisor or an executive. For example, in the Army, soldiers are grouped into squads, battalions,
companies, brigades and regiments on the basis of allotment of men to each unit. The principles of
span of management span of control or span of supervision is used under this type of departmentation.

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Organization structures

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 Organizational Structures

Centralized and Decentralized

Formal structures
Informal structures

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 Types of Organization Structure

All managers must bear that there are two organizations they must deal
with-one formal and the other informal.
 The formal organization in usually delineated by an organizational
chart and job descriptions. The official reporting relationships are
clearly known to every manager.
 Alongside the formal organization exists are informal organization
which is a set of evolving relationships and patterns of human
interaction within an organization that are not officially prescribed.

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 Formal organizational structures

• Line organizational structure.

• Staff or functional authority organizational structure.
• Line and staff organizational structure.
• Divisional organizational structure.
• Project organizational structure.
• Matrix/ hybrid organizational structure.
• Network Structure .

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 1.Line organization structure
A line organization has only direct, vertical relationships between different levels in
the firm. There are only line departments-departments directly involved in
accomplishing the primary goal of the organization. For example, in a typical firm, line
departments include production and marketing. In a line organization authority follows
the chain of command.

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 2.Staff or Functional str ucture

The jobs or positions in an organization can be categorized as:

Line position: a position in the direct chain of command that is

responsible for the achievement of an organization's goals and

Staff position: A position intended to provide expertise, advice and

support for the line positions.

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 The line officers or managers have the direct authority (known as line
authority) to be exercised by them to achieve the organizational goals. The
staff officers or managers have staff authority (i.e., authority to advice the
line) over the line. This is also known as functional authority.
 An organization where staff departments have authority over line personnel in
narrow areas of specialization is known as functional authority organization.
Exhibit 10.4 illustrates a staff or functional authority organizational structure.

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 3.Line and staff structure
Most large organizations belong to this type of organizational
structure. These organizations have direct, vertical
relationships between different levels and also specialists
responsible for advising and assisting line managers. Such
organizations have both line and staff departments. Staff
departments provide line people with advice and assistance
in specialized areas (for example, quality control advising
production department).

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The line and staff organizational chart. The line functions are production
and marketing whereas the staff functions include personnel, quality
control, research and development, finance, accounting etc. The staff
authority of functional authority organizational structure is replaced by
staff responsibility so that the principle of unity of command is not
violated.
Three types of specialized staffs can be identified:
 (i) Advising,
 (ii) Service and
 (iii) Control.
Some staffs perform only one of these functions but some may perform
two or all the three functions. The primary advantage is the use of
expertise of staff specialists by the line personnel. The span of control of
line managers can be increased because they are relieved of many
functions which the staff people perform to assist the line.

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 4.Divisional Structure
In this type of structure, the organization can have different basis on which
departments are formed. They are:

 (i) Function,
 (ii) Product,
 (iii) Geographic territory,
 (iv) Project and
 (iv) Combination approach.

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 5.Project Structure
A project organizations a temporary organization designed to
achieve specific results by using teams of specialists from
different functional areas in the organization. The project
team focuses all its energies, resources and results on the
assigned project. Once the project has been completed, the
team members from various cross functional departments
may go back to their previous positions or may be assigned
to a new project. Some of the examples of projects are:
research and development projects, product development,
construction of a new plant, housing complex, shopping
complex, bridge etc.

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 Feature: Temporary organization designed to achieve specific results by using
teams of specialists from different functional areas in the organization.

 Importance of Project Organizational Structure:

 (i) Work is defined by a specific goal and target date for completion.
 (ii) Work is unique and unfamiliar to the organization.
 (iii) Work is complex having independent activities and specialized skills are
necessary for accomplishment.
 (iv) Work is critical in terms of possible gains or losses.
 (v) Work is not repetitive in nature.

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 Characteristics of project organization:

 1. Personnel are assigned to a project from the existing permanent organization and are under the direction and control of
the project manager.
 2. The project manager specifies what effort is needed and when work will be performed whereas the concerned department
manager executes the work using his resources.
 3. The project manager gets the needed support from production, quality control, engineering etc. for completion of the
project.
 4. The authority over the project team members is shared by project manager and the respective functional managers in the
permanent organization.
 5. The services of the specialists (project team members) are temporarily loaned to the project manager till the completion of
the project.
 6. There may be conflict between the project manager and the departmental manager on the issue of exercising authority
over team members.
 7. Since authority relationships are overlapping with possibilities of conflicts, informal relationships between project manager
and departmental managers (functional managers) become more important than formal prescription of authority.
 8. Full and free communication is essential among those working on the project.

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 6.Matrix Structure
It is a permanent organization designed to achieve specific results by using teams of
specialists from different functional areas in the organization.
 Feature: Superimposes a horizontal set of divisions and reporting relationships
onto a hierarchical functional structure
 Advantages:
1. Decentralized decision making.
2. Strong product/project co-ordination.
3. Improved environmental monitoring.
4. Fast response to change.
5. Flexible use of resources.
6. Efficient use of support systems.

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Matrix Structure

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In matrix structures, there are functional managers and product (or project
or business group) managers. Functional manager are in charge of
specialized resources such as production, quality control, inventories,
scheduling and marketing. Product or business group managers are in
charge of one or more products and are authorized to prepare product
strategies or business group strategies and call on the various functional
managers for the necessary resources.

The problem with this structure is the negative effects of dual authority
similar to that of project organization. The functional managers may lose
some of their authority because product managers are given the budgets to
purchase internal resources. In a matrix organization, the product or
business group managers and functional managers have somewhat equal
power. There is possibility of conflict and frustration but the opportunity
for prompt and efficient accomplishment is quite high.

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In the matrix structure, employees may report to two or more bosses depending on
the situation or project. For example, under normal functional circumstances, an
engineer at a large engineering firm could work for one boss, but a new project may
arise where that engineer’s expertise is needed. For the duration of that project,
the employee would also report to that project’s manager, as well as his or her boss
for all other daily tasks.

The matrix structure is challenging because it can be tough reporting to multiple

bosses and knowing what to communicate to them. That’s why it’s very important
for the employees to know their roles, responsibilities and work priorities.

Advantages of this structure is that employees can share their knowledge across the
different functional divisions, allowing for better communication and understanding
of each function’s role. And by working across functions, employees can broaden
their skills and knowledge, leading to professional growth within the company.

On the other hand, reporting to multiple managers may add confusion and conflict
between managers over what should be reported. And if priorities are not clearly
defined, employees, too, may get confused about their roles.

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 7.Network Structure

 Network organizational structure helps visualize both internal and external

relationships between managers and top-level management. They are not only less
hierarchical but are also more decentralized and more flexible than other
structures.

 The idea behind the network structure is based on social networks. Its structure
relies on open communication and reliable partners; both internal and external. The
network structure is viewed as agiler than other structures because it has few tires,
more control and bottom flow of decision making.

 Using a Network organizational structure is sometimes a disadvantage because of its

complexity. The below example of network org chart shows the rapid
communication between entities.
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 Centralization and Decentralization

 An organizational structure is either centralized or decentralized.

Traditionally, organizations have been structured with centralized leadership
and a defined chain of command. The military is an organization famous for
its highly centralized structure, with a long and specific hierarchy of superiors
and subordinates.
 There has been a rise in decentralized organizations, as is the case with many
technology startups. This allows companies to remain fast, agile, and
adaptable, with almost every employee receiving a high level of personal
agency.

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 Centralization describes where decisions are ultimately made. Once you've
established your chain of command, you'll need to consider which people and
departments have a say in each decision. A business can lean toward
centralized, where final decisions are made by just one or two entities; or
decentralized, where final decisions are made within the team or department
in charge of carrying out that decision.
 Decentralization is another form of organizational structure that functions by
delegating decision-making capabilities to multiple teams across geographies.
 In such an organization, most of the planning, strategy and decision to
implement them are taken by the people in the middle and lower level of
management.
 The advantage of decentralization is that the employees are empowered to
make their own decisions that will benefit the organization, which results in a
high level of employee satisfaction and boosts the productivity of an
organization.
 Decentralization enables low-level employees to gain leadership skills, which
can contribute to the growth of the organization in the long run.

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 Delegation

 From a management perspective, the best definition of

delegation is when a manager or team leader gives
another member of staff the responsibility and authority
to complete an assigned task.

 Superiors delegate authority to subordinates in the

workplace, it’s that simple. Delegation isn’t abdication of
duty or neither is it dumping tasks on someone else’s
desk. Effective delegating means you care.
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Principle of Delegation

 Principle of Functional Definition:

 Principle of Unity of Command:
 Principle of Delegation by Results Expected:
 Principle of Absoluteness of Responsibility:
 Principle of Parity of Authority and Responsibility:
 Authority Level Principle:
 The Scalar Principle:

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 Why Do Leaders Fail to Delegate Effectively?

 
•Ego – I can do it better myself.
•Time – Takes too long to explain.
•Accountability – I’m accountable if it goes wrong.
•Skills Gaps – My staff don’t possess the technical skills.
•Authority Threat – Delegation reduces my own authority.
 

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