Fundamentals of Organizing

Module II: Organising & Staffing

 Fundamentals of Organising: Concept,

Departmentation, Matrix Organisation
Structure
 Authority: Delegation of Authority,
Centralization and Decentralisation
 Staffing: Concept, Importance, Factors
affecting Staffing

Concept of Organizing
 The term organization may be defined in
various ways. The term organization is used
in the form of organizing in the following
ways:
 1. Organization as entity
 referred to as enterprise as a whole like

company, corporation, partnership firm, etc.

 In this form, organization is defined as
collectivity of people for achieving common
objectives.
Concept of Organizing
 2. Organization as a group of people
 When organization is defined as a group of people, it
may be also defined as an entity. In this form
organization has the following features:
 a. An organization always refers to people.
 b. The organization is composed of people who
interact among themselves.
 c. The interactions are specified by some sort of
structure, that is, who will interact with whom.
 d. The interactions are meant to achieve some sort of
objectives.
  
Concept of Organizing
 3. Organization as structure
 Organization as a structure which prescribes the
relationships among individuals and positions that they
hold.
 There may be different ways in which these
relationships are prescribed.
 Structure tends to be somewhat permanent with a
provision of incorporating changes whenever required.
 However, the use of the term structure to denote
organization is not used independently but is combined
with the term organization either in the form of
organization structure or structure of organization.
Concept of Organizing
 4. Organization as process
 The term organization is used in the form of process means
through which organization structure is created. As a
process, in present context, the term organization is referred
to as entity. Whenever it is used as a process, it is termed as
organizing rather as organization. In this part, organizing is
through which organization structure is designed.
 Essential process that creates a structure, it includes:
 -Determination of activities (activities analysis).
 -Grouping of activities & assigning them to specified
positions/persons (relations analysis).
 -Creation of network of positions/persons for managing.
 
Definitions of Organizing
Therefore, can be defining as:
“Organization is to determine the activities to accomplish a job
and arrange the distribution among the people”.

In organizing, plans are reviewed, tasks to be performed

are listed, tasks are grouped into jobs that can be
done by an individual, departments are created,
work is assigned to individuals and authority is delegated.
Definitions of Organizing

 This is the identification and classification of

the required activities, the grouping of
activities necessary to attain objectives, the
assignment of each grouping to a manager
with authority and the provision of
coordination

 In organizing, structures are created,

relationships established and resources are
allocated for the accomplishment of activities
 Nature of Organization

 Structure of relationships
 Managerial function
 Ongoing process
 Encourages teamwork
 Foundation of management
 Goal-oriented
 Adaptive to change
 Situational
Departmentation

 a department is a distinct area of a branch of the

organization which handles tasks of similar nature.
 A department has a manager as an authority for ensuring
the performance and coordination of its tasks and
responsibilities.
 Departmentation is a managerial process that forms the
basis on which work or individuals are grouped into
manageable units.
 grouping of similar tasks and jobs that have been
classified through work analysis and specialization for
their effective coordination by appointing a managerial
authority over them.
Departmentation

 Departmentation is the grouping of homogeneous

activities into one organization unit on the basis of
special and continuous nature of activities.
 It involves horizontalization of activities in an
enterprise. It leads to grouping of both activities
and personnel.
 A department may be called a division, branch,
regiment, section or some other organizational unit.
 “Departmentation can be defined as the process by
which activities or function of the enterprise is
grouped homogeneously into different groups”.
Bases of Departmentation

 Departmentation by Functional departmentalization:

 similar occupational specialties or processes are
grouped together under functional systems or units
of finance, manufacturing, marketing, research, etc.
 Heads are Specialist managers with commensurate
knowledge, skills and orientation for the specialized
tasks
 leads to specialization and high efficiencies.
 threat of losing sight of overall organizational
interests because different departments tend to
pursue their own goals.
Departmentation by Functional
departmentalization

 CEO

 Marketing Finance Operation HR

Bases of Departmentation

 Departmentation by Product or Product

Departmentalization:
 assembles different activities of an organization in
accordance with different product types that it
manufactures and markets.
 Managers as heads for different activities related with
different product of the organization. For example, major
retail stores are structured around product group such as
home accessories, appliances, clothing, books, etc.
 Intention is to sell a large number of products,
simultaneously focusing on different products.
 Threat is that some of the products might get relatively
less attention than they actually deserve.
Departmentation by Product or Product Departmentalization:

CEO

 Hair Care Oral Care Household Care

Bases of Departmentation
 Departmentation by Geographical Regions or geographical
departmentalization:
 different jobs are grouped on the basis of territory or
geography. For example, companies organize their foreign
subsidiaries, sales and marketing departments by regions
such as South Asia, Europe, North America or Northeast,
Southeast, Northwest, etc.
 logical for large national or multinational companies as it
enables them to manage their operations in different
geographical regions.
 appoint managers for different geographical regions and
make them accountable for the success or failure of the
organization in that region.
  
Departmentation by Geographical Regions or
geographical departmentalization

CEO
 

North South East West South East

  
  
Bases of Departmentation
 Departmentation by process or process Departmentalization:
 activities in an organization are grouped on the basis of different steps
involved in the process of manufacturing and delivery of a product or
service.
 steps of the process require different types of skills, this Departmentation
offers a basis of homogeneous categorizing of work activities.
 the human resources with similar skills get to work together for a specific
part of the entire process under the supervision of a manager who has
considerable knowledge, skills and experience in the concerned field.
 For example, a patient who has to undergo an operation has to follow a
process of preliminary diagnostic tests, admission to hospital,
performance of surgery, post-operative care, payment of dues, discharge
from the hospital and out-patient attention.
 These different services are provided by the different individuals having
very different skill-sets. These services can be grouped into different
departments.
Departmentation by process or
process Departmentalization:

CEO

Melting Machining casting Finishing

Bases of Departmentation
 Departmentation by customer group or customer departmentalization:
Some organizations serve different market segments by offering very different
types of products and services or
by offering a similar type of product as a solution for a very different type of need
of different type of customers.
These customers can be served effectively with very different channels and
organization structures having people with different skill sets.
groups jobs on the basis of a common set of needs or problems of specific
customers.
 
 The current Departmentation trend is to structure work according to customers,
using cross-functional teams.( self-directed teams)
 Organizations can also have different departments, managers, channels 0r
divisions to serve industrial and consumer markets, urban and rural markets, etc.
 for instance, an organization selling lubricants may classify its markets as
consumer and industrial sector. It can classify its sales and distribution channel
according to these different markets to serve them effectively, although the
product is almost the same.

Departmentation by customer group or
customer departmentalization:

CEO
 

Government Institutional Wholesaler Retail Export

 
Choices of Bases of Departmentation

 1. Specialization:
 The more an organization structure reflects the division of work in an
organization through grouping of activities in departmental form, the
more efficiently and effectively it tends to contribute to organizational
operation. This is possible because of specialization of work.
 2. Coordination:
 the related activities are performed in a way that their performance is
synchronized so that each activity contributes to others.
 In a sense, all activities grouped in various forms have the same
objective of achieving organizational goals, though they may be
similar in nature and their performance may require different skills.
 Therefore, the best result can be achieved when all activities are
performed in a coordinated way and each activity contributes in the
positive way to others.
 Thus, the basis of departmentation should ensure that closely
connected operations are put together.
 
Choices of Bases of Departmentation

 3. Control: it is the process of analyzing whether the intended results

are being achieved by a particular department or not. If not, what can
be done to bring the situation to a desirable level? Normally, more
the clearly-defined activities and consequently responsibilities of
departments are more are the chances for effective control because
the manager can know very easily what is to be controlled.
 4. Economy: A balance should be maintained between the cost of
creating a department and its contributions. The existence of a
department is desirable only when it contributes more than its cost.
 5. Focus on Results: In an organization, the final results or objectives
are achieved through the achievement through the subordinate
achievement of these results. Therefore, all those activities which
contribute to the achievement of these results should be given
proper attention. This will ensure that all necessary activities are
performed and there is no duplication of unnecessary activities.
Choices of Bases of Departmentation
 6. Local Conditions: Considering the local condition
requirement is more important to those organizations
which operate in different geographical areas as the
same kind of work is different when the location is
different.
 7. Human Considerations: Departments should be
created on the basis of availability of personnel, their
aspirations and value systems, informal work groups and
attitudes of people towards various forms of
organization structure. Departments affect the
satisfaction and dissatisfaction levels of the human
beings. Therefore, departments should not be created
merely to suit the needs of a few individuals only.
Types of Organisational Structures
 Line Organisation
 Staff Organisation
 Functional Organisation
 Matrix Organisation
Line Organisation
 Most basic form
 Presents all the levels & Operational

Functions
 Does not contain advisory functions
 Chain of command & communication runs

vertically, in several layers

Line Organisation
Staff Organisation
 Almost similar to line, but contain advisory
role.
 These advisory units don’t have hierarchical
duties and authorities
 Free to advise at all times, even without
request by line authorities
 Only line unit can transform the advice into
action
Line and Staff Organization
PRODUCTION MANAGER

Staff Human Engineering

Managers Department Department

Line
FOREMEN FOREMEN FOREMEN
Managers

Materials
Purchasing Fabrication Painting Assembly Sales Distribution
Handling

6 - 29
Functional Organisation
 More complex structure,
 Division is based on functions to be

performed( Product/ Service Based)

 Advisory units becomes specialist and gets

clearly defined scope of authority

Functional Organization
Project & Matrix Organisation
 Project has fixed life span
 Either short or long duration
 Members may be specially recruited or may be
permanently employed and can be sent to the project
from Various departments / divisions
 There are several departments under matrix organization.
 Each department is assigned with a specify task.
 The available resources of organization can be used by
each department along with the co-ordination of other
departments in an organization.
 The Matrix Organization may be followed where a large
number of small projects have to be managed.
Matrix Organization
Definition of Matrix Organization
 According to Stanley Davis & Paul Lawrence
 “Matrix organization is any organization that

employs a multiple command structure but

also reflected support mechanism & an
associated organizational culture & behavior
pattern.”
Conditions for Effective Matrix Organisation

 The principle of scalar chain of command is not followed in

the matrix organization. A project manager should give
report to more than one superior.
 
 These should be an agreement among the managers
regarding the authority of utilizing the available resources.
The term resources include physical resources, financial
resources & human resources.
 
 A conflict may arise among the managers regarding the
utilization of available resources. There should be a
common willingness among the authority holders to face
the conflicts with a view of resolving them.
Merits of Matrix Organization

 Achievement of objectives:
 tells the benefit of functional organization, line & staff
organization.
 achievement of objective with technical specialization.
 
 Best Utilization of resources:
 The available resources are used by the managers for the
specified project.
 At the same time, the resources are utilized by the managers with
full understanding among them.
 
 Appropriate Structure:
 to adapt to the external changes.
 E.g. In order to service the competition, Matrix Organization is
used to meet customer demands according to the expectations
without affecting the marketing of the existing products.
Merits of Matrix Organization

 Flexibility:
 a highly flexible organization.
 The rules & procedures are framed on the basis of the experience
of the organization.

 Motivation:
 If any department is functioning slowly towards the competition
of the particular project proper motivation is provided to the
concerned department.
 
 Personal development:
 Matrix Organization given an excellent scope for training &
development of efficient person.
 
Demerits of Matrix Org

 Complex relationship:
 does not follow the principle of scalar chain of command. Here,
a single person had gives report to more than one superior.

 Struggle for power:

 A subordinate is controlled by many superiors.
 It means the power is used over the subordinate by many
authority holders.
 It results in delay in the completion of the project.

 Arising Conflict:
 The resolution or the decision is taken under Matrix
Organization with too much of self analysis of decision makers.
The work of decision makers or the manager may be slow in the
accomplishment of the project.
Demerits of Matrix Org

 Exercise and emphasis on group decision making:

 The available resources are utilized by the departments for
taking group decision.
 There is no spirit of accommodation & understanding under
the Matrix Organization so there is delay in taking a group
decision. It leads to delay in the completion of the project.

 Heterogeneous:
 Matrix Organization is created by deputing the staff
temporarily. There are skilled professionals of various
departments. It is difficult to co-ordinate the work of the
skilled staff members when there is a lack of unity of
command in an organization.