Principles and Practice of Management

Lesson No 05

Organizing Function

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5.1 Introduction

● Organizing is the management function that focusses on allocating and arranging human and non-
human resources so that plans can be carried out successfully. Deferent tasks must be assigned to
different people and their efforts must be co-ordinated. This involves co-ordination of tasks and the
various ways to accomplish it.

● In management process organizing function provides a valuable tools for promoting innovation and
facilitation needed changes. Organizing is also concerned with building, developing and maintaining
working relationships.

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5.2Formal and Informal Organizations
Formal Organization
• A Formal Organization has a well defined structure that may describe its authority, purpose,
accountability and responsibility relationships.

• The structure also defines the channels through which communications take place. All organization
members have clearly specified jobs. The hierarchy of objectives are clearly stated.

• Formal organization are durable and planned. The Formal Organizations are relatively inflexible due to
their hierarchy

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 Characteristics of Formal Organization

• Well defined rules and regulation.

• Bound by delegation.

• Arbitrary structure.

• Determination of objectives and policies.

• Limitation on activities of people.

• Strict observance of principles co-ordination.

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 Informal Organization

• Informal Organization refers to what people do of their own in relation to their needs,
emotions and attitudes. Because of friendship, kindship or close relationships human beings
associate themselves in groups of their own choice.

• Informal Organization is loosely organized, flexible and spontaneous Membership in Informal

Organization may be gained either consciously or unconsciously. The exact nature of
relationships among the members and goals of organization are unspecified. Peoples are not
bounded by procedures and regulations.

• Under Informal Organization likes and more important than delegation of authority an
responsibility. Freedom of action is the silent feature of this organization. Informal
Organization may extend noy only to individuals but also to groups within and outside
the Organizational set up.

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 Characteristics of an Informal Organization

• Informal Organization develops spontaneously.

• It is based on informal authority that attaches to the person, not to the position.

• It provides satisfaction of social needs.

• It provides a good channel of motivation and communication.

• It has great impact on productivity and job satisfaction.

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  Formal Organization Informal Organization
1. It is a planned structure based on duties It is not structured but an outcome of social
and procedures. relation.

2. More emphasis is on work specialization People are motivate and influenced by

than skill, talent of individual. status, friendship reconsiation of desire,
sentiments and social customs.

3. Motivating force in economic incentive Motivating force is social and personal

in the form of promotion increment. needs.

4. A Formal Organization is designed to A informal Organization is neither

require people to do things in a
prescribed manner, to obey orders for
designation managers and to co-operate
in order to achieve acknowledge
objective.
prescribed nor predetermined. It is
spontaneous, transitory growing
diminishing.
5. A Formal Organization has a hierarchy of jobs, Informal Organization has leadership structure,
authority relationship and rules for rules standards, norms, rewards but all these are
compliance and codes for punishment in case neither prescribed nor followed by any
of non-observance of rule and regulations. mandatory procedures for execution.

6. Formal Organization is a rational system with It is a natural, social, human system which allows
minimum variability in its functioning. and accommodates variability.

7. Communication is through authority channels Communication channel is completely haphazard

(scalar chain). but spontaneous (grapenvine).

8. Person working at higher position is the leader. Only those can emerge as leaders who can exert
influence on its members.

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5.3 Organization Chart

• An organization chat is a graphical model of the formal structure of an organization.

The chart indicates the relationship between the various departments of the
organization.

• The boxes in the organization chart represent formal organization positions and the
lines between boxes represent lines of authority among positions. It also indicates
the line of communication and downward flow of authority throughout all the levels
of management.

• The organization chart shows job titles and indicates manager subordinate
relationships. A typical organization chart is shown in Fig.

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 Chief
Manager

Production Works Quality control Marketing

Manager Manager Manager Manager

Forman Forman Forman

Machine-shop Assembly-shop despatch

Workmen Workmen Workmen

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Need of Organization Chart

• Various reasons or purposes to have an organization chart are as follows:

1. It assigns responsibilities to individuals.

2. It helps identity control properly.

3. It makes the management functions simpler.

4. It serves as a framework of budgeting and scheduling.

5. It helps to give sense of security.

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6. It outline fundamental relationship.

7. It outline basic authority

8. It serves as a basis for directives.

9. It helps to improve communication channels.

10. It can be referred as reference document for various purpose.

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 Limitations of Organizational Chart

• Organizational Chart does not represent human relationship between superior and
subordinates.

• It can introduce obstacles in relationships.

• It shows only formal authority relationships and omits many significant informal and
informational relationships.

• It does not provide as to the authority existing at any point in the structure.

• For any change in hierarchy or creation of new position results in reorganizing the chart.

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5.4 Principles of Organizing

I. Unity of Command and Direction

II. Chain of Command
III. Span of Management
IV. Division of Labor
V. Coordination
VI. Authority
VII. Responsibility
VIII.Balanced Responsibility and Authority

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5.5 Responsibility , Authority & Delegation -

• Before studying the Deligation, let us understand the few important terms.
• Responsibility – Responsibility means the obligation to carry out duties and achieve
goals related to a position.
• Authority – Authority is right to make decisions, carry out actions and direct others
related to the duties and goals of a person.
• Delegation - Delegation means assigning part of a manager’s work to others along
with authority and responsibility necessary to achieve results.
• Line position – A line position is a position that has authority and responsibility for
achieving the major goals of the organization.

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• Staff position – A staff position is a position whose primary purpose is to provide specialized expertise
and to assist to line positons.
• Line functions – Line functions are those functions that have direct impact on
e.g. Production and sales.
• Staff functions – Staff functions are those functions that help the line persons most effectively in
accomplishing the objectives.
e.g. accounting, personnel, quality control and purchasing.
• As mentioned above for a manufacturing enterprise production and sales are typically considered line
departments while purchasing and accounting are normally staff departments. However, each
organization defines its major goals and designates line and staff functions.

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 5.6 Delegation
Definitions
1. "Delegation means assigning work to the others and giving them authority to do so”

2. "Delegation takes place when one person gives another the right to perform work on his behalf and in
his name and the second person accepts a corresponding duty or obligation to do that is required of
him.”
3. "Delegation is the dynamics of management, it is the process a manager follows in dividing the work
assigned to him so that he performs that part which only he, because of his unique organizational
placement, can perform effectively, and so that he can get others to help him with what remains."

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 Objectives of Delegation
1.To reduce the excessive burden on the superiors Relieves manager for more challenging jobs
2.To provide opportunities of growth and self development to junior executives.
3.To create a team of experienced and matured managers
4.To improve individual as well as overall efficiency
5. Leads to motivation of subordinates
6. Facilitates efficiency and quick actions
7. Improves employee morale
8. Develops team spirit
9. Facilitates management development

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Delegation Process

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 Barriers to Delegation

Part of Manager
Part of subordinator

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 Part of Manager
1. Unwillingness of the manager to delegate authority
2. Fear of competition
3. Lack of confidence in subordinates
4. Lack of ability to direct
5. Absence of controls that warn of coming troubles
6. Conservative and cautious temperament of the manager
7. Desire to dominate subordinates

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 Part of Subordinator
1. Too much dependence on the manager for decisions
2. Fear of criticism
3. Lack of information
4. Absence of positive incentives
5. Absence of self-confidence
6. Difficulty in decision-making
7. Poor superior-subordinate relations
8. Undue interference by superior
9. Fear of being exposed
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5.7 Organizational Life Cycle

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5.8 Organizational Structures
According to Mintzberg organizations are formed of five main parts:

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Operating core
Those who perform the basic work related directly to the production of products and
services

Strategic apex
Charged with ensuring that the organisation serve its mission in an effective way, and also
that it serve the needs of those people who control or otherwise have power over the
organization

Middle-line managers
Form a chain joining the strategic apex to the operating core by the use of delegated
formal authority

Technostructure
The analysts who serve the organisation by affecting the work of others. They may design
it, plan it, change it, or train the people who do it, but they do not do it themselves

Support staff
Composed of specialized units that exist to provide support to the organisation outside the
operating work flow

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1. Simple Structure

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2. Machine Bureaucracy

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3 .Professional Bureaucracy

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4 .Divisionalized Form

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5. Adhocracy

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