PART III; organizing

Chapter Five ; organizational

structure
 Revision on Managerial functions

• Every organization has its own objectives/

Reason for establishment

• The managerial functions are functions which enable

the organization achieving its objectives
 Organizing
• Organizing is the function of management which
follows planning.

• It is a function in which the synchronization and

combination of human, physical and financial
resources takes place.

• All the three resources are important to get

results.
 Organizing
• Therefore, organizational function helps
in achievement of results which in fact is
important for the functioning of a concern
 Organizing
Organizing is the function of management that
involves ;

• developing an organizational structure and

• allocating human resources to ensure

the accomplishment of objectives.

• The structure of the organization is

the framework within which effort is coordinated
 Organizing
• Organizing is that managerial process which
seeks to define the role of each individual in
the organization towards the attainment of
enterprise objectives

.
According to Chester Barnard, “Organizing is
a function by which;
• the concern is able to define the
role positions,
• the jobs related and the co-
ordination between authority and
responsibility.
• Hence, a manager always has to organize
in order to get results
 Organizing, Definitions
“Organizing is the establishment of authority
relationships with provisions for co-ordination
between them, both vertically and horizontally
in the enterprise/organizational structure”. -
Koontz and O ‘Donnell
 Organizing, Definitions
“Organizing is the process of ;
• identifying and grouping the work to be
performed,
• defining and delegating the responsibility and
authority and
• establishing a pattern of relationship for
the
Louis A. Allen.
of enabling people work
purpose most to accomplish the
effectivel
 Organizing
In sum, Organizing as a process involves:
 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
Delegation of authority and creation
of responsibility.
Coordinating authority and
responsibility relationships.
 Organizing processes
Identification of activities

Classification of grouping of activities

Assignment of duties.

Delegation of authority and

creation of
responsibility.

Coordinating authority and responsibility

relationships
 Organizational structure
• Organizational structure defines the manner
in which the roles, power, authority, and
responsibilities are assigned and governed,
and depicts how information flows between
the different levels of hierarchy in an
organization.
 Organizational structure
• An organization that is well structured
achieves structure
effective coordination, as the delineates
formal communication
channels, and describes how separate actions of
individuals are linked together.
 Organizational structure
• The structure an organization designs depends greatly on its
objectives and the strategy it adopts in achieving those
objectives.
• An organizational chart is the visual representation of this
vertical structure.

• It is therefore very important for an take utmost care

Organization to while creating the organizational structure.

 Organizational structure
The structure should clearly determine:
• the reporting relationships and the flow of
authority as this will support good
communication – resulting in efficient and
effective work process flow.
• An organizational structure is a system that
outlines how certain activities are directed in
order to achieve the goals of an organization.
 Organizational structure
• These activities can include rules, roles, and
responsibilities.
• The organizational structure also determines
how information flows between levels within
the company/organization.
• The key principle of an organizational
structure is how authority is passed down and
around the company/organization.
 Organizational structure
• Understanding what everyone's roles and
responsibilities helps to create accountability
for individuals, teams and departments.
 Organizational structure
• The structure should clearly determine the
reporting relationships and the flow of
authority as this will support good
communication – resulting in efficient and
effective work process flow.
• An organizational structure is a system that
outlines how certain activities are directed in
order to achieve the goals of an
organization.
 Organizational chart/organogram

• An organizational chart, also called

organogram, organogram, or organizational
breakdown structure is a diagram that shows
the structure of an organization and the
relationships and relative ranks of its parts and
positions/jobs
 Formal Vs informal organizations

• Organizations are basically classified on the

basis of relationships.

• There are two types of organizations formed

on the basis of relationships in an organization

• Formal and Informal organizations

 Formal Vs informal Organization

• Although there is only one organization, it

always has two distinct faces, that is, it can be
viewed from two different perspectives—the
formal and the informal.
 Formal Vs informal Organization

1, Formal Organization –
• is the official blueprint of the organization, which is carefully planned,
described, and enumerated in terms of roles, positions, hierarchy, and a set of
officially sanctioned procedures.

• Expectations define the official roles; these roles are combined into formal
positions and offices; and the roles and offices are arranged into a formal
hierarchy of authority according to their relative power and states.
 Formal Vs informal Organization

• This hierarchical structure in turn is

governed by an official set of rules,
regulations, procedures, and routines

• Formal organization originates from the set

organizational structure and informal

organization originates from formal
organization.
 Formal Vs informal Organization

• This is one which refers to a structure of well

defined jobs each bearing a measure of authority
and responsibility.
• It is a conscious determination by which people
accomplish goals by adhering to the norms laid
down by the structure.
• This kind of organization is an arbitrary set up in
which each person is responsible for his
performance.
 Formal Vs informal Organization

2, Informal Organization –
• It refers to a network of personal and social
relationships which spontaneously originates
within the formal set up.
• Informal organizations develop relationships
which are built on likes, dislikes, feelings and
emotions.
• Therefore, the network of social groups based on
friendships can be called as informal
organizations.
 Formal Vs informal Organization

• There is no conscious effort made to have

informal organization.
• It emerges from the formal organization and it
is not based on any rules and regulations as in
case of formal organization.
 Formal Vs informal Organization

• In some ways, the informal organization is a

shadow of the formal, but it is based on
informal relations rather than formal ones.
Compare the elements of the formal and
informal organization below:
 Formal Vs informal Organization

• The two perspectives of organization are often

quite different.

• The formal is clearly based of prescribed

official relations whereas the informal is
anchored in personal relations that, emerge
spontaneously as participants interact.
 Formal Vs informal Organization

• Much of the formal is written down and found

in documents and charts; however, the
informal is virtually never written down, but it
exists and, at times, is as important or more so
than the formal.
 Formal Vs informal Organization
• For an efficient organization, both formal
and informal organizations are required.

• They are the two phase of a same concern.

 Formal Vs informal Organization
• They interact and communicate amongst
themselves. Therefore, both formal and informal
organizations are important.
• When several people work together for
achievement of organizational goals, social tie
ups tends to built and therefore informal
organization helps to secure cooperation by
which goals can be achieved smooth.
• Therefore, we can say that informal organization
emerges from formal organization
 Elements of Formal Organization

• Hierarchy of Authority
• Division of Labor
• Formalization
• Impersonality
• Formal Communication
• Formal Leadership
Elements of Informal Organization

• Hierarchy of Friendships
• Division into Cliques
• Informal Norms and Procedures
• Personal Relations
• Informal Communication
• Informal Leadership
 Formal organization

• Formal organization has a formal set up

to achieve pre- determined goals.

• This is formal organizational structure

 Features of formal organization
• Formal organization has the following features:
• Deliberately created structure : ...
• Job-oriented: ...
• Division of work : ...
• Depart mentation: ...
• Formal authority :
• Span of control
• Unity of command ...
• Delegation: ...
• Coordination: ...
• Based on principles of organizing
 Advantages of formal organizational
structure
• Systematic work. Formal organizations divide
activities into units and positions. Each has a
specific role and purpose. Such an arrangement
allows the organization to function systematically
and smoothly.
• More coordinated. Formal organizations clearly
describe the units and positions, including their
respective roles. It allows everyone to move in
the same direction towards achieving goals.
 Advantages of formal
• Clear authority. Formal organizations have an
established chain of command. It lays out the
lines of authority and decision-making power.
Thus, the relationship between subordinates and
superiors is clearly defined.
• No ambiguity or confusion. Each person, job
position, and department has clearly defined
roles. Therefore, no ambiguity or confusion is in
carrying out the role. Moreover, it minimizes
wastage by eliminating overlapping roles.
 Advantages of formal
• More stable. Organizations operate according to
rules and procedures. As a result, the behavior
and relationships among members are
predictable. And, the organization will continue
even when some key people such as directors
leave.
• Professional relationship. People interact with
each other because of work. And, they put more
emphasis on professional relationships than
interpersonal relationships such as kinship.
 Characteristics of a formal
organizational structure

• Goals. Formal organizations document it in writing, for example, in a vision

and mission statement. And each unit, position, and person work together to
achieve those goals.

structure within the organization into a chart, called an organizational chart. It

describes how the organization is divided into divisions and positions and how
they are interconnected.

• Organizational structure. Formal organizations

have a clear structure. They describe the
 Characteristics of a formal
• Level of hierarchy. Organizations define a clear
level of hierarchy. It codifies the relationships
between different positions in the organization,
from top to bottom. Each position has different
authorities, roles, and responsibilities.
• Authority. The formal organization defines and
assigns authority to each position. Each
cannot act outside his authority. Take an
example in decision making. In certain
organizational structures, it flows from top to
bottom and not the other way around.
 Characteristics of a formal
• Chain of command. The formal organization
governs how the authority and responsibilities
between positions should be exercised. It is
usually pyramidal in shape.
• The higher position is responsible for the
actions and decisions made by the
position. lower In addition, the
communicationlineswithin
of the organization follow
the chain of command.
 Characteristics of formal
• Procedures, rules, and policies. Formal organizations
are highly dependent on rules, procedures, and policies
to operate.
• They are usually in writing and become the basis for
managing all activities and functions within the
organization.
• Therefore, everyone must adhere to them strictly,
leaving little latitude for interpretation.
• Member management system. The organization has a
system in place for replacing members. For example,
the selection is not based on political relations or
kinship but on qualifications.
 Importance offormal Organizing
structure
1. Specialization
-
• Organizational structure is a network of
relationships in which the work is divided into
units and departments.

• This division of work is helping in bringing

specialization in various activities of concern.
Importance of Organizational structure
2. Well defined jobs
- Organizational structure helps in putting right
men on right job which can be done by
selecting people for various departments
according to their qualifications, skill and
experience.
- This is helping in defining the jobs properly
which clarifies the role of every person.
Importance of Organizing structure
3. Clarifies authority
• Organizational structure helps in clarifying the
role positions to every manager (status quo).

• This can be done by clarifying the powers to

every manager and the way he has to exercise
those powers should be clarified so that misuse
of powers do not take place.
Importance of Organizing structure

• Well defined jobs and responsibilities attached

helps in bringing efficiency into managers
working.

• This helps in increasing productivity.

Importance of Organizing structure
4. Co-ordination
- Organization is a means of creating co-ordination
among different departments of the enterprise.
- It creates clear cut relationships among
positions and ensure mutual co-
operation
individuals. among
- Harmony of work is brought by level
managers exercising higher their
interconnected activities ofauthority over
lower level manager
Importance of Organizing structure
• Authority responsibility relationships can be
fruitful only when there is a formal relationship
between the two.
• For smooth running of an organization, the co-
ordination between authority- responsibility is
very important.
• There should be co-ordination between different
relationships.
• Clarity should be made for having an ultimate
responsibility attached to every authority.
Importance of Organizing structure
• There is a saying, “Authority without
responsibility leads to ineffective behavior and
responsibility without authority makes person
ineffective.”

• Therefore, co-ordination of authority-

responsibility is very important.
Importance of Organizing structure
5. Effective administration
- The organization structure is helpful in
defining the jobs positions. The roles to be
performed by different managers/employees
are clarified.
Specialization is achieved through division of
work. This all leads to efficient and effective
administration.
Importance of Organizing structure
• 6. Growth and diversification –
• A company’s growth is totally dependent
on how efficiently and smoothly a concern
works.
• Efficiency can be brought about by
ordination
clarifying the between
role authority to and
positions
responsibility
the managers,andco- concentrating on
specialization.
Importance of Organizing structure
• In addition to this, a company can diversify if
its potential grow. This is possible only when
the organization structure is well- defined.
This is possible through a set of formal
structure.
Importance of Organizing structure
7. Sense of security –
• Organizational clarifies the job
structure positions.
• The roles assigned to every manager is clear.
Co-ordination is possible. Therefore, clarity of
powers helps automatically in increasing
mental satisfaction and thereby a sense of
security in a concern. This is very important
for job satisfaction.
Importance of Organizing structure
• 8. Scope for new changes
- Where the roles and activities to be performed
are clear and every person gets independence
in his working, this provides enough space to
a manager to develop his talents and flourish
his knowledge.
-
 Departmentalization
• Depart mentation means the process by which
similar activities of the business/organization
are grouped into units for the purpose of
facilitating smooth administration at all levels.
• It implies the division of total work of an
organization into individual functions and sub
functions.
• It is the process of division of organization into
different parts known as departments.
 Departmentalization
• According to L. A. Allen –

“Depart mentation is the means of dividing a

large and monolithic functional organization into
smaller, flexible, administrative units.”
 Departmentalization
• Depart mentation or Departmentalization is
the process of grouping the activities of an
enterprise/organization into several units for
the purpose of administration at all levels.

• It also provides a basis on which the top

managers can co-ordinate and control the
activities of the departmental units.
•
 Departmentalization
• Depart mentation can provide a necessary
degree of specialization of executive activity
for efficient performance.

• It can simplify the tasks of management

within a workable span.
 Departmentalization
• It also provides a basis on which the top
managers can co-ordinate and control the
activities of the departmental units.
• Depart mentation is a part of the
organization process.
 Departmentalization

• It involves the grouping of common activities

under a single person’s control. The
activities are grouped on the basis of a
function of the organization.

• This work is done by a chief executive of the

concerned organization.
 Need for and Importance of Depart
mentation
• The basic need for depart mentation is to
make the size of each departmental unit
manageable and secure the advantages of
specialization.

• Grouping of activities and, consequently, of

personnel, into departments makes it possible
to expand an enterprise to any extent.
 Importance of depart,,
- A manager gets ready for taking independent
decisions which can be a road or path to
adoption of new techniques of production.

- This scope for bringing new changes into the

running of an enterprise is possible only
through a set of organizational structure
 Importance of
• Depart mentation is necessary on account of
the following reasons:
1. Advantages of Specialization:
• Depart mentation enables an enterprise to
avail of the benefits of specialization.
• When every department looks after one major
function, the enterprise is developed and
efficiency of operations is increased.
 Importance of depart,,
• 2. Feeling of Autonomy:

• Normally departments are created in the

enterprise with certain degree of autonomy
and freedom.
 Importance of depart,
• The manager in charge of a department can
take independent decisions within the overall
framework of the organization.

• The of autonomy provides

satisfaction job and motivationwhich lead
feeling
higher efficiencytoof operations.
 Importance of depart,
3. Expansion:
• One manager can supervise and direct only a
few subordinates.

• Grouping of activities and personnel into

depart mentation makes it possible for the
enterprise to expand and grow.
 Importance of depart,
• 4. Fixation of Responsibility:
• Depart mentation enables each person to
know the specific role he is to play in the total
organization.
 Importance of depart,
• The responsibility for results can be defined
more clearly, precisely and accurately and an
individual can be held accountable for the
performance of his responsibility.
 Importance of depart,
• 5. Up-liftment of Managerial Skill:
• Depart mentation helps in the development of
managerial skill.
• Development is possible due to two factors.
• Firstly, the managers focus their attention
on some specific problems which provide
them effective on-the-job training.
 Importance of depart,
• Secondly, managerial need for further training
can be identified easily because the managers’
role is prescribed and training can provide
them opportunity to work better in their area
of specialization
 Importance of depart,
6. Facility in Appraisal:
• Appraisal of managerial performance
easier when specific tasks
becomes toare
assigned departmental personnel.

• Managerial performance can be measured

when the areas of activities are specified and
the standards of performance are fixed
 Importance of depart,
• Depart mentation provides help in both these
areas.

• When a broader function is divided into

small segments and a particular segment is
assigned to each manager, the area to be
appraised is clearly known; and the factors
affecting the performance can be pointed out
more easily.
•
 Importance of depart,
• Similarly, the standards for performance can
be fixed easily because the factors influencing
the work performance can be known clearly.

• Thus, performance appraisal becomes more

effective.
 Importance of depart,
7. Administrative Control:
• Depart mentation is a means of dividing the
large and complex organization into small
administrative units.
• Grouping activities and personnel into
of units facilitates
manageable administrative
• control.
Standards of performance for each and every
department can be precisely determined.
 Factors to be Considered in Depart
mentation:
• A suitable basis of depart mentation is
which
one facilitates the performance
organizational functions of efficiently
effectively so that the objectives of and
organization are achieved. the

• Since each basis is suitable to a particular type

of organization, often a combination of
various basis is adopted.
Factors, considered in departmen,
• So, the determination of suitability of depart
mentation basis should be considered in the
light of various principles or factors affecting
the functioning of an organization.
 Factors, considered in departmen
1, Specialization:
• The activities of an organization should be
grouped in such a way that it leads to
specialization of work.
• Specialization helps to improve efficiency and
ensure economy of operations.

• It enables the personnel to become experts.

 Factors, considered in departmen
2, Co-ordination:
• Quite different activities may be grouped
together under one executive because they
need to be coordinated.

• So, the basis of depart mentation should

ensure that the dissimilar activities are put
together in one department.
 Factors, considered in departmen
• So, the determination of suitability of depart
mentation basis should be considered in the
light of various principles or factors affecting
the functioning of an organization.
 Factors, considered in departmen
3, Control:
• Depart mentation should be such that it
facilitates the measurement of performance
and adoption of timely corrective action.
• It should enable the managers to hold the
employees accountable for results.
• Effective control helps to achieve
organizational objectives economically and
efficiently.
 Factors, considered in departmen
4, Proper Attention:
• All the activities which contribute to the
achievement of subordinate results should be
given adequate attention.
• This will ensure that all necessary activities are
performed and there is no unnecessary
duplication of activities.
• Key areas should be given special attention.
 Factors, considered in departmen
6, Local Condition:
• While forming departments adequate
attention to the local conditions should be given.
• This is more important to the organization which
operates in different geographical areas.
• Depart mentation should be adjusted
according to the available resources.
• It should aim at full utilization of resources.
 Factors, considered in departmen
5,Economy:
• Creation of departments involves extra cost of
additional space, equipment and personnel.

• So, the pattern and number of departments

should be so decided that maximum possible
economy is achieved in the utilization of
physical facilities and personnel.
 Factors considered ;
6 Human Consideration:
• Depart mentation should also consider
the human aspect in the organization.
• So, along with the technical factors
discussed above, departments should be
createdofon the
basis availabilit of personnel, their
attitude, y and valuesystems,
aspiration
informal work groups, cultural patterns, etc.
 Factors, considered in departmen
• Due attention to the human factors will make
depart mentation more effective and more
efficient.
 Span of Management/control
• Span of management means the number of
people managed efficiently by a single officer
in an organization

• Span of management —the number of

employees managed by a single supervisor—
varies from company to company, and also
from team to team within the same company.
 Span of Management/control
• Span of management can also named as Span
of span of authority, span of or
control,
responsibility span of supervision

•
•The limit of number of members for span
of control may be increased or decreased
according to the levels of management
 Types of span of control
There are two types of span of control:-
• A wide span of control and
• a narrow span of control
 Wide span of control
• Often found within a flat
structure, a wide span organizational
of control
managers to have more direct reports allows
and,
therefore, more control over the work they
produce.
 Wide
• Although a wide span of control requires
fewer managers and may facilitate an easier
delegation of responsibilities, having a large
number of direct reports can be
overwhelming for managers, and it can also
create confusion around team and individual
accountability.
 Wide span of control
-
It is one in which a manager can supervise and
control effectively a large group of persons at
one time.
The features of this span are:-
i) Less overhead cost of supervision
ii. Prompt response from the employees
 Wide span of control
• iii. Better communication
• iv. Better supervision
• V Better co-ordination

• According this span, one manager can

to and efficiently handle a large
effectively
number of subordinates at one time
 Narrow span of control
• More common in a traditional organizational
hierarchy, a narrow span of control provides
each manager with fewer individuals to
manage as well as more layers within the
organizational structure in general.
• .
 Narrow span of control
• A narrow span of control provides managers
and employees with more time for one-on-
one communication as well as more
opportunities for employee advancement, but
it can also create more opportunities for
delayed decision-making,
increased bureaucracy,
 Narrow span of control

• According to this span, the work and authority

is divided amongst many subordinates and a
manager doesn't supervises and control a very
big group of people under him.

• The manager according to a narrow span

supervises a selected number of employees at
one time.
 Narrow span
• The features are:
i)Good for Work which requires tight
control and supervision
ii. Co-ordination is difficult to be achieved.
iii. Communication gaps can come.
iv. Messages can be distorted.
v. Specialization work can be achieved.
 Determinations/ Factors influencing
Span of Management
1, Managerial abilities-

• In the concerns where managers are capable,

qualified and experienced, wide span of
control is always helpful.
 Factors
2. Competence of subordinates-
• Where the subordinates are capable and
competent and their understanding levels are
proper, the subordinates tend to very
frequently visit the superiors for solving their
problems.
• In such cases, the manager can handle large
number of employees.
• Hence wide span is suitable.
 Factors
• 3. Nature of work-

• If the work is of repetitive nature, wide span

of supervision is more helpful.
• On the other hand, if work requires mental
skill or craftsmanship, tight control and
supervision is required in which narrow span
is more helpful.
 Factors
4. Delegation of authority-
• When the work is delegated to lower levels in
an efficient and proper way, confusions are
less and congeniality of the environment can
be maintained.
• In such cases, wide span of control is
suitable and the supervisors can manage and
control large number of sub- ordinates at one
time.
 Factors
5. Degree of decentralization-
• Decentralization is done in order to achieve
specialization in which authority is shared by many
people and managers at different levels. In such cases,
a tall structure is helpful.
• There are certain concerns where decentralization is
done in very effective way which results in direct and
personal communication between superiors and sub-
ordinates and there the superiors can manage large
number of subordinates very easily. In such cases, wide
span again helps.
 Factors
•5, Level of supervision
– The degree of span of control can be increased
at the bottom level management and decreased
at top level management
 Factors
6 Using of standards
–, Standards are used in an organization to
detect the errors or faults in the performance of
work
 Factors
7, Methods of communication

– One of the factors determining the span of

control is Methods of Communication which is
divided in to two Oral and Written
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