ORGANIZING

The management function of organising ensures that efforts are directed towards the attainment of goals laid down in the planning function in such a manner that resources are used optimally and people are able to work collectively and effectively for a common purpose. Thus, it is in the context of effective management that the organisation function earns due importance. It is a means for translating plans into action.

The organising function leads to the creation of an organisational structure which includes the designing of roles to be filled by suitably skilled people and defining the inter relationship between these roles so that ambiguity in performance of duties can be eliminated.

Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.

Louis Allen

 Organising is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them.

Theo Haimman

ORGANIZING

Organising can be defined as a process that initiates implementation of plans by clarifying jobs and working relationships and effectively deploying resources for attainment of identified and desired results

(goals).

Steps in the Process of Organising

(i) Identification and division of work:

The first step in the process of organising involves identifying and dividing the work that has to be done in accordance with previously determined plans. The work is divided into manageable activities so that duplication can be avoided and the burden of work can be shared among the employees.

(ii) Departmentalisation:

 Once work has been divided into small and manageable activities then those activities which are similar in nature are grouped together. Such sets facilitate specialisation.

This grouping process is called departmentalisation.

Departments can be created using several criteria as a basis.

(iii) Assignment of duties:

 It is necessary to define the work of different job positions and accordingly allocate work to various employees. Once departments have been formed, each of them is placed under

the charge of an individual. Jobs are then allocated to the members of each department in accordance to their skills and competencies.

(iv) Establishing reporting relationships:

Merely allocating work is not enough. Each individual should also know who he has to take orders from

and to whom he is accountable.

The following are the main features of organising:

(i) It is a sub process of management

(ii) It is goal oriented. It is designed on the basis of objectives and it aims at achieving them.

(iii) It deals with group efforts.

(iv) It is based on the principle of division of work.

(v) It establishes authority-responsibility relationship among the organisational members.

Importance of Organising

Performance of the organising function can pave the way for a smooth transition of the enterprise in accordance with the dynamic business environment.

The following points highlight the crucial role that organising plays in any business enterprise:

 (i) Benefits of specialization

Repetitive performance of a particular task allows a worker to gain experience in that area and leads to specialisation.

(ii) Clarity in working relationships:

 Organizing helps in creating a hierarchical order thereby enabling the fixation of responsibility and specification of the extent of authority to be exercised by an individual. The working relationships are defined through the structure formed as per the process of planning.

 (iii) Optimum utilization of resources:

 Organising leads to the proper usage of all material, financial and human resources. The proper assignment of jobs avoids overlapping of work and also makes possible the best use of resources. Avoidance of duplication of work helps in preventing confusion and minimising the wastage of resources and efforts.

 (iv) Adaptation to change:

It allows the organisation structure to be suitably modified and the revision of inter-relationships amongst managerial levels to pave the way for a smooth transition. It also provides much needed stability to the enterprise as it can then continue to survive and grow inspite of changes.

 (v) Effective administration:

. Clarity in working relationships enables proper execution of work. Management of an enterprise thereby becomes easy and this brings effectiveness in administration.

(vi) Development of personnel:

. Effective delegation allows the managers to reduce their workload by assigning routine jobs to their subordinates. The reduction in workload by delegation is not just necessary because of limited capacity of an individual but also allows the manager to develop new methods and ways of performing tasks.

vii) Expansion and growth:

Organising helps in the growth and diversification of an enterprise.

Organisation Structure

Peter Drucker emphasises on the importance of having an appropriate organisation structure when he says, “organisation structure is an indispensable means; and the wrong structure will seriously impair business performance and even destroy it.”

The organisation structure can be defined as the framework within which managerial and operating tasks are performed. It specifies the relationships between people, work and resources. It allows correlation and coordination among human, physical and financial resources and this enables a business enterprise to accomplish desired goals.

Span of management

Span of management refers to the number of subordinates that can be effectively managed by a superior. This determines the levels of management in the structure.

Conclusion of structure & span of management-

An organisation structure is built around the analysis of activities, responsibility for decisions, and relationships which enable attainment of objectives. Activity analysis leads to departmentalisation, decision making to evolution of the pattern of flow of authority, and relationships to leading, staffing and communication. The structure defines the pattern of vertical flow of authority, called level, and the area over which the authority runs is known as the span of an organisation.

Types of Organisation Structures

The organisational structure can be classified under two categories which are as follows:

 (i) Functional structure and (ii) Divisional structure

Functional structure:

When units and sub-units of activities are created in an organisation on the basis of functions, it is known as functional structure. Thus, in any industrial organisation, specialised functions like manufacturing, marketing, finance and personnel are constitute as separate units of the organisation. All activities connected with each such function are placed in the same unit.

As the volume of activity increases, sub-units are created at lower levels in each unit and the number of persons under each manager at various levels get added.. This results in the interrelated positions taking the shape of a pyramid.

Advantages:

 The functional structure has many advantages to offer. Important among them are as follows:

 (a) Occupational specialisation

A functional structure leads to occupational specialisation since emphasis is placed on specific functions. This promotes efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve performance.

 (b) Control and coordination

 It promotes control and coordination within a department because of similarity in the tasks being performed.

(c) Efficiency

 It helps in increasing managerial and operational efficiency and this results in increased profit.

(d) Minimal duplication of effort

 It leads to minimal duplication of effort which results in economies of scale and this lowers cost.

 (e) Focus on Limited range of skills

 It makes training of employees easier as the focus is only on a limited range of skills.

 (f) It ensures that different functions get due attention.

 Disadvantages:

The functional structure has certain disadvantages which an organisation must take into consideration before it adopts it. Some of them are as follows:

(a) Focuses on departments

A functional structure places less emphasis on overall enterprise objectives than the objectives pursued by a functional head. Such practices may lead to functional empires wherein the importance of a particular function may be overemphasised. Pursuing departmental interests at the cost of organisational interests can also hinder the interaction between two or more departments.

(b) Problems in coordination

 It may lead to problems in coordination as information has to be exchanged across functionally differentiated departments.

(c) Interdepartmental

Interdepartmental conflicts can also arise in the absence of clear separation of responsibility.

 (d) Inflexibility

 It may lead to inflexibility as people with same skills and knowledge base may develop a narrow perspective and thus, have difficulty in appreciating ay other point of view. Functional heads do not get training for top management positions because they are unable to gather experience in diverse areas

Suitability:

It is most suitable when the size of the organisation is large, has a diversified activities and operations require a high degree of specialisation.

Divisional Structure

The divisional organisation structure is more suited to very large enterprise particularly those which deal in multiple products to serve more than one I distinctive markets. The organisation is divided into smaller business units which , are entrusted with the business related to different products or different market territories.

In other words, independent divisions (product divisions or market division)  are created under the overall control of the head office. Each divisional manager is given autonomy to rim all functions relating to the product or market segment or regional market. Thus, each division may have a number of supporting functions to undertake.

The divisional structure is characterised by decentralisation of authority. Thus it enables managers to take decisions promptly and resolve problems appropriate to the respective divisions.

Advantages:

 The divisional structure offers many benefits. Prominent among these are as follows:

(a) Product specialisation

Product specialisation helps in the development of varied skills in a divisional head and this prepares him for higher positions. This is because he gains experience in all functions related to a particular product.

(b) Fixation of responsibility

 Divisional heads are accountable for profits, as revenues and costs related to different departments can be easily identified and assigned to them. This provides a proper basis for performance measurement. It also helps in fixation of responsibility in cases of poor performance of the division and appropriate remedial action can be taken.

 (c) Flexibility and initiative

 It promotes flexibility and initiative because each division functions as an autonomous unit which leads to faster decision making.

(d) Expansion and growth

 It facilitates expansion and growth as new divisions can be added without interrupting the existing operations by merely adding another divisional head and staff for the new product line.

 Disadvantages:

The divisional structure has certain disadvantages. Some of them are as follows:

 (a)  Conflicts among different divisions-

Conflict may arise among different divisions with reference to allocation of funds and further a particular division may seek to maximise its profits at the cost of other divisions.

(b) Increase in costs

 It may lead to increase in costs since there may be a duplication of activities across products. Providing each division with separate set of similar functions increases expenditure.

(c) Authority to supervise

 It provides managers with the authority to supervise all activities related to a particular division. In course of time, such a manager may gain power and in a bid to assert his independence may ignore organisational interests.

 Suitability:

Divisional structure is suitable for those business enterprises where a large variety of products are manufactured using different productive resources.

Basis	Functional Structure	Divisional Structure
Formation	Formation is based on functions	Formation is based on product lines and is supported by functions.
Specialisation	Functional specialisation.	Product specialisation
Responsibility	Difficult to fix on a department	Easy to fix responsiblity for performance.
Managerial Development	Difficult, as each functional manager has to report to the top management.	Easier, autonomy as well as the chance to perform multiple functions helps in managerial development.
Cost	Functions are not duplicated hence economical	Duplication of resources in various departments, hence costly.
Coordination	Difficult for a multiproduct company.	Easy, because all functions related to a particular product are integrated in one department.

Delegation

Albert K. Wickesberg, too, in the same spirit observes: "The act or process of

delegation is the assigning to subordinates of specified tasks of the organisation and the granting to one or more persons the authority necessary for directing satisfactorily the activities and duties so assigned."

According to Terry, Delegation may be classified as

 (a) Downward: when a higher authority delegates to the lower authority as a sales manager delegates to a salesman

 (b) Upward: when a lower authority delegates to a higher authority as the shareholders delegate their authority to the Board of Directors, and

 (c) 'Sideward' when delegation is at an equal level as in a case of a person delegating to his peers in the organisation. Therefore, delegation can be defined as the entrustment of a part of work or responsibility and authority to another and the creation of accountability for performance.

Elements of Delegation

According to Louis Allen, delegation is the entrustment of responsibility and authority to another and the creation of accountability for performance. A detailed analysis of Louis Allen’s definition brings to light the following essential elements of delegation:

 (i) Authority:

Authority refers to the right of an individual to command his subordinates and to take action within the scope of his position. The concept of authority arises from the established scalar chain which links the various job positions and levels of an organisation.

Authority also refers to the right to take decisions inherent in a managerial position to tell people what to do and expect them to do it.

(ii) Responsibility:

It arises from a superior– subordinate relationship because the subor-dinate is bound to perform the duty assigned to him by his superior. Thus, responsibility flows upwards i.e., a subordinate will always be responsible to his superior

(iii) Accountability:

 Delegation of authority, undoubtedly empowers an employee to act for his superior but the superior would still be accountable for the outcome: Accountability implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability.

Importance of Delegation

Effective delegation leads to the following benefits:

 (i) Effective management:

 By empowering the employees, the managers are able to function more efficiently as they get more time to concentrate on important matters. Freedom from doing routine work provides them with opportunities to excel in new areas.

(ii) Employee development:

Delegation makes them better leaders and decision makers. Thus, delegation helps by preparing better future managers. Delegation empowers the employees by providing them with the chance to use their skills, gain experience and develop themselves for higher positions.

(iii) Motivation of employees :

Responsibility for work builds the self-esteem of an employee and improves his confidence. Employee feels encouraged and tries to improve his performance further.

 (iv) Facilitation of growth:

Trained and experienced employees are able to play significant roles in the launch of new projects by replicating the work ethos they have absorbed from existing units, in the newly set up branches.

 (v) Basis of management hierarchy:

Delegation of authority establishes superior-subordinate relationships, which are the basis of hierarchy of management. It is which determines who has to report to whom. The extent of delegated authority also decides the power that each job position enjoys in the organisation.

(vi) Better coordination:

. This helps to avoid overlapping of duties and duplication of effort as it gives a clear picture of the work being done at various levels. Such clarity in reporting relationships help in developing and maintaining effective coordination amongst the departments, levels and functions of management. Thus, delegation is a key element in effective organising.

Decentralisation

Centralisation and Decentralisation Centralisation and decentralisation are relative terms, as seen from the existing status of various business enterprises.

Centralisation means the concentration of formal authority at the top levels of an organisation. It is a tendency aimed at centralised performance. Hence, it is the ' opposite of dispersal and delegation of authority.

It has been opined that decentralisation refers to the physical location of facilities and the extent of dispersal of authority throughout an organisaticrn. Hence, it is an arrangement by which the ultimate authority to command and the ultimate responsibility for results is localized in units located in different parts of the country. It is argued that assigning of functions and responsibility, for their efficient and effective performance, to the subordinates or sub-divisions is the essence of decentralization.

Importance

Decentralisation is much more than a mere transfer of authority to the lower levels of management hierarchy. It is a philosophy that implies selective dispersal of authority because it propagates the belief that people are competent, capable and resourceful.

(i) Develops initiative among subordinates:

Decentralisation helps to promote self-reliance and confidence amongst the subordinates. This is because when lower managerial levels are given freedom to take their own decisions they learn to depend on their own judgment.

(ii) Develops managerial talent for the future:

 Formal training plays an important part in equipping subordinates with skills that help them rise in the organisation but equally important is the experience gained by handling assignments independently.

(iii) Quick decision making:

In a decentralised organisation, however ,since decisions are taken at levels which are nearest to the points of action and there is no requirement for approval from many levels, the process is much faster.

(iv) Relief to top management:

Decentralisation diminishes the amount of direct supervision exercised by a superior over the activities of a subordinate because they are given the freedom to act and decide albeit within the limits set by the superior.

v) Facilitates growth:

Decentralisation awards greater autonomy to the lower levels of management as well as divisional or departmental heads. This allows them to function in a manner best suited to their department and fosters a sense of competition amongst the departments.

(vi) Better control:

Feedback from all levels helps to analyse variances and improve operations. In decentralisation, one of the challenges is the accountability of performance. In response to this challenge, better control systems are being evolved such as the balance score card and management information system.

Basis	Delegation	Decentralisation
Nature	Delegation is a compulsory act because no individual can perform all tasks on his own.	Decentralisation is an optional policy decision. It is done at the discretion of the top management.
Freedom of action	More control by superiors hence less freedom to take own decisions.	Less control over executives hence greater freedom of action.
Status	It is a process followed to share tasks	It is the result of the policy decision of the top management.
Scope	It has narrow scope as it is limited to superior and his immediate subordinate.	It has wide scope as it implies extension of delegation to the lowest level of management
Purpose	To lessen the burden of the manager.	To increase the role of the subordinates in the organisation by giving them more autonomy.