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 ORGANISATION

Organisations are established to attain different goals related to different interest groups. These goals are attained through the mutual contribution of all related stakeholders. The effectiveness and efficiency of organization helps in providing the continuity and success to the business firms. The importance of organisation can be realized in many ways, among which some are discussed as follows:

(i) Facilitates Administration:

 An efficient and sound organisation makes it easy for the management to relate to the flow of resource continually to the overall objectives. A sound organisation helps in providing appropriate platform where management can perform the functions of planning, direction, coordination, motivation and control.

(ii) Facilitates Growth and Diversification:

 A sound organisation helps in the growth and diversification of activities. The growth is facilitated by clear division of work, proper delegation of authority, etc. In short, it helps in the organisational elaboration. In case of reasonable expansion of the organisation, the functional types get replaced by a more flexible decentralized organisation.

(iii) Permits Optimum Use of Resources:

The optimum use of technical and human resources gets facilitated with sound and efficient organisation. The organisation can have the facilities of latest technological developments

and improvements. It also facilitates optimum use of human resources through specialization. The people in the organisation get appropriately trained and get promotion opportunities. A sound organisation provides all the desired potential and strength to the company to meet the future challenges.

(iv) Stimulates Creativity:

Specialization in the organisation helps individuals in getting well-defined duties, and clear lines of authority and responsibility. It encourages the creativity of the people. The sound organizational structure enables managers to concentrate on important issues where their talent can be exploited to the

maximum.

(v) Encourages Synergy Effect:

 When one ‘efficient’ team member is able to persuade and motivate all other average team-members to work more efficiently, resulting in greater performance of the group than what it was before the motivation of all other employees, the effect is known as ‘synergy effect’

A sound organisation helps in adopting efficient methods of selection, training, remuneration and promotion for employees. It makes people work in a team with synergy. Organisation helps in providing factors, like job rotation, job enlargement and enrichment to its employees. A sound organisation provides higher job satisfaction to its employees through proper delegation and decentralization, favorable working environment and democratic and participative leadership. It enhances the mode of communication and interaction among different levels of the management.

(vi) Transfer and Adaptation of Technology:

 Any organisation involved in the ongoing process of research enhances its level of services. In this course, it adapts the latest technologies available in the market and indirectly it also imparts these technologies to the society through its members

PROCESS OF ORGANISATION

The steps involved in the process of an organisation are:

(i) Determination of Objectives: Organisation is usually associated with defining objectives. Therefore, it is necessary for the management to identify the objectives before begining any activity. It will assist the management in the selection of men and materials and with their help it can attain its objectives. Objectives also act as the strategy for the management and the workers. They give unity of direction in the organisation.

(ii) Identification and Grouping of Activities: When the members of the groups are to unite their efforts

effectively there must be an appropriate division of the main activities. Each job should be properly classified and grouped. This will facilitate the group to know what is expected of them as members of the group and will help in avoiding any duplication of efforts. For example, the total activities of an individual industrial organization can be separated into major functions, like production, purchasing, marketing and financing, and each such function is further subdivided into various jobs. The job assigned may be classified and grouped to ensure the useful achievement of the additional steps.

(iii) Allotment of Duties: Once the activities are categorised and grouped into various jobs categorizing and grouping the activities into various jobs, they should be allocated to the employees so that they can carry them out effectively. Each individual should be given a particular job to do according to his ability and made responsible

for that. He should also be given sufficient authority to do the job assigned to him.

(iv) Developing Relationships: Since various individuals work in the same organisation it is the duty of the management to lay down the structure of relationships in the organisation. Everybody should clearly know to whom he is accountable. This will facilitate the smooth functioning of the enterprise by facilitating delegation of responsibility and authority.

(v) Integration of Activities: Integration can be accomplished in the entire activities in following ways:

(a) Through authority relationships – horizontally, vertically, and laterally.

(b) Through organized information or communication systems and with the help of effective coordination

integration can be accomplished. This will enable the enterprise to achieve unity of objectives, team work

and team spirit by the integration of different activities.

TYPES OF ORGANISATION STRUCTURE

There are two types of Organisation Structures:

The formal organisation refers to the structure of jobs and positions with defined functions and relationships.

This type of organisation is built by the management to realize the objectives of an enterprise.

The types of organisation employed by companies vary considerably. However, on the basis of the nature of authority and its flow, the fundamental organisation structures may be classified as follows:

(1) Line Organisation

(2) Functional Organisation

(3) Line and Staff Organisation

(4) Project Management Organisation

(5) Matrix Organisation.

Line Organisation

Historically, line type of structure is the oldest pattern of organisation. The oldest and simplest form of organization is line origination. Line functions refer to those employees who have direct responsibility for accomplishing the objective of the enterprise. In this form of organisation, a supervisor exercises direct supervision over a subordinate, under the organisation, authority flows from the person at the top to the person at the lowest ring of the organisation.

Here the chief executive leads the organisation. This form of organisation is otherwise called military organization or scalar type of organisation.

The line organisation is Illustrated by a Figure given herein:

Benefits of Line Organisation:

(i) It is simple to work.

(ii) It is economical and effective. It permits rapid decisions and effective coordination.

(iii) It promotes unity of command and conforms to the scalar principle of organisation.

 (iv) It fixes responsibility for the performance of tasks in a definite manner upon definite individuals.

 (v) With a unified control and undivided loyalty, line organisation ensures excellent discipline.

 (vi) It is less expensive due to non-involvement of staff personnel.

(vii) It is stable.

Weaknesses of Line Organisation:

 (i) It suffers from lack of specialisation. Each department manager looks after activities of his own department only.

 (ii) There is a possibility of keymen being loaded to the breaking point. Since there is no staff aid, the organisation can be seized by a strong man and run on an arbitrary basis. Such a dictatorial or arbitrary power can lead to a considerable damage to the organisation.

 (iii) Such enterprises suffer from lack of expert staff to give them advice. There are occasions when the line manager is not competent enough to make decisions.

 (iv) Line organisation is rigid and inflexible. Discipline is maintained to the extent that organisation is rarely allowed to change.

(v) It is based upon an autocratic system of management.

 (vi) The work may be divided according to the whims of the manager rather than according to any scientific plan.

(vii) It cramps progress and prevents effective working of the unit.

(viii) It is likely to encourage nepotism (favoritism shown on the basis of family relationship, in business and politics).

The Line Organisation system can be successfully utilised:

 (i) Where the scale of business is small, and the number of subordinates and operative employees are not many;

 (ii) In continuous process industries;

 (iii) Where the work is largely of routine nature;

(iv) Where the machinery is nearly automatic and does not call for the intelligence of the foreman;

(v) Where labour-management problems are not difficult to solve.

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 pcrsohnel 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.

The main advantage of the functional structure of organisation is that there is functional specialjsation in each unit, which leads to operational efficiency of people engaged, and the organisation as a whole derives the benefit of specialised operations.

The heads of the functional units are in direct toucll with the chief executive who can sort out inter-functional problems, if any, and also coordinate the interrelated functions.

The chief executive is a!so able to be in direct touch with lower level subordinates and thereby have full knowledge of the state of affairs in the organization..

However, while the functional arrangement may be well suited to small and medium size organisations, it is incapable of handling the problems of an organisation as it grows in size and complexity.

 Problems of sub-units at lower levels do not receive adequate attention of higher level managers while some of the activities tend to be over-emphasised.

Functional units become unwieldy and difficult to manage when there are diverse kinds of activities performed in large number of sub-units. Personal contact between superiors and subordinates becomes rare, and flow of communication is slow leading to problems of coordination and control.

 Line and Staff Organisation

Both the line and functional plans prove inadequate in operation. The line system concentrates on authority too much. But purely functional plan also divides it too much. The line and staff system strikes a happy balance between the two.

 Under this organisation “line” is supplemented by “staff”. The staff refers to officers who are not line managers but are more or less permanently detailed to special services or to the study of some phases of operations.

Staff personnel thus act as an advisory group adjacent to the line. This pattern of organisation came into being as a result of the departmental managers having to investigate, think and plan and, at the same time, perform the ordinary tasks of production and selling.

Consequently, the work of investigation, research, recording, standardisation and advising, i.e., the work of experts, was wholly distinguished and separated from the routine process of manufacturing and selling. Thus, there arose a clear demarcation between ‘thinking’ and ‘doing’; the staff being the ‘thinkers’ and the line being the ‘doers’.

The merits of line and staff organisation are:

(i) It adds functional specialists to the pure line organisation and thus aims at combining the merits of the two.

 (ii) The stability and discipline of the line organisation are preserved; only the specialist is added

(iii) It brings expert knowledge to bear upon management. Functional specialists provide advice to the management on wide-ranging matters.

(iv) It provides for better placement and utilisation of personnel and leads to more concerted skill development.

The drawbacks are:

(i) The line and staff relationships often lead to numerous frictions and jealousies.

 (ii) Line managers may depend too much on staff experts and thus lose much of their judgement and initiative.

(iii) On the contrary, the staff experts remain ineffective because they do not get the authority to implement their recommendation.

The Problem of Choice: The problem of choosing from among the three types of organisation discussed above is not that of selecting one of them; rather it is concerned with determining the right balance among the three.

• The line structure is part of every organisation, no matter how small or simple it is. The line structure is characterised by total absence of staff specialists

. • At the other extreme is functional organisation with too much of specialisation.

 • In between these two lies the line and staff organisation. A typical organisation is generally characterised by line and staff positions in structure.

 It has some staff specialists vested with a degree of functional authority relating to their respective areas of specialisation over lower line managers. Some of the staff managers generally succeed in acquiring a degree of functional authority whether permitted or not. It would be judicious, therefore, to strike a balance between the line and functional authority.

Project Management Organisation

 Project organisation is not a separate kind of organisation, like the line, line and staff and functional organisations; it is rather set up within an existing organisation for the purpose of completing a project or accomplishing assigned objectives in time, and within cost and profit goals as laid down by the management in this connection.

 Project organisation is directed by the project manager responsible for project goals. Project management organisation may involve development and introduction of a new product, complete redesigning of an existing product line, installing a new plant, and the like. For example, ‘software development’ for a client.

 Project organisation involves appointment of the project manager usually drawn from the middle management ranks. He is responsible for detailed planning, coordination, control and achievement of the objectives within the time schedule.

Resulting Organisation Structure:

 The essence of project management organisation is its independent status which cuts horizontally the normal organisation structure. Since project management is usually required to take prompt decisions and actions from a number of functional areas, flow of information is largely lateral and not vertical. Thus project organisation is characterised by exceptionally strong horizontal working relationships. For instance, major product development calls for close working between the engineering, production and marketing departments; and with employers who are at the same level in organisation hierarchy. However, frequent product changes and decisions affecting costs require communication with the superiors. Project organisation, as such does not completely rule out the possibility of vertical communication though horizontal working relationships are stronger.

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.

Matrix organisation:

This is another type of adaptive structure which aims at combining the advantages of autonomous project organisational and functional specialisation. In the matrix organisation structure, there aye functional departments with specialised personnel who are deputed to work full time in different projects sometimes in more than one project under the overall guidance and direction of project managers. When a project work is completed, the individuals attached to it go back to their respective functional department to be assigned again'to some other project. This arrangement is found suitable where the organisation is engaged in contractual project activities and there are many projects to manager, as in a large construction company or - engineering - firm.

Matrix organisation provides a flexible structure ideally suited to the requirements of changing conditions. It facilitates pooling of specialised and technical personnel from different functional departments, who can be deputed to a number of projects. They acquire valuable experience of handling varied and complex problems in project work. There is speedy exchange of information and decision-making as they ,work under the coordinating authority of project managers.

The major drawback of matrix organisation is that the personnel drawn from specialised functional departments are subjected to dual authority, that of the functional heads and the project managers. The principles of unity of command is thereby sacrificed. This generates stresses and strains in project management, because there is simultaneous engagement of the same individual in a number of projects.

Informal Organisation-

Informal organisation refers to the relationship between people that is not based on procedures but on personal attitudes, prejudices, likes and dislikes. There always exists an informal organisation in a formal organisation and every management has to recognise this fact. Barnard viewed informal organisation as joint personal activity without being conscious of the joint purpose, even though possibly contributing to joint results.

Features of Informal Organisation

Informal organisation is characterised by the following features:

(i) It develops spontaneously and is not established by formal managers.

(ii) It is based on informal authority attached to the person and not the position. Informal authority is earned and not delegated. This authority under informal organisation largely flows either upwards or horizontally.

(iii) Informal organisation represents human tendency to cut across formal channels communication informally with other parts of the enterprise.

 (iv) It is all-pervasive and exists in every enterprise.

(v) Informal organisation is not always destructive, though, at times, it can make the job of management more difficult. Because of its powerful influence on productivity and job satisfaction, formal management would do well to derive benefit from the study of informal organisation.

 (vi) Informal organisation cannot altogether be abolished. It is not created at the will of the formal managers.

Moreover, the formal managers cannot do without the conventions, customers and culture the informal organisation is strongly bound with. Functions of Informal Groups

(i) These groups maintain and continue the cultural values and life style of the group.

(ii) They provide social satisfactions.

(iii) The group develops system of communication in order to meet wants and to keep its members informed about what affects them.

(iv) They exercise social controls by which the behaviour of others is influenced and regulated.

Problems Associated with Informal Organisation

 (i) Resistance to Change: There is a tendency that the group may become overly protective of its life style and stand like a rock in the face of change. They are strongly bound by conventions, customs and culture.

(ii) Role Conflict: The quest for social satisfactions may lead members away from organisational objectives. What is good for the employee is not always good for the organisation. This would results in a role conflict. Workers want to meet the requirements of both, their group as well as of their employer, but frequently these requirements are conflicting each other.

(iii) Rumour: Communication in informal organisation leads to the problem of rumour.

(iv) Conformity: Social control of informal groups exerts strong pressures for conformity. The closer they are attached to it, the stronger its influence becomes. Benefits of Informal Organisation Informal systems bring a number of benefits for the employers.

 Informal system:

(i) Makes the total system more effective.

(ii) Lightens the work load of the management.

(iii) Helps get work done.

(iv) Tends to encourage cooperation.

(v) Fills in the gaps in a manager’s abilities.

(vi) Gives satisfaction and stability to work groups.

(vii) Provides a useful channel of communication.

(viii) Provides a safety valve for employees’ emotions.

 (x) Encourages managers plan and act more carefully. Control of Informal Organisation The benefits of informal organisation will accrue only when it is properly controlled and its potential power properly channelised.

The significant aspects of manager’s duty in this connection are:

 (i) He should recognise and reconcile himself to the existence of informal organisation.

(ii) He should influence the informal organisation so that its role is more positive and its negative aspect is minimised.

(iii) He should integrate informal organisation with the formal organisation in such a way that the former also contributes to the accomplishment of enterprise objectives.

(iv) He should make informal organisation secondary to formal organisation, and not vice versa.

PRINCIPLES OF ORGANISATION

 of objectives:

Every member of the  should be familiar with its goals and objectives. There must be unity of objectivse so that all efforts can be concentrated on the set goals. The principle requires objectives to be clearly formulated and well-understood.

Division of work and specialization-

The entire work in the organisation should be divided into various parts so that every individual is confined to the performance of a single job. This facilitates specialisation which in turn leads to efficiency and quality However, each area of specialisation            interrelated the total integrated system by means ofof all activities of all departments.

Definition of jobs:

 Every   in the organisation should be clearly defined in relation to other positions in the organisation. The duties and responsibilities assigned to every position and its relationship with other positions should be so defined that there is no overlapping of functions.

Separation of line and staff functions-

Whenever  possible, line functions be separated from staff activities. Line functions are those which accomplish the main objectives of the company. In many manufacturing companies   the manufacturing and  sales departments are considered be accomplishing the main objectives of the business and so are called the line functions. Other functions like personnel, plant maiatenance, financing and legal are considered as staff functions.

Chain of command or  Scalar principle:

There must be clear lines of authority running from the top to the bottom of  the organisation.  Authority is the right to decide, direct and coordinate. The organisation structure should facilitate delegation of authority, Clarity is achieved through delegation by steps or levels from the top position to the operating level. From the chief executive, a line of authority may proceed to departmental managers, to supervisors or foreman and finally to workers. This chain of commandis also known as scalar principle of organisation.

Parity of authority and  responsibility or principle of correspondence:

 Responsibility should aiways be coupled with corresponding authority. 'Each subordinate must have sufficient authority to discharge the responsibility entrusted to him. This principle suggests that if a plant manager in a multiplant organisation is held accountable for all activities in his plant, he should not be subject to seek orders from company headquarters for his day to day activities.

Unity of command:

 No one in the organisation should report to more than one line supervisor. Everyone in the organisation should know to whom he reports and who reports to him. Stated simply, everyone should have only one boss. Receiving directions from several supervisors may result in confusion, chaos, conflicts and lack of action.

Unity of direction:

 According to this principle a group of activities that have a common goal should be managed by one person. There should be one head and one plan for a common objective of different activities. This facilitate smooth progression towards the achievements of  overall organisational goals.

Exception principle:

The principle suggests that higher level managers should attend to exceptional matters only. All routine decisions should be taken at lower level, whereas problems   matters and policy decisions   be referred to higher levels.

 Span of supervision:

 The term 'span of supervision  means the number of persons a manager or a supervisor can direct. No manager should be required to supervise more subordinates than he can effectively manage within the limits of available and ability. The exact number may vary according to the nature of the job and the frequency or intensity of supervision needed.

Principle of balance:

 There should be proper balance between various parts of the organisation and no function should be given undue importance at the cost of others. Balance should be maintained also between centralisation and   span of supervision and lines of communication, and authority allocated to department and personnel at  various levels.

 Communication-

 A good            network is essential to achieve the objectives of an organisation. No doubt the line of authority provides channels of communication downward and upward, still some blocks in communication occur in many organisation. The confidence of superior in his subordinates and two-way communication are the factors that unite an organisation into an effectively operating system.

Flexibility:

 The organisation structure should be flexibleso that it can be easily and economically adapted to the changes in the nature of business as well as technological innovations. Flexibility of organisation structure ensures the ability to change with the environment without disrupting the basic design.

Continuity:

 Change is the law of nature. Many changes take   outside the organisation These changes must be reflected in the organisation. For this purpose the form of organisation  be able to serve the    to its objectives for a   period of time.

Span of Control-

The term 'span of control' is also known as 'span of supervision' or 'span of authority'. Simply stated it refers to the number of individuals a manager can effectively supervise. Thus, it is expected that the span of control, that is, the number of subordinates directly reporting to a superior should be limited so as to make supervision and control effective. This is because executives have limited time and ability.

Factors affecting span of control-

Nature of the work, Ability of the manager, Efficiency of the organization, Staff assistant , Time available for supervision, Ability of the subordinates, Degree of decentralization

ORGANISATION CHART

An organisation chart shows a diagrammatic representation of important aspects of an organisation including the major functions and their relationships. It is a blue print of company organisation, its functions lines of authority and way positions.

 In other words, it is a graphic portrayal of positions in the enterprise and of the formal lines of accountability among them. It provides a bird's eye -view of the relationships between different departments of divisions of an enterprise as well as the relationships between the executives and subordinates at various levels. It enables each executive and employee to understand his position in the organisation and to know to whom he is accountable. Thus, it is obvious that an organisation chart has the following characteristics:

1 It is a diagrammatic presentation.

 2 It shows principal lines of authority in the organisatipn.

3 It shows the interplay of various functions and relationships

 4 It indicates the channels of communications.

An organisation cliai: is merely a type of record showing the formal organisational relationships which management intends should prevail.

ORGANISATIONAL MANUAL

An organisation chart shows who has authority over whom, but it does not show the extent of authority of the duties each person in the Organizations is expected to perform, except in so far as duties are implied by job titles. For this reason, big undertakings prepare organisation manuals that include job descriptions and other information in addition to the charts. A job description includes factual statements of job contents in terms of its duties and responsibilities. An organisation manual is an authoritative guide to the organisational members. It consists of records of top management decisions, standard practices and procedures and the description of various jobs. With such information available in the Manual employees  are not required to approach their superiors for instruction and guidance, causing interruption of work and resulting in wastage of  time and energy  of the superior and the subordinates.

 

Types of Manual

Manuals may be prepared by an organisation with different contents and purposes in view, such as,

(1) Policy manual,

(2 )Operations manual,

 (3) Organisation manual,

(4) Rules and Regulations manual, and

(5)Departmental manual.

These are discussed below:

Policy manual: It is prepared to state the policies of the enterprise

It is a basic guide . to action.. Policy manual describes the overall framework        within which activities take place and thus reveals the broad courses of managerial action likely to take place under certain conditions. It contains decision, resolutions and pronouncements of the management of the enterprise.

Operations Manual -  The purpose of manual is to inform the  employees of established methods, procedures  and the desired standards of performance of work. It lists the authorised steps and suppliments them by the use of diagrams sketches, charts, etc of each department and division.

Organisation manual: It describes the organisational setup indicating the duties and responsibilities of various departments and their respective sub-divisions. It is a portrayal of the formal chain of responsibilities and authorities among different persons working in the enterprise. The levels of authority and responsibility  of each executive is indicated in the manual so as to avoid in the organisation. Promotional charts may be included in the organisation           showing the possible promotional avenues throughout the entire organisation.

Rules and regulations manual: This manual provides information relating to the operating rules and employment regulations. It contains regulations governing hours of work, timings, procedure for taking leave, etc. It is actually a handbook of employment rules. It may also indicate the various benefit plans for employees including rules regarding the use of library, cafeteria, recreation club, etc.

Departmental manual: This manual includes procedures to be adopted with regard to departmental work. It gives in detail the internal policies and operating rules of the department. It shows with the help of charts and diagrams the inter-departmental relationships. For instance,  the filing manual  contains the organisation of filing department responsibilities of various jobs, relationships between  the employees, and the standard procedures for different operations. Similarly, other departments may also have such manuals.

 

Purpose and Cause of Organising

 It needs to be emphasized that structure is a means, not an end in itself. As such not only should it facilitate achievement of enterprise objectives through orderly organised group effort but it should also do the same with the least cost in terms of time, money, effort and pain. Thus, strictly speaking, the structure does not have objectives of its own, rather it is a manifestation of enterprise objectives in terms of those attributable to the specific tasks, roles and relationships. The basic cause of organisation structure lies in the limitations of span of management. If there were no such limitations, one could have an organized enterprise with only one manager. The number of subordinates a manager can effectively manage may be a few or many depending upon one’s ability, the requirements of job to be done, and the basic factors that influence time demands.

Dynamic Organisation  Structure

 Organisation structure should not be static. An enterprise operates under a highly dynamic environment where technological, social, political and economic setting in which it operates and the people managing the organisation are continually in a flux. This calls for adapting the organisation structure to changing conditions so that it can survive and grow.

Delegation-

Delegation refers to the downward transfer of authority from a superior to a subordinate. It is a pre-requisite to the efficient functioning of an organisation because it enables a manager to use his time on high priority activities. It also satisfies the subordinate’s need for recognition and provides them with opportunities to develop and exercise initiative.

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. 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: Responsibility is the obligation of a subor-dinate to properly perform the assigned

duty. 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. It

cannot be delegated and flows upwards i.e., a subordinate will be accountable to a superior for satisfactory performance of work.

Process of Delegation Irrespective of the level at which authority is passed on to subordinates, the delegation of authority can be conceived as a four-step process. The steps are listed below:

(i) Allocation of Duties:

 Duties are the tasks and activities that a superior desires someone else to do. So, before authority can be delegated, the duties over which the authority relates must be allocated to subordinate.

(ii) Delegation of Authority:

 The essence of the delegation process is empowering another person to act on behalf of the manager. This denotes passing on the formal rights to act on behalf of another.

 (iii) Assignment of Responsibility:

When authority is delegated, one must assign responsibility along with it. That is, when one is given “rights”, one must also be assigned a corresponding “obligation” to perform. Here it is important to recognise the importance of equating authority with responsibility. To allocate authority without responsibility creates opportunities for abuse, but no one should be held responsible for what one has no authority over. Now a question may arise as to when responsibility cannot be delegated, how can its parity with authority be ensured? Actually, one has to recognise two forms of responsibility: operating responsibility and ultimate responsibility. While the former can be delegated the latter is absolute.

 (iv) Creation of Accountability:

To complete the delegation process, the manager must create accountability; that is, subordinates must be held answerable for the discharge of the duties assigned to them and the judicious use of authority delegated. Thus, duties, authority and obligation constitute three important ingredients of delegation. All the three aspects of delegation are interrelated. Hence, a change in one will call for an adjustment with others.

Barriers to Delegation

– Fear of loss of Power

– Certain personal attitudes

 – Lack of ability to direct well

Principles of Delegation

Delegation does not always work as smoothly as the manager might expect it to. To overcome weak delegation. and to make delegation more effective, certain guides, rules or principles are enunciated and followed. Some of the important principles are discussed below:

(i) Clarity of Delegation:

Whether specific or general, written or unwritten, delegation of authority must be very clear in terms of its contents, functional relations, scope and assignments. The delegatee should also be given a clear idea about the tasks assigned, what is expected of the recipient in his own job and how his obligation fits into the general plan. Ambiguity in delegation often leads to poor results and tends to make the delegation less effective. Principle of clarity of delegation also implies defining in clear terms the horizontal and vertical relationships of the position of each subordinate to the other positions in the organisation. That is, every subordinate must know what position in the organisation structure exists at his own level and how his position fits in the overall management hierarchy.

(ii) Delegation to be Consistent with Results Expected:

A manager before proceeding with actual delegation of authority to the subordinate should know the jobs and results expected of such delegation. He should thereafter delegate only that much authority which is just sufficient to accomplish the results. It is an important guiding principle of delegation and rests on the assumption that goals are set and plans made in advance, and that jobs are set-up to accomplish or implement them. This principle also helps to minimise the dangers of delegating too much or inadequate authority.

 (iii) Responsibility cannot be Delegated:

Obligation to accomplish the assigned task is absolute and can not be partitioned when authority is delegated to the subordinate. Thus, when the chief executive of a company appoints a sales manager to look after sales, the former does not absolve himself of his responsibility for the same by delegating part of his authority to the latter. The chief executive even after delegation still remains accountable to the Board of Directors for management and supervision of the whole of the enterprise. If this principle is violated, three important consequences will follow: – If the manager is able to pass on obligation along with delegation of authority to the subordinates, the rule of single chain of command will be violated. – Management at the top shall have great responsibility and yet not be accountable for the results. – When manager is allowed to delegate even his own obligation, there shall be no way of knowing who is accountable for what. Thus, when authority is delegated, obligations are not passed down the organisation; rather new responsibilities are created at each level.

 (iv) Parity of Authority and Responsibility:

Whenever authority is delegated, responsibility steps in and is coextensive with authority. A subordinate can be held accountable for the tasks assigned to him and to the extent authority delegated for their accomplishment. Accordingly, sales manager cannot be held responsible for production failures for which he was given no authority. Since both authority and responsibility relate to the same assignment, it is logical that the two should be co-extensive.

(v) Exception Principle:

 A manager can delegates authority to the subordinate to relieve himself of the overload which he thinks can be passed on, in order to push down the process of decision-making as near the source of information and action as possible. In such a case, it is expected that the recipient of authority shall make proper use of it and make all the decisions falling within the scope of his authority. Only in exceptional cases when he fails to make the decision at his level, he should refer the matter to higher-ups for consideration and decision.

(vi) Principle of Functional Definition:

To develop departmentation, activities must be grouped to facilitate the accomplishment of goals, and the manager of each sub-division must have authority to coordinate its activities with the organisation as a whole. Principle of functional definition also says that the more a position or a department has clear definition of results expected, activities to be undertaken, organisation authority delegated, and authority and informational relationships with other positions understood, the more adequately the individual responsible can contribute towards accomplishing enterprise objectives.

 (vii) Scalar Principle:

 It says that the more clear the line of authority from the top manager in an enterprise to every subordinate position, the more effective will be the responsible decision-making and organisation communication. Subordinates must know who delegates authority to them and to whom matters beyond their own authority must be referred.

(viii) Principle of Unity to Command:

According to this principle, the more completely an individual has a reporting relationship with to a single superior, the lesser will be the problem of conflict in instructions and the greater the feeling of personal responsibility for results. Therefore, in case of delegation, except for the inevitable instances of splintered authority, the right of discretion over a particular activity will flow from a single superior to a subordinate. Thus, delegation will be more effective when the subordinate receives orders and instructions directly from one senior. This avoids the problem of confusion, preferences and divided loyalty.

CENTRALISATION AND DECENTRALISATION

Centralisation and decentralization are relative terms, as seen from the existing status of various business

enterprises. An organisation is centralized when decision-making authority is retained by higher management levels whereas it is decentralized when such authority is delegated.

Complete centralisation would imply concentration of all decision making functions at the apex of

the management hierarchy. An organisation can never be

completely centralised or decentralised.

As it grows in size and complexity , there is a tendency to move towards decentralised decision

making. This is because in large organisations those employees who are directly and closely involved with certain operations tend to have more knowledge about them than the top management which may only be indirectly associated with individual operations.

Advantages of Decentralisation

Advantages of decentralisation become the limitations of centralisation:

 (i) Decentralisation makes for quick decision and improves quality of the decisions by pushing decisionmaking closest to the situation.

 (ii) Decentralisation helps improve effectivity of managers. Development of self-reliant managers is encouraged. Every manager knows what he is expected to do. Good managers are tested and can be encouraged, whereas weak managers can be counselled and reprimanded.

 (iii) Democratisation of management is yet another advantage of decentralisation. Those who are governed can assert their voice and have a share in that governance.

(iv) Decentralisation provides actual work experience to a large number of middle and lower managers and thus creates a reservoir of promotable managerial manpower.

 (v) Improved morale of personnel is another great advantage of decentralisation. Managers at different levels and semi- autonomous divisions are able to see by themselves the results of their own actions and ascertain their role and success.

Advantages of Centralisation

Advantages of centralisation are largely absent in a decentralised organisation and they become limitations of decentralisation.

 (i) Uniformity of policy and procedure can strictly be enforced since decisions and controls are largely centralised.

 (ii) Centralisation helps to eliminate overlapping or duplicate activities and thus effects sufficient cost savings.

(iii) Centralisation helps in fuller utilisation of talents of outstanding executives for enterprise as a whole.

(iv) Centralisation ensures consistency in operating and uniformity in decision and consequently, helps to retain substantial control over activities of the enterprise.

Factors Determining the Degree of Decentralisation

To which extent authority can be delegated largely depends on the attitude and temperament of individual managers, yet many other factors also affect it. Some such factors of overwhelming preponderance may be explained as follows:

 (i) Importance and Significance of the Decision:

 One of the important factors determining the degree of decentralisation of authority iscostliness of the decision. Normally, decisions which are costly in terms of money value involved or in terms of factors like goodwill and image of the establishment, employee morale or motivation tend to be centralised at the upper levels of management. In other words, it is very rare that authority for crucial decisions is delegated. Of course, the practice is not based on the assumption that people at the higher level in the managerial hierarchy do not make mistakes. It is believed, however, that higher level executives commit better fewer mistakes since they are trained and more experience, and in possession of adequate information necessary to arrive at a decision. In fact, it is observed from the mode of managerial behaviour that the determining factor in the centralisation of authority with regard to specific area or areas is the weight of responsibility since authority delegation does not implicate responsibility delegation.

(ii) Size of the Enterprise:

 Another pertinent factor determining of decentralisation is largely the size of the organisation. The larger the firm, the more decisions are to be taken. Hence a number of departments and many levels are included. There is no denying the fact that it becomes too difficult to coordinate all of them. Moreover, a number of executives and specialists need to be consulted in such big establishments. In essence, decisions are often delayed, though delayed decisions cost more.

 Diseconomies of large size may be greatly reduced by organising the enterprise into a number of decentralised units resulting in greater economy and efficiency. Of course, exactness of the size, till now, is a controversial matter. Nothing in particular or categorically can be prescribed. But it is to be appreciated in all circumstances that the size of each individual unit should be so determined that departments or units are easily manageable with authority considerably decentralised.

(iii) Management Attitude and Philosophy:

Decentralisation largely depends upon the character of top executives and their attitude. It may be noted that outlook and attitude of top management is, undoubtedly, a significant determinant of the extent and mode of authority dispersal. It is certain that an executive with traditional rigid outlook hardly contemplates delegating substantial authority. On the other hand, people with rational managerial temperament believe and want to rely upon participative approach of doing the work and are anxious to take maximum opportunity of individual initiative in the organisation, opt for decentralisation.

(iv)Control Techniques:

 Another related factor determining the degree of decentralisation is the magnitude of the desire to obtain a uniform policy with regard to such vital factors as the price of a product, service, delivery, credit, etc., which can best be practised by centralised authority.

(v)Availability of Capable Executives:

Nevertheless, availability of capable executives substantially determines the nature and extent of dispersal of authority. It is not uncommon that top executives willing to delegate authority find themselves handicapped for want of capable and qualified subordinates. Obviously, the key to safeORGANIZING

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 ORGANISATION

Organisations are established to attain different goals related to different interest groups. These goals are attained through the mutual contribution of all related stakeholders. The effectiveness and efficiency of organization helps in providing the continuity and success to the business firms. The importance of organisation can be realized in many ways, among which some are discussed as follows:

(i) Facilitates Administration:

 An efficient and sound organisation makes it easy for the management to relate to the flow of resource continually to the overall objectives. A sound organisation helps in providing appropriate platform where management can perform the functions of planning, direction, coordination, motivation and control.

(ii) Facilitates Growth and Diversification:

 A sound organisation helps in the growth and diversification of activities. The growth is facilitated by clear division of work, proper delegation of authority, etc. In short, it helps in the organisational elaboration. In case of reasonable expansion of the organisation, the functional types get replaced by a more flexible decentralized organisation.

(iii) Permits Optimum Use of Resources:

The optimum use of technical and human resources gets facilitated with sound and efficient organisation. The organisation can have the facilities of latest technological developments

and improvements. It also facilitates optimum use of human resources through specialization. The people in the organisation get appropriately trained and get promotion opportunities. A sound organisation provides all the desired potential and strength to the company to meet the future challenges.

(iv) Stimulates Creativity:

Specialization in the organisation helps individuals in getting well-defined duties, and clear lines of authority and responsibility. It encourages the creativity of the people. The sound organizational structure enables managers to concentrate on important issues where their talent can be exploited to the

maximum.

(v) Encourages Synergy Effect:

 When one ‘efficient’ team member is able to persuade and motivate all other average team-members to work more efficiently, resulting in greater performance of the group than what it was before the motivation of all other employees, the effect is known as ‘synergy effect’

A sound organisation helps in adopting efficient methods of selection, training, remuneration and promotion for employees. It makes people work in a team with synergy. Organisation helps in providing factors, like job rotation, job enlargement and enrichment to its employees. A sound organisation provides higher job satisfaction to its employees through proper delegation and decentralization, favorable working environment and democratic and participative leadership. It enhances the mode of communication and interaction among different levels of the management.

(vi) Transfer and Adaptation of Technology:

 Any organisation involved in the ongoing process of research enhances its level of services. In this course, it adapts the latest technologies available in the market and indirectly it also imparts these technologies to the society through its members

PROCESS OF ORGANISATION

The steps involved in the process of an organisation are:

(i) Determination of Objectives: Organisation is usually associated with defining objectives. Therefore, it is necessary for the management to identify the objectives before begining any activity. It will assist the management in the selection of men and materials and with their help it can attain its objectives. Objectives also act as the strategy for the management and the workers. They give unity of direction in the organisation.

(ii) Identification and Grouping of Activities: When the members of the groups are to unite their efforts

effectively there must be an appropriate division of the main activities. Each job should be properly classified and grouped. This will facilitate the group to know what is expected of them as members of the group and will help in avoiding any duplication of efforts. For example, the total activities of an individual industrial organization can be separated into major functions, like production, purchasing, marketing and financing, and each such function is further subdivided into various jobs. The job assigned may be classified and grouped to ensure the useful achievement of the additional steps.

(iii) Allotment of Duties: Once the activities are categorised and grouped into various jobs categorizing and grouping the activities into various jobs, they should be allocated to the employees so that they can carry them out effectively. Each individual should be given a particular job to do according to his ability and made responsible

for that. He should also be given sufficient authority to do the job assigned to him.

(iv) Developing Relationships: Since various individuals work in the same organisation it is the duty of the management to lay down the structure of relationships in the organisation. Everybody should clearly know to whom he is accountable. This will facilitate the smooth functioning of the enterprise by facilitating delegation of responsibility and authority.

(v) Integration of Activities: Integration can be accomplished in the entire activities in following ways:

(a) Through authority relationships – horizontally, vertically, and laterally.

(b) Through organized information or communication systems and with the help of effective coordination

integration can be accomplished. This will enable the enterprise to achieve unity of objectives, team work

and team spirit by the integration of different activities.

TYPES OF ORGANISATION STRUCTURE

There are two types of Organisation Structures:

The formal organisation refers to the structure of jobs and positions with defined functions and relationships.

This type of organisation is built by the management to realize the objectives of an enterprise.

The types of organisation employed by companies vary considerably. However, on the basis of the nature of authority and its flow, the fundamental organisation structures may be classified as follows:

(1) Line Organisation

(2) Functional Organisation

(3) Line and Staff Organisation

(4) Project Management Organisation

(5) Matrix Organisation.

Line Organisation

Historically, line type of structure is the oldest pattern of organisation. The oldest and simplest form of organization is line origination. Line functions refer to those employees who have direct responsibility for accomplishing the objective of the enterprise. In this form of organisation, a supervisor exercises direct supervision over a subordinate, under the organisation, authority flows from the person at the top to the person at the lowest ring of the organisation.

Here the chief executive leads the organisation. This form of organisation is otherwise called military organization or scalar type of organisation.

The line organisation is Illustrated by a Figure given herein:

Benefits of Line Organisation:

(i) It is simple to work.

(ii) It is economical and effective. It permits rapid decisions and effective coordination.

(iii) It promotes unity of command and conforms to the scalar principle of organisation.

 (iv) It fixes responsibility for the performance of tasks in a definite manner upon definite individuals.

 (v) With a unified control and undivided loyalty, line organisation ensures excellent discipline.

 (vi) It is less expensive due to non-involvement of staff personnel.

(vii) It is stable.

Weaknesses of Line Organisation:

 (i) It suffers from lack of specialisation. Each department manager looks after activities of his own department only.

 (ii) There is a possibility of keymen being loaded to the breaking point. Since there is no staff aid, the organisation can be seized by a strong man and run on an arbitrary basis. Such a dictatorial or arbitrary power can lead to a considerable damage to the organisation.

 (iii) Such enterprises suffer from lack of expert staff to give them advice. There are occasions when the line manager is not competent enough to make decisions.

 (iv) Line organisation is rigid and inflexible. Discipline is maintained to the extent that organisation is rarely allowed to change.

(v) It is based upon an autocratic system of management.

 (vi) The work may be divided according to the whims of the manager rather than according to any scientific plan.

(vii) It cramps progress and prevents effective working of the unit.

(viii) It is likely to encourage nepotism (favoritism shown on the basis of family relationship, in business and politics).

The Line Organisation system can be successfully utilised:

 (i) Where the scale of business is small, and the number of subordinates and operative employees are not many;

 (ii) In continuous process industries;

 (iii) Where the work is largely of routine nature;

(iv) Where the machinery is nearly automatic and does not call for the intelligence of the foreman;

(v) Where labour-management problems are not difficult to solve.

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 pcrsohnel 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.

The main advantage of the functional structure of organisation is that there is functional specialjsation in each unit, which leads to operational efficiency of people engaged, and the organisation as a whole derives the benefit of specialised operations.

The heads of the functional units are in direct toucll with the chief executive who can sort out inter-functional problems, if any, and also coordinate the interrelated functions.

The chief executive is a!so able to be in direct touch with lower level subordinates and thereby have full knowledge of the state of affairs in the organization..

However, while the functional arrangement may be well suited to small and medium size organisations, it is incapable of handling the problems of an organisation as it grows in size and complexity.

 Problems of sub-units at lower levels do not receive adequate attention of higher level managers while some of the activities tend to be over-emphasised.

Functional units become unwieldy and difficult to manage when there are diverse kinds of activities performed in large number of sub-units. Personal contact between superiors and subordinates becomes rare, and flow of communication is slow leading to problems of coordination and control.

 Line and Staff Organisation

Both the line and functional plans prove inadequate in operation. The line system concentrates on authority too much. But purely functional plan also divides it too much. The line and staff system strikes a happy balance between the two.

 Under this organisation “line” is supplemented by “staff”. The staff refers to officers who are not line managers but are more or less permanently detailed to special services or to the study of some phases of operations.

Staff personnel thus act as an advisory group adjacent to the line. This pattern of organisation came into being as a result of the departmental managers having to investigate, think and plan and, at the same time, perform the ordinary tasks of production and selling.

Consequently, the work of investigation, research, recording, standardisation and advising, i.e., the work of experts, was wholly distinguished and separated from the routine process of manufacturing and selling. Thus, there arose a clear demarcation between ‘thinking’ and ‘doing’; the staff being the ‘thinkers’ and the line being the ‘doers’.

The merits of line and staff organisation are:

(i) It adds functional specialists to the pure line organisation and thus aims at combining the merits of the two.

 (ii) The stability and discipline of the line organisation are preserved; only the specialist is added

(iii) It brings expert knowledge to bear upon management. Functional specialists provide advice to the management on wide-ranging matters.

(iv) It provides for better placement and utilisation of personnel and leads to more concerted skill development.

The drawbacks are:

(i) The line and staff relationships often lead to numerous frictions and jealousies.

 (ii) Line managers may depend too much on staff experts and thus lose much of their judgement and initiative.

(iii) On the contrary, the staff experts remain ineffective because they do not get the authority to implement their recommendation.

The Problem of Choice: The problem of choosing from among the three types of organisation discussed above is not that of selecting one of them; rather it is concerned with determining the right balance among the three.

• The line structure is part of every organisation, no matter how small or simple it is. The line structure is characterised by total absence of staff specialists

. • At the other extreme is functional organisation with too much of specialisation.

 • In between these two lies the line and staff organisation. A typical organisation is generally characterised by line and staff positions in structure.

 It has some staff specialists vested with a degree of functional authority relating to their respective areas of specialisation over lower line managers. Some of the staff managers generally succeed in acquiring a degree of functional authority whether permitted or not. It would be judicious, therefore, to strike a balance between the line and functional authority.

Project Management Organisation

 Project organisation is not a separate kind of organisation, like the line, line and staff and functional organisations; it is rather set up within an existing organisation for the purpose of completing a project or accomplishing assigned objectives in time, and within cost and profit goals as laid down by the management in this connection.

 Project organisation is directed by the project manager responsible for project goals. Project management organisation may involve development and introduction of a new product, complete redesigning of an existing product line, installing a new plant, and the like. For example, ‘software development’ for a client.

 Project organisation involves appointment of the project manager usually drawn from the middle management ranks. He is responsible for detailed planning, coordination, control and achievement of the objectives within the time schedule.

Resulting Organisation Structure:

 The essence of project management organisation is its independent status which cuts horizontally the normal organisation structure. Since project management is usually required to take prompt decisions and actions from a number of functional areas, flow of information is largely lateral and not vertical. Thus project organisation is characterised by exceptionally strong horizontal working relationships. For instance, major product development calls for close working between the engineering, production and marketing departments; and with employers who are at the same level in organisation hierarchy. However, frequent product changes and decisions affecting costs require communication with the superiors. Project organisation, as such does not completely rule out the possibility of vertical communication though horizontal working relationships are stronger.

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.

Matrix organisation:

This is another type of adaptive structure which aims at combining the advantages of autonomous project organisational and functional specialisation. In the matrix organisation structure, there aye functional departments with specialised personnel who are deputed to work full time in different projects sometimes in more than one project under the overall guidance and direction of project managers. When a project work is completed, the individuals attached to it go back to their respective functional department to be assigned again'to some other project. This arrangement is found suitable where the organisation is engaged in contractual project activities and there are many projects to manager, as in a large construction company or - engineering - firm.

Matrix organisation provides a flexible structure ideally suited to the requirements of changing conditions. It facilitates pooling of specialised and technical personnel from different functional departments, who can be deputed to a number of projects. They acquire valuable experience of handling varied and complex problems in project work. There is speedy exchange of information and decision-making as they ,work under the coordinating authority of project managers.

The major drawback of matrix organisation is that the personnel drawn from specialised functional departments are subjected to dual authority, that of the functional heads and the project managers. The principles of unity of command is thereby sacrificed. This generates stresses and strains in project management, because there is simultaneous engagement of the same individual in a number of projects.

Informal Organisation-

Informal organisation refers to the relationship between people that is not based on procedures but on personal attitudes, prejudices, likes and dislikes. There always exists an informal organisation in a formal organisation and every management has to recognise this fact. Barnard viewed informal organisation as joint personal activity without being conscious of the joint purpose, even though possibly contributing to joint results.

Features of Informal Organisation

Informal organisation is characterised by the following features:

(i) It develops spontaneously and is not established by formal managers.

(ii) It is based on informal authority attached to the person and not the position. Informal authority is earned and not delegated. This authority under informal organisation largely flows either upwards or horizontally.

(iii) Informal organisation represents human tendency to cut across formal channels communication informally with other parts of the enterprise.

 (iv) It is all-pervasive and exists in every enterprise.

(v) Informal organisation is not always destructive, though, at times, it can make the job of management more difficult. Because of its powerful influence on productivity and job satisfaction, formal management would do well to derive benefit from the study of informal organisation.

 (vi) Informal organisation cannot altogether be abolished. It is not created at the will of the formal managers.

Moreover, the formal managers cannot do without the conventions, customers and culture the informal organisation is strongly bound with. Functions of Informal Groups

(i) These groups maintain and continue the cultural values and life style of the group.

(ii) They provide social satisfactions.

(iii) The group develops system of communication in order to meet wants and to keep its members informed about what affects them.

(iv) They exercise social controls by which the behaviour of others is influenced and regulated.

Problems Associated with Informal Organisation

 (i) Resistance to Change: There is a tendency that the group may become overly protective of its life style and stand like a rock in the face of change. They are strongly bound by conventions, customs and culture.

(ii) Role Conflict: The quest for social satisfactions may lead members away from organisational objectives. What is good for the employee is not always good for the organisation. This would results in a role conflict. Workers want to meet the requirements of both, their group as well as of their employer, but frequently these requirements are conflicting each other.

(iii) Rumour: Communication in informal organisation leads to the problem of rumour.

(iv) Conformity: Social control of informal groups exerts strong pressures for conformity. The closer they are attached to it, the stronger its influence becomes. Benefits of Informal Organisation Informal systems bring a number of benefits for the employers.

 Informal system:

(i) Makes the total system more effective.

(ii) Lightens the work load of the management.

(iii) Helps get work done.

(iv) Tends to encourage cooperation.

(v) Fills in the gaps in a manager’s abilities.

(vi) Gives satisfaction and stability to work groups.

(vii) Provides a useful channel of communication.

(viii) Provides a safety valve for employees’ emotions.

 (x) Encourages managers plan and act more carefully. Control of Informal Organisation The benefits of informal organisation will accrue only when it is properly controlled and its potential power properly channelised.

The significant aspects of manager’s duty in this connection are:

 (i) He should recognise and reconcile himself to the existence of informal organisation.

(ii) He should influence the informal organisation so that its role is more positive and its negative aspect is minimised.

(iii) He should integrate informal organisation with the formal organisation in such a way that the former also contributes to the accomplishment of enterprise objectives.

(iv) He should make informal organisation secondary to formal organisation, and not vice versa.

PRINCIPLES OF ORGANISATION

 of objectives:

Every member of the  should be familiar with its goals and objectives. There must be unity of objectivse so that all efforts can be concentrated on the set goals. The principle requires objectives to be clearly formulated and well-understood.

Division of work and specialization-

The entire work in the organisation should be divided into various parts so that every individual is confined to the performance of a single job. This facilitates specialisation which in turn leads to efficiency and quality However, each area of specialisation            interrelated the total integrated system by means ofof all activities of all departments.

Definition of jobs:

 Every   in the organisation should be clearly defined in relation to other positions in the organisation. The duties and responsibilities assigned to every position and its relationship with other positions should be so defined that there is no overlapping of functions.

Separation of line and staff functions-

Whenever  possible, line functions be separated from staff activities. Line functions are those which accomplish the main objectives of the company. In many manufacturing companies   the manufacturing and  sales departments are considered be accomplishing the main objectives of the business and so are called the line functions. Other functions like personnel, plant maiatenance, financing and legal are considered as staff functions.

Chain of command or  Scalar principle:

There must be clear lines of authority running from the top to the bottom of  the organisation.  Authority is the right to decide, direct and coordinate. The organisation structure should facilitate delegation of authority, Clarity is achieved through delegation by steps or levels from the top position to the operating level. From the chief executive, a line of authority may proceed to departmental managers, to supervisors or foreman and finally to workers. This chain of commandis also known as scalar principle of organisation.

Parity of authority and  responsibility or principle of correspondence:

 Responsibility should aiways be coupled with corresponding authority. 'Each subordinate must have sufficient authority to discharge the responsibility entrusted to him. This principle suggests that if a plant manager in a multiplant organisation is held accountable for all activities in his plant, he should not be subject to seek orders from company headquarters for his day to day activities.

Unity of command:

 No one in the organisation should report to more than one line supervisor. Everyone in the organisation should know to whom he reports and who reports to him. Stated simply, everyone should have only one boss. Receiving directions from several supervisors may result in confusion, chaos, conflicts and lack of action.

Unity of direction:

 According to this principle a group of activities that have a common goal should be managed by one person. There should be one head and one plan for a common objective of different activities. This facilitate smooth progression towards the achievements of  overall organisational goals.

Exception principle:

The principle suggests that higher level managers should attend to exceptional matters only. All routine decisions should be taken at lower level, whereas problems   matters and policy decisions   be referred to higher levels.

 Span of supervision:

 The term 'span of supervision  means the number of persons a manager or a supervisor can direct. No manager should be required to supervise more subordinates than he can effectively manage within the limits of available and ability. The exact number may vary according to the nature of the job and the frequency or intensity of supervision needed.

Principle of balance:

 There should be proper balance between various parts of the organisation and no function should be given undue importance at the cost of others. Balance should be maintained also between centralisation and   span of supervision and lines of communication, and authority allocated to department and personnel at  various levels.

 Communication-

 A good            network is essential to achieve the objectives of an organisation. No doubt the line of authority provides channels of communication downward and upward, still some blocks in communication occur in many organisation. The confidence of superior in his subordinates and two-way communication are the factors that unite an organisation into an effectively operating system.

Flexibility:

 The organisation structure should be flexibleso that it can be easily and economically adapted to the changes in the nature of business as well as technological innovations. Flexibility of organisation structure ensures the ability to change with the environment without disrupting the basic design.

Continuity:

 Change is the law of nature. Many changes take   outside the organisation These changes must be reflected in the organisation. For this purpose the form of organisation  be able to serve the    to its objectives for a   period of time.

Span of Control-

The term 'span of control' is also known as 'span of supervision' or 'span of authority'. Simply stated it refers to the number of individuals a manager can effectively supervise. Thus, it is expected that the span of control, that is, the number of subordinates directly reporting to a superior should be limited so as to make supervision and control effective. This is because executives have limited time and ability.

Factors affecting span of control-

Nature of the work, Ability of the manager, Efficiency of the organization, Staff assistant , Time available for supervision, Ability of the subordinates, Degree of decentralization

ORGANISATION CHART

An organisation chart shows a diagrammatic representation of important aspects of an organisation including the major functions and their relationships. It is a blue print of company organisation, its functions lines of authority and way positions.

 In other words, it is a graphic portrayal of positions in the enterprise and of the formal lines of accountability among them. It provides a bird's eye -view of the relationships between different departments of divisions of an enterprise as well as the relationships between the executives and subordinates at various levels. It enables each executive and employee to understand his position in the organisation and to know to whom he is accountable. Thus, it is obvious that an organisation chart has the following characteristics:

1 It is a diagrammatic presentation.

 2 It shows principal lines of authority in the organisatipn.

3 It shows the interplay of various functions and relationships

 4 It indicates the channels of communications.

An organisation cliai: is merely a type of record showing the formal organisational relationships which management intends should prevail.

ORGANISATIONAL MANUAL

An organisation chart shows who has authority over whom, but it does not show the extent of authority of the duties each person in the Organizations is expected to perform, except in so far as duties are implied by job titles. For this reason, big undertakings prepare organisation manuals that include job descriptions and other information in addition to the charts. A job description includes factual statements of job contents in terms of its duties and responsibilities. An organisation manual is an authoritative guide to the organisational members. It consists of records of top management decisions, standard practices and procedures and the description of various jobs. With such information available in the Manual employees  are not required to approach their superiors for instruction and guidance, causing interruption of work and resulting in wastage of  time and energy  of the superior and the subordinates.

 

Types of Manual

Manuals may be prepared by an organisation with different contents and purposes in view, such as,

(1) Policy manual,

(2 )Operations manual,

 (3) Organisation manual,

(4) Rules and Regulations manual, and

(5)Departmental manual.

These are discussed below:

Policy manual: It is prepared to state the policies of the enterprise

It is a basic guide . to action.. Policy manual describes the overall framework        within which activities take place and thus reveals the broad courses of managerial action likely to take place under certain conditions. It contains decision, resolutions and pronouncements of the management of the enterprise.

Operations Manual -  The purpose of manual is to inform the  employees of established methods, procedures  and the desired standards of performance of work. It lists the authorised steps and suppliments them by the use of diagrams sketches, charts, etc of each department and division.

Organisation manual: It describes the organisational setup indicating the duties and responsibilities of various departments and their respective sub-divisions. It is a portrayal of the formal chain of responsibilities and authorities among different persons working in the enterprise. The levels of authority and responsibility  of each executive is indicated in the manual so as to avoid in the organisation. Promotional charts may be included in the organisation           showing the possible promotional avenues throughout the entire organisation.

Rules and regulations manual: This manual provides information relating to the operating rules and employment regulations. It contains regulations governing hours of work, timings, procedure for taking leave, etc. It is actually a handbook of employment rules. It may also indicate the various benefit plans for employees including rules regarding the use of library, cafeteria, recreation club, etc.

Departmental manual: This manual includes procedures to be adopted with regard to departmental work. It gives in detail the internal policies and operating rules of the department. It shows with the help of charts and diagrams the inter-departmental relationships. For instance,  the filing manual  contains the organisation of filing department responsibilities of various jobs, relationships between  the employees, and the standard procedures for different operations. Similarly, other departments may also have such manuals.

 

Purpose and Cause of Organising

 It needs to be emphasized that structure is a means, not an end in itself. As such not only should it facilitate achievement of enterprise objectives through orderly organised group effort but it should also do the same with the least cost in terms of time, money, effort and pain. Thus, strictly speaking, the structure does not have objectives of its own, rather it is a manifestation of enterprise objectives in terms of those attributable to the specific tasks, roles and relationships. The basic cause of organisation structure lies in the limitations of span of management. If there were no such limitations, one could have an organized enterprise with only one manager. The number of subordinates a manager can effectively manage may be a few or many depending upon one’s ability, the requirements of job to be done, and the basic factors that influence time demands.

Dynamic Organisation  Structure

 Organisation structure should not be static. An enterprise operates under a highly dynamic environment where technological, social, political and economic setting in which it operates and the people managing the organisation are continually in a flux. This calls for adapting the organisation structure to changing conditions so that it can survive and grow.

Delegation-

Delegation refers to the downward transfer of authority from a superior to a subordinate. It is a pre-requisite to the efficient functioning of an organisation because it enables a manager to use his time on high priority activities. It also satisfies the subordinate’s need for recognition and provides them with opportunities to develop and exercise initiative.

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. 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: Responsibility is the obligation of a subor-dinate to properly perform the assigned

duty. 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. It

cannot be delegated and flows upwards i.e., a subordinate will be accountable to a superior for satisfactory performance of work.

Process of Delegation Irrespective of the level at which authority is passed on to subordinates, the delegation of authority can be conceived as a four-step process. The steps are listed below:

(i) Allocation of Duties:

 Duties are the tasks and activities that a superior desires someone else to do. So, before authority can be delegated, the duties over which the authority relates must be allocated to subordinate.

(ii) Delegation of Authority:

 The essence of the delegation process is empowering another person to act on behalf of the manager. This denotes passing on the formal rights to act on behalf of another.

 (iii) Assignment of Responsibility:

When authority is delegated, one must assign responsibility along with it. That is, when one is given “rights”, one must also be assigned a corresponding “obligation” to perform. Here it is important to recognise the importance of equating authority with responsibility. To allocate authority without responsibility creates opportunities for abuse, but no one should be held responsible for what one has no authority over. Now a question may arise as to when responsibility cannot be delegated, how can its parity with authority be ensured? Actually, one has to recognise two forms of responsibility: operating responsibility and ultimate responsibility. While the former can be delegated the latter is absolute.

 (iv) Creation of Accountability:

To complete the delegation process, the manager must create accountability; that is, subordinates must be held answerable for the discharge of the duties assigned to them and the judicious use of authority delegated. Thus, duties, authority and obligation constitute three important ingredients of delegation. All the three aspects of delegation are interrelated. Hence, a change in one will call for an adjustment with others.

Barriers to Delegation

– Fear of loss of Power

– Certain personal attitudes

 – Lack of ability to direct well

Principles of Delegation

Delegation does not always work as smoothly as the manager might expect it to. To overcome weak delegation. and to make delegation more effective, certain guides, rules or principles are enunciated and followed. Some of the important principles are discussed below:

(i) Clarity of Delegation:

Whether specific or general, written or unwritten, delegation of authority must be very clear in terms of its contents, functional relations, scope and assignments. The delegatee should also be given a clear idea about the tasks assigned, what is expected of the recipient in his own job and how his obligation fits into the general plan. Ambiguity in delegation often leads to poor results and tends to make the delegation less effective. Principle of clarity of delegation also implies defining in clear terms the horizontal and vertical relationships of the position of each subordinate to the other positions in the organisation. That is, every subordinate must know what position in the organisation structure exists at his own level and how his position fits in the overall management hierarchy.

(ii) Delegation to be Consistent with Results Expected:

A manager before proceeding with actual delegation of authority to the subordinate should know the jobs and results expected of such delegation. He should thereafter delegate only that much authority which is just sufficient to accomplish the results. It is an important guiding principle of delegation and rests on the assumption that goals are set and plans made in advance, and that jobs are set-up to accomplish or implement them. This principle also helps to minimise the dangers of delegating too much or inadequate authority.

 (iii) Responsibility cannot be Delegated:

Obligation to accomplish the assigned task is absolute and can not be partitioned when authority is delegated to the subordinate. Thus, when the chief executive of a company appoints a sales manager to look after sales, the former does not absolve himself of his responsibility for the same by delegating part of his authority to the latter. The chief executive even after delegation still remains accountable to the Board of Directors for management and supervision of the whole of the enterprise. If this principle is violated, three important consequences will follow: – If the manager is able to pass on obligation along with delegation of authority to the subordinates, the rule of single chain of command will be violated. – Management at the top shall have great responsibility and yet not be accountable for the results. – When manager is allowed to delegate even his own obligation, there shall be no way of knowing who is accountable for what. Thus, when authority is delegated, obligations are not passed down the organisation; rather new responsibilities are created at each level.

 (iv) Parity of Authority and Responsibility:

Whenever authority is delegated, responsibility steps in and is coextensive with authority. A subordinate can be held accountable for the tasks assigned to him and to the extent authority delegated for their accomplishment. Accordingly, sales manager cannot be held responsible for production failures for which he was given no authority. Since both authority and responsibility relate to the same assignment, it is logical that the two should be co-extensive.

(v) Exception Principle:

 A manager can delegates authority to the subordinate to relieve himself of the overload which he thinks can be passed on, in order to push down the process of decision-making as near the source of information and action as possible. In such a case, it is expected that the recipient of authority shall make proper use of it and make all the decisions falling within the scope of his authority. Only in exceptional cases when he fails to make the decision at his level, he should refer the matter to higher-ups for consideration and decision.

(vi) Principle of Functional Definition:

To develop departmentation, activities must be grouped to facilitate the accomplishment of goals, and the manager of each sub-division must have authority to coordinate its activities with the organisation as a whole. Principle of functional definition also says that the more a position or a department has clear definition of results expected, activities to be undertaken, organisation authority delegated, and authority and informational relationships with other positions understood, the more adequately the individual responsible can contribute towards accomplishing enterprise objectives.

 (vii) Scalar Principle:

 It says that the more clear the line of authority from the top manager in an enterprise to every subordinate position, the more effective will be the responsible decision-making and organisation communication. Subordinates must know who delegates authority to them and to whom matters beyond their own authority must be referred.

(viii) Principle of Unity to Command:

According to this principle, the more completely an individual has a reporting relationship with to a single superior, the lesser will be the problem of conflict in instructions and the greater the feeling of personal responsibility for results. Therefore, in case of delegation, except for the inevitable instances of splintered authority, the right of discretion over a particular activity will flow from a single superior to a subordinate. Thus, delegation will be more effective when the subordinate receives orders and instructions directly from one senior. This avoids the problem of confusion, preferences and divided loyalty.

CENTRALISATION AND DECENTRALISATION

Centralisation and decentralization are relative terms, as seen from the existing status of various business

enterprises. An organisation is centralized when decision-making authority is retained by higher management levels whereas it is decentralized when such authority is delegated.

Complete centralisation would imply concentration of all decision making functions at the apex of

the management hierarchy. An organisation can never be

completely centralised or decentralised.

As it grows in size and complexity , there is a tendency to move towards decentralised decision

making. This is because in large organisations those employees who are directly and closely involved with certain operations tend to have more knowledge about them than the top management which may only be indirectly associated with individual operations.

Advantages of Decentralisation

Advantages of decentralisation become the limitations of centralisation:

 (i) Decentralisation makes for quick decision and improves quality of the decisions by pushing decisionmaking closest to the situation.

 (ii) Decentralisation helps improve effectivity of managers. Development of self-reliant managers is encouraged. Every manager knows what he is expected to do. Good managers are tested and can be encouraged, whereas weak managers can be counselled and reprimanded.

 (iii) Democratisation of management is yet another advantage of decentralisation. Those who are governed can assert their voice and have a share in that governance.

(iv) Decentralisation provides actual work experience to a large number of middle and lower managers and thus creates a reservoir of promotable managerial manpower.

 (v) Improved morale of personnel is another great advantage of decentralisation. Managers at different levels and semi- autonomous divisions are able to see by themselves the results of their own actions and ascertain their role and success.

Advantages of Centralisation

Advantages of centralisation are largely absent in a decentralised organisation and they become limitations of decentralisation.

 (i) Uniformity of policy and procedure can strictly be enforced since decisions and controls are largely centralised.

 (ii) Centralisation helps to eliminate overlapping or duplicate activities and thus effects sufficient cost savings.

(iii) Centralisation helps in fuller utilisation of talents of outstanding executives for enterprise as a whole.

(iv) Centralisation ensures consistency in operating and uniformity in decision and consequently, helps to retain substantial control over activities of the enterprise.

Factors Determining the Degree of Decentralisation

To which extent authority can be delegated largely depends on the attitude and temperament of individual managers, yet many other factors also affect it. Some such factors of overwhelming preponderance may be explained as follows:

 (i) Importance and Significance of the Decision:

 One of the important factors determining the degree of decentralisation of authority iscostliness of the decision. Normally, decisions which are costly in terms of money value involved or in terms of factors like goodwill and image of the establishment, employee morale or motivation tend to be centralised at the upper levels of management. In other words, it is very rare that authority for crucial decisions is delegated. Of course, the practice is not based on the assumption that people at the higher level in the managerial hierarchy do not make mistakes. It is believed, however, that higher level executives commit better fewer mistakes since they are trained and more experience, and in possession of adequate information necessary to arrive at a decision. In fact, it is observed from the mode of managerial behaviour that the determining factor in the centralisation of authority with regard to specific area or areas is the weight of responsibility since authority delegation does not implicate responsibility delegation.

(ii) Size of the Enterprise:

 Another pertinent factor determining of decentralisation is largely the size of the organisation. The larger the firm, the more decisions are to be taken. Hence a number of departments and many levels are included. There is no denying the fact that it becomes too difficult to coordinate all of them. Moreover, a number of executives and specialists need to be consulted in such big establishments. In essence, decisions are often delayed, though delayed decisions cost more.

 Diseconomies of large size may be greatly reduced by organising the enterprise into a number of decentralised units resulting in greater economy and efficiency. Of course, exactness of the size, till now, is a controversial matter. Nothing in particular or categorically can be prescribed. But it is to be appreciated in all circumstances that the size of each individual unit should be so determined that departments or units are easily manageable with authority considerably decentralised.

(iii) Management Attitude and Philosophy:

Decentralisation largely depends upon the character of top executives and their attitude. It may be noted that outlook and attitude of top management is, undoubtedly, a significant determinant of the extent and mode of authority dispersal. It is certain that an executive with traditional rigid outlook hardly contemplates delegating substantial authority. On the other hand, people with rational managerial temperament believe and want to rely upon participative approach of doing the work and are anxious to take maximum opportunity of individual initiative in the organisation, opt for decentralisation.

(iv)Control Techniques:

 Another related factor determining the degree of decentralisation is the magnitude of the desire to obtain a uniform policy with regard to such vital factors as the price of a product, service, delivery, credit, etc., which can best be practised by centralised authority.

(v)Availability of Capable Executives:

Nevertheless, availability of capable executives substantially determines the nature and extent of dispersal of authority. It is not uncommon that top executives willing to delegate authority find themselves handicapped for want of capable and qualified subordinates. Obviously, the key to safeORGANIZING

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 ORGANISATION

Organisations are established to attain different goals related to different interest groups. These goals are attained through the mutual contribution of all related stakeholders. The effectiveness and efficiency of organization helps in providing the continuity and success to the business firms. The importance of organisation can be realized in many ways, among which some are discussed as follows:

(i) Facilitates Administration:

 An efficient and sound organisation makes it easy for the management to relate to the flow of resource continually to the overall objectives. A sound organisation helps in providing appropriate platform where management can perform the functions of planning, direction, coordination, motivation and control.

(ii) Facilitates Growth and Diversification:

 A sound organisation helps in the growth and diversification of activities. The growth is facilitated by clear division of work, proper delegation of authority, etc. In short, it helps in the organisational elaboration. In case of reasonable expansion of the organisation, the functional types get replaced by a more flexible decentralized organisation.

(iii) Permits Optimum Use of Resources:

The optimum use of technical and human resources gets facilitated with sound and efficient organisation. The organisation can have the facilities of latest technological developments

and improvements. It also facilitates optimum use of human resources through specialization. The people in the organisation get appropriately trained and get promotion opportunities. A sound organisation provides all the desired potential and strength to the company to meet the future challenges.

(iv) Stimulates Creativity:

Specialization in the organisation helps individuals in getting well-defined duties, and clear lines of authority and responsibility. It encourages the creativity of the people. The sound organizational structure enables managers to concentrate on important issues where their talent can be exploited to the

maximum.

(v) Encourages Synergy Effect:

 When one ‘efficient’ team member is able to persuade and motivate all other average team-members to work more efficiently, resulting in greater performance of the group than what it was before the motivation of all other employees, the effect is known as ‘synergy effect’

A sound organisation helps in adopting efficient methods of selection, training, remuneration and promotion for employees. It makes people work in a team with synergy. Organisation helps in providing factors, like job rotation, job enlargement and enrichment to its employees. A sound organisation provides higher job satisfaction to its employees through proper delegation and decentralization, favorable working environment and democratic and participative leadership. It enhances the mode of communication and interaction among different levels of the management.

(vi) Transfer and Adaptation of Technology:

 Any organisation involved in the ongoing process of research enhances its level of services. In this course, it adapts the latest technologies available in the market and indirectly it also imparts these technologies to the society through its members

PROCESS OF ORGANISATION

The steps involved in the process of an organisation are:

(i) Determination of Objectives: Organisation is usually associated with defining objectives. Therefore, it is necessary for the management to identify the objectives before begining any activity. It will assist the management in the selection of men and materials and with their help it can attain its objectives. Objectives also act as the strategy for the management and the workers. They give unity of direction in the organisation.

(ii) Identification and Grouping of Activities: When the members of the groups are to unite their efforts

effectively there must be an appropriate division of the main activities. Each job should be properly classified and grouped. This will facilitate the group to know what is expected of them as members of the group and will help in avoiding any duplication of efforts. For example, the total activities of an individual industrial organization can be separated into major functions, like production, purchasing, marketing and financing, and each such function is further subdivided into various jobs. The job assigned may be classified and grouped to ensure the useful achievement of the additional steps.

(iii) Allotment of Duties: Once the activities are categorised and grouped into various jobs categorizing and grouping the activities into various jobs, they should be allocated to the employees so that they can carry them out effectively. Each individual should be given a particular job to do according to his ability and made responsible

for that. He should also be given sufficient authority to do the job assigned to him.

(iv) Developing Relationships: Since various individuals work in the same organisation it is the duty of the management to lay down the structure of relationships in the organisation. Everybody should clearly know to whom he is accountable. This will facilitate the smooth functioning of the enterprise by facilitating delegation of responsibility and authority.

(v) Integration of Activities: Integration can be accomplished in the entire activities in following ways:

(a) Through authority relationships – horizontally, vertically, and laterally.

(b) Through organized information or communication systems and with the help of effective coordination

integration can be accomplished. This will enable the enterprise to achieve unity of objectives, team work

and team spirit by the integration of different activities.

TYPES OF ORGANISATION STRUCTURE

There are two types of Organisation Structures:

The formal organisation refers to the structure of jobs and positions with defined functions and relationships.

This type of organisation is built by the management to realize the objectives of an enterprise.

The types of organisation employed by companies vary considerably. However, on the basis of the nature of authority and its flow, the fundamental organisation structures may be classified as follows:

(1) Line Organisation

(2) Functional Organisation

(3) Line and Staff Organisation

(4) Project Management Organisation

(5) Matrix Organisation.

Line Organisation

Historically, line type of structure is the oldest pattern of organisation. The oldest and simplest form of organization is line origination. Line functions refer to those employees who have direct responsibility for accomplishing the objective of the enterprise. In this form of organisation, a supervisor exercises direct supervision over a subordinate, under the organisation, authority flows from the person at the top to the person at the lowest ring of the organisation.

Here the chief executive leads the organisation. This form of organisation is otherwise called military organization or scalar type of organisation.

The line organisation is Illustrated by a Figure given herein:

Benefits of Line Organisation:

(i) It is simple to work.

(ii) It is economical and effective. It permits rapid decisions and effective coordination.

(iii) It promotes unity of command and conforms to the scalar principle of organisation.

 (iv) It fixes responsibility for the performance of tasks in a definite manner upon definite individuals.

 (v) With a unified control and undivided loyalty, line organisation ensures excellent discipline.

 (vi) It is less expensive due to non-involvement of staff personnel.

(vii) It is stable.

Weaknesses of Line Organisation:

 (i) It suffers from lack of specialisation. Each department manager looks after activities of his own department only.

 (ii) There is a possibility of keymen being loaded to the breaking point. Since there is no staff aid, the organisation can be seized by a strong man and run on an arbitrary basis. Such a dictatorial or arbitrary power can lead to a considerable damage to the organisation.

 (iii) Such enterprises suffer from lack of expert staff to give them advice. There are occasions when the line manager is not competent enough to make decisions.

 (iv) Line organisation is rigid and inflexible. Discipline is maintained to the extent that organisation is rarely allowed to change.

(v) It is based upon an autocratic system of management.

 (vi) The work may be divided according to the whims of the manager rather than according to any scientific plan.

(vii) It cramps progress and prevents effective working of the unit.

(viii) It is likely to encourage nepotism (favoritism shown on the basis of family relationship, in business and politics).

The Line Organisation system can be successfully utilised:

 (i) Where the scale of business is small, and the number of subordinates and operative employees are not many;

 (ii) In continuous process industries;

 (iii) Where the work is largely of routine nature;

(iv) Where the machinery is nearly automatic and does not call for the intelligence of the foreman;

(v) Where labour-management problems are not difficult to solve.

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 pcrsohnel 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.

The main advantage of the functional structure of organisation is that there is functional specialjsation in each unit, which leads to operational efficiency of people engaged, and the organisation as a whole derives the benefit of specialised operations.

The heads of the functional units are in direct toucll with the chief executive who can sort out inter-functional problems, if any, and also coordinate the interrelated functions.

The chief executive is a!so able to be in direct touch with lower level subordinates and thereby have full knowledge of the state of affairs in the organization..

However, while the functional arrangement may be well suited to small and medium size organisations, it is incapable of handling the problems of an organisation as it grows in size and complexity.

 Problems of sub-units at lower levels do not receive adequate attention of higher level managers while some of the activities tend to be over-emphasised.

Functional units become unwieldy and difficult to manage when there are diverse kinds of activities performed in large number of sub-units. Personal contact between superiors and subordinates becomes rare, and flow of communication is slow leading to problems of coordination and control.

 Line and Staff Organisation

Both the line and functional plans prove inadequate in operation. The line system concentrates on authority too much. But purely functional plan also divides it too much. The line and staff system strikes a happy balance between the two.

 Under this organisation “line” is supplemented by “staff”. The staff refers to officers who are not line managers but are more or less permanently detailed to special services or to the study of some phases of operations.

Staff personnel thus act as an advisory group adjacent to the line. This pattern of organisation came into being as a result of the departmental managers having to investigate, think and plan and, at the same time, perform the ordinary tasks of production and selling.

Consequently, the work of investigation, research, recording, standardisation and advising, i.e., the work of experts, was wholly distinguished and separated from the routine process of manufacturing and selling. Thus, there arose a clear demarcation between ‘thinking’ and ‘doing’; the staff being the ‘thinkers’ and the line being the ‘doers’.

The merits of line and staff organisation are:

(i) It adds functional specialists to the pure line organisation and thus aims at combining the merits of the two.

 (ii) The stability and discipline of the line organisation are preserved; only the specialist is added

(iii) It brings expert knowledge to bear upon management. Functional specialists provide advice to the management on wide-ranging matters.

(iv) It provides for better placement and utilisation of personnel and leads to more concerted skill development.

The drawbacks are:

(i) The line and staff relationships often lead to numerous frictions and jealousies.

 (ii) Line managers may depend too much on staff experts and thus lose much of their judgement and initiative.

(iii) On the contrary, the staff experts remain ineffective because they do not get the authority to implement their recommendation.

The Problem of Choice: The problem of choosing from among the three types of organisation discussed above is not that of selecting one of them; rather it is concerned with determining the right balance among the three.

• The line structure is part of every organisation, no matter how small or simple it is. The line structure is characterised by total absence of staff specialists

. • At the other extreme is functional organisation with too much of specialisation.

 • In between these two lies the line and staff organisation. A typical organisation is generally characterised by line and staff positions in structure.

 It has some staff specialists vested with a degree of functional authority relating to their respective areas of specialisation over lower line managers. Some of the staff managers generally succeed in acquiring a degree of functional authority whether permitted or not. It would be judicious, therefore, to strike a balance between the line and functional authority.

Project Management Organisation

 Project organisation is not a separate kind of organisation, like the line, line and staff and functional organisations; it is rather set up within an existing organisation for the purpose of completing a project or accomplishing assigned objectives in time, and within cost and profit goals as laid down by the management in this connection.

 Project organisation is directed by the project manager responsible for project goals. Project management organisation may involve development and introduction of a new product, complete redesigning of an existing product line, installing a new plant, and the like. For example, ‘software development’ for a client.

 Project organisation involves appointment of the project manager usually drawn from the middle management ranks. He is responsible for detailed planning, coordination, control and achievement of the objectives within the time schedule.

Resulting Organisation Structure:

 The essence of project management organisation is its independent status which cuts horizontally the normal organisation structure. Since project management is usually required to take prompt decisions and actions from a number of functional areas, flow of information is largely lateral and not vertical. Thus project organisation is characterised by exceptionally strong horizontal working relationships. For instance, major product development calls for close working between the engineering, production and marketing departments; and with employers who are at the same level in organisation hierarchy. However, frequent product changes and decisions affecting costs require communication with the superiors. Project organisation, as such does not completely rule out the possibility of vertical communication though horizontal working relationships are stronger.

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.

Matrix organisation:

This is another type of adaptive structure which aims at combining the advantages of autonomous project organisational and functional specialisation. In the matrix organisation structure, there aye functional departments with specialised personnel who are deputed to work full time in different projects sometimes in more than one project under the overall guidance and direction of project managers. When a project work is completed, the individuals attached to it go back to their respective functional department to be assigned again'to some other project. This arrangement is found suitable where the organisation is engaged in contractual project activities and there are many projects to manager, as in a large construction company or - engineering - firm.

Matrix organisation provides a flexible structure ideally suited to the requirements of changing conditions. It facilitates pooling of specialised and technical personnel from different functional departments, who can be deputed to a number of projects. They acquire valuable experience of handling varied and complex problems in project work. There is speedy exchange of information and decision-making as they ,work under the coordinating authority of project managers.

The major drawback of matrix organisation is that the personnel drawn from specialised functional departments are subjected to dual authority, that of the functional heads and the project managers. The principles of unity of command is thereby sacrificed. This generates stresses and strains in project management, because there is simultaneous engagement of the same individual in a number of projects.

Informal Organisation-

Informal organisation refers to the relationship between people that is not based on procedures but on personal attitudes, prejudices, likes and dislikes. There always exists an informal organisation in a formal organisation and every management has to recognise this fact. Barnard viewed informal organisation as joint personal activity without being conscious of the joint purpose, even though possibly contributing to joint results.

Features of Informal Organisation

Informal organisation is characterised by the following features:

(i) It develops spontaneously and is not established by formal managers.

(ii) It is based on informal authority attached to the person and not the position. Informal authority is earned and not delegated. This authority under informal organisation largely flows either upwards or horizontally.

(iii) Informal organisation represents human tendency to cut across formal channels communication informally with other parts of the enterprise.

 (iv) It is all-pervasive and exists in every enterprise.

(v) Informal organisation is not always destructive, though, at times, it can make the job of management more difficult. Because of its powerful influence on productivity and job satisfaction, formal management would do well to derive benefit from the study of informal organisation.

 (vi) Informal organisation cannot altogether be abolished. It is not created at the will of the formal managers.

Moreover, the formal managers cannot do without the conventions, customers and culture the informal organisation is strongly bound with. Functions of Informal Groups

(i) These groups maintain and continue the cultural values and life style of the group.

(ii) They provide social satisfactions.

(iii) The group develops system of communication in order to meet wants and to keep its members informed about what affects them.

(iv) They exercise social controls by which the behaviour of others is influenced and regulated.

Problems Associated with Informal Organisation

 (i) Resistance to Change: There is a tendency that the group may become overly protective of its life style and stand like a rock in the face of change. They are strongly bound by conventions, customs and culture.

(ii) Role Conflict: The quest for social satisfactions may lead members away from organisational objectives. What is good for the employee is not always good for the organisation. This would results in a role conflict. Workers want to meet the requirements of both, their group as well as of their employer, but frequently these requirements are conflicting each other.

(iii) Rumour: Communication in informal organisation leads to the problem of rumour.

(iv) Conformity: Social control of informal groups exerts strong pressures for conformity. The closer they are attached to it, the stronger its influence becomes. Benefits of Informal Organisation Informal systems bring a number of benefits for the employers.

 Informal system:

(i) Makes the total system more effective.

(ii) Lightens the work load of the management.

(iii) Helps get work done.

(iv) Tends to encourage cooperation.

(v) Fills in the gaps in a manager’s abilities.

(vi) Gives satisfaction and stability to work groups.

(vii) Provides a useful channel of communication.

(viii) Provides a safety valve for employees’ emotions.

 (x) Encourages managers plan and act more carefully. Control of Informal Organisation The benefits of informal organisation will accrue only when it is properly controlled and its potential power properly channelised.

The significant aspects of manager’s duty in this connection are:

 (i) He should recognise and reconcile himself to the existence of informal organisation.

(ii) He should influence the informal organisation so that its role is more positive and its negative aspect is minimised.

(iii) He should integrate informal organisation with the formal organisation in such a way that the former also contributes to the accomplishment of enterprise objectives.

(iv) He should make informal organisation secondary to formal organisation, and not vice versa.

PRINCIPLES OF ORGANISATION

 of objectives:

Every member of the  should be familiar with its goals and objectives. There must be unity of objectivse so that all efforts can be concentrated on the set goals. The principle requires objectives to be clearly formulated and well-understood.

Division of work and specialization-

The entire work in the organisation should be divided into various parts so that every individual is confined to the performance of a single job. This facilitates specialisation which in turn leads to efficiency and quality However, each area of specialisation            interrelated the total integrated system by means ofof all activities of all departments.

Definition of jobs:

 Every   in the organisation should be clearly defined in relation to other positions in the organisation. The duties and responsibilities assigned to every position and its relationship with other positions should be so defined that there is no overlapping of functions.

Separation of line and staff functions-

Whenever  possible, line functions be separated from staff activities. Line functions are those which accomplish the main objectives of the company. In many manufacturing companies   the manufacturing and  sales departments are considered be accomplishing the main objectives of the business and so are called the line functions. Other functions like personnel, plant maiatenance, financing and legal are considered as staff functions.

Chain of command or  Scalar principle:

There must be clear lines of authority running from the top to the bottom of  the organisation.  Authority is the right to decide, direct and coordinate. The organisation structure should facilitate delegation of authority, Clarity is achieved through delegation by steps or levels from the top position to the operating level. From the chief executive, a line of authority may proceed to departmental managers, to supervisors or foreman and finally to workers. This chain of commandis also known as scalar principle of organisation.

Parity of authority and  responsibility or principle of correspondence:

 Responsibility should aiways be coupled with corresponding authority. 'Each subordinate must have sufficient authority to discharge the responsibility entrusted to him. This principle suggests that if a plant manager in a multiplant organisation is held accountable for all activities in his plant, he should not be subject to seek orders from company headquarters for his day to day activities.

Unity of command:

 No one in the organisation should report to more than one line supervisor. Everyone in the organisation should know to whom he reports and who reports to him. Stated simply, everyone should have only one boss. Receiving directions from several supervisors may result in confusion, chaos, conflicts and lack of action.

Unity of direction:

 According to this principle a group of activities that have a common goal should be managed by one person. There should be one head and one plan for a common objective of different activities. This facilitate smooth progression towards the achievements of  overall organisational goals.

Exception principle:

The principle suggests that higher level managers should attend to exceptional matters only. All routine decisions should be taken at lower level, whereas problems   matters and policy decisions   be referred to higher levels.

 Span of supervision:

 The term 'span of supervision  means the number of persons a manager or a supervisor can direct. No manager should be required to supervise more subordinates than he can effectively manage within the limits of available and ability. The exact number may vary according to the nature of the job and the frequency or intensity of supervision needed.

Principle of balance:

 There should be proper balance between various parts of the organisation and no function should be given undue importance at the cost of others. Balance should be maintained also between centralisation and   span of supervision and lines of communication, and authority allocated to department and personnel at  various levels.

 Communication-

 A good            network is essential to achieve the objectives of an organisation. No doubt the line of authority provides channels of communication downward and upward, still some blocks in communication occur in many organisation. The confidence of superior in his subordinates and two-way communication are the factors that unite an organisation into an effectively operating system.

Flexibility:

 The organisation structure should be flexibleso that it can be easily and economically adapted to the changes in the nature of business as well as technological innovations. Flexibility of organisation structure ensures the ability to change with the environment without disrupting the basic design.

Continuity:

 Change is the law of nature. Many changes take   outside the organisation These changes must be reflected in the organisation. For this purpose the form of organisation  be able to serve the    to its objectives for a   period of time.

Span of Control-

The term 'span of control' is also known as 'span of supervision' or 'span of authority'. Simply stated it refers to the number of individuals a manager can effectively supervise. Thus, it is expected that the span of control, that is, the number of subordinates directly reporting to a superior should be limited so as to make supervision and control effective. This is because executives have limited time and ability.

Factors affecting span of control-

Nature of the work, Ability of the manager, Efficiency of the organization, Staff assistant , Time available for supervision, Ability of the subordinates, Degree of decentralization

ORGANISATION CHART

An organisation chart shows a diagrammatic representation of important aspects of an organisation including the major functions and their relationships. It is a blue print of company organisation, its functions lines of authority and way positions.

 In other words, it is a graphic portrayal of positions in the enterprise and of the formal lines of accountability among them. It provides a bird's eye -view of the relationships between different departments of divisions of an enterprise as well as the relationships between the executives and subordinates at various levels. It enables each executive and employee to understand his position in the organisation and to know to whom he is accountable. Thus, it is obvious that an organisation chart has the following characteristics:

1 It is a diagrammatic presentation.

 2 It shows principal lines of authority in the organisatipn.

3 It shows the interplay of various functions and relationships

 4 It indicates the channels of communications.

An organisation cliai: is merely a type of record showing the formal organisational relationships which management intends should prevail.

ORGANISATIONAL MANUAL

An organisation chart shows who has authority over whom, but it does not show the extent of authority of the duties each person in the Organizations is expected to perform, except in so far as duties are implied by job titles. For this reason, big undertakings prepare organisation manuals that include job descriptions and other information in addition to the charts. A job description includes factual statements of job contents in terms of its duties and responsibilities. An organisation manual is an authoritative guide to the organisational members. It consists of records of top management decisions, standard practices and procedures and the description of various jobs. With such information available in the Manual employees  are not required to approach their superiors for instruction and guidance, causing interruption of work and resulting in wastage of  time and energy  of the superior and the subordinates.

 

Types of Manual

Manuals may be prepared by an organisation with different contents and purposes in view, such as,

(1) Policy manual,

(2 )Operations manual,

 (3) Organisation manual,

(4) Rules and Regulations manual, and

(5)Departmental manual.

These are discussed below:

Policy manual: It is prepared to state the policies of the enterprise

It is a basic guide . to action.. Policy manual describes the overall framework        within which activities take place and thus reveals the broad courses of managerial action likely to take place under certain conditions. It contains decision, resolutions and pronouncements of the management of the enterprise.

Operations Manual -  The purpose of manual is to inform the  employees of established methods, procedures  and the desired standards of performance of work. It lists the authorised steps and suppliments them by the use of diagrams sketches, charts, etc of each department and division.

Organisation manual: It describes the organisational setup indicating the duties and responsibilities of various departments and their respective sub-divisions. It is a portrayal of the formal chain of responsibilities and authorities among different persons working in the enterprise. The levels of authority and responsibility  of each executive is indicated in the manual so as to avoid in the organisation. Promotional charts may be included in the organisation           showing the possible promotional avenues throughout the entire organisation.

Rules and regulations manual: This manual provides information relating to the operating rules and employment regulations. It contains regulations governing hours of work, timings, procedure for taking leave, etc. It is actually a handbook of employment rules. It may also indicate the various benefit plans for employees including rules regarding the use of library, cafeteria, recreation club, etc.

Departmental manual: This manual includes procedures to be adopted with regard to departmental work. It gives in detail the internal policies and operating rules of the department. It shows with the help of charts and diagrams the inter-departmental relationships. For instance,  the filing manual  contains the organisation of filing department responsibilities of various jobs, relationships between  the employees, and the standard procedures for different operations. Similarly, other departments may also have such manuals.

 

Purpose and Cause of Organising

 It needs to be emphasized that structure is a means, not an end in itself. As such not only should it facilitate achievement of enterprise objectives through orderly organised group effort but it should also do the same with the least cost in terms of time, money, effort and pain. Thus, strictly speaking, the structure does not have objectives of its own, rather it is a manifestation of enterprise objectives in terms of those attributable to the specific tasks, roles and relationships. The basic cause of organisation structure lies in the limitations of span of management. If there were no such limitations, one could have an organized enterprise with only one manager. The number of subordinates a manager can effectively manage may be a few or many depending upon one’s ability, the requirements of job to be done, and the basic factors that influence time demands.

Dynamic Organisation  Structure

 Organisation structure should not be static. An enterprise operates under a highly dynamic environment where technological, social, political and economic setting in which it operates and the people managing the organisation are continually in a flux. This calls for adapting the organisation structure to changing conditions so that it can survive and grow.

Delegation-

Delegation refers to the downward transfer of authority from a superior to a subordinate. It is a pre-requisite to the efficient functioning of an organisation because it enables a manager to use his time on high priority activities. It also satisfies the subordinate’s need for recognition and provides them with opportunities to develop and exercise initiative.

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. 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: Responsibility is the obligation of a subor-dinate to properly perform the assigned

duty. 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. It

cannot be delegated and flows upwards i.e., a subordinate will be accountable to a superior for satisfactory performance of work.

Process of Delegation Irrespective of the level at which authority is passed on to subordinates, the delegation of authority can be conceived as a four-step process. The steps are listed below:

(i) Allocation of Duties:

 Duties are the tasks and activities that a superior desires someone else to do. So, before authority can be delegated, the duties over which the authority relates must be allocated to subordinate.

(ii) Delegation of Authority:

 The essence of the delegation process is empowering another person to act on behalf of the manager. This denotes passing on the formal rights to act on behalf of another.

 (iii) Assignment of Responsibility:

When authority is delegated, one must assign responsibility along with it. That is, when one is given “rights”, one must also be assigned a corresponding “obligation” to perform. Here it is important to recognise the importance of equating authority with responsibility. To allocate authority without responsibility creates opportunities for abuse, but no one should be held responsible for what one has no authority over. Now a question may arise as to when responsibility cannot be delegated, how can its parity with authority be ensured? Actually, one has to recognise two forms of responsibility: operating responsibility and ultimate responsibility. While the former can be delegated the latter is absolute.

 (iv) Creation of Accountability:

To complete the delegation process, the manager must create accountability; that is, subordinates must be held answerable for the discharge of the duties assigned to them and the judicious use of authority delegated. Thus, duties, authority and obligation constitute three important ingredients of delegation. All the three aspects of delegation are interrelated. Hence, a change in one will call for an adjustment with others.

Barriers to Delegation

– Fear of loss of Power

– Certain personal attitudes

 – Lack of ability to direct well

Principles of Delegation

Delegation does not always work as smoothly as the manager might expect it to. To overcome weak delegation. and to make delegation more effective, certain guides, rules or principles are enunciated and followed. Some of the important principles are discussed below:

(i) Clarity of Delegation:

Whether specific or general, written or unwritten, delegation of authority must be very clear in terms of its contents, functional relations, scope and assignments. The delegatee should also be given a clear idea about the tasks assigned, what is expected of the recipient in his own job and how his obligation fits into the general plan. Ambiguity in delegation often leads to poor results and tends to make the delegation less effective. Principle of clarity of delegation also implies defining in clear terms the horizontal and vertical relationships of the position of each subordinate to the other positions in the organisation. That is, every subordinate must know what position in the organisation structure exists at his own level and how his position fits in the overall management hierarchy.

(ii) Delegation to be Consistent with Results Expected:

A manager before proceeding with actual delegation of authority to the subordinate should know the jobs and results expected of such delegation. He should thereafter delegate only that much authority which is just sufficient to accomplish the results. It is an important guiding principle of delegation and rests on the assumption that goals are set and plans made in advance, and that jobs are set-up to accomplish or implement them. This principle also helps to minimise the dangers of delegating too much or inadequate authority.

 (iii) Responsibility cannot be Delegated:

Obligation to accomplish the assigned task is absolute and can not be partitioned when authority is delegated to the subordinate. Thus, when the chief executive of a company appoints a sales manager to look after sales, the former does not absolve himself of his responsibility for the same by delegating part of his authority to the latter. The chief executive even after delegation still remains accountable to the Board of Directors for management and supervision of the whole of the enterprise. If this principle is violated, three important consequences will follow: – If the manager is able to pass on obligation along with delegation of authority to the subordinates, the rule of single chain of command will be violated. – Management at the top shall have great responsibility and yet not be accountable for the results. – When manager is allowed to delegate even his own obligation, there shall be no way of knowing who is accountable for what. Thus, when authority is delegated, obligations are not passed down the organisation; rather new responsibilities are created at each level.

 (iv) Parity of Authority and Responsibility:

Whenever authority is delegated, responsibility steps in and is coextensive with authority. A subordinate can be held accountable for the tasks assigned to him and to the extent authority delegated for their accomplishment. Accordingly, sales manager cannot be held responsible for production failures for which he was given no authority. Since both authority and responsibility relate to the same assignment, it is logical that the two should be co-extensive.

(v) Exception Principle:

 A manager can delegates authority to the subordinate to relieve himself of the overload which he thinks can be passed on, in order to push down the process of decision-making as near the source of information and action as possible. In such a case, it is expected that the recipient of authority shall make proper use of it and make all the decisions falling within the scope of his authority. Only in exceptional cases when he fails to make the decision at his level, he should refer the matter to higher-ups for consideration and decision.

(vi) Principle of Functional Definition:

To develop departmentation, activities must be grouped to facilitate the accomplishment of goals, and the manager of each sub-division must have authority to coordinate its activities with the organisation as a whole. Principle of functional definition also says that the more a position or a department has clear definition of results expected, activities to be undertaken, organisation authority delegated, and authority and informational relationships with other positions understood, the more adequately the individual responsible can contribute towards accomplishing enterprise objectives.

 (vii) Scalar Principle:

 It says that the more clear the line of authority from the top manager in an enterprise to every subordinate position, the more effective will be the responsible decision-making and organisation communication. Subordinates must know who delegates authority to them and to whom matters beyond their own authority must be referred.

(viii) Principle of Unity to Command:

According to this principle, the more completely an individual has a reporting relationship with to a single superior, the lesser will be the problem of conflict in instructions and the greater the feeling of personal responsibility for results. Therefore, in case of delegation, except for the inevitable instances of splintered authority, the right of discretion over a particular activity will flow from a single superior to a subordinate. Thus, delegation will be more effective when the subordinate receives orders and instructions directly from one senior. This avoids the problem of confusion, preferences and divided loyalty.

CENTRALISATION AND DECENTRALISATION

Centralisation and decentralization are relative terms, as seen from the existing status of various business

enterprises. An organisation is centralized when decision-making authority is retained by higher management levels whereas it is decentralized when such authority is delegated.

Complete centralisation would imply concentration of all decision making functions at the apex of

the management hierarchy. An organisation can never be

completely centralised or decentralised.

As it grows in size and complexity , there is a tendency to move towards decentralised decision

making. This is because in large organisations those employees who are directly and closely involved with certain operations tend to have more knowledge about them than the top management which may only be indirectly associated with individual operations.

Advantages of Decentralisation

Advantages of decentralisation become the limitations of centralisation:

 (i) Decentralisation makes for quick decision and improves quality of the decisions by pushing decisionmaking closest to the situation.

 (ii) Decentralisation helps improve effectivity of managers. Development of self-reliant managers is encouraged. Every manager knows what he is expected to do. Good managers are tested and can be encouraged, whereas weak managers can be counselled and reprimanded.

 (iii) Democratisation of management is yet another advantage of decentralisation. Those who are governed can assert their voice and have a share in that governance.

(iv) Decentralisation provides actual work experience to a large number of middle and lower managers and thus creates a reservoir of promotable managerial manpower.

 (v) Improved morale of personnel is another great advantage of decentralisation. Managers at different levels and semi- autonomous divisions are able to see by themselves the results of their own actions and ascertain their role and success.

Advantages of Centralisation

Advantages of centralisation are largely absent in a decentralised organisation and they become limitations of decentralisation.

 (i) Uniformity of policy and procedure can strictly be enforced since decisions and controls are largely centralised.

 (ii) Centralisation helps to eliminate overlapping or duplicate activities and thus effects sufficient cost savings.

(iii) Centralisation helps in fuller utilisation of talents of outstanding executives for enterprise as a whole.

(iv) Centralisation ensures consistency in operating and uniformity in decision and consequently, helps to retain substantial control over activities of the enterprise.

Factors Determining the Degree of Decentralisation

To which extent authority can be delegated largely depends on the attitude and temperament of individual managers, yet many other factors also affect it. Some such factors of overwhelming preponderance may be explained as follows:

 (i) Importance and Significance of the Decision:

 One of the important factors determining the degree of decentralisation of authority iscostliness of the decision. Normally, decisions which are costly in terms of money value involved or in terms of factors like goodwill and image of the establishment, employee morale or motivation tend to be centralised at the upper levels of management. In other words, it is very rare that authority for crucial decisions is delegated. Of course, the practice is not based on the assumption that people at the higher level in the managerial hierarchy do not make mistakes. It is believed, however, that higher level executives commit better fewer mistakes since they are trained and more experience, and in possession of adequate information necessary to arrive at a decision. In fact, it is observed from the mode of managerial behaviour that the determining factor in the centralisation of authority with regard to specific area or areas is the weight of responsibility since authority delegation does not implicate responsibility delegation.

(ii) Size of the Enterprise:

 Another pertinent factor determining of decentralisation is largely the size of the organisation. The larger the firm, the more decisions are to be taken. Hence a number of departments and many levels are included. There is no denying the fact that it becomes too difficult to coordinate all of them. Moreover, a number of executives and specialists need to be consulted in such big establishments. In essence, decisions are often delayed, though delayed decisions cost more.

 Diseconomies of large size may be greatly reduced by organising the enterprise into a number of decentralised units resulting in greater economy and efficiency. Of course, exactness of the size, till now, is a controversial matter. Nothing in particular or categorically can be prescribed. But it is to be appreciated in all circumstances that the size of each individual unit should be so determined that departments or units are easily manageable with authority considerably decentralised.

(iii) Management Attitude and Philosophy:

Decentralisation largely depends upon the character of top executives and their attitude. It may be noted that outlook and attitude of top management is, undoubtedly, a significant determinant of the extent and mode of authority dispersal. It is certain that an executive with traditional rigid outlook hardly contemplates delegating substantial authority. On the other hand, people with rational managerial temperament believe and want to rely upon participative approach of doing the work and are anxious to take maximum opportunity of individual initiative in the organisation, opt for decentralisation.

(iv)Control Techniques:

 Another related factor determining the degree of decentralisation is the magnitude of the desire to obtain a uniform policy with regard to such vital factors as the price of a product, service, delivery, credit, etc., which can best be practised by centralised authority.

(v)Availability of Capable Executives:

Nevertheless, availability of capable executives substantially determines the nature and extent of dispersal of authority. It is not uncommon that top executives willing to delegate authority find themselves handicapped for want of capable and qualified subordinates. Obviously, the key to safe