ORGANIZING

Prof. Preeti Bhaskar Symbiosis Centre for Management Studies, Noida

 Meaning and importance

Course outline

Structure of organization- Functional, divisional and administrative Formal and informal organization, Matrix Organization Delegation: Meaning and Importance Elements of Delegation Concept-centralization and de-centralization

CLASSIFICATION OF MANAGEMENT FUNCTIONS

Managerial functions

MANAGEMENT FUNCTIONS
Operative functions

Organizing
A manager is responsible for organizing people, work processes, and equipment.

organizing
getting the resources arranged in an orderly and functional way to accomplish goals and objectives

According to Theo Haimman

Organizing is the process of defining and grouping the activities of the enterprise and establishing authority relationship among them

Steps in organizing
Identifying the activities required for achieving objectives. Classifying these activities in to convenient groups Assigning the group of activities to appropriate persons. Delegating authority and fixing responsibilities. Coordinating Authority Responsibility relationship throughout the enterprise.

Importance of organizing
Specialization Well defined jobs Clarifies authority Co-ordination Effective administration Growth and diversification Sense of security Scope for new changes

Organizational Structure
A formal system of task and reporting relationships that coordinates and motivates members so that they work together to achieve organizational goals

organizational chart a chart that shows how the firm is structured and who is in charge of whom

Managing director

Production Manager

Marketing Manager

Finance Manager

Factory Manager

Store Manager
Store Keeper

Sales Manager

Advertising

Manager

Accounts officer

Internal auditor

Sales Supervisor

Sales Supervisor

Accountant

foreman

foreman
Salesman Salesman

Accountant Clerks

Accountant Clerks

Worker

Worker

ORGANIZATION

STRUCTURE

organizational structure

Authority relationship

Departmental organization

Interpersonal organization

Line organization a) Pure line organization b) Departmental organization

Line and staff organization Divisional organization

Functional organization Committee organization

Matrix organization

Formal structure Informal structure

Line organization
Order

Authority

Top Management

Middle
Management
Complaint

Lower

Suggestion

Management

Pure Line organization

General Manager Production Manager

Foreman - A

Foreman- B

Worker

Worker

Worker

Worker

Worker

Worker

Activities of all employees working in the same level happen to be similar

DEPARTMENTAL ORGANIZATION
General Manager

Marketing Dept.
Superintendent

Finance Dept.
Superintendent
Employee

Production Dept. Superintendent

Employee

HR Dept. Superintendent
Employee

Foreman - A

Worker

Worker

Worker

Worker

Worker

Worker

Line and staff organization

Shareholder
Research officer

BOD

General Manager

Public Relation Officer

Production Manager

Superintendent

Quality control Officer

Advertising officer

Marketing Manager

Superintendent

Foreman A

Foreman A

Production Officer

Sales officer

Foreman A

Foreman A

Worker

Worker

Salesman

Salesman

Divisional structures (based on product, geography, customer, and process.)

 advantages of

divisional structures:
More flexibility in responding to environmental changes Clear points of responsibility. Expertise focused on specific customers, products, and regions. Greater ease in restructuring.

disadvantages of

divisional structures:
Duplication of resources and efforts across divisions. Competition and poor coordination across divisions.

Emphasis on divisional goals at expense of organizational goals.

Functional structures
People with similar skills and performing similar tasks are grouped together into formal work units. Members work in their functional areas of expertise. Work well for small organizations producing few products or services.

Functional structures
Managing Director
production dept.
production

Marketing dept.
Sales Dept.

purchase dept.
Purchase of raw material
purchase of tools and machinery

Finance dept.
Financial records of purchase

Human resource dept.

Manpower Planning

Quality control Repair and maintenance

Advertising Dept. Market research Dept.

Investments

Compensation

Records of purchase

Loans and advances

Employee welfare

 advantages of

functional structures:

disadvantages of

functional structures:

Economies of scale. Task assignments consistent with expertise and training. High-quality technical problem solving,

Difficulties in pinpointing responsibilities.

Functional problem.
Sense of cooperation and common purpose break down.

In-depth training and skill development.

Clear career paths within functions.

Narrow view of performance objectives.

Excessive upward referral of decisions.

Committee organization
Advisory Committee

Executive Committee

Committee organization

Special purpose Committee

Joint consultant Committee

 Matrix structure
Combines functional and divisional structures to gain advantages and minimize disadvantages of each.
Used in:
Manufacturing Service industries

Professional fields
Non-profit sector Multi-national corporations

Matrix structure in a small multi-project business firm.

 advantages of matrix

disadvantages of

structures:
Better cooperation across functions. Improved decision making. Increased flexibility in restructuring.

matrix structures
Two-boss system is susceptible to power struggles. Two-boss system can create task confusion and conflict in work priorities. Team meetings are time consuming. Team may develop groups Increased costs due to adding team to structure.

Better customer service.

Better performance accountability. Improved strategic management.

 The structure of the organization in its official state

Formal structures

An organization chart identifies the following aspects of formal structure:

The division of work. Supervisory relationships. Communication channels. Major subunits. Levels of management.

Informal structures
A shadow organization made up of the

unofficial, but often critical, working relationships between organization members.

Potential advantages of informal structures:

Helping people accomplish their work. Overcoming limits of formal structure. Gaining access to interpersonal networks. Informal learning.

Span of control

 Span of control
The number of persons directly reporting to a manager. Organizing trend:
Many organizations are shifting to wider spans of control as levels of management are eliminated. Managers have responsibility for a larger number of subordinates who operate with less direct supervision.

Spans of control

FACTORS GOVERNING SPAN OF CONTROL

Ability of the Manager Ability of a employees Type of work Well defined authority and responsibility Geographic location Levels of Management

Delegation

Delegation
F.G. MOORE

Delegation means assigning work to others and giving them authority to do it.

right of an individual to command his subordinates and right to take decision within the limits of his position

Authority

Delegation
Accountability Responsibility

Obligation to carry out responsibility and give reports about performance to the superior

The obligation of subordinate to perform the assigned job properly

Importance of Delegation
Reduction of executives work load Quick and better decision Development of the skills of the subordinated High morale of subordinate Effective Management Employee Development Motivation of Employees Facilitation of growth Basis of managerial hierarchy Better coordination

Process of Delegation
Assigning of duties/
Responsibilities Fixing accountability

Granting Authority

Obstacles in Delegation
Factors of Superior (Delegators)
Factors of Subordinates(Delegate) Organizational factor

Obstacles in Delegation
Boss is reluctant to delegation because he/she: Feels he can do better himself Dislikes gives other chance Lacks confidence in subordinates Does not have adequate control
Subordinated is reluctant to delegation because he/she:

Organizational factor :
Inadequate planning Unclear authority relationship Splintered authority Non availability of competent managers

Likes to depend on the boss Dislikes criticism Lacks self confidence Does not have adequate resources

Unable to instruct subordinate

Has little positive incentives

Guidelines for effective delegation:

Carefully choose the person to whom you delegate. Define the responsibility; make the assignment clear. Agree on performance objectives and standards. Agree on a performance timetable. Give authority; allow the other person to act independently. Show trust in the other person. Provide performance support. Give performance feedback Recognize and reinforce progress. Help when things go wrong. Dont forget your accountability for performance results.

Centralization and Decentralization

Centralization
Dept.
Dept.

FIG-1
Dept.

Dept.

CEO

Dept .
Dept.

?
Dept.
Dept. Dept. CEO Dept.

Dept. Dept.

Dept.

FIG-2
De- Centralization

Dept. Dept.

Dept.

Centralization
Centralization means complete authority of decision making being at the top level.

According to Allen, Centralization is the systematic and consistent reservation of authority at central points in the organization.

Advantages of Centralization
Effective utilization of talents of the top management.

Disadvantages of Centralization
Doesnt give an opportunity to lower level managers/supervisors to develop their managerial skills. Centralized organization faces the problem of lower motivation levels among workforce. The success of organization depends on the competence of top executives which might be quite risky.

It allows the development of a strong co-ordinates top management team.

Uniformity of policies and plans across the organization. Duplication of functions and facilities is minimized which in turn reduces costs. Quick decision-making and communication.

Decentralization is a systematic delegation of authority at all levels of management and in all of the organization.

 According to Kreitner,

Decentralization is granting of decision making authority by top management to the lower level employees

Advantages
Decentralization reduces the workload of top executives.

Disadvantages
Decentralization increases the administrative expenses and each division or department has to be sufficient in terms of physical facilities and trained personnel. As each department or division enjoys substantial autonomy it might lead to co-ordination problems. There might be lack of uniformity and inconsistent procedures as each department might have the authority to formulate its own policies and procedures.

It improves job satisfaction and morale of lower level managers by satisfying their needs for independence, participation and status.
Decision making is quicker. It facilitates growth and diversification. As each product division is given sufficient autonomy for innovation and creativity. It gives opportunity to subordinates to exercise their own judgment. They develop managerial skills which will be useful to the organization in the longer run.

Centralization

Is suitable for small business

Is suitable for large business

Decentralization

Difference between : Delegation and Decentralization

Delegation

Decentralization

Basis
Meaning

Delegation
Managers delegate some of their function and authority to their subordinates. Scope of delegation is limited as superior delegates the powers to the subordinates on individual bases. Responsibility remains of the managers and cannot be delegated

Decentralization
Right to take decisions is shared by top management and other level of management. Scope is wide as the decision making is shared by the subordinates also. Responsibility is also delegated to subordinates.

Scope

Responsibility

Freedom of Work

Freedom is not given to the subordinates as they have to work as per the instructions of their superiors. It is a routine function

Freedom to work can be maintained by subordinates as they are free to take decision and to implement it.
It is an important decision of an enterprise. Decentralization becomes more important in large concerns and it depends upon the decision made by the enterprise, it is not compulsory. It is a systematic act which takes place at all levels and at all functions in a concern.

Nature

Need on purpose

Delegation is important in all concerns whether big or small. No enterprises can work without delegation.

Grant of Authority

The authority is granted by one individual to another.

Grant of Responsibility

Responsibility cannot be delegated

Degree of delegation varies from concern to concern and department to department. Delegation is a process which explains superior subordinates relationship

Authority with responsibility is delegated to subordinates.

Decentralization is total by nature. It spreads throughout the organization i.e. at all levels and all functions It is an outcome which explains relationship between top management and all other departments.

Degree

Process

Essentiality

Delegation is essential of all kinds of concerns

Delegation is essential for creating the organization Delegated authority can be taken back. Very little freedom to the subordinates

Decentralization is a decisions function by nature.

Decentralization is an optional policy at the discretion of top management. It is considered as a general policy of top management and is applicable to all departments. Considerable freedom

Significance

Withdrawal Freedom of Action