UNIT-2 CHAPTER-7 ORGANISATION

Organization
Group of people Entity (that is utilizing resources to create a result) A structure of relationship A process

Organisation as a Structure
Organisation, as a structure, has the following features: Two or more persons

Common goals
Cooperative efforts Division of work Communication Rules and regulations Pyramidal shape

Organisation as a Process (Organising)

Organising is the process by which employees, facilities and tasks are related to each other, with a view to achieve specific goals. It refers to the way, work is arranged and allocated among members of the organisation, so as to achieve the goals. As a process, organisation, thus refers to one of the important functions of management, i.e., organising. The process of organising, thus, involves the following steps:

Identifying the work

Grouping the work Establishing relationships Delegating authority

Providing for coordination and control

Importance of Sound Organisation

Enlarges abilities Facilitates administration Facilitates growth and diversification Permits optimum use of resources Stimulates creativity

Facilitates coordination

Unity of Objectives Specialization or Division of work Span of Control Scalar Principle Functional Definition Exception Principle Unity of Command Balance

Efficiency Flexibility Continuity Facilitation of Leadership Coordination

Organization Structure
An organization structure shows the authority and responsibility relationships between the various positions in the organization by showing who reports to whom.

Forms of Organization Structure

Line Organization Line and Staff Organization Functional Organization Project Organisation Matrix organisation

Line Organization
General Manager Production Manager Superintendent Finance Manager Asstt. Finance Manager Accountants Marketing Manager Asstt. Marketing Manager Sales Supervisors

Foreman

Workers

Clerks

Salesmen

Line Organization
It consists of an uninterrupted series of authority steps and forms a hierarchical arrangement. It not only becomes the avenue of command to operating personnel but also provides the channel of communication, coordination and accountability in enterprise.

Line and Staff Organization

Board of Directors Executive Committee------ Managing Director---------- ----Controller of Finance Asstt. To Managing Director

Manager Division A

Manager Division B

Manager Division C

Line Organization
Right to decide and command

Contributes directly to the accomplishment of objectives Flows downward from a superior to subordinate Creates superior-subordinate relationship Bears final responsibility for results Provides channel of communication

Staff

Right to provide advice, assistance and information Assists line in the effective accomplishment of organizational objectives Possessed by specialists Extension of line and supports line Provides ideas for decision Does not bear final responsibility Thinking function No channel of communication is created

Functional Organization
Managing Director Production Manager Engineer Superintendent of Production Chemist

Foreman

Foreman

Foreman

Foreman

Workmen

Workmen

Workmen

Functional Organization

This is based on the concept of functional foremanship. In this Organization is divided into a number of functional areas. Each function is managed by an expert in that area.

Project Organization
Managing Director Manager Project Division II Manager Project Division I

Engineer R&D A/c officer Manager

Engineer

R&D Manager

A/c officer

Project Organization
Oriented towards the completion of a project Moulding the organization around a specific project It is usually structured to facilitate planning and designing of the product, completion of the task and phasing out of the project Need for project organization is felt when an organization is to execute a project which is subject to high standards of performance Assignment presents a unique or unfamiliar change

Matrix Organization
Division X Production Proj. Mgr. I Proj Mgr II Prod Grp Prod Grp Engineering Finance Engg Grp Engg Grp Fin Grp Fin Grp Personnel Pers. Grp Pers. Grp

Matrix Organization
It is created by merging the two complementary organizations the project and the functional projects cut across the functional line project teams are composed of people from functional departments who are assigned to the project for a specific period or for the duration of the project After the project is finished they return to the functional departments

Departmentation
Departmentation or departmentalization is the process of grouping tasks into jobs, the combining of jobs into effective work groups and the combining of groups into identifiable segments or departments. A department is a division ,branch, regiment or some other organizational unit over which a manager has authority for performance of task.

Need and Importance of Departmentation

Specialization Expansion Autonomy Fixation of responsibility Appraisal Administrative Control

Types of Departmentation
Departmentation by Functions Departmentation by Products Departmentation by Territory Departmentation by Customer Departmentation by Process Departmentation by Time and Numbers Composite Departmentation

Functional Departmentation
Board of Directors Managing Director

Marketing

Production

Finance Repairs and Maintenance

Quality Control

Processing Material

Functional Departmentation
Each major function is organized as a separate department Basic or organic functions are the functions whose performance is vital and essential to the survival of the organization. A major function may be divided into minor or sub functions Exists almost in every organization at some level

Product Departmentation
Board of Directors Managing Director Plastic Division Chemical Division Metals Division

Finance

Production

Sales

Personnel

Product Departmentation
Every major product is organized as a separate department Each department looks after the production, sales and finance of one product Useful when product expansion and diversification, manufacturing and marketing characteristics of the product are of significance

Departmentation by Territory
Board of Directors Managing Director East Zone North Zone South Zone West Zone

Branch -I

Branch - II

Branch -III

Departmentation by Territory
Used when several units are geographically dispersed All activities in a given territory are grouped together

Departmentation by Process
Chief Executive General Manager

Spinning

Weaving

Dyeing

Packing

Departmentation by Process

Departmentation of manufacturing process may be done on the basis of production processes or equipment involved

Manpower and material are brought together in such a department to carry out a particular operation

Authority

Authority may be defined as the power to make decisions which guides the actions of others

Characteristics of Authority
Legal and legitimate No unlimited rights Relationship between two individuals Used to achieve organizational goals key to managerial job right to decision making

Responsibility

Responsibility is the duty to which a person is bound by reason of his status or task.

Characteristics of Responsibility
Can be assigned to humans only Arises from superior-subordinate relationship Continuing obligation or confined to the performance of a single function Defined in terms of functions or targets or goals Derivative of authority

Absolute and cannot be delegated Flows upward

Formal Organization
Consciously created to achieve organizational objectives Official hierarchy of relations Formal relations are well planned and are created deliberately Follows official chain of command Usually stable Formal authority is institutional Reflects technological aspect and not human sentiments

Follows a rigid structure of relationships Prescribed pattern of behaviour for its members

Informal Organization
Has no predetermined objectives Structure is based on human emotions and sentiments Relations are unplanned Does not have a fixed chain of command Life of informal groups is short Informal authority is personal Leaders are not appointed Reflects human aspect

Loosely structured and is highly flexible Develops social norms of behaviour through mutual consent

Delegation

The process a manager follows in dividing the work assigned to him so that he performs that part which only he, because of his unique organizational placement, can perform effectively and so that he can get others to help with what remains.

Characteristics of Delegation
Takes when superior grants discretion to subordinate Cannot delegate entire authority Does not imply reduction in the authority of manager May be specific or general, written or implied, formal or informal

Process of Delegation
Determination of result expected Assignment of duties Granting of Authority Creating accountability for performance

Centralization

Centralization is systematic and consistent reservation of authority at central points within an organization.

Advantages of Centralization
Effective utilization of talents of the top leader Unifying force Strong coordinated top management team is developed Uniformity of policy and plans

Disadvantages
Delay in communication Inhibits development of lower level employees Low motivation and morale of lower level people

Decentralization

Decentralization refers to the systematic effort to delegate to the lowest levels all authority except that which can only be exercised at central authority. It is the distribution of authority throughout organization.

Advantages
Relief to top executives Motivation of subordinates Quick decisions Growth and diversification Executive development Effective communication Efficient supervision and control

Disadvantages
Expensive Difficulty in coordination Lack of uniformity

Nature of Staffing
Staffing is a universal function Continuous process Dynamic process Cannot be entrusted to the personnel department only

Scope of Staffing
Procurement Development Compensation Integration Maintenance

Importance of Staffing
Helps in discovering competent employees Higher performance due to right person on the right job improves job satisfaction and morale of the employee Facilitates optimum utilization of human resources

Need for Staffing

Increased size of organization Advancement of technology Long range need for manpower Human relation movement