UNIT 5

ORGANISING

Meaning of Organising :-
After laying down the plans and objectives the next function to be performed
by the managers is organising. It determines what activities and resources are
required and decides who will do a particular task, where it will be done and
when it will be done.
* Thus organising means establishing relationship between various factors
of production and it in concerned with establishing relationship amongst
jobs, sections, department & position.
Organising is the process of identifying and grouping the work to be
performed, defining and delegating responsibility and authority and
establishing relationships for the purpose of enabling people to work most
effectively together in accomplishing objectives.

Step Involved in the Process of Organising :-

1. Identification and Division of Work :- It involves identification and
dividing the total work to be done into specific activities (called jobs) in
accordance with previously determined plans. By dividing the work the
burden of work can be shared among the employees.
It facilitates specialisation of work & skills. Duplication of work can be
avoided by dividing the work into manageable activities.
2. Departmentalisation :- The second step in organising is to combine or
group similar or related jobs into larger units, called departments,
divisions or sections. They can be grouped on the basis of functions which
an organisation undertakes to achieve its objective. For example
departments may be created for manufacturing, marketing, financing etc.
Departmentalisation is done to achieve coordination & to facilitate unity
of efforts.

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3. Assignment of duties :- Once departments have been formed each of
them is placed under the charge of an individual called departmental head
(e.g., production manager, finance manager etc.) Jobs are then allocated to
the members of each department according to their skills and
qualifications.
4. Establishing Reporting Relationships :- Merely allocating work is not
enough. Each individual should also know from whom he has to take
orders and to whom he is accountable. It helps in coordination amongst
various departments.

Importance of Organising :-
1. Benefits of specialisation : - In organising every individual is assigned a
part of total work and not the whole task. Due to this division of work
into smaller units and repetitive performance leads to specialisation. Thus
organising promotes specialisation which in turn leads to efficient &
speedy performance of tasks.
2. Clarity in working Relationship :- It helps in creating well defined jobs
and also clarifying the limits of authority and responsibility of each job.
The superior, subordinate relationship is clearly defined in organising.
3. Effective Administration : It provides a clear description of jobs and
related duties which helps to avoid confusion and duplication. Clarity in
working relationships enables proper execution of work which results in
effective administration.
4. Optimum Utilisation of resources : The proper assignment of jobs avoids
overlapping/duplication of work. This helps in preventing confusion and
minimising the wastage of resources and efforts.
5. Adaptation of change :- It allows a business enterprise to adapt itself
according to changes in the business environment. Organisational
structures can be suitably modified according to changes.
6. Development of personnel : Sound organisation encourages initiative &
creative thinging on part of employees.
7. Expansion and growth : It helps in growth & diversification of an
enterprise by adding more job positions & department.

Meaning of Organisational Structure :-

It seeks to establish relations among all the persons working in the
organisation. Under the organisational structure various posts are created to

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perform different activities for the attainment of the objectives of the
enterprise. Relations among persons working on different posts are
determined. The structure provides a basis or framework for managers and
other employees for performing their functions.
The organisation structure can be defined as the frame work within which
managerial and operating tasks are performed.

Relation between Span of Management and Organisation structure

- Span of mangement refers to the number of subordinates that can be
effectively managed by a superior. The Span of management to a large extent
gives shape to the organisation structure. This determines the levels of
management in the structure.

Types of Organisation Structures

I. Functional Structure :- In functional structure activities are grouped and

departments are created on the basis of specific functions to be performed.
For example all the jobs related to production are grouped under
production department - Sales to sales department etc.

Advantages :
1. Specialisation - Better division of labour takes place which results in
specialisation of functions and its consequent benefits.
2. Coordination is established :- All the persons working within a
department are specialist of their respective jobs. It makes the co-
ordination easier at department level.
3. Helps in increasing managerial efficiency : Managers of one department
are performing same type of function again and again which makes them
specialised and improves their efficiency.
4. Minimises cost - It leads to minimum duplication of effort which results
in economies of scale and thus lowers cost.

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Disadvantages
1. Ignorance of organisational objectives - Each departmental head works
according to his own wishes. They always give more weight to their
departmental objectives. Hence overall organisation objectives suffer.
2. Difficulty in Inter-departmental Coordination - All departmental heads
work as per their own wishes which results coordination within the
department but it makes inter-departmental coordination difficult.
3. Hurdle in complete development - because each employee specialises
only in a small part of the whole job.

Suitability :-
1. Where the size of business unit is large.
2. Where specialisation is required.
3. Where there is mainly only one product in sold.

II. DIVISIONAL ORGANISATION STRUCTURE :

Dividing the whole enterprise according to the major products to be
manufactured (like metal, plastic, cosmetics etc) in known as divisional
organisation structure.

Advantages :-
1. Quick decision making :- Divisional manager can take any decision
regarding his division independently which makes decisions quick and
effective.
2. Divisional results can be Assessed :- Divisional results (profit/loss) can
be assessed easily. On this basis unprofitable division can be closed.
3. Growth and Expansion :- It facilitates growth and expansion as new
divisions can be added without disturbing existing departments.

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Disadvantages :-
1. Conflicts - among different divisions on allocation of resources
2. Duplicity of Functions : - Entire set of functions is required for all
divisions. It gives rise to duplicity of efforts among divisions.
3. Selfish Attitude :- Every division tries to display better performance even
sometimes at the cost of other divisions. This shows their selfish attitude.

Suitablity :-
1. Where the number of main products are more than one.
2. Where the size of the concern is large enough.

FORMAL ORGANISATION
This structure is designed by the management to achieve organisational goals
in which the responsibilities, authority and mutual relationships among all the
employees working in an enterprise are clearly defined. It can be functional
or divisional.

Features :-
1. It in deliberately created by the top management.
2. It is based on rules and procedures. Which are in written form
3. It is impersonal - Does not take into consideration emotional aspect.
4. It clearly difines the authority and responsibility of every individual.
5. It is created to achieve organisational objectivies.

Advantages :-
1. Easier to fix responsibility since mutual relationships are clearly defined.
2. No overlapping of work - because things move according to a definite
plan.
3. Unity of command through an established chain of commands.
4. Easy to achieve objectives - because of coordination and optimum use of
human and material resources.
5. Stability in the organisation - because behaviour of employees can be fairly
predicted since there are specific rules to guide them.

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Disadvantages :
1. The work is based by rules which causes unnecessary delay.
2. Lack of initiatives - because the employees have to do what they are told
to do and they have no opportunity of thinking.
3. Limited in scope - It is difficult to understand all human relationships in
an enterprice as it places more emphasis on structure and work.

Informal Organisation :
An informal organisation is that organisation which is not established
deliberately but comes into existence because of common interests, tastes and
religious and communal relations.

Features :
1. It originates from within the formal organisation as a result of personal
interaction among employees.
2. It has no written rules and procedures.
3. It does not have fixed lines of communication.
4. It is not deliberately created by the management.
5. It is personal - means the feelings of individuals are kept in mind.

Advantage
1. Speed : Prescribed lines of communication are not followed which leads
to faster spread of information.
2. Fulfillment of social needs - enhances job satisfaction which gives them
a sense of belongingness in the organisation.
3. Quick solution of the problems - because the subordinates can speak out
their mind before the officers which helps the officers to understand the
problems of their subordinates.

Disadvantages :-
1. It creates rumours :- All the persons in an informal organisation talk
carelessly and sometimes a wrong thing in conveyed to the other person.
2. It resists change and lays stress on adopting the old techniques.
3. Priority to group Interests - Pressurises members to confirm to group
expectations.

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 Difference between Formal & Informal organisation
Basis Formal organisation Informal organisation
1. Meaning If refers to the structure of It refers to the network of
well defined authority and social relationships which
and responsibility. develops automatically
2. Nature Rigid Flexible
3. Authority Arises by virtue of positions Arises out to personal
in management qualities.
4. Adherence Violation of rules may lead No such punishments.
to rules to penalties and punishments
5. Flow of Takes place through the Not through a planned
communi- scalar chain route It can take place in
cation any direction.

Delegation of Authority
Meaning - It means the granting of authority to subordinates to operate within
the prescribed limits. The manager who delegates authority holds his
subordinates responsible for proper performance of the assigned tasks. To
make sure that his subordinates perform all the work effectively and efficiently
in expected manner the manager creates accountability.

Elements of Delegation :-
1. Authority - The power of taking decisions in order to guide the activities
of others. Authority is that power which influences the conduct of others.
2. Responsibility : It is the obligation of a subordinate to properly perform
the assigned duty. When a superior issues orders it becomes the
responsibility of the subordinate to carry it out.
3. Accountability - When a superior assigns some work to a subordinate, he
is answerable to his superior for its success or failure.
Principle of Absoluteness of Accountability - Authority can be delegated
but responsibility / Accountability cannot be delegated by a manager. The
authority granted to a subordinate can be taken back and re-delegated to
another person. The manager cannot escape from the responsibility for
any default or mistake on the part of his subordinates.

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Importance of Delegation of Authority
1. Reduction of Executive work load - It reduces the work load of officers.
They can thus utilise their time in more important and creative works
instead of works of daily routine.
2. Employee development - Employees get more opportunities to utilise
their talent which allows them to develop those skills which will enable
them to perform complex tasks.
3. Quick and better decision are possible - The subordinate are granted
sufficient authority so they need not to go to their superiors for taking
decisions concerning the routine matters.
4. High Morale of subordinates - Because of delegation of authority to the
subordinates they get an opportunity to display their efficiency and
capacity.
5. Better coordination - The elements of delegation - authority, responsibility
and accountability help to define the power, duties and answerability
related to various job positions which results in developing and
maintaining effective co-ordination.
Difference - Authority, Resposibility and Accountability
Basis Authority Responsibility Accountability
1. Meaning Right to command Obligation to Answerability for
perform an out come of the
assigned task assigned task.
2. Origin Arises from formal Arises from Arises from
position delegated authority responsibility.
3. Flow Downward - from upward - from upward - from
Superior to Subordinate to Subordinate to
Subordinate Superior Superior
4. Withdrawl Can be withdrawn Cannot be Cannot be
anytime by giving withdrawn once withdrawn once
notice created created

Decentralisation :-
Meaning - It means to delegate authority to all levels of management for
taking decisions. Under decentralisation all the authority except the one which
is absolutely necessary for the superiors to hold is given to the subordinates
permanently. Under decentralisation the number of centres for taking decisions

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increases because the managers belonging to the middle and lower level have
the authority to take important decisions.
Centralisation and Decentralisation - represents the pattern of authority
among managers at different levels. Centralisation of authority means
concentrations of power of decision making in a few hands. In such an
organisation very little authority is delegated to managers at middle and lower
levels. No organisation can be completely centralised or decentralised. They
exist together and there in a need for a balance between the two. As the
organisation grows in size there is tendency to move towards decentralisation.
Thus every organisation characterised by both.

Importance of Decentralisation :-
1. Develops initiative amongst subordinates - It helps to promote
confidence because the subordinates are given freedom to take their own
decisions.
2. Quick and better decisions - The burden of managerial decisions does
not lie on a few individuals but get divided among various persons which
helps them to take better and quick decisions.
3. Relieves the top Executives from excess workload - The daily managerial
works all assigned to the subordinates which leaves enough time with the
superiors which they can utilise in developing new strategies.
4. Managerial Development - It means giving authority to the subordinates
upto the lower level to take decisions regarding their work. In this way
the opportunity to take decisions helps in the development of the
organisation.
5. Better Control - It makes it possible to evaluate performance at each level
which results in complete control over all the activities.
Difference between - Delegation & Decentralisation
Basis Delegation Decentralisation
1. Nature It is a compulsory act It is an optional policy
2. Freedom Less freedom to take More freedom of action due
of action decisions due to more to less control by the top
control by the superiors management.
3. Status It is a process of sharing It is the result of policy
tasks and authority decisions taken by top
management.

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4. Scope Narrow - as it is confined Wide - It includes extensions
to a superior and his of delegation to the lowest
immediate subordinate. of management.
5. Purpose To reduce the burden of To increase the role and
the manager autonomy of lower level
management.

QUESTIONS

1 marks
1. How effective administration in possible through organising?
2. Name the function of management which coordinates the physical,
financial and human resources and establishes productive relations among
them for achievement of specific goals.
3. Name the organisation which is directed by group norms.
4. What is organisation chart?
5. What is meant by organisational structure?
6. Difficulty in inter-departmental coordination is one of the limitations of
which organisation structure.
7. What is meant by Authority?
8. What is the basis of delegation of authority.
9. Why effective management is possible through delegation of authority.

3 marks
10. What is functional organisation structure? Write two advantages of this
structure.
11. How accountability related to authority? Explain.
12. Why is it necessary to delegate authority? Give three reasons.
13. Write three characteristics of decentralisation.
14. State three steps in the process of organising.

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4/5 marks
15. Explain briefly any four features of formal organisation.
16. The employees of Sachin Ltd. a software company, have formed a
Dramatic group for their recreation, Name the type of organisation and
state its three features.
17. Distinguish between Formal and Informal organisation (any four
points)
18. A manager is of the view that he is not responsible for the quality of
work that he has delegated to his subordinates . Do you agree?
19. Delegation of authority provides the means where by a manager multiples
himself Commnet.

6 marks
20. Explain the importance of organising as a function of management.
21. Formal organisation is considered better than informal organisation . Do
you agree with this statement? Give reasons.
22. What is meant by Divisional structure of an organisation? Explan any
two advantages and two limitations of it.
23. Decentralisation is an optional policy. Explain why an organisation would
choose to be decentralised.
24. Explain the meaning and process of delegation of authority.

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