Chapter -S(Organlzlng)

once the plans have been laid d · . . so that

. b . own, next step rs to organize resources an a manner
biecttves can e achieved Pl •
an organizational
0
. . •
. .
anning managers are responsible for desagrung
structure .thus in organizing the activities of the organization must be organized in a manner so
that plans can be successfully implemented.

ORGANISIN G IS A MEANS OF TRANSLAT ING PLANS INTO.ACT ION.

Organizing includes th e process of determining ,vhat activities are to be cond~cted, ho~

the activities are to be grouped, ho,v responsibility and authority are to be elegated and
who reports to whom? _ .
Jq:: PROCESS OF ORGANISING:
I " !Identification.and division of work: the or • • to . ,,..
I J ,:: smaller units, each unit of total work is calle ----- ~....... ads • •I
!

J :, •to specialization. The division of work leads • I

: r :, every individual is assigned a job , one cash· ...·~~.. ne

per.son issU;es cheque books, one perso wor
• ] ;) is able to work smoothly.· • ·_ .• :
W] : 2 .Grouping the jobs and ---------=,..,__- s been divided into smaller
-.111rn'I%"'

,. ] tasks then tasks which ....... er. This grouping process is

•1 called department· ... s to specialization. ~epartments can be
• ] ..-. created on s
--
•- I ""'.....,
TERRITORY
•1 PRODUCTS

<; f (Kids rketing, productions) (Textiles, cosmetic~) (East, west, north,

•
l --.south)
.. I .;But most"-··· on ways are:.
,:; (a)Functional ~epart mentation: llll:der this jobs related to same ~ction are grouped under
~ n e department. For e.g all jobs related to production are grouped under production ,department,
.,, ,jobs related to ~ale are grouped sales department and so on.
I .. _.
. .
~b)Divis ional depart mentation: when organization is producing more than one type of •
........,..._.__-:,roducts then they prefer divisional depart mentation, under this jobs related to one product are
~rouped under one department. For example if an organization is producing cosmetics, textiles
~ a n d medicines then jobs related to production , sale and market of cosmetics are grouped under
il •One department and jobs related to textile under one and so on. ._. .
• g3 .•
--
 3 Assigning Duties: Once the department has been formed, each
department is placed under the
charge of an individual called departmental head. Individuals work
ing in different depart~:nts
are assigned jobs according to their skills and qualifications they
are assigned duties by giving
then1 a docu1nent called job description, This document clearly
defines the contents and
responsibilities related to the job.

4Establisbing reporting relationship: Only assigning work

is not enough, each individual
should know from where he has to take orders and to whom he is
answerable, for this authority
and relationship between superiors and subordinates should be clear
ly defined. Such clear
relationship helps to minimize confusions and helps in ·coordinat
ion among various
departments.

IMPORTANCE OF ORGANISING:

1 Benefits of Spe•eialization: Organizing leads to division of wor

is .assigned only one type ofjob on regular basi
repetitively he will gain exp·erience in that area
work lo~d and increase~ productivity.
2 Clarity in working relationships: Int •
different jdbs and the mangers clear!
docume~t called job des~ription • on the written
· job. This job-description hr' as to be done in every
. •.

3 Optimlifil utilizati .
e optimum utilization of human and
materia~source wledge, and expepenc~ and capacity of
people, with V.U.4,.L.-
vance, what they are supposed to do, so it
. tivates employees to put h?- their best.
4 Ad r • zation works in a dynamic en~ironment, change in
t ?\n • e o ill portunity and threat, organizing helps an enterprise to adjust
er mstances ~y modifying·the organization structure, for e.g major job.
or products can be added.
Organizing provides ~tability to enterprise so that it can continue
to survive and grow in spite of
changes.

s Effective Administration: In the organizing function the similar and related jobs
are grouped
under one department which leads to unification of efforts and harm
ony in work. The helps tp
avoid confusion and duplication of wor~. Clarity in working relati
onships makes work m~re
systematic and managing becomes easy. •S
8
 )rganizing reduce. s the. ,vork load oftop management through delegation of
. k
op 1nanagement 1s relieved •from rout·ine wor and can concentrat ,
e on adminis
• npany. •
) 01

sonnel• D 1 tton • . .
6 Devclopn1ent of. per • e ega of aut hority red uces the work load of tn
b
m time to concentrate on strategic i
. . t.1
j,e s to sub ord iQa tes, it giv es the
assigning rou JO
e. Delegati
~ew areas or _gr ow th, and this ma ke·s them more innovative and creativ
find m
o~u nity to sub ord ina tes to utilize their talent and develop-skills to perfor
pre:vides opp k. ·
complex and higher responsibility tas
• g helps 1n • growth and expans•ion 1n • ways
· two
7 Expansion And growth·• org an1•z1n
.
' 1' f • and' proper division of work, comp •
', (') Wi th optimum 1 iza ion of resources
uf
1
in a systematic manner.
' me et challenges and expand their activities
.._ .
structure creates favorable condi •
• (ii) Properly designed organization
an enterpri
: diversification of enterprise; it allows
their c~tome
; product line. This helps to increase
;; and expansion of business.
' 0R©ANI
•
SING STRUCTURE -
.... r\.•.._.+'"..', ~Jft•·"'' e • and operating tasks
""'
,- Organization structure refers
to the fr
hi
r= are per f~rmed, it specifies the
•
rela .
-
r'-' Th e need for an adequat •
.
te ris . henever an enterpns~ gro
'
ws m
•• ;

coordination bec om es difficult du

.

e to
·,·,.

- "'
• size or cdhlplexity,
•

uate organization structure is felt._

IA

ne ~ ~c tio ns or
.. .
with same structure for a lon g ·er
~e.

,-...-.,
• it wil o 1tability of the enterprise.

• It allocat responsibility.
ation.
•it lays down pattern of communic
business.
• It helps in maintain control over . . .
can be
NA GE ME NT : it me ans how many employees·or subordinates
SPAN OF MA r. Wh en
ed by one ma nge r or how ma ny subordinates is under one superio
effectively manag the n the mangers
respon sibility rela tion shi p are established in organizing process
authority and
trol. g5 .
must keep in mind the span of con
Types of organization structure: (a) FU
NCTIONAL (b) DMSIONAL
Functional structure: grouping of jobs of
similar nature as functions and organizing
functions as separate departments creates the major
a functional structure. All department's repo
coordinating head for e.g. Managing Directo rt to a
r.
MANAGING DIRECTOR

I-Iuman Resource Marketin Fi na nc ,~ Production

Suitability (i) When organization is of med

ium size (ii) When organization has single
line or related products. product

(iii) When organization has diverse activiti

es (IV) each activity requires • •
specialization.
. .

A»VAN'F~<;ES:
lSpecialis_ation: Since emphasis is placed
on specific
utilization of manpower as erhplqyees per
forni simil
improve perfo~ance.
2Improves efficiency: Experts are ap~oi -
,6' 1n n:~
...es efficiency of
workers as they get suggestions an
·cr~ase~ efficiency
incre~e~·prbfit: •
-~-,'

3 Minimize: Cost: It le :s to mi •
·, which results in economies ofscale

4 Effecf ..u.,LUJ.i::=.,o --
•
employees easier as they are trained in lim
'

types of ited
o ction. department are given training of pro
duction

5 Better con ion: It promot~s control _and coordination with

because of s· in a department
tasks being performed.
6 Expansion and growth: New departments
can be added without disturbing existing
departments.
 DISADVANTAGES:
' . .
1 Emphasis on departmental obJec hve s: Fun nal stru
ctio cture places more Ie
dep artm ent al obi ect ' h .
• • b'~ect1ves, such practic .
ives t an ove rall or antz atton o es ea
ere
J
org a • . . g
mpires wh
e nizattonal interests are ignored.
2 Difficulty in coordinatio . All. departmental heads may work as per their own wi
this improves coordinatio n.. th10
n Wt the dep artm ent, but it makes interdepartmental coo
difficult.
.
ere st- A fl' . dep artments wh en the mt
3 Conflict of int • con 1ct of interes t may arise among ·
two or mo re department are not same, For e.g sales department wants customer friendly
s •
. h' h. artment.
des 1g~ w tc is not acceptable to production dep
"'1 ' . 1t becomes diff . icult to hold a department respg
...... 4 Difficu lty
. in fixing resp ons1'b'I 1 1ty:
,;,,,.-
. •
• not able to achieve its es
'l l~ orgam. •zation al goa ls are not ac
• company 1s
h'1eved .c.J.Or e.g 1f
es
•:~Ja
ent
n bec om es dif ficult to find out tha t failure was due to production dep
°"' the
it
department.
training of one
V 5 Leads to inflexibility: Employees get
shifted to other dep
which they belong so they cannot be

~ :
""J ..
......
DIVISIONAL S!RUCTURE: Wh~n
org_ani'
product then activities related to one Drc
5illlc
Ol1\l~·tti.g more than one
t(l~;tartment. Thus when
e as divisional
..•.
jobs rel ied to one product are grou ed

~,.
;
~] :'
:-
structure.
.
• ! .• .. - siness units or divisions.
ponsible for p·erformance and he ~njoys
-.. -· • ....
•Each unit is,,..........••,.,.......... • I,.

authority o er ' ••
' I ---•--
(;,,tr .. • ch 'division has functions like produc
tion, purchase,
G-,,1 ... • •
I
\
tend to exists.
in Each division functional st'ructure

:=a-- --. • Each divisio n wv

loss of his division.
~- ... a pro fit cen tre, wh ere the divisional head is ~esponsible for pro
fit and

tl.le
org ani zat ion is pro duc ing soa ps, tex tiles, medicines, cosmetics etc, then all
·For example if oftextile
ted to me dic ine wil l be gro upe d und er medicine department, all activities
activities rela
in textile department and so on.
.
ctu re is suitab le onl y to mu ltip rod uct manufacturing large or g~ tio ns
•Divisional stru
~1
 I BOARD OF DIRECTORS

IManaging Director
Textile department Cosmetic department Medicines department Soaps dep~ment

•production .
•production .
•production •production
•purchase •purchase •purchase •purchase
•marketing •marketing •marketing •marketing
•finance •finance •finance •finance
SUITABILITY: • When more than one product line is to be followed• organ
ization which
requires product specialization •organizations which require each division to
be self con"'-4J·Ll. .__.
under divisional structure each department ~as production, sales and finance
depart....,...,...,~"'
ADVANTAGES: . \\
1 Prod~ct specialization: it leads-to product specialization as all activities r
at~n e ·1d~
are grouped under one department. . V
•.
•
2 Greater accountability: As each product division is
· for its own profit loss, it helps in perfonna:n.ce measure
poor perfonnance.

3 Flexfbility: It promotes·flexibility as each di •sion •• in •

decision n!king.

4 Exp!Olsion. and growth: if o e • e of product then it is easy to

add a new product divisio

5 Quick decis' ndependently, the· divisional manger can

take any dee· •.u.VJ.JLUU j.; tly without consulting other divisional
•mangers, h

1 Departmental co ict· Conflicts may arise among departments with respec

t to distribution
of funds; particular department may maximize the profits at the cost of other
departments.
2 Costly: it leads to increase in cost as e~ch division has its o~ set of simila 4
r functions, thus it
leads to duplication ·of activities. 6 ,S •
V

3.Igno resthorga(.'niza · ·onal manger has complete authon·

tion interests.. o·1v1s1
• . . . . . . • •
div1s10ns ey 1ocu s on their ow prod uct with out thmkmg about organ1zat10
II · t t f th n
overa m eres o e organization is ignored.
• s on
· • s1on
4 Oro aniz ational stru ctur c b
ccom cs com plex: as there are man y d1v1
.
• •on 1tmc • fi ark
multiple•products and within ea, c11,1·1v1s1
. b
r: • • production, 1nance, m
t1ons lake
perfonned
n·n
1
ci•cncc between functional and divisional structure
Basis Fun ctio nal Structure Div ision al Structure
Meaning Grouping of jobs of simi lar Gro upin g ofjobs of one
natu re under one department. product under one
de artment.
Fonnation On the basi s of wor k On the basis of roduets.
Specialization It leads to specialization of It leads to specializadon of
wor k or functional product.
s ecialization.
Responsibility Easy to fix responsibility as
Difficult to fix responsibility
on a particular department. depa rtme nts work
inde ndentl
Managerial development There are less chances for
Managerial development is
easy as mangers perform
overall development as
managers specialize in one multifunctions.
function onl .
Cost Economical s there is no
It is costly as there is
du lication of effort.
du Iication of work.
Coordination It is difficult.
Less more
Autonomy

TYP ES OF ORGANISATION
-- -- -- -- -- -- -. -- -- -- -- -~ -- =- -- -- -- -,
,,- -- --
-- Form al or aniz atio n Info rma l or aniz atio n
•
Inte ract ion amo ng peop le at wor k plac e give
;; It refers to the organization structure which is
rise to a netw ork of social relations~ip
; designed by the man agem ent to achieve
among em_ployees calle d info rma l
_ orga niza tion al goals. it clarifies the authority ••
organization. for exam ple managers and
• and responsibility relationship among superior
subordinates taki ng part in cricket match on
,.; and subordinates. The formal organization can
Sundays or mee ting in ca@tena2f moming .
..._ have either functional or divisional structure
coffee or ches~ rou •.etc.
•
Fea ture s
Features
(i) originates from with in the formal
-. (i)Specifies the relationship among various job
nization as a resu lt of pers onal
positions and makes clear who has to report orga
-
111W

ll'W to whom.
interactions.
(ii)it is a means to achieve organizational (ii)s tand ards of beh avio r are deve lope d by
__ goals as all the rules and procedures required grou p norm s not by offic ial rule s and
are laid down. regulations.
..i.:.:in.:...:d.:...:e:..c..=.e.::n.=d.:..;en=-t=-c=h=an==n:=.e::ls:.....:o:..:f:...:c:.:o:.:m::.::m:.:u:.:n::.:i:.=c=ati==·:.::o!!n~
~:::----s_i_n_c_o_or_d_i_n_at_io_n_am_o_,;n-.v_ar-:io:-:;u~s_---1.~ii:J
SC\
depa11ments.
(iv)it is deliberately designed by top level without specified directions.
management to achieve organizational goals. (iv)it is spontaneous and is not created
(v)more emphasis on work rather than deliberately.
interpersonal relationships. (v)it has no definite structure becoz it is a
complex network of social relationships
Advantaaes among members.
(i)casier to fix responsibility as mutual A<lvanta es
relationships are clearly defined. (i)leads to faster spread of information as
(ii)claritics of roles as each member knows well as quick feedb ck because formal line of
his duties and this avoids duplication of communicatio • not llowed.
efforts. (ii) it help ft fil; ci I needs of
(iii)unity of command is maintained by a empl?ye s, ,14.is • r s s eir job satis!action
established chain of communication. an O s th~ s o be ngingness m the
(iv)it helps in achievement of goals by or a~a t .
clarifying rules and procedures and als •i itYo e ates or • a equacies in the
giving more importance to work. o al r a1 ization there y helps in
(v) it brings stability as empl a hi • ganizational goals ,for e.g
are guided throu h s ecific r le . o ees reaction towards plans and policies
Disadvanta s e tested through the informal network.
(i)because offo Disadvanta es
chain) it lead (i)according to survey 70%> of information
delays in ci~io a •n spread through informal organizational-
(ii)creativ t t m structure are rumors which may mislead the
not employees.
recognized a o~ a y follow the
laid policies. (ii)it may resist any change in the
(iii)it gives more • portance to work to be organization so the management may not be
done rather than interpersonal relationship successful in implementing changes, it may
delay or restrict growth.
among employees
(iv)it does not provide job satisfaction as it (iii)informal groups can be harmful to the
organization if the informal group are
ignores social needs of the employees.
against the organizational interests.
(iv)there is no systematic working as it does
not form a structure for smooth working of the
or anization .

General manager .J
Ji

Production manager - '• '"LL--------,

Sales manager ; Purchase manager
I"
\
" ,,
'' ... ,,
\ I
,,
Production officer '' Sales officer \
.../ ...
'

'
...) f\M

90 A~ w ui U lv
 Delegation: A manager no 111 tt not manage to do
wn, the volume of work ka c~ ~ow capable he is can S
0 ma es it impossibl e tO <l o aII task on h"1s own. o to
organizational goals l,c 11as to dclcgat, l115
• I • .
' e aut mn ty. He has to share his work I
subordinates.
.
.
The process of sharin(0J worl<wit ation or
h subordinates is done through "Deleg
Delegation refers to downwa' 1·d transfer of authority from superior to a subordin
legation helps hout it ,his activities wo
0
et ·icted only t mhaat nagher to. extend his area of operations wit
res 1 ow e can do.
.
• Delega tion is pre .
-requisite bor the efficien t functio ning of the organization. Because 1t enab
. . .
manger to use his time on priority activities.
. . . es them wit • •es to
. h opportumti
s the subord • t , provid
• It also satisfie ma e s need for recogmtton and
develop and show their init ve. iati

GATOR and other person is C.".'f&"~ .....

• The person who delegate is called DELE
DELEGATEE.
Ma nag er divides his wo rk
. .
i-,\-'r
' ~- .....ant d pri ori ty area pf wo rk
Routine and repetitlve nature I .
(Anyone cJ do irrespective of his pos· • n) (
do becoz ofh;s unique position)

The concept of delegation is

Principles of Delegatio :
responsibility assigned: when an emplo
yee is given
~cv
authority to carry out tha t
-, --·~- be given adequate or necessary
au tho rit y= assigned responsibility,
but if

res pon sib ilit y= misuse of authority.

- -- If responsibi 1ty is> tha n aut hor ity

=m ake s person ineffective.
tim e but is not
c; ity to produce 100 units in one wee k
For e.g if a person was given responsibil store
to pur cha se the raw mat eria l, if ther e is no raw material available in the
given.authority not be
he cou ld not com plet e the targ et on time, thu s in this case the wo rke r can
room as a result
not the matching authority to carry on
the
he was giv en onl y resp ons ibil ity and
blamed, because tion ofjob .
h less authority results in non comple
work, thus excess of responsibility wit
A~
 De leg ati on do cs no t me
an Ab dic ati on (es cap ing aw ay
fro m on es res po nsi bil
ity )
This means the manger shall still
accountable for the performance
assigned to his subordinate. This of the task that he has
means that he cannot escape from
seniors even after delegation. It me answerability towards his
ans if subordinate fails to perform
satisfactory manner, then ultimate the delegated task in
responsibility lies with superior.
superior is absolutely responsible So rightly said that the
and accountable for all work delega
ted to the subordinates
Fo r c.g sup po se the dir
ectors of the company manufacturi
manager has delegated the task to ng computers per day. The marke
his sales manger working under him ting
not achieve the target, and in this , the sales manager could
case the marketing manager is res
directors for this failure. The pro ponsible / accountable to the
cess of delegation does not reliev
his own responsibility. e the marketing manager of

3 Delegated authorities can be

taken back and re delegated to
an
Importance of Delegation: De
legation ensures that subordinate
manager and reduces workload of of the
manager and ~. --- .
following benefits n.rr". l·torT ,
it has
1 Effective management : When
routine work they are able .to do
managers del
their work ee om from doing
important matters. time to concentrate on
2 Employees development:
talent, it gives them oppo o get more opportunities to utilize the
ir
complex task and i • ls which will enable them to per
form
makes them be ,,..,...,..,.,, , it helps in preparing future manag
ers as it
.
oy s. e a 10n helps in develo
a sup •or as ping the talents of the employees,
so e as to subordinate it is not when
supe •or st h1 s bo • es, thi task sha ring only' but also shows that
s makes subordinates more commi
improve ht5°n e e level he tted Re spo nsibility of work
feels motivated and try to improve
his work.
4 Facilit es o ganizational gro
wth: in the process of delegation
passing their responsibility and aut when the managers are
hority to the subordinates they kee
and capability of all the subordina p in mind the qualification
tes. This leads to division of work
: very important for or ga ni and specialization which is
za tio ~

' '/ ~.
{f ,: / Anumdeep mctUk,
0"-v
l\1

tkuthut
hkh ht
Relation between authority, responsibility and accountability:

Authority is clclcgated, responsibility is assumed and accountability is imposed.

Responsibility is derived from authority and accountability is derived from responsibility.

Difference between authority responsibility and accountability
Basis Authority Rcsponsibili_ty Accountability
Meaning Power to take Obligation to perform a Answerable for the
decision task output of assigned
Delegation task .
Can be delegated Cannot be fully Cannot be delegated
delegated at all.
Origin Arises from formal Arises from delegation Arises from
position of authority
Flow of direction responsibility. -
Flows downward Flows upward from Flows _upward from
from superior to subordinate to superior subordinate to
subordinate
su_perior
Nature It is power It is duty It is answerability.

CENTRALISATION AND DECENTRALISATION

Centralization: refers to concentration of power or authority in few hands i.e top level an
organization is centralized when the decision making authority is in the hands of top level
management only.

Decentralization: those organizations in which decision making power is shared with lower
level are decentralized organizations. It, means dispersal of authority It refers to delegation
of authority throughout all the levels of organization, thus when decision making powers taken
by lower levels are numerous and important an organization can be called greatly decentralized.
There should be balance between Centralization and Decentralization:

Complete Centralization----Would mean concentration of all decision making functions at the

top level. This would remove the need of management hierarchy.

Complete Decentralization----Would mean delegation of all decisions making power to the

lower levels. This would remove the need for higher positions.

Thus both of the above situations are not possible,Because an organization can never be
centralized or decentralized completely.Important decisions should be centralized and routine
decisions should be decentralized. As an organization grows in size, it tends to move towards
decentralized decision making, because those employees who are directly or closely involved
with certain operations have more knowledge about them then top management~ Thus there
should be balance between both. Thus an organization has characteristics of both
centralization and decentralization. Amandeep Malik
 Rela tion behveen delcgatio
' n anc1 0 cccntralization:
.
I Dece ntral izati on is the t 1011 .
with hvo whe re as in De c~ cn ~ , of delegation, in delegation we mult1p
• _ccn ra 1zat1 0,n the authority is multiplied by many.
1
• J d.
Because systematic dc)c oar1011 t 1<mg •
place at ever y level will resul t m even Y I
authority and responsib" 1 tt' a
dece ntral izati on.
1
Y at every level and resu lt in
· d t
If delegation is restricted tO certam levels only then there will be no com plete ecen
a Iso.

For ioan~r
. um
le if directors give the responsibility to production head
sd~et! annu m and auth orize
to complete the ~ge
him to hire the required workers, decide their salan es
SO,Ok
wor mg con 1 10ns.

production man ager

The p~oduchtion head further shares his responsibility and authority with the
to achieve t e target and select the workers.

1:he productio~i manager shares his authothemrity and responsibility with the supervisors who
directly deal with the workers and authorise to select the workers.

een directors and production head, ~ana gers

This sharin_g of aut~ority and responsibilities betwon of authority at every level automat1cally.
and subordmates wtll result in systematic distributi
ntralisation.
That is why we say systemati~ delegation leads to dece

In delegation the auth ority is shar ed between two persons only, i.e.,_manager ~d subodirerdinate,
le at every level are mvolved, 1.e., ctors
whereas in dece ntral isati on man y peop
production head, manager, subordinates,etc.

Amandeep Malik