ORGANIZING

DEFINITION:

Organizing is the process of identifying and grouping of work to be

performed, defining and delegating responsibility and authority and
establishing relationship for the purpose of enabling people to work
effectively together in accomplishing the objectives.

NEED FOR ORGANIZING:

1. Allocation of resources: -- Organizing helps to allocate the

resources available to various activities and ensure smooth
functioning of all the departments in the organization.
2. Effective communication: -- formal and structured
communication from top to bottom and vice - versa can be
carried out effectively that helps the employees for various
interactions in the organization.
3. Division of work: -- Logical and clear division of work can be
done and delegation of authority will become easy. Every
employee will know what he is expected to do in the
organization.
4. Discipline: -- Discipline among all the levels of the employees
can be achieved easily by the organizing system in the
organization.

REQUIREMENTS OF ORGANIZING

1. Clear cut objectives

2. Time frame to achieve those objectives
3. Information about resources required
4. Grouping of activities
5. Assigning duties and responsibilities
6. Strong relationships

IMPORTANCE OF ORGANIZING

1. Achieving organizational objectives:-

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 Organizing helps the management to choose the right path to
achieve the achieve the objectives within defined time frame
with the resources available.

2. Proper and easy administration:-

The process of organizing makes a clear mention of each and
every activity of every manager and also of their extent of
authority. It helps to avoid delays, avoid duplication of work,
increases efficiency. Thus makes administration easier.
3. Optimum use of various resources :-
Under the process of organizing the entire work is divided into
various small activities. There is a different employee
performing every different job. Consequently, there is optimum
utilization of all the available resources (e.g., material,
machine, financial, human resource, etc.) in the organization.
4. Better arrangement of manpower and material:-
Organizing function acts as a guide to allocate correct
proportion of manpower and material to have the best output
of product or service.
5. Development of Personnel:-
Delegation of authority is an important part of organizing. By
delegating the routine the managers can concentrate to
develop new methods and ways of performing job. It gives
them time to innovate new technologies and areas for growth
of the companies
6. Smooth co-ordination of activities:-
The organizing function establishes relation between different
departments keeping in mind the co-ordination among
different departments. By bringing clarity in working
relationship administrative efficiency improver.
7. Adoption to change:-
Whenever the changes take place in the business environment
then with the help of organizing function these changes can be
adopted systematically because organizing function creates
different departments and group related activities under each
department.
8. Growth and success of the business:-
Good organizing system helps the organization to grow,
expand and diversify the enterprise as there is clarity about
flow of authority which facilitates decision making
9. Strong working relationships:-
In the organizing function it is clearly defined that what all and
how much power and authority is enjoyed by different

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 individuals or managers. Each manager knows very clearly to
whom he can give order and from whom he has to receive the
order. The superior-subordinate relation is clearly defined in
organizing.

STEPS OR PROCESS OF ORGANIZING

1. The top management fixes the common objectives of the

organization
2. Identification of all activities which are required to achieve the
objectives
3. Grouping of similar activities and assign to individual
departments
4. Defining the responsibilities of all staff members (employees
and managers)
5. Delegate authority to staff members
6. Establish relationship between superior and subordinate
7. Provide all necessary resources to the staff to achieve the
objectives
8. Co-ordination of efforts of various departments to be directed
properly to achieve the organizational objectives

TYPES OF FORMAL ORGANIZATIONS

1. Line organization
2. Line and Staff organization
3. Functional Organization
4. Matrix Organization

Line Organization
Characteristics:

• Oldest forms of organizational structure

• Line of authority flows down vertically from top to bottom
• Unity of command is maintained in straight line
• Every person is in-charge of all employees under him and he is
accountable to his superior only.

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Merits:
• Simplicity – it is most simplest form of organization and easy
to implement in the organization
• Discipline – discipline can be maintained easily and controlled
effectively because of unity of command
• Prompt decisions—as the authority lies with top
management or manager to whom authority is delegated, it is
easy to take decisions
• Orderly communication—communication flows smoothly
from top to bottom by providing line of command
• Easy supervision—as all the departments are managed by
one manager and all managers by top management it
becomes easy to have supervision on all levels of employees

Demerits:
• Lack of specialization—Line managers may not be
specialized to perform all the activities. Changes in business
may need people who are specialized at certain tasks , but line
managers may not be able to acquire all specializations
• Absence of conceptual thinking—as people are busy with
administrative work, the time required to be spent for
conceptual thinking or creative and innovative ideas is very
less for the management people
• Autocratic approach—as the decision making power lies only
with top management or department heads, their decisions are
implemented ignoring human values and needs
• Problems of co-ordination—it becomes difficult for the line
managers coordinate all the activities of the department(both
internally and with other departments), maintain peace and
harmony among all the employees of the department

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 Line and Staff Organization
Characteristics:

• Line managers give orders to subordinates and work to fulfill

organizational objectives
• Staff specialists have rich knowledge in their respective areas
• Staff people recommend ideas to line people, but don’t have
authority to enforce their preferences
• Staff people supplement line managers

Merits:
• Line managers get benefit of the specialists’ advice on all
important tasks
• Specialized advices will be useful to improve quality of
product/service
• Line managers are relaxed from non-core activities
• Management and line managers can concentrate on skill
development
• More flexibility as staff specialists can be added o the line
managers at various levels of the organization
• Strong relationship between line and staff personnel
Demerits:
• Complex organization structure to understand and maintain
• Frictions in line and staff personnel relationships due to
difference in opinions of the line and staff employees
• Line managers are more dependent on staff for special advices

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 Functional Organization
Characteristics:

• Activities of the organization are divided into various functions

like R&D, Production, Marketing, Human Resources etc
• Each functional area will have one executive as in- charge who
will be responsible for all the activities of the respective
departments.
• Functional head have full authority over the unit irrespective of
level of operation
• Limited span of control – as the functional heads can’t take
decisions in matters related to other departments

Merits:
• High specialization – in this type of structure every
employees gets expert guidance of several specialists
• Clarity in functioning -- Segregating the workforce according
to function clarifies organizational responsibility and allocation
of tasks. This tends to eliminate duplication of assignments
that waste time and effort and makes it easier for
management to direct work to appropriate employees.
• Control and co-ordination over all functional tasks -- As
each supervisor is an expert in his area of work, co-ordination
of various activities, supervision and control in the functional
area will be better
• Optimum utilization of resources-- The whole work process
is segregated into functions and the specialists in the field take

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 care of it. Hence, there is no work burden to executives. This
leads to optimum utilization of all resources including human
resources.
Demerits:
• Need more co-ordination among various functional areas of the
organization
• Slow decision making -- Decision problem involving several
specialists cannot be taken quickly as consultation of all
functional managers is required
• Indiscipline among the employees -- It violates the
principle of unity of command as a person received orders
from several specialists. It leads to conflict and poor discipline

Matrix organization
Characteristics:
• 2D structure of organization
• Project managers are appointed to co-ordinate activities of the
project
• Personnel are drawn from respective functional departments
• Functional staff have 2 bosses (administrative head and
project manager)

Merits:
• Operational freedom – Employees have freedom to operate
on 1 project at a time
• More flexibility – It is more flexible than other types of
organizations
• Focuses on end results -- It provides motivation to the
project staff as they can focus directly on the completion of a
particular project

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 • More professional in work – It provides an environment in
which professionals can test their competence and make
maximum contributions
• Better resource co-ordination -- It helps to focus attention,
talent and resources on single project individually which
facilitates better planning and control
• Effective communication – The communication is more
effective as every manager interacts with employees involved
in the project to give clear information about the project

Demerits:
• Need high level of co-ordination between project managers
and functional managers
• Difficult to define authority and responsibility suiting
both functional and project management
• Employee may be de-motivated due to internal conflicts
between the managers in choosing the employees for a project
• Team members have to report to 2 heads and leads to
heavy pressure of work

INFORMAL ORGANIZATION
Characteristics:
• Its members are joined together to satisfy their personal needs
• Dynamic in nature
• It involves members from various organizational levels
• It is affected by relationship outside the firm
• certain people are assigned greater importance than others by
the informal group

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Merits:
 Fulfillment of social needs -- It meets social needs of the
members and hence results in a sense of belongingness
among them
 Influence on productivity -- It has a powerful positive
influence on the productivity and job satisfaction
 Fast communication of information among the members as
they do not follow scalar chain (grapevine style of
communication is adapted)
 Fulfillment of organizational goals -- It is very difficult for
management to bring changes in the organization if the
informal organization opposes them. Such resistance may
restrict growth of the organization
Demerits:
 Resistance to change -- It is very difficult for management to
bring changes in the organization if the informal organization
opposes them. Such resistance may restrict growth of the
organization
 Create rumors -- All the persons in an informal organization
talk carelessly and sometimes a wrong thing is conveyed to
the other person which may bring in horrible results
 Lack of specialization -- It is based on the mutual
relationships rather than on division of work as anybody can
talk to any person in any department with regard to any topic.
Hence, specialization is not possible

BASIS FOR
FORMAL INFORMAL
COMPARIS
ORGANIZATION ORGANIZATION
ON

An organization type inAn organization formed

which the job of eachwithin the formal
member is clearly defined,organization as a network of
Meaning whose authority,interpersonal relationship,
responsibility andwhen people interact with
accountability are fixed iseach other, is known as
formal organization. informal communication.

Deliberately by top
Creation Spontaneously by members.
management.

Purpose To fulfill, the ultimateTo satisfy their social and

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BASIS FOR
FORMAL INFORMAL
COMPARIS
ORGANIZATION ORGANIZATION
ON

objective of the
psychological needs.
organization.

Stable, it continues for a

Nature Not stable
long time.

Communica
Official communication Grapevine
tion

Control
Rules and Regulations Norms, values and beliefs
mechanism

Focus on Work performance Interpersonal relationship

Members are bound by

Authority All members are equal.
hierarchical structure.

Size Large Small

DEPARTMENTATION
Meaning and usefulness
• Grouping of similar activities of the business into small units
to facilitate better administration
• Useful to fix responsibilities
• Managers of the departments have power to take certain
decisions
• Increases operating efficiency

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 • Evaluation of performance is easier

Types of Departmentation
• Departmentation by Functions
• Departmentation by Product/Service
• Departmentation by Region
• Departmentation by Customers
• Departmentation by Process

Departmentation by Functions
This method refers to grouping of activities of the organization into
major functional departments like production, marketing, finance,
human resources etc.

Advantages:
• Specialization
• Better coordination
• Effective usage of resources
Disadvantages:
• Over load
• Fail to see organization as a whole

Departmentation by Product/Service
In this method, a separate department is formed for each and every
product or service developed by the organization. All these
departments will have the functional departments again to handle
the functional requirements.

Advantages:
• Better product knowledge
• Better customer service
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 • Easy performance evaluation
• Expansion of product line
• Better coordination and control
Disadvantages:
• Extra cost to maintain sales force
• Duplication of activities
• Need more managerial persons

Departmentation by Region
In this method, activities are grouped area wise and assigned to a
manager. This is mostly adopted by the large organizations which
are spread geographically in its operations.

Advantages:
• Control over local markets
• Effective control and coordination
• Exploration of opportunities
Disadvantages:
• More overhead cost
• Costly in maintain
• Lack of communication
• Duplication of activities

Departmentation by Customers

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In this method, Departmentation is done on the basis of the
customers who have different needs of product or service from the
organization.

Advantages:
• Better service to customers
• Earn goodwill
• Can know the needs of customer
• Promotes specialization
Disadvantages:
• Lack of co-ordination
• Under utilization of resources

Departmentation by Process
In this method, Departmentation is done on the base of the process
that is followed for producing a product or service.

Advantages:
• Better maintenance of equipment
• Economy in operation
• More suitable for manufacturing organizations

Disadvantages:
• Costly
• Need more space and capital
• Inefficiency in 1 process may affect other processes

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 DELEGATION OF AUTHORITY

• It is a process of sharing work and authority between manager

and his/her sub-ordinate
• It enables to assign the work and delegate them with adequate
authority to do it.

Need for delegation

1. Reduces work load to managers -- With the process of

delegation the managers can pass all their routine work to
the subordinates and concentrate on important work .
2. Builds superior- subordinate relations – the delegation of
authority and responsibility is done between superior and
subordinate only when they have mutual trust on each other.
This helps to build strong relationship between them.
3. Motivates subordinates – because of delegation of
authority and responsibility the subordinates develop the
feeling of belongingness and trust which is shown to them
by their superiors. Some employees can be motivated by
such kind of non-financial incentives.
4. Develops managers -- Delegation help in making better
future managers by giving them chance to use their skills, gain
experience of work related to higher job position.
5. Improves managerial effectiveness – The manager who
delegates can work much better than the one who does not
delegate, as he/she can concentrate on important matters and
take appropriate decisions timely.

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 6. Overall organizational growth – The division of work is
done at all levels of management due to delegation of
authority , which increases the efficiency levels that in turn
enables the organization to grow , expand or diversify.

Steps in Delegation

1. Determination of expected results – it is essential to

delegate authority to a manager is adequate enough to
accomplish the results expected. The results expected must
bane clearly defined by the superior to subordinate.
2. Assignment of duties – the duties to be done by an
employee to whom delegation is made must be clear with
complete information about the set of tasks to be done
3. Authorization for action – granting of permission to take
actions and decisions related to the work, in order to get the
work done is necessary. This also sets the limits to the
subordinate to work.
4. Creation of obligation – the last step is to create obligation on
part of the subordinate for satisfactory performance of the
assignment given to him/her.

Difficulties in delegation

On part of Superior
• Lure for authority – A manager may not delegate due to lure
for authority. He thinks that if he delegates, his position or
importance in the organization may reduce.
• Lack of trust in subordinate – Manager may not have
confidence and trust on the subordinate about the abilities,
capacity and dependability to accomplish an assignment.
• Lack of fear of exposure – If a manager is weak, he may
hesitate to delegate authority due to fear of exposure of his
faulty work methods and procedures.
• Lack of control -- Where manager does not establish
adequate controls nor has no means of knowing the use of
authority, he may hesitate to delegate the authority.

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On part of Subordinate
• Lack of self-confidence -- If a subordinate finds it easier to
ask the boss for taking decisions while tackling problems, he
may avoid accepting authority even though the boss may be
prepared to delegate it
• Dependency on boss -- If a subordinate finds it easier to ask
the boss for taking decisions while tackling problems, he may
avoid accepting authority even though the boss may be
prepared to delegate it
• Fear of criticism -- If a subordinate fears that he will be
criticized even for a small mistake, he will shirk from accepting
authority
• Unclear delegation -- Inadequacy of information and lack of
resources are other bottlenecks act as a hindrance in the way
of accepting authority by the subordinates

CENTRALIZATION AND DECENTRALIZATION

Centralization:
• It refers to concentration of authority with top management
and little/no delegation to lower levels of Management
• Planning and decision making are done by top-management
Decentralization:
• It refers to dispersion of authority, responsibility and
accountability to lower levels of management for decision
making and for end result.

Characteristics of Centralization and Decentralization

• Centralization • Decentralization
• Authority lies only with top • Dispersion of authority to
management various levels of
• Slow decision making management
• Leadership style • Faster decision making
• Vertical flow of • Sharing of responsibility
communication from top to • Open and free flow of
bottom communication
• Top management alone • Multiple persons are
takes the decisions involved in decision making
• Suitable for small • Suitable for large size
organizations organization

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Basis for Delegation Decentralization
comparison
Meaning Delegation means Decentralization is the final
handing over an outcome achieved, when
authority from one the delegation of authority
person of high level is performed systematically
to the person of low and repeatedly to the
level lowest level
Authority Authority is shared Both are delegated to the
and among levels of lower levels of
Responsibilit management. management or
y Responsibility lies subordinates
with managers and
cannot be delegated
Accountabilit Superiors are Department heads are
y accountable for the accountable for the acts of
acts done by the concerned department
subordinates.

Requirement Yes, for all No, it is an optional

organization philosophy which may or
delegation of may not be adopted by the
authority is very organization.
necessary
Liberty of Subordinates do not A substantial amount of
Work have full liberty freedom is there

Control The ultimate control The overall control vests

is the hands of with top management and
superior. delegates authority for day
to day control to
departmental heads.

Relationship Creates superior- A step towards creation of

subordinate semi-autonomous units.
relationship.

Freedom of Very little freedom to Considerable amount of

Action the subordinates freedom

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Withdrawal Can be taken back It is a policy of the
organization and decision
lies with top management

SPAN OF CONTROL

• The number of people who report to one manager in a

hierarchy
• The more people under the control of one manager the wider
the span of control
• Less means a narrower span of control

Types of span of control

• Narrow span of control

• Wide span of control

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