ORGANISING(EN)

DEFINE ORGANISING AS A PROCESS:

“Organising is the process of defining and grouping the activities of the enterprise and
establishing authority relationships among them." — Theo Haimman
IMPORTANCE/SIGNIFICANCE OF ORGANISING:The following points highlight
the crucial role that organising plays in any business enterprise:
1. Benefits of Specialisation: It leads to specialisation by a systematic allocation of jobs
resulting in reduced workload and enhanced productivity. Repetitive performance of a
particular work helps a worker to gain experience and get specialized in that area.
2. Clarity in Working Relationships: It leads to clarity in working relationships by
specifying who is to report to whom. This removes ambiguity in transfer of
information and instructions.
3. Optimum Utilization of Resources: The proper assignment of jobs avoids
overlapping of work and also makes possible the best use of resources. It leads to
optimum utilization of resources by avoiding duplication of work and minimizing
wastage of resources and efforts.
4. Adaptation to Change: The process of organising allows the organisation structure
to be suitably modified according to changes in business environment. It thus provides
stability to the enterprise as it can continue to survive and grow in spite of changes.
5. Effective Administration: It helps in effective administration by providing a clear
description of jobs and working relationships. This helps in avoiding confusion and
duplication, and enables proper execution of work.
6. Development of Personnel : It helps in development of personnel by delegation of
work to subordinates. It allows the manager to develop new methods and ways of
performing tasks.
7. Expansion and Growth: New geographical territories can be added to current areas
of operation and this will help to increase customer base, sales and profit. It helps in
expansion and growth by allowing an enterprise to add more job positions,
departments and product lines. 1.
ORGANISING PROCESS
The steps involved in the organising process are:
1. Identification and Division of Work: The first step in the process of organising
involves identifying and dividing the total work to be done into manageable activities
(called jobs) so that duplication of efforts and resources can be avoided and the burden
of work can be shared among the employees.
2. Departmentalisation: Once work has been divided into small and manageable
activities then those activities which are similar in nature are grouped together. This
grouping process called departmentalisation. This facilitates specialisation.
3. Assignment of Duties: Once departments have been formed, each of them is placed
under the charge of an individual. Jobs are then allocated to the members of each
department in accordance to their skills and competencies.
4. Establishing Reporting Relationships: Merely allocating work is not enough
individual should also know who he has to take orders from and to whom he is a The
establishment of such clear relationships helps to create a hierarchical and helps in
coordination amongst various departments.
ORGANISING STRUCTURE
Organisation structure is the outcome of the organising process.
The organisation structure can be defined as the framework within which managerial
and operating tasks are performed.
WHEN STRUCTURE IS REQUIRED?
The need for an adequate organisation structure is felt by an enterprise whenever it
grows in size or complexity. As an organisation grows, coordination becomes difficult
due to the emergence. The of new functions and increase in structural hierarchies.
How is the organisation structure of a firm is shown?
 The organisation structure of a firm is shown in an organisation chart.
 The span of management, to a large extent gives shape to the organizational
structure.
 Span of management refers to the number of subordinates that can be effectively
managed by a superior. This determines the levels of management in the structure. 2.
WHY STRUCTURE IS REQUIRED?
A proper organisation structure is essential to ensure a smooth flow of communication
and better control over the operations of a business enterprise.
Types of Organisation Structure: The two most commonly found forms of
organisation structures are:
(a) Functional Structure. (b) Divisional Structure.
FUNCTIONAL STRUCTURE
Meaning: Functional structure is an organizational structure formed by grouping of
jobs of similar nature according to functions and organising these major functions as
separate departments. A functional structure is an organizational design that groups
similar or related functions/jobs together. For example, a company manufacturing
garments may have separate departments for Production, Marketing, Finance, etc.
(Diagram from NCERT)
Suitability: Functional structure is suitable for those enterprises which have only one
category of products to offer. When the size of the organisation is large, it has
diversified activities and operations require a high degree of specialisation.
Advantages:
(i) It leads to occupational specialisation since emphasis is placed on specific functions.
This promotes efficiency in utilization of manpower.
(ii) It promotes control and coordination within a department because of similarity in
the tasks being performed.
(iii) It increases managerial and operational efficiency resulting in increased profit.
(iv) It lowers cost as it reduces duplication of effort.
(v) It makes training of employees easier as it focuses on a limited range of skills.
(vi) It ensures that different functions get due attention.
Disadvantages:
(i) Creation of functional empires where less emphasis is placed on overall objectives
of the enterprise and more on the objectives pursued by a functional head.
(ii) Inter-departmental conflicts may arise when the interests of two or more
departments are not compatible. For example, the sales department insisting on a
customer friendly design may cause difficulties in production. Such dissension can
prove to be harmful in terms of fulfillment of organizational interest .
(iii) Problems in coordination as information has to be exchanged across functionally
differentiated departments. 3.
(iv) Inflexibility- as people with the same skills and knowledge may develop a narrow
perspective. Functional heads do not get training for top management positions.
DIVISIONAL STRUCTURE
Meaning: Divisional structure is an organisation structure comprising of separate
business units or divisions created on a certain basis e.g. on the basis of different
products produced, etc. For example, a large company may have two divisions, say
Footwear and Garments. Each division is multi-functional because within each
division functions like production, marketing, finance, etc. are performed together to
achieve a common goal. Each division works as a profit center where the divisional
head is responsible for the profit or loss of his division. (Diagram from NCERT)
Suitability: Divisional structure is suitable for those business enterprises where a
large variety of products are manufactured using different productive resources. When
an organisation grows and needs to add more employees, create more departments
and introduce new levels of management, it will decide to adopt a divisional structure.
Advantages:
(i) Product Specialisation helps in the development of varied skills in a divisional head
and this prepares him for higher positions.
(ii) Divisional heads are accountable for profits, as revenues and costs related to
different departments can be easily identified and assigned to them. It also helps in
fixation of responsibility in cases of poor performance.
(iii) It promotes flexibility and initiative because each division functions as an
autonomous unit which leads to faster decision making.
(iv) It facilitates expansion and growth as new divisions can be added without
interrupting existing operations by merely adding another divisional head and staff for
the new product line.
Limitations:
(i) Conflict may arise among different divisions with reference to allocation of funds.
(ii) It may lead to increase in costs since there may duplication activities across
products. Providing each division with separate set of similar functions increases
expenditure.
(iii) It provides managers with the authority to supervise all activities related to a
particular division. Divisional interests may supersede organizational interests.
DIFFERENCE BETWEEN FUNCTIONAL & DIVISIONAL STRUCTURE:
(FROM NCERT) 4.
Informal organisation cannot be altogether eliminated.
It would be in the best interest of the organisation if the existence of such groups is
recognized and the roles that their members play are identified.
 The knowledge of such groups can be used to gather their support and
consequently lead to improved organizational performance
 Such groups can also provide useful communication channels.

Thus, instead of confronting them, the management should skillfully take advantage of
both the formal and informal organisation so that work continues smoothly.

FORMAL ORGANISATION

Formal organisation refers to the organisation structure which is deliberately created

by the management to accomplish a particular task The structure in a formal
organisation can be functional or divisional.

Features:

(i) It is deliberately designed by the top management to facilitate smooth functioning

of the organisation.
(ii) It specifies the relationships among various job positions. This clarifies who has to
report to whom.
(iii) it places more emphasis an work rather than interpersonal relationships.
(iv) It is a means to achieve the objectives as it lays down rules and procedures w their
achievement.
(v) It coordinates the efforts of various departments.

Advantages:

(i) It is easier to fix responsibility since mutual relationships are clearly defined.
(ii) It avoids duplication of effort since there is no ambiguity in the role that each
member has to play.
(iii) it maintains unity of command through an established chain of command.
(iv) It leads to accomplishment of goals by providing a framework for the operations to
be performed.
(v) It provides stability to the organisation because there are specific rules to guide
behaviour of employees.
5.
Limitations:
(i) Procedural delays-delay in decision-making because communication flows through
scalar chain.
(ii) Fails to recognize creative talent of employees since it does not allow any
deviations from rigidly laid down policies.
(ii) Non-fulfillment of social needs of employees because it places more emphasis on
structure and work.

INFORMAL ORGANISATION
Informal organisation is a network of personal and social relations within the formal
organisation arising spontaneously as people associate with one another.
e.g., managers and subordinates taking part in cricket matches.

Features:
(i) It originates from within the formal organisation as a result of personal interaction
among employees.
(ii) it emerges spontaneously and is not deliberately created by the management.
(iii) The standards of behaviour evolve from group norms.
(iv) Independent channels of communication are developed by group members.
(v) It has no definite structure or form because it is a complex network of social
relationships among members.

Advantages:
(i) It leads to faster spread of information as well a quick feedback since fixed lines of
communication are not followed.
(ii) It fulfills the social needs of the members. This enhances their job satisfaction since
it gives them a sense of belongingness in the organisation.
(iii) It contributes towards fulfillment of organizational objectives by compensating for
adequacies in the formal organisation. For example, employees' reactions towards
plans and policies can be tested.

Limitations:
(i) It may spread rumours which may work against the interest of the formal
organization.
(ii) It may lead to resistance to change which may delay or restrict growth.

6.
(iii) It pressurizes members to conform to group norms which may be against
organizational interest.

DIFFERENCE BETWEEN FORMAL AND INFORMAL ORGANISATION(FROM NCERT)

CONCEPT AND ELEMENTS OF DELEGATION

(INTRODUCTION OF DELEGATION from NCERT)

Meaning: Delegation is the transfer of authority from superior to subordinate,

entrustment of responsibility and creation of accountability for performance which
helps a manager to extend his area of operations. Elements of Delegation are:

Authority: It refers to the right of an individual to command his subordinates and to

take action within the scope of his position.
 Origin-It arises from formal position.
 Flow-Authority flows from top to bottom, i.e. the superior has authority over the
subordinate.
 Delegation-Can be delegated.

2. Responsibility: It refers to the obligation of a subordinate to properly perform the

assigned duty.
Origin-it arises from delegated authority.
Flow-it flows upwards, i.e. a subordinate will always be responsible to his superior.
Delegation-Cannot be entirely delegated

3. Accountability: It refers to the answerability for the final outcome of the assigned
task.
Origin-it arises from responsibility.
Flow-it flows upwards, i.e. a subordinate will be accountable to a superior for
satisfactory performance of work.
Delegation- Once authority has been delegated and responsibility accepted, one cannot
deny accountability. It cannot be delegated.

Delegation does not mean abdication.

The manager shall still be accountable for the assigned task. Moreover, the authority
granted to a subordinate can be taken back and redelegated to another person.
7.
IMPORTANCE OF DELEGATION
1. Effective management: Delegation helps in effective management as the managers
get more time to concentrate on important matters Freedom from doing routine work
provides them with opportunities to excel in new areas.

2. Employee development: Effective delegation helps in development of employees as

the employees get more opportunities to utilize their talent. This allows them to
perform complex tasks and assume those responsibilities which will improve their
career prospects.

3. Motivation of employees: When a superior entrusts subordinate with a task, it is not

merely the sharing of work but involves trust on the superior’s part and commitment
on the part of the subordinate. It helps to motivate employees as the employees feel
encouraged and try to improve their performance further.

4. Facilitation of growth: It facilitates growth by providing a ready workforce to take

up leading positions in new ventures. Trained and experienced employees are able to
play significant roles in the launch of new projects.

5. Basis of management hierarchy: Delegation of authority establishes superior-

subordinate relationships, which are the basis of hierarchy of management. It is the
degree and flow of authority which determines who has to report to whom.

6. Better coordination: Elements of delegation, namely, authority, responsibility and

accountability help to define powers, duties and answerability related to various
positions in an organisation. This helps in better co-ordination by avoiding
overlapping of duties and duplication of effort.

CONCEPT OF DECENTRALISATION
Decentralization refers to systematic delegation of authority through all the levels of
management and in all the departments except that which can be exercised only at
central points. Decentralisation implies selective dispersal of authority and believes that people
are competent, capable and resourceful it recognises the decision-maker's need for autonomy.
The management, however, needs to carefully select those decisions which will be
pushed down to lower levels (operational decisions) and those that will be retained for
higher levels (major policy decisions). It can lead to organisational disintegration if the
departments start to operate on their own guidelines which may be contrary to the
interest of the organisation. 8.
DIFFERENCE BETWEEN DELEGATION AND DECENTRALISATION
(FROM NCERT)

IMPORTANCE OF DECENTRALISATION

1. Relief to the top management: It gives relief to the top management as, when the
subordinates are given the freedom to act, the top management gets more time to
devote on important policy decisions rather than handling operational decisions.

2. Develops initiative amongst subordinates: It develops initiative amongst

subordinates by promoting self reliance and confidence among them. This is because
when lower managerial levels are given freedom to take their own decisions they learn
to depend on their own judgement.

3. Develops managerial talent for the future: it develops managerial talent for the
future by giving the subordinates a chance to prove themselves, thus, creating
reservoir of qualified manpower to fill up challenging positions in future.

4. Facilitates growth: It facilitates growth by fostering competition amongst the

departments leading to increase in productivity, thereby generating to higher profits
which can be used for growth and expansion.

5. Quick decision-making: It helps in quick decision making since decisions are taken
at the points of action. There is no requirement for approval from many levels. There
are also less chances of information getting distorted as it doesn't have to go through
many levels.

6. Better control: It leads to better control by evaluating performance at each level of

management. The departments can be held accountable for their results. Feedback
from all levels helps to analyse variances and improve operations.

9.