Organising

Dr. Sanchayan Mukherjee

B.M.E. (1st Class Hons.), M.E.(Distinction), M.I E., F.A.E., Ph.D. (Engineering)
Member of Faculty
Department of Mechanical Engineering
Kalyani Government Engineering College
Kalyani – 741235, Nadia, West Bengal, India
 Concepts of Organizing

The working relationships — vertical and horizontal associations

between individuals and groups — that exist within an
organization affect how its activities are accomplished and
coordinated. Effective organizing depends on the mastery of
several important concepts: work specialization, chain of
command, authority, delegation, span of control, and
centralization versus decentralization. Many of these concepts
are based on the principles developed by Henri Fayol.
 Formal Organisation
The formal organisation refers to the structure of jobs and positions
with clearly-defined functions and relationships as prescribed by the
top management. This type of organisation is bound by rules, systems
and procedures and is deliberately built by the management to
accomplish organisational goals. But the degree of its success depends
on the attitudes and capacities of the people within the organisation.
The formal organisation is built around the key pillars of
division of labour, scalar process, structure and span of control. These
may also be called the principles of formal organisation. Its structure is
designed to enable its members to work together for accomplishing
common goals. An individual should adjust himself to the formal
organisation.
According to Chester Bernard, “Formal Organisation is a
system of consciously coordinated activities or forces of two or more
persons.”
Formal organisation is deliberately impersonal and is based on
the ideal relationship between persons in terms of authority and
responsibility.
 Informal Organisation

Informal organisation refers to the relationships between people in an

organisation based not on procedures and regulations but on personal
attitudes, whims, prejudices, likes, dislikes, etc. It arises from the personal
and social relations of the people which cut across formal channels to
communicate with one another. Sometimes, it is afflicted with rumours and
offers resistance to the new ideas of management. Following are the vital
features of informal organisation:
1. It arises spontaneously.
2. Its formation is a natural process.
3. It reflects human relationships.
4. Its membership is voluntary.
5. It is based on common taste, whims, prejudices, etc.
Formal Organisation vs. Informal Organisation
 Work Specialization
One popular organizational concept is based on the fundamental
principle that employees can work more efficiently if they're allowed
to specialize. Work specialization, sometimes called division of labor, is
the degree to which organizational tasks are divided into separate jobs.
Employees within each department perform only the tasks related to
their specialized function.
When specialization is extensive, employees specialize in a
single task, such as running a particular machine in a factory assembly
line. Jobs tend to be small, but workers can perform them efficiently.
By contrast, if a single factory employee built an entire automobile or
performed a large number of unrelated jobs in a bottling plant, the
results would be inefficient.
Despite the apparent advantages of specialization, many
organizations are moving away from this principle. With too much
specialization, employees are isolated and perform only small, narrow,
boring tasks. In addition, if that person leaves the company, his
specialized knowledge may disappear as well. Many companies are
enlarging jobs to provide greater challenges and creating teams so that
employees can rotate among several jobs.
 Chain of Command
The chain of command is an unbroken line of authority that links all persons in an organization and
defines who reports to whom. This chain has two underlying principles: unity of command and scalar
principle.
Unity of command: This principle states that an employee should have one and only one supervisor to
whom he or she is directly responsible. No employee should report to two or more people. Otherwise,
the employee may receive conflicting demands or priorities from several supervisors at once, placing
this employee in a no-win situation.
Sometimes, however, an organization deliberately breaks the chain of command, such as
when a project team is created to work on a special project. In such cases, team members report to
their immediate supervisor and also to a team project leader. Another example is when a sales
representative reports to both an immediate district supervisor and a marketing specialist, who is
coordinating the introduction of a new product, in the home office.
Nevertheless, these examples are exceptions to the rule. They happen under special
circumstances and usually only within a special type of employee group. For the most part, however,
when allocating tasks to individuals or grouping assignments, management should ensure that each has
one boss, and only one boss, to whom he or she directly reports.
Scalar principle: The scalar principle refers to a clearly defined line of authority that includes all
employees in the organization. The classical school of management suggests that there should be a
clear and unbroken chain of command linking every person in the organization with successively higher
levels of authority up to and including the top manager. When organizations grow in size, they tend to
get taller, as more and more levels of management are added. This increases overhead costs, adds
more communication layers, and impacts understanding and access between top and bottom levels. It
can greatly slow decision making and can lead to a loss of contact with the client or customer.
 Authority

Authority is the formal and legitimate right of a manager to

make decisions, issue orders, and allocate resources to
achieve organizationally desired outcomes. A manager's
authority is defined in his or her job description.
Organizational authority has three important
underlying principles:
• Authority is based on the organizational position, and
anyone in the same position has the same authority.
• Authority is accepted by subordinates. Subordinates
comply because they believe that managers have a
legitimate right to issue orders.
• Authority flows down the vertical hierarchy. Positions at
the top of the hierarchy are vested with more formal
authority than are positions at the bottom.
 Types of Authority
• Line authority gives a manager the right to direct the work of his or her
employees and make many decisions without consulting others. Line
managers are always in charge of essential activities such as sales, and
they are authorized to issue orders to subordinates down the chain of
command.
• Staff authority supports line authority by advising, servicing, and assisting,
but this type of authority is typically limited. For example, the assistant to
the department head has staff authority because he or she acts as an
extension of that authority. These assistants can give advice and
suggestions, but they don't have to be obeyed. The department head may
also give the assistant the authority to act, such as the right to sign off on
expense reports or memos. In such cases, the directives are given under
the line authority of the boss.
• Functional authority is authority delegated to an individual or department
over specific activities undertaken by personnel in other departments.
Staff managers may have functional authority, meaning that they can issue
orders down the chain of command within the very narrow limits of their
authority. For example, supervisors in a manufacturing plant may find that
their immediate bosses have line authority over them, but that someone
in corporate headquarters may also have line authority over some of their
activities or decisions.
Why would an organization create positions of functional authority?
After all, this authority breaks the unity of command principle by
having individuals report to two bosses. The answer is that functional
authority allows specialization of skills and improved coordination. This
concept was originally suggested by Frederick Taylor. He separated
“planning” from “doing” by establishing a special department to
relieve the labourer and the foreman from the work of planning. The
role of the foreman became one of making sure that planned
operations were carried out. The major problem of functional
authority is overlapping relationships, which can be resolved by clearly
designating to individuals which activities their immediate bosses have
authority over and which activities are under the direction of someone
else.
 Delegation

A concept related to authority is delegation. Delegation is the

downward transfer of authority from a manager to a
subordinate. Most organizations today encourage managers
to delegate authority in order to provide maximum flexibility
in meeting customer needs. In addition, delegation leads to
empowerment, in that people have the freedom to contribute
ideas and do their jobs in the best possible ways. This
involvement can increase job satisfaction for the individual
and frequently results in better job performance. Without
delegation, managers do all the work themselves and
underutilize their workers. The ability to delegate is crucial to
managerial success. Managers need to take four steps if they
want to successfully delegate responsibilities to their teams.
 Steps of Delegation
1. Specifically assigning tasks to individual team members.
The manager needs to make sure that employees know that they are ultimately responsible
for carrying out specific assignments.
2.Giving team members the correct amount of authority to accomplish assignments.
Typically, an employee is assigned authority commensurate with the task. A classical principle
of organization warns managers not to delegate without giving the subordinate the authority
to perform to delegated task. When an employee has responsibility for the task outcome but
little authority, accomplishing the job is possible but difficult. The subordinate without
authority must rely on persuasion and luck to meet performance expectations. When an
employee has authority exceeding responsibility, he or she may become a tyrant, using
authority toward frivolous outcomes.
3.Making sure that team members accept responsibility.
Responsibility is the flip side of the authority coin. Responsibility is the duty to perform the
task or activity an employee has been assigned. An important distinction between authority
and responsibility is that the supervisor delegates authority, but the responsibility is shared.
Delegation of authority gives a subordinate the right to make commitments, use resources,
and take actions in relation to duties assigned. However, in making this delegation, the
obligation created is not shifted from the supervisor to the subordinate — it is shared. A
supervisor always retains some responsibility for work performed by lower-level units or
individuals.
4.Creating accountability.
Team members need to know that they are accountable for their projects. Accountability
means answering for one's actions and accepting the consequences. Team members may
need to report and justify task outcomes to their superiors. Managers can build accountability
into their organizational structures by monitoring performances and rewarding successful
outcomes.
 Difficulty in Accomplishing the Steps of Delegation
• Delegation requires planning, and planning takes time. A manager may say,
“By the time I explain this task to someone, I could do it myself.” This
manager is overlooking the fact that the initial time spent up front training
someone to do a task may save much more time in the long run. Once an
employee has learned how to do a task, the manager will not have to take the
time to show that employee how to do it again. This improves the flow of the
process from that point forward.
• Managers may simply lack confidence in the abilities of their subordinates.
Such a situation fosters the attitude, “If you want it done well, do it yourself.”
If managers feel that their subordinates lack abilities, they need to provide
appropriate training so that all are comfortable performing their duties.
• Managers experience dual accountability. Managers are accountable for their
own actions and the actions of their subordinates. If a subordinate fails to
perform a certain task or does so poorly, the manager is ultimately
responsible for the subordinate's failure. But by the same token, if a
subordinate succeeds, the manager shares in that success as well, and the
department can be even more productive.
• Finally, managers may refrain from delegating because they are insecure
about their value to the organization. However, managers need to realize that
they become more valuable as their teams become more productive and
talented.
 Span of Control
Span of control (sometimes called span of management) refers to the number of
workers who report to one manager. For hundreds of years, theorists have
searched for an ideal span of control. When no perfect number of subordinates
for a manager to supervise became apparent, they turned their attention to the
more general issue of whether the span should be wide or narrow.
A wide span of management exists when a manager has a large number of
subordinates. Generally, the span of control may be wide when
• The manager and the subordinates are very competent.
• The organization has a well-established set of standard operating procedures.
• Few new problems are anticipated.
A narrow span of management exists when the manager has only a few
subordinates. The span should be narrow when
• Workers are located far from one another physically.
• The manager has a lot of work to do in addition to supervising workers.
• A great deal of interaction is required between supervisor and workers.
• New problems arise frequently.

It may be kept in mind that the span of management may change from one
department to another within the same organization.
 Determination of Span of Management

In 1953, V. A. Graicunas, a French management consultant, suggested the fixation

of number of subordinates based on a mathematical calculation. Number of
superior-subordinate relationships increases geometrically with the increase in
number of subordinates.
Direct single relationships: These relationships arise from the direct individual
contacts of the superior with his subordinates. For example, if X supervises Y and
Z, there will be two direct single relationships, e.g., X to Y and X to Z.
Direct group relationships: These relationships arise between the superior and his
subordinates in all possible combinations. In the above example, X, Y and Z will
have the following direct groups: X to Y with Z and X to Z with Y. In other words,
depending on the need of the situation, X may consult Y with Z in attendance or
he may consult Z with Y in attendance.
Cross relationships: These relationships arise on account of mutual interaction of
subordinates working under the common superior. In the above example, two
cross relationships can take place between Y and Z, e.g., Y with Z and Z with Y.
 Centralization versus Decentralization

• The general pattern of authority throughout an

organization determines the extent to which that
organization is centralized or decentralized.
• A centralized organization systematically works to
concentrate authority at the upper levels. In a
decentralized organization, management consciously
attempts to spread authority to the lower organization
levels.
 Factors that can Influence the Extent to Which a Firm is
Centralized or Decentralized
• The external environment in which the firm operates. The more complex and
unpredictable this environment, the more likely it is that top management will
let low-level managers make important decisions. After all, low-level managers
are closer to the problems because they are more likely to have direct contact
with customers and workers. Therefore, they are in a better position to
determine problems and concerns.
• The nature of the decision itself. The riskier or the more important the
decision, the greater the tendency to centralize decision making.
• The abilities of low-level managers. If these managers do not have strong
decision-making skills, top managers will be reluctant to decentralize. Strong
low-level decision-making skills encourage decentralization.
• The organization's tradition of management. An organization that has
traditionally practiced centralization or decentralization is likely to maintain
that posture in the future.
In principle, neither philosophy is right or wrong. What works for one organization
may or may not work for another. Kmart Corporation and McDonald's have both
been very successful — both practice centralization. By the same token,
decentralization has worked very well for General Electric and Sears. Every
organization must assess its own situation and then choose the level of
centralization or decentralization that works best.
 Departmentation

Departmentation is the process of grouping activities into units for the

purpose of administration.
Span of management is a factor greatly restricting the size of the
enterprise, and it is through departmentation that the enterprise can
expand to an indefinite degree. Departmentation is largely a function
of the growth of the enterprise and the principle of specialisation. The
process of departmentation may be categorised into following three
stages:
Primary departmentation: It is the initial break up of the functions into
basic activities.
Intermediate departmentation: It is the creation of departments in the
middle level of the organisation.
Ultimate departmentation: It is the division of activities into separate
units at the lower levels.
 Need and Importance of Departmentation

• Specialisation: In specialisation, a person focuses his attention on a

specialised piece of work and attains mastery over it. Thus,
specialisation makes the organisation’s operation more efficient.
• Fixation of responsibility: the responsibility of the work can be
precisely and accurately fixed with the help of departmentation.
• Facilitates appraisal: the performance appraisal of managers is
greatly facilitated, since they performed specified jobs.
• Feeling of autonomy: Departmentation provides independent
charge to managers. This feeling gives them satisfaction and, in
turn, increases their responsibilities and efficiency.
• Development of managers: departmentation helps in the
development of managers because of their focus on some specific
problems and prescribed roles.
 Basis of Departmentation
• By functions: The organisation may be divided into departments on the basis of
functions such as production, marketing, finance, personnel, and so on. These functions
can further be divided into sub-functions.
• By product: When the activities associated with each product or group of closely related
products are combined into relatively autonomous and integrated units within the
overall framework of the company, such an organisation is described as product
departmentation. It enjoys the advantage of specialised product knowledge and
promotes coordination of different activities connected to a particular product.
• By location: When the activities of an organisation are (physically or geographically)
widely dispersed, territorial divisions may be created. Such divisions take the advantage
of the intimate knowledge of the local conditions possessed by the executives.
• By time: In organisations, where the work is performed round the clock, work shifts form
the basis for departmentation. Thus activities are divisionalised on the basis of time.
• By process: In process departmentation, various manufacturing processes are taken as
the basis for dividing the activities. Spinning, weaving, dyeing, etc. Can form the
examples for such a departmentation.
• By customers: In customer-based departmentation, departments are created around the
markets served or around marketing channels. Wholesale, retail, and export customers
are examples of such departmentation.
 Principles of Departmentation
A sound departmentation in an organisation depends on the following
factors:
• Degree of specialisation: Departmentation should be made on the basis of
those methods which facilitate specialisation. It helps in improving
efficiency and, thereby, productivity.
• Adequate attention to key areas: Separate divisions may be created for all
the key areas which are considered to be the basic to the success of an
organisation.
• Control: The departmentation must aim to make control effectively. For
example, as an enterprise expands, the functional form of organisation
becomes difficult to control and other patterns like product
departmentation may be adopted.
• Cost considerations: The expenses involved in creating a separate
department for an activity should also be considered at the time of
selection of basis of departmentation.
• Coordination: The method of departmentation chosen should ensure
proper coordination, which is said to be the essence of management.