CH-5

ORGANISING

NAME-TANISH
CLA SS -12 t h
Commerce ROLL
No-1229
Concept of
Organising
 In the last chapter we discussed about
planning, which making plans for achieving
objectives.
 Planning is only successful when organizing
function is done well by management.
 So , organising as a function of management is
responsible for successful implementation of
plans, to accomplish business objectives.
 Organising , which ensures that all physical
and human resources required to achieve
objectives are available , the enterprise is
structured in a manner that it is able to
adapt to the dynamic business environment.
Concept of
Organising
 Lets learn organising in simple way, -
suppose u have objective to achieve more
than 90% marks in your board exam this
year and to get admission in reputed
college/university.
 So what have you done to to
achieve your objective?
 I am sure you all must have
prepared a plan for it.
 Plan may be like, to devote at least 5
hours in a week of self study to each
Concept of
Organising
 Your plan is perfect but for achieving your
goal, you will require physical resources like
all relevant books, a place where you can
study with concentration and human
resources like a teacher/mentor who will
guide you to make short term goals, help you
to prepare notes, answer questions, manage
time etc.
 Did you realise what are you doing?
 Nothing but organising resources to
achieve your objectives.
 All this is part of organising function of
MEANING OF
ORGANISING
 ‘Organising translates plans into action’ by
deciding who will perform a particular task,
how and where it will be performed.
 ‘Organising is the process of defining and
grouping the activities of the enterprise and
establishing authority relationship among
them’. ----- THEO HAIMMAN
 ‘To organize a business is to provide it with
everything useful to its functioning: raw
materials, machines and tools, capital and
personnel’.– HENRI FAYOL
ORGANISING
PROCESS
Identification & Division Of
Work: –
 The total work to be done should be divided
into specific jobs as according to
predetermined plans. – Job = a set of
related tasks that can be performed by an
individual.

It should have specific and definite
tasks to be performed. As far as
possible, it should define expected
results along with the job.
 Division of work → specialization of efforts and
skills + avoids duplication of work.
 Management must ensure that all the activities
required to achieve organizational objectives
Departmentalizatio
n

Grouping similar and related jobs into
larger units called departments, divisions or
sections and placing them under a
department head. It facilitates
specialization.
 The departments are linked together
and are interdependent.
 Aims at achieving co-ordination and facilitate
unity of action.
 Departmentation can be done on the basis
of:
•Functions: marketing, personnel, finance etc.
•Products: Textiles, chemical, power division
etc.
•Territories: Western, northern, central,
Assignment Of
Duties:
Assignment Of
Duties:

Define the work of different job positions
and allocate work accordingly.
 Once departments are formed, the dept is
placed under the charge of an individual.
 Jobs are assigned to an individual best
suited to perform it.
 Qualifications, experience, ability and
aptitudes of people should be matched
with duties.
 E.g. activities of finance should be assigned to
persons having qualifications and experience
in finance e.g. C.A‘s
Establishing Reporting
Relationships:
 Granting requisite authority to enable
employees to perform the job satisfactorily.
 Superior subordinate relations between
different people and job positions
created, so that everybody knows from
whom he is to take orders and to whom
he can issue orders.

Creates management hierarchy = a
chain of command from the top manager
to the individual at the lowest level.
 This helps in coordination.
Importance of
Organizing
 Benefits of specialization: In organizing every individual is
assigned apart of total work and not the whole task. This
division of work into smaller units and repetitive performance
leads to specialization. Thus organizing promotes specialization
which in turn leads to efficient & speedy performance of tasks.

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 organizing.
 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 ineffective administration.
 Optimum utilization of resources: The proper assignment of jobs
avoids overlapping/duplication of work. This helps in
preventing confusion and minimizing the wastage of resources
and efforts.
Importance of
Organizing
Adoption to Change: A properly designed organizational
structure is flexible which facilitates adjustment to
changes in workload caused by change in external
environment related to technology, products, resources
and markets.

Development of Personnel: Sound organization
encourages initiative and relative thinking on part of the
employees. When managers delegate their authority, it
reduces their workload so they can focus on more
important issues related to growth & innovation. This also
develops the subordinates’ ability and helps him to realize
his full potential.
 Expansion and growth: It helps in growth &
diversification of an enterprise by adding more job
positions, departments, products lines, new
geographical territories etc.
Meaning of Organizational
Structure
 It seeks to establish relations among all the
persons working in the organization.
 Under the organizational structure, various posts
are created to 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 employers for performing
their functions.
 The organization structure can be defined as the
frame work within which managerial and
operating tasks are performed.
Relation between Span
Management and
of
Organization structure:
 Span of management 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 organization structure.
 This determines the levels of
management in the structure.
 Arrow span of management results in tall
structure whereas wider span of
management results in flat structure.
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 departments etc.
 Suitability
 (1) Large organizations producing one line of
product.
 (2) Organizations which require high degree
of functional specialization with diversified
activities.
Functional
Structure:
Advantages of functional
structure
 Specialization: Better decision of labour takes place
which results in specialization of functions and its
consequent benefits.
 Coordination is established: All the persons working
within a departmental are specialists of their
respective jobs. It makes the co-ordination easier
at departmental level.
 Helps in increasing managerial efficiency: Managers
of one department are performing same type
of function again and again which makes them
specialized and improves their efficiency.
 Minimizes cost: It leads to minimum duplication
of effort which results in economies of scale
and thus lowers cost.
Disadvantages of functional
structure
 Ignorance of organizational objectives: Each
departmental head works according to his
own wishes. They always give more weight
to their departmental objectives. Hence
overall organizational objectives suffer.
 Difficulty in Inter-departmental Coordination: All
departmental heads work as per their own
wishes which leads to coordination within the
department easier but it makes inter-
departmental coordination difficult.
 Hurdle in complete development – because
each employee specializes only in a small
part of the whole job.
DIVISIONAL
ORGANIZATION
STRUCTURE
 Dividing the whole enterprise according

to the major products to be

manufactured (like metal, plastic,
cosmetics etc.) is known as divisional
organization structure.

 Suitability: This structure is suitable in

organizations producing multi product or
different lines of products requiring
product specialization.
 Also growing companies which intend to
add more lines of products in future
DIVISIONAL
ORGANIZATION
STRUCTURE
Advantages of
Divisional organization
structure
 Quick decision-making: Divisional manager

can take any decision regarding his

division independently which makes
decisions quick and effective.
 Divisional results can be assessed: Division
results (profit/loss) can be assessed easily.
On this basis any unprofitable division can
be closed.
 Growth and Expansion: It facilitates growth
and expansion as new divisions can be
added without disturbing existing
departments.
Disadvantages of
Divisional organization
structure
 Conflicts among different divisions on
allocation of resources.
 Duplicity of Functions: Entire set of functions
is required for all divisions. It gives rise to
duplicity of efforts among divisions &
increases cost.
 Selfish Attitude: Every division tries to
display better performance and
sometimes even at the cost of other
divisions. This shows their selfish attitude.
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 works effectively and
efficiently in expected manner the
manager creates accountability.
Elements of
Delegation
 Authority: The power of taking decisions in
order to guide the activities of others.
Authority is that power which influences
the conduct of others.
 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.
 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.
 For example, If the chief executive asks marketing
manager to achieve a sales target of sale of 100
units/day. The marketing manager delegates this task to
deputy sales manager, who fails to achieve the target.
Then marketing manager will be answerable for the work
performance of his subordinates. Thus, accountability is always
of the person who delegates authority.
 Difference between Authority,
Responsibility and
Accountability
Basis Authority Responsibility Accountability

•bligation to perform an
Accountability for
Right
1. Meaning the outcome of
to assigned task.
the assigned task.
comma
nd
Arises
Arises from delegated
2. Origin from Arises from
authority.
formal responsibility.
position.
Downward-
from Upward- from Upward- from
3. Flow
superior subordinate to subordinate to
to superior. superior.
subordinat
e.
Can be
Delegation of
Authority
Importance of the Delegation
of Authority
 Reduction of Executives’ work load: It reduces the
work load of officers. They can thus utilize
their time in more important and creative
works instead of works of daily routine.
 Employee development: Employees get more
opportunities to utilize their talent which
allows them to develop those skills which will
enable them to perform complex tasks.

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.
Importance of the Delegation
of Authority
 High Morale of subordinates: Because of
delegation of authority to the subordinates
they get an opportunity to display their
efficiency and capacity.
 Better coordination: The elements of
delegation – authority, responsibility and
accountability help to define the powers,
duties and answer ability related to
various job positions which results in
developing and maintaining effective
coordination.
Decentralizatio
n
 Decentralisation of authority means dispersal of
authority to take decisions throughout the
organization, upto the lower levels.
 It implies reservation of some authority with the top
level management and transferring rest of the authority
to the lower levels of the organization.
 This empowers lower levels to take decisions
regarding problems faced by them without
having to go to the upper levels.
 According to Allen,‘ Decentralisation refers to
systematic efforts to delegate to the lowest
level, all authority except the one which can be
exercised at central points.‟
Centralization vs
Decentralisation
 Centralization = authority retained at top
level and Decentralization = Systematic
delegation of authority at all levels and
in all departments of a firm. Firm needs
to balance the two.
 In case of a decentralized firm, Top
level retains authority for:
 Policies and decisions w.r.t the whole firm
 Overall control and coordination

Middle and lower levels have
authority to take decisions w.r.t tasks
allocated to them
Centralization and
Decentralization
 Centralization and Decentralization-represents the
pattern of authority among managers at different
levels.
 Centralization of authority means concentration of
power of decision making in a few hands. In such an
organization very little authority is delegated to
managers at middle and lower levels.
 No organization can be completely
centralized or decentralized.
 They exist together and there is a need for a
balance between the two. As the organization grows
in size, there is tendency to move towards
decentralization.
 Thus, every organization is characterized by
both.
Importance of
Decentralization
 Develops initiative amongst subordinates: It helps to
promote confidence because the subordinates are given
freedom to take their own decisions.
 Quick and better decisions: The burden of managerial
decisions does not lie in the hands of few individuals but gets
divided among various persons which helps them to take better
and quick decisions.
 Relieves the top executives from excess workload: The
daily managerial works are assigned to the subordinates
which leaves enough time with the superiors which they can
utilize in developing new strategies.
 Managerial Development: It means giving authority to the
subordinates up to the lower level to take decisions
regarding their work. In this way the opportunity to take
decisions helps in the development of the organization.

Better Control: It makes it possible to evaluate
performance at each level which results in complete control
over all the activities.
Difference between – Delegation
and Decentralization
Basis Delegation Decentralization

1. Nature It is a compulsory act. It is an optional policy.

Less freedom to take More freedom of action

2. Freedom of
decisions due to more due to less control by
action
control by the superiors. the top management.
It is the result of
It is a process of sharing
3. Status policy decisions
tasks and authority.
taken by top
management.
Narrow- as it is confined Wide- It includes
4. Scope to a superior and his extension of delegation
immediate and to all the levels of
subordinate. management.