Chapter Four

Organizing Function
 Objectives of Chapter
After completing this chapter the students will be able to:
 Define Organizing function

 Describe formal and informal organizations

 Describe the organizing Process & principles

 Distinguish power versus authority

 CHAPTER FOUR
ORGANIZING FUNCTION

Definition
 Organizing is defined as the process of;
 Identifying what tasks should be done
 Grouping & categorizing those tasks based on their similarities &
differences
 Assigning tasks to individuals
 Delegation of authority and assigning responsibility
 Organizing involves differentiation and integration.
 Differentiation: is the process of departmentalization or
segmentation of activities on the basis of some homogeneity.
 Integration: is the process of achieving unity of effort among the
various departments (segments/subjects).
The result of organizing process is organization structure.
 Organizational structure refers to a formal framework by
which managers devise for controlling and coordinating the
work of all organizational members.
 It’s the established pattern of normal relationships among the
various components of the org.
Organizational Chart
 Refers to a diagram or chart of all the positions in the
organization and their formal r/ships to one another
 It’s a formal drawing of boxes and lines where;
 boxes represent firms activities & people performing
these activities
 lines indicate relationships among them.
 People near the top of the chart have more authority and
responsibility than those below them.
Fig: Sample Organizational Chart
An organization chart shows:
 Who reports to whom – the chain of command,
 How many subordinates work for each manager – the span of control,
 Formal channel of communication,
 Hierarchy of decision making - where decision maker for a problem is
located
 Equal interaction (horizontal lines) etc.
Formal and informal organizations
A. Formal organization: - is an organization that is deliberately and
rationally designed and approved by management through the
organizing process in order to achieve the objectives of the firm.
 Its intentionally drafted by the top management with an explicit aim of
achieving well defined goal.
B. Informal organization: - refers to natural groupings of people in the
work situation based on their behavioral patterns, interests, beliefs,
objectives, etc.
 No conscious attempt is made to create an informal organization.
 Are networks of personal or social gatherings developed through
casualties with out having a clear objective.
The Organizing Process
 Organizing is an ongoing managerial process whether forming a new
organization, or reorganizing the existing
1. Consider/review Plans and Goals:
 As a result of changes in plans, new departments may be created
and old ones may be given additional responsibilities and the
organizing process must see this in its telescope.
2. Determine the Work Activities Necessary to Accomplish Objectives:
 It is the step through which managers know what tasks must be
done
3. Classify and Group Activities:
 Identify the general nature of the activities
 Group the activities into these related areas
 Establish the basic department design for the organizational
structure
4. Assign and Delegate Appropriate Authority:
 The identified essential activities after being classified and
grouped into major operational areas must be assigned the
appropriate authority to accomplish the task.
 In this step, the type and quantity of authority necessary.
5. Design a Hierarchy of Relationships:
 Determination of both vertical and horizontal operating
relationships of the organization as a whole.
 Vertical structuring of the organization results in a decision
making hierarchy showing who is in charge of each task, of
each specialty area, and of the organization as a whole.
 Horizontal structuring defines the working relationships
between operating departments and also makes the final
decision on the span of control
Principles of Organization
1. Division of Work: is dividing large tasks into smaller packages of work
to be distributed among several people.
 It is breaking down complex organizational tasks in to a more simple,
routine and well defined tasks.
 Advantage: upgrading productivity.
 Disadvantages: boredom and absenteeism.
2. Departmentalization: is the process of combining jobs (activities) into
groups & further sub-dividing them into sections or units.
3. Hierarchy (Scalar Chain): represents a line of authority in an
organization. It specifies the order of rank from top management to the
lowest level of the enterprise. It reflects both;
 Unity of command: each employee in the organization should have
one boss to whom he/she is directly responsible &
 Unity of direction: similar activities in the organization should be
directed by one manager who plans and leads the activity
4. Span of Control/Span of Management/: - refers to the number of
people and departments that report directly to a particular manager. Are
two types;
1. Wide span of management: - 2. Narrow span of management: -
 A single manager is supposed  A situation in which a manager
to manage huge no. of handles few no. of immediate
subordinates resulting in a flat subordinates resulting in a taller
organizational structure with a
organizational structure &
relatively large no of
fewer hierarchical levels.
hierarchical levels.
There is no correct number for the span of control. The number of span of
control (having wide or narrow span of control) is determined by the
following variables:
1. Complexity and variety of the subordinates’ work
 The more complex subordinate’s job, the fewer number of
subordinates
 The more routine the subordinates work , the greater the no of
subordinates.
2. Ability and training of the subordinates
 The more capable and experienced the subordinates are, the greater
should be the number of subordinates.
 The more trained the subordinates are, the greater the no. of
subordinates.
3. Ability of the manager
 If the manager has high potential ability, the number of subordinates
can be made too many.
4. Company’s philosophy for centralization and decentralization
 companies that favor centralization usually has narrow span of control
 companies that encourage decentralization usually display wide span of control
5. Chain of command
Is the plan that specifies who reports to whom in an organization.
The higher the employee in an organization hierarchy, the higher
will be the employee’s organizational responsibility and Vice-versa.
6. Coordination:
Co-ordination is the process of integrating the activities of separate
departments in order to pursue organizational goals effectively.
Symptoms of lack of co-ordination in organization
 Loss of control.
 Excessive conflict.
 Separation of authority and competence.
 Neglected responsibilities in organization
 Reading Assignment
Departmentalization
Basis/types of departmentalization
Advantages and disadvantages of each type of dept .
Authority and its Distribution
 Authority is the right to give orders and make decisions
 It is the set of rights that enables members to discharge their
responsibility
 It’s a formal and legitimate power of a manager to guide and direct
the actions of subordinates, make decisions and allocate resources
for the attainment of org. goals
Authority can be viewed from two perspectives.
1. Classical View of Authority (top-down theory of authority)
 According to the classical view, authority originates from a very
high level then lawfully passes down from level to level.
2. Acceptance View of Authority (bottom-up theory of authority)
 Authority stems from the influenced rather than the influencer.
 Authority exists only in the acceptance of the influenced.
 This view says authority of management is only to the extent of
which subordinates are willing to accept.
Types of Authority
A. Line Authority: defines the relationship between superior and
subordinate.
 It is direct supervisory relationship used by superiors in giving
authority to their subordinates and helps to establish the chain
of command in an organization.
B. Staff Authority:- is authority to assist and advise the line
manager in accomplishing organizational objectives.
 It is advisory in nature and is granted an advisory authority.
C. Functional Authority:- is the right to control activities of other
departments as they relate to specific staff responsibilities.
 Its an authority that permit Staff managers to control their
systems/procedures in other departments. eg, Audit
department, Personnel dep‘t
 Power Vs Authority
People often use power and authority interchangeably, but;
Power is the ability to act or exert influence; where as authority is the
right to do so.

Authority Power

 Positional: it will be there even  Personal: it exists b/c of the

if the incumbent leaves person
 It is delegated  Not all power can be delegated

 Narrow  Broader

 It is subset of power  It encompasses authority

 Sources of Power
1. Legitimate power: - legitimate power is the power which is derived from
a person’s official position in an organization. It’s the power that a leader
possesses as a result of occupying a particular position or role in the org.
2. Reward Power: - is leaders ability to reward another person for carrying
out orders or meeting performance requirements.
3. Coercive power: - refers to the ability to punish another individual for
not meeting requirements. It is virtually the opposite of reward power.
4. Expert Power: - refers to the power that one can posses as a result of
his/her knowledge and expertise regarding the task to be performed by
subordinates.
When we do what our doctors tell us we are acknowledging their
expert power.
5. Referent Power: - is based on the identification of an individual with
who is held in high esteem, admired, and often imitated by the
subordinates. Referent power refers to a person who has desirable
resources or personal traits.
 Delegation of Authority
Delegation:
 It is the assignment of authority and responsibility to others in order to
carry out certain assignments.
 It is the process of pushing down of authority from superior to
subordinates who possess specialized skill to perform such job.
 It is a two-sided affair by which the superior must be willing to
sacrifice a portion of his authority and the subordinate must be willing
to shoulder the additional responsibility.
Importance
 Enhances effective communication with subordinates
 It frees managers from performing difficult and time consuming tasks
& allows them to look on to strategic planning and decision making
 It results in prompt decision
 It gives exposure to subordinates & serves them as a motivational
factor
Process
1. Allocation of duties /Assignment of tasks to the Subordinates
 The distribution and allocation of duties among subordinates
must be fair and well balanced.
 The tasks should be distributed in such a manner that the
subordinates are not unnecessarily over burdened and that
each one is capable of efficiently completing it.
2. Delegation of authority
 In order for the subordinate to complete the duties or tasks,
the authority necessary to do them should be delegated by the
manager to the subordinate.
 A guideline for authority is that it should be adequate to
complete the task- no more and no less.
 Cont’d
3. Acceptance of responsibility
 Responsibility is the obligation to carry out one’s assigned
duties to the best of one’s ability.
 It is not delegated by the manager, the employee accepts it.
Then only, the employee can be obligated.
4. Creation of Obligation or Accountability
 Accountability is having to answer to someone for your
actions.
 The person assigned the task is morally responsible to do his
best since he has willingly accepted these tasks.
 Obligation is a personal concern for the task. Even if the
subordinate gets part of the task done through other people,
the obligation and the accountability still lie with the
subordinate.
Barriers to Delegation
A. Reluctance of Executive/Managers
 “I can do it better my self”, many managers believe that no body else can do
the job better than themselves.
 Lack of confidence and trust in subordinates.
 Sense of Insecurity/Loss of power or fear of competition from subordinate
 A manager may fear being known as 'Lazy' if he delegates most of his tasks
B. Reluctance of Subordinates
 Fear of criticism and dismissal for dead actions.
 Lack of sufficient incentives/rewards for assuming extra responsibility
 Lack of self - confidence in doing the job
 Subordinates usually feel that making decision is the bosses job
 Some subordinates hesitate to accept new and added assignments when
there is a lack of necessary information and when the available resources are
not adequate or in proper.
Guidelines for Effective Delegation
The management must be willing to give employees freedom to
accomplish delegated tasks
 This means letting them use choose methods and solutions
different from the ones the manager choose.
 It also means giving them the freedom to make mistakes and to
learn from their mistakes.
Open Communication between managers and employees
 Managers who know the capabilities of their employees can more
realistically decide which task can be delegated to whom.
 The subordinate must know precisely what he has to know & do.
Proper Selection and training
 The management must make proper assessment of subordinates
in terms of their abilities and limitations before delegating the
proper authority.
 Motivate Subordinates
 Adequate incentives in the form of promotion, status, better working
conditions or additional browses must be provided for additional work
well performed.
 Establish adequate controls (feedback system).
 If there are adequate check points and controls built in the system, like
weekly report...etc., then managers will not be continuously spending
time in checking the performance and progress of subordinates.
Centralization Vs. Decentralization
 Centralization is the situation in which authority for most decisions is
concentrated at the top of the managerial hierarchy (selective
concentration).
 Decentralization: - requires the authority to be dispersed by extension and
delegation throughout all levels of management. (Dispersion of authority)
 Read:-Advantages & disadvantages of Centralization
& Decentralization