Principles and Practices of Management

People working together in groups to achieve some goal must have roles to play; organizing involves establishing intentional structure of roles for people in all enterprise to fill. It is a tool of managing and not an end in itself. The purpose of organizing is to fit together individuals and their tasks as productively as possible, so that every individual knows what his responsibility is, that is how he fits into the organization pattern, and the end result is synergism (i.e. 2 + 2 = 5 effect).

Basic elements of organizing

• • • • • •

Identifying the activities involved to attain the objectives of the enterprise. Grouping of similar activities. Definition of responsibility and authority. Delegation of the requisite authority. Provision of adequate physical facilities to discharge duties. Establishment of clear structural relationships among individual and groups.

As a company grows in size it does more and more activities and organizing gets complicated.

Formal organizations result from planning where the pattern or the structure has already been determined by the Chief Executive of the firm. An informal organization is any joint personal activity without conscious joint purpose even though possibly contributing to joint results. Informal organizations comprise of all kinds of groups which are not prescribed officially through formal organizing efforts but have evolved naturally bring cemented together through social interests.

Effects of organizing

• • • •

Specialization is encouraged which enhances productivity. Duplication of activities is avoided. Co-ordination is fostered by supplying framework for holding together the various functions in an orderly pattern and logical

Expansion and growth is aided.

Span of management and organization levels: Organization levels exist because there is a limit to the number of persons a manager can
supervise effectively (though this limit varies depending on situation, type of work, etc). The span may be categorized as narrow or wide.

Advantages of narrow span: Close supervision, close control, fast communication between sub-ordinates and superior. Disadvantages of narrow span: Superior tend to get too involved in subordinates work, many levels of management leads to cost
escalation, excessive distance comes up between top and lowest level of management.

Advantages of wide span: Superiors are forced to delegate, clear policies have to be made, and subordinates are carefully selected. Disadvantages of wide span: Tendency of overloaded superiors to become decision bottlenecks. Danger of superiors' loss of control
requires exceptional quality of managers. It is also expensive leading to indirect costs, more managers, more peons, costs of facilities etc., also department levels complicate communication-omissions and misinterpretation of information may result. It also complicates planning &

control Factors determining an effective span: Things like personal capacities of superior and subordinate like comprehending quickly
commanding loyalty and respect lead to reducing time spent by superiors and subordinates.


Subordinate training: Better the training of subordinates lesser the contact necessary by superior. This governs the superior subordinate
relationships. Well-trained subordinates need less managers time and contact.

Clarity of delegation of authority: The main reason for excessive time burdens on superior- subordinate relationships is inadequate authority delegation Clarity of plans: Routine jobs can have more accurate plans and if they are non-routine planning will be that much tougher. Use of objective standards: So that superior can know which subordinate is deviating and direct attention can be given to exceptional
cases for successful execution of plans.

Rate of change: It is also an important determinant of the degree to which policies can be formulated and stability of policies maintained. Communication techniques: Effective communication of plans and instructions clearly and concisely increases a manager's span. Amount
of personal contact needed in the business. Different businesses have different requirements.

Variation by organization level: A study has shown that specialization by individuals was an important variable affecting span, if there are a
lot of specialties, effective spans were narrower at lower and middle levels but increased at upper levels, lack of variety of work has little

Structure must reflect objectives, plans, authority available and the environment (political, social, ethical, technical etc.). As the structure is filled by people, therefore, it must take into account people's limitations and customs. Organizing does not imply any extreme occupational specialization which normally makes labor uninteresting, tedious and unduly restrictive.

THEORIES OF ORGANISING Classical Approach - has four pillars

• • • •

Division of labor
Scalar and functional processes (horizontal and vertical growth)

Structure Span of control

Managers who believe in Theory X use Carrot (money) and Stick (punishment) approach. A dehumanized organization structure was seen.

Neo Classical Approach Theory Y: Reflects human relations movement as well as behavioral science approach. This approach stresses on motives, supervision,
group and intergroup behavior. People oriented organizations came up which emphasized on informal organizations.

Systems Approach
Defines organization as a structured process in which the individuals interact for fulfillment of objectives. Emphasis is on adaptability and efficiency. Organization is seen as an open and adaptable system which has five parts:

1. 2. 3. 4. 5.

The individual. Formal structure. Group or informal organization. Status and role patterns. Physical environment of work.

The linking processes are communication, concept of balance and decision process. The organizational system has three goals -growth, stability and interaction among individuals and groups. Under systems approach there are three main components

• • •

Individuals, Formal organization & Informal organization Contingency approach - Systems orientation with further modifications. Emphasis is on the need to adapt the organization to the demands of technology, the need for innovation generating from environmental and decision making uncertainty. Multivariate Approach -Regards organization as a system of four interacting variables

1. Task - Basic business.
2. Structure - covering system of authority, workflow and communication.

3. Technology. 4. People (Actors).
A stable industry may have mechanistic organization. Organic management is most suitable for coping with unstable and changing conditions and unpredictable problems. Dynamic technologies like electronics, computers should have organic structure with less emphasis in rules with necessary decentralization and liberal lateral communication. Sound organization provides the best mechanism for management in action. Well designed and balanced organization facilitates management and operations of the enterprise, leads to precise and effective delegation, enables growth and diversification, provides optimum use of technical improvements, encourages stability, provides effective management of change and gives premium to innovations. In today's dynamic environment if a company is not innovative it is bound to die.

Power is a much broader concept than authority. It is the ability of an individual or group to induce or influence beliefs and actions of other persons and groups. Authority on the other hand is the right due to a position to exercise discretion; it is power in an organization setting. Power could be derived due to following basis:

Line and staff concept: Line functions have a direct impact in the accomplishment of the objectives of the enterprise. Staff functions help
line persons to work more effectively in accomplishing the objectives. Clearer the line of authority from ultimate management position in an enterprise to every subordinate position clearer will be the responsibility for decision-making, more effective organization communication will be. Line authority is direct supervision by superior over a subordinate. Staff relationship is advisory, the function is to investigate, conduct

research and give advice to line managers.
Line and staff are mainly authority relationships and not what people do. Some departments are predominantly staff (R&D, P R). Others are line (Finance, Marketing, and Production). Although often departments are referred to as line or staff but within each department there are line and staff relationships. Authority is the right that is delegated to an individual or department to control specified processes, practices, policies or other matters relating to activities undertaken by persons in other departments. Decentralization of authority is the tendency to disperse decision-making
authority in an organized structure. Decentralization implies more than delegation. It reflects the philosophy or organization and management.

Many managers fail due to poor delegation. No one person can do all the work for the group, similarly no one manager can exercise all authority for making decisions. The process of delegation involves:

• • • •

Determination of results expected from a position. Assignment of tasks to a position. Delegation of authority for accomplishing these tasks. Holding of people in positions responsible for accomplishment of tasks.

Delegation must have clarity so it should be written, but regular changes must be made in organization structure to keep it flexible. Delegated authority can always be recovered. Splintered authority exists wherever a problem requires pooling of delegated authority of 2 or more

managers. Personal attitudes towards delegation

• • • •

Perceptiveness to other ideas Willingness to let go (by superior) Willingness to let others make mistakes Willingness to trust subordinates

Guidelines for overcoming weak delegation

• • • • •

Define assignments and. delegate authority in the light of results expected Select the person in the light of the job to be done Maintain open lines of communication Establish proper controls Reward effective delegation and successful assumption of authority

Factors determining the degree of decentralization of authority

• • • • • • • • • • •

Cost of the decision (in cash or intangibles)

Desire for uniformity of policy
Size and character of the organization History and culture (Ford motors -centralized, Merged companies- decentralized)

Management philosophy Desire for independence Availability of managers Control techniques Decentralized performance
Business dynamics Environmental influences (Government controls, tax etc.)

Delegation is a device to meet the challenge of growth. Those who are jealous of other doing well cannot delegate. An overworked executive is generally poor at delegation. He is overloaded with work he should not be doing -a good manager must learn to work with and through

others. Authority, Responsibility and accountability are the three elements of delegation in the absence of anyone of these delegations are
impossible. Delegation is not a process of abdication of responsibility. Mutual trust is one of the important pre-requisites of delegation. Delegation is entrustment of responsibility and authority to another and the creation of accountability for performance. Delegating of authority is the creation of an obligation on the part of the subordinate to the superior executive for the satisfactory performance of the assigned duties. The acceptance of this obligation on the part of the subordinate creates responsibility. Responsibility can not be

delegated so the superior even after delegating a job to the subordinate is ultimately responsible for its accomplishment so he must continue to supervise direct and control the subordinate to whom he has delegated the authority. Authority and responsibility should be coexisting and both must be present for smooth functioning of the organization, the entire process of delegation can become ineffective unless authority delegated is commensurate with responsibility. A manager must realize that every business is a continuing entity and must work efficiently even in the absence of the top most efficient manager so the manager must delegate his power to subordinates so that they can deal with problems independently and use their own

Is grouping activities and people into departments. It helps to expand organizations. There is no ideal way of Departmentalization applicable to all situations and organizations. Various forms are seen in the industry, such as:

• • • • • • • •

Departmentalization by simple numbers (Only useful at the lowest level). Departmentalization by time (Very old systems -shifts seen in organizations where normal working day does not suffice e.g., Hospitals). Departmentalization by enterprise function (Grouping of activities in accordance with the functions of an enterprise -example Production, selling, financing etc.).

Functional Departmentalization (It is the most widely employed basis for organizing activities and is at present seen in almost every enterprise). Departmentalization by territory (Based on geographical territories). Customer Departmentalization (Grouping of activities to reflect a primary interest in customers is common in services industries). Process Departmentalization (Seen in manufacturing firms). Product Departmentalization (In multi-line large-scale enterprises).

Coordination may be achieved through rules, procedures, planning, organizational hierarchy, personal contacts and sometimes through the

Liaison department. Advantages of departmentalization:

• • •

Logical and time proven, specialization leads to efficiency, simplifies training, facilitates tighter control, maintains power, also there is added prestige of major functions. Places responsibility at lower levels, emphasis on local markets, improves coordination, advantage of economies of local operation,

measurable training ground for General Managers.
Encourages concentration on customer needs, develops expertness in a customer area.

Disadvantages: •
De-emphasis of overall company objective over departmental objectives, over specialization and narrow viewpoints of key personnel

may result, reduces coordination, responsibility for profits is at top only, slow adaptation to changes, limits development of General

• •

Requires more persons with general manager abilities, problem of top management control. May be difficult to coordinate operations between customer demands, customer groups may not always be clearly defined.

MATRIX organization
Another kind of departmentalization is Matrix / Grid / Projects. Here a combining of functional and product departmentalization is seen in the same organization structure. This is seen in construction, marketing etc. A matrix organization is oriented towards end-results, professional
identity is maintained. pinpoints product-profit responsibility. However. it has a disadvantage that there is a possibility of disunity of command.

requires managers effective in human relations. Now Strategic Business Units (SBUs) are being seen within an organization for a product. There is no one best way of departmentalization and departmentalization is not an end in itself. Departmentalization is just a means of


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