Professional Documents
Culture Documents
WHAT IS ORGANISING ?
According to Theo Haimann,,
"Organising is the process of defining
and grouping the activities of the
enterprise and establishing the
authority relationships among them."
In simpler words,
Organising is something you do before you do
something, so that when you do it it, is not all
mixed up
IMPORTANCE OF ORGANISING
(1) Benefits of Specialisation:
Under organising all the activities are subdivided into various
works or jobs. For all the sub works, competent people are
appointed who become experts by doing a particular job time and
again. In this way, maximum work is accomplished in the minimum
span of time and the organisation gets the benefit of specialisation.
(3) Optimum Utilisation of Resources:
Under the process of organising the entire work is divided into
various small activities. There is a different employee performing
every different job.
(4) Adaptation to Change:
Organising process makes the organisation capable of adapting to
any change connected with the post of the employees. This
becomes possible only because of the fact that there is a clear
scalar chain of authority for the manager’s right from the top to the
lower level.
(7) Expansion and Growth:
The process of organising allows the employees the freedom to take
decisions which helps them to grow. They are always ready to face new
challenges. This situation can help in the development of the enterprise.
This helps in increasing the earning capacity of the enterprise which in
turn helps its development.
• After dividing the work in smaller jobs, related and similar jobs are
grouped together and put under one department. The
departmentation or grouping of jobs can be done by the
organisation in different ways. But the most common two ways
are:
• a) Functional departmentation:
• b) Divisional departmentation:
(a) Functional departmentation:
Under this method jobs related to common function are grouped under
one department. For example, all the jobs related to production are
grouped under production department; jobs related to sales are
grouped under sales department and so on.
• 1. Delay in Action:
• While following scalar chain and chain of command actions get delayed in formal
structure.
• 2. Ignores Social Needs of Employees:
• Formal organisational structure does not give importance to psychological and
social need of employees which may lead to demotivation of employees.
• 3. Emphasis on Work Only:
• Formal organisational structure gives importance to work only; it ignores human
relations, creativity, talents, etc.
WHAT IS INFORMAL ORGANIZATION?
• 1. Fast Communication:
• Informal structure does not follow scalar chain so there can be faster spread of
communication.
• 2. Fulfills Social Needs:
• Informal communication gives due importance to psychological and social need
of employees which motivate the employees.
• 3. Correct Feedback:
• Through informal structure the top level managers can know the real feedback
of employees on various policies and plans.
DISADVANTAGES OF
INFORMAL ORGANISATION:
• 1. Spread Rumours:
• According to a survey 70% of information spread through informal organisational
structure are rumors which may mislead the employees.
• 2. No Systematic Working:
• Informal structure does not form a structure for smooth working of an organisation.
• 3. May Bring Negative Results:
• If informal organisation opposes the policies and changes of management, then it
becomes very difficult to implement them in organisation.
• 4. More Emphasis to Individual Interest:
• Informal structure gives more importance to satisfaction of individual interest as
compared to organisational interest.
STRATEGIC USE OF
INFORMAL ORGANISATION.
• Informal organisation can be used to get benefits in the formal
organisation in the following way:
Meaning An organization type in which the job of An organization formed within the formal
each member is clearly defined, whose organization as a network of interpersonal
authority, responsibility and accountability relationship, when people interact with each
are fixed is formal organization. other, is known as informal communication.
Purpose To fulfill, the ultimate objective of the To satisfy their social and psychological
organization. needs.
Nature Stable, it continues for a long time. Not stable
• Line organisation is the simplest and the oldest type of organisation. It is also known
as scalar organisation or military type of organisation.
• An important characteristic of such type of organisation is superior-subordinate
relationship. Superior delegates authority to another subordinate and so on, forming
a line from the very top to the bottom of the organisation structure. The line of
authority so established is referred as “line authority.” Under this type of
organisation authority flows downwards, responsibility moves upwards in a straight
line. Scalar principle and unity of command are strictly followed in line organisation.
• For example-This type of organisation resembles with the army administration or
military type of organisation. As in case of military, commander-in-chief holds the top
most position and has the entire control over the army of the country, which in turn
is developed into main area commands under major-generals.
TYPES OF LINE ORGANIZATIONS
• 2. Facilitates Evaluation:
• When same policies are used for all segments of the enterprise their performance can easily be evaluated. It also helps in
comparing the results of different departments. This will bring a sense of competition among various segments. Ultimately the
overall performance will improve.
• 3. Economies:
• Centralization of management will bring in economies of large scale. There will be a centralized buying and selling. This will
enable bulk buying resulting in discounts and savings in transportation expenses. When sales are done in large quantities then
customers are offered better terms and low prices. There will be an economy in managerial expenses also.
• 4. Co-ordination of Activities:
• Co-ordination of activities of various segments is also facilitated by centralized management. In the absence of centralization,
different segments may pursue their independent policies. This may result in disunity and disintegration. Different segments may
emphasize their own goals only without bothering about organizational objectives. Centralized management will help in
coordinating the work of different segments in such a way that organizational goals are achieved.
DISADVANTAGES OF CENTRALIZATION:
Centralization may be useful only up to a certain level and also under certain conditions. Beyond a
certain point it creates difficulties in day-to-day working and also restricts the growth of an
enterprise.
Following are some of the disadvantages of centralization:
1. Destroys Individual Initiative:
• Centralization revolves around one person only. One man takes all the decisions and decides the
modes of implementing them. Nobody is given the authority to use his own judgment even if
there are glaring lacunae in the decisions. It destroys initiative of subordinates. They do not make
any suggestions and just carry on with whatever has been conveyed to them.
2. Over Burden of Few:
• This system gives all responsibilities to few persons in the organization. They remain over-
burdened with routine work while sub-ordinates do not have sufficient work. The centralization of
all powers do not allow the chief executive to devote sufficient time for important tasks of
planning, coordinating and motivating. In a decentralized set-up routine matters are left to the
subordinates and manager concentrates on important administrative work only.
3. Slows Down the Operations:
• The operations of the enterprise are slowed down under centralized set-up. All decisions are taken
only by one person and his unavailability keeps the matters pending. Even clarifications about
decisions are referred to the top which destroys invaluable time in formalities. If the subordinates
have powers to interpret decisions then operations can be toned up. Things move very slowly in a
centralized set up because everything has to pass through the manager.
4. Distance from Customers:
• The customers do not come into contact with policy-makers. They meet only those officials who do
not have the powers to take decisions. Moreover one person cannot meet and know the reactions of
customers regarding products and service. This also comes in the way of intimate understanding of
market situations by the chief executive.
5. No Scope for Specialization:
• Centralization does not offer any scope for specialization. All decisions are taken by one person and
he may not be a specialist in all the areas. In the present competitive world there is a need for
employing the services of specialists. The specialists will be able to introduce new things in their
fields and they may improve the performance of the enterprise.
• Even if specialists may be employed under centralized set-up they will not be given a free hand in
their areas. They will keep on convincing the chief executive who is the ultimate decision-maker. The
specialists do not have any role in an organization with centralized authority.
•
ADVANTAGES OF DECENTRALISATION:
1. Reduces the burden on top executives:
• Decentralisation relieves the top executives of the burden of performing various
functions. Centralisation of authority puts the whole responsibility on the shoulders of
an executive and his immediate group. This reduces the time at the disposal of top
executives who should concentrate on other important managerial functions. So, the
only way to lessen their burden is to decentralise the decision-making power to the
subordinates.
2. Facilitates diversification:
• Under decentralization, the diversification of products, activites and markets etc., is
facilitated. A centralised enterprise with the concentration of authority at the top will
find it difficult and complex to diversify its activities and start the additional lines of
manufacture or distribution.
3. To provide product and market emphasis:
• A product loses its market when new products appear in the market on account of
innovations or changes in the customers demand. In such cases authority is
decentralised to the regional units to render instant service taking into account the
price, quality, delivery, novelty, etc.
4. Executive Development:
• When the authority is decentralised, executives in the organisation will get the opportunity to
develop their talents by taking initiative which will also make them ready for managerial positions.
The growth of the company greatly depends on the talented executives.
5. It promotes motivation:
• To quote Louis A. Allen, “Decentralisation stimulates the formation of small cohesive groups.
Since local managers are given a large degree of authority and local autonomy, they tend to weld
their people into closely knit integrated groups.” This improves the morale of employees as they
get involved in decision-making process.
6. Better control and supervision:
• Decentralisation ensures better control and supervision as the subordinates at the lowest levels
will have the authority to make independent decisions. As a result they have thorough knowledge
of every assignment under their control and are in a position to make amendments and take
corrective action.
7. Quick Decision-Making:
• Decentralisation brings decision making process closer to the scene of action. This leads to
quicker decision-making of lower level since decisions do not have to be referred up through the
hierarchy.
DISADVANTAGES OF DECENTRALISATION:
Some disadvantages of decentralisation are:
Purpose To lessen the burden of the manager. To increase the role of the
Basis
subordinates in the organisation
Delegation
Scope
Right to take decisions is shared by top management and other level of management. It has a narrow scope as it is limited to It has a wider scope as it implies
Scope
superior and his immediate subordinate
Scope of delegation is limited as superior delegates the powers to the subordinates on individual bases.
extension of delegation to the
Scope is wide as the decision making is shared by the subordinates also.
lowest level of management.
Responsibility
Status
Responsibility is also delegated to subordinates.
Freedom of Work
It is a process followed to share tasks. It is the result of the policy
Freedom is not given to the subordinates as they have to work as per the instructions of their superiors. decision of top management.
Freedom to work can be maintained by subordinates as they are free to take decision and to implement it.
Nature
Nature
It is a routine function Delegation is a compulsory act because Decentralisation is an optional
It is an important decision of an enterprise.
Need on purpose
no individual can perform all the tasks on policy decision. It is done at the
his own.
Delegation is important in all concerns whether big or small. No enterprises can work without delegation. discretion of the top
Decentralization becomes more important in large concerns and it depends upon the decision made by the enterprise, it is not compulsory.
Grant of Authority
management only.
The authority is granted by one individual to another.
It is a systematic act which takes place at all levels and at all functions in a concern.
Grant of Responsibility
DELEGATION OF AUTHORITY
BASIS FOR COMPARISON DELEGATION DECENTRALIZATION
Accountability Superiors are accountable for the acts Department heads are accountable
done by subordinates. for the acts of the concerned
department.
Parties Superior and Subordinate Top Management and Middle or Low
Level Management.
Requirement Yes, for all organization delegation of No, it is an optional policy which may
authority is very necessary. or may not be adopted by the
organization.
Liberty of Work Subordinates do not have full liberty. A substantial amount of freedom is
there.
Control The ultimate control is the hands of The head of the department or
superior. division have the control.