Management Principles & Applications

UNIT III
 Syllabus:

UNIT 3
Organizing
Concept, Process of organizing - An overview, Span of management, Different types of
authority (line and staff and functional), Decentralization, Delegation Formal and informal
Structure principle of organizing.
ORGANIZING
 A second key function of managers is organizing, which is the process
of coordinating and allocating a firm’s resources in order to carry
out its plans.

 Organizing includes developing a structure for the people, positions,

departments, and activities within the firm.

 Managers can arrange the structural elements of the firm to

maximize the flow of information and the efficiency of work
processes.

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ORGANIZING
 It entails defining jobs and working relationships, assigning
different tasks associated with the plans, arranging and allocating
resources, design a structure which distinguishes duties,
responsibilities and authorities, scheduling activities, in order to
maintain smoothness and effectiveness in operations.

 Organizations accomplish this by doing the following:

Dividing up tasks (division of labour)
Grouping jobs and employees (departmentalization)
Assigning authority and responsibilities (delegation)

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ORGANIZING - DEFINITION

"Organising is the process of identifying and grouping the work to be

performed, defining and delegating responsibility and authority and
establishing relationships for the purpose of enabling people to work most
effectively together in accomplishing objectives.“

- Louis Allen

Organizing is the process of defining and grouping activities, and establishing

authority relationships among them to attain organizational objectives.
- Theo Haimann

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 Characteristics of Organizing

 Division of Labour: Work is assigned

to the employee who is specialised in
that work.
 Coordination: Different members of
the organization are given different
tasks to perform when all the tasks are
put together logically and sequentially,
it results in the objectives, so
coordination is required.
 Objectives: Objectives need to be
specifically defined.

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Characteristics of Organizing

 Authority-Responsibility Structure: For an effective authority

responsibility structure, the position of each manager and
executive is specified, as per the degree of the authority and
responsibility assigned to them, while performing the duties.

 Communication: The techniques, flow and importance of

communication must be known to all the members.

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Importance of Organizing

1. Efficient Administration
 It brings together various departments by grouping similar and related jobs
under a single specialization.
 This establishes coordination between different departments, which leads to
unification of effort and harmony in work.
 It governs the working of the various departments by defining activities and
their authority relationships in the organizational structure.
 It creates the mechanism for management to direct and control the various
activities in the enterprise.
2. Resource Optimization
 Organizing ensures effective role-job-fit for every employee in the organization.
 It helps in avoiding confusion and delays, as well as duplication of work and
overlapping of effort.

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Importance of Organizing

3. Benefits Specialization
 It is the process of organizing groups and sub-divide the various activities and
jobs based on the concept of division of labor.
 This helps in the completion of maximum work in minimum time ensuring the
benefit of specialization.

4. Promotes Effective Communication

 Organizing is an important means of creating coordination and communication
among the various departments of the organization.
 Different jobs and positions are interrelated by structural relationship.
 It specifies the channel and mode of communication among different members.

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Importance of Organizing

5. Creates Transparency
 The jobs and activities performed by the employees are clearly defined on the
written document called job description which details out what exactly has to
be done in every job.
 Organizing fixes the authority-responsibility among employees.
 This brings in clarity and transparency in the organization.

6. Expansion and Growth

 When resources are optimally utilized and there exists a proper division of work
among departments and employees, management can multiply its strength and
undertake more activities.
 Organizations can easily meet the challenges and can expand their activities in
a planned manner.

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Concepts of Organizing

Effective organizing depends on the mastery of several important concepts:

 Work specialization
 Chain of command
 Authority
 Delegation
 Span of control
 Centralization versus Decentralization

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 Work Specialisation

 Work specialization, sometimes called a division of labor, refers to the

degree to which an organization divides individual tasks into separate
jobs.
 Work specialization allows managers to break down complex tasks into
smaller more specific tasks that the workers or employees can complete.
 Every worker is trained specifically on how to perform a small, particular
task in the best way.
 Gradually, that worker becomes extremely effective and proficient at
doing that task. Thus, every worker in the company becomes an expert to
some extent.

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Work Specialisation

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Work Specialisation

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Chain of command
 In an organizational structure, “chain of command” refers to a
company's hierarchy of reporting relationships from the bottom to
the top of an organization, who must answer to whom.
 The chain of command not only establishes accountability, it lays out
a company’s lines of authority and decision-making power.
 A proper chain of command ensures that every task, job position and
department has one person assuming responsibility for performance.
 The chain of command in an organisation clarifies the sequence of
reporting in the organisation.
 Every employee working in an organisation has knowledge of his
authority and the responsibility of reporting.
 The chain of command tightly controls the flow of information and
decision-making in an organisation.

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Levels of Chain of command
There are three levels of the chain of command in an organisation, such
as Top-level managers, middle-level managers, and front-line
managers.
Top-level Management
 The top-level management consists of a board of directors, CEO,
president, vice president, and owner of an organisation.
 Top-level managers control the whole organisation. They are responsible
for deciding the goals and objectives of an organisation.
 They learn about the external environment, such as a change of
technology in the industry, and make decisions for the organisation
accordingly.
 They are also responsible for preparing strategies to achieve the goals
and objectives of the organisation.

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Levels of Chain of command

Middle-level Management
 Middle-level managers establish communication between front-line
and top-level managers.
 They take instructions from the top management and pass that
information to front-level managers.
 They supervise the work of front-line managers and make sure that
work is being done as required and on time.
 In addition to this, middle-level managers are also responsible for the
allocation of resources to front-line managers.

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Levels of Chain of command
Front Line Management
 The front-line managers actively participate in the day-to-day
activities of the organisation.
 The examples of front-line managers are supervisor, department head,
project head, office manager, etc.
 The role of front-line managers in an organisation is to supervise and
control the day-to-day activities of employees working in the
organisation.
 They make sure that each employee is completing their work as
required and on time.
 Employees working in the organisation take their problems to the front-
line managers, and front-line managers are responsible for providing
solutions to them.

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Features of Chain of command
1. Rank order
 The main feature of the chain of command is the order of ranks in the
organisation.
 Different employees are given different ranks.
 People with different ranks have different roles to play in the organisation.
 Rank order creates discipline in the organisation.
2. Accountability of decisions
 In a chain of command, people at different levels are given authority to
make decisions.
 People are also accountable for the decisions made by them.
 That means they will take full responsibility for their decisions.

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Features of Chain of command
3. Standardized language and methods of communication for
company structure
 In an organisation, a standard language should be used for
communication purposes among the employees of different levels. A
standard language of communication creates a formal environment in the
organisation.
 Along with standardized language, a standardized method of
communication is also followed in an organisation.
 For example, a front-line manager will report to the middle manager and
not directly to top-level management. Similarly, top-level managers give
their orders and instructions to middle-level managers. A proper method
of communication creates discipline in the organisation and employees
know whom to approach in case of emergency without any confusion.

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Features of Chain of command
4. Delegation of Authority
 Delegation of authority becomes easy when there is a proper chain of
command in an organisation.
 Having a chain of command in the organisation provides clarity to
people to whom to give orders and from whom to take instructions.

 In this way, a senior manager can delegate his subordinates to attend

a meeting on his behalf when he is busy with some other work.
 Delegation of authority keeps the action moving in an organisation
even when somebody is not present.

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Features of Chain of command
5. Levels of management
 The chain of command helps in creating different levels of management
in an organisation.
 There are three levels of management in an organization, such as top-
level management, middle-level management, and lower-level
management.
 Each level of management plays an essential role in the organisation and
has a set of duties and authorities.
For example, the role of top-level management is to decide future goals for
the organisation and prepare plans and strategies to achieve those goals.
The top-level management will be interested in the result and will not get
involved in the day-to-day works taking place in the organisation.

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Features of Chain of command
6. Feedback rules
 The last but not least feature of the chain of command is the feedback
rule.
 The feedback rule is an essential part of the chain of command system in
an organisation.
 The people sitting in power take feedback from the employees working at
lower levels to learn about the effectiveness of a decision.
 Feedbacks helps in improving future decision making.

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Advantages of Chain of command
 Accountability: In a chain of the command system, accountability and
responsibilities are clearly define. Each manager is responsible for
managing and controlling a group of employees, and he is accountable
for their performance.
 Clarity to Approach: Employees of the organisation have the clarity to
whom to approach when they need resources to get work done. Similarly,
they know without confusion to whom to contact when they want to
provide feedback.
 Eliminates the uncertainty of reporting: In small organizations, all
employees report to the owner of the business. But in organizations
where there is a large number of employees, it becomes difficult for one
person to manage everyone. Therefore, in such scenarios, having
different people managing different works helps. Each employee has
somebody to report for his work.

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Advantages of Chain of command
 Reporting: Each employee report directly to their boss and ask for
assistance from their immediate boss. Each boss will have a boss to
whom he is supposed to report.
 Fast Process of works: The chain of command helps in fast resolution of
problems. Because there is no confusion among employees to whom to
approach when a problem arises.
 Maintaining contact with customers, vendors, and shareholders. The
job title of a person will convey his authority and his role in the
organisation.
 Chain of command enhances the productivity of the organisation, as
all employees of the organisation have an explicit knowledge of work they
supposed to do. In this way, work is done without the wastage of time
and resources.

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Disadvantages of Chain of command
 In the chain of the command system, the decision-making responsibilities
lie in the hands of people sitting at the top level.
 Top-level managers are not aware of the problems faced by people working
at a lower level, and thus, they usually decide unrealistic goals for the
organization.

 The chain of command slows down the decision-making process because

of the long chain of hierarchy. A decision that can be quickly taken by a
lower-level employee has required the approval of upper management.

 For example, if an employee ran out of printing ink, he is expected to

take the permission of his immediate boss to refill the printing ink.

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Disadvantages of Chain of command
 Chain of command is difficult to implement in a modern environment
because, in present times, the decisions are required to make where
there is a need for a decision.
 The chain of command creates customers’ unsatisfaction. Employees
at lower levels usually deal with customers’ complaints and problems.
But because they are incapable of making the decision themselves, they
are required to take the permission of their superior before providing a
solution to customers.
 Because of this, delay in resolution takes place, which leaves
customers unsatisfied.

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Span of Management

 The Span of Management refers to the number of subordinates who can

be managed efficiently by a superior.
 The manager having the group of subordinates who report him
directly is called as the span of management.
 The span of management is related to the horizontal levels of the
organization structure.
 There is a wide and a narrow span of management.
 With the wider span, there will be less hierarchical levels, and thus,
the organizational structure would be flatter.
 Whereas, with the narrow span, the hierarchical levels increases,
hence the organizational structure would be tall.

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The Span of Management has two implications:

 Influences the complexities of the individual manager’s job

 Determine the shape or configuration of the Organization

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Span of Management – Kinds of Structure

 Depending on the number of employees that can be supervised or

controlled by managers, there can be two kinds of structures in the
organisation:

I. Tall structures, and

II. Flat structures.

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I. Tall Structure

 These structures are found in classical bureaucratic organisations.

 In this structure, a manager can supervise less number of subordinates.
 He can, therefore, exercise tight control over their activities.
 This creates large number of levels in the organisation.
 This is also known as narrow span of control.

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Tall Structure: Merits

1. Managers can closely supervise activities of the subordinates.

2. There can be better communication amongst superiors and
subordinates.
3. It promotes personal relationships amongst superiors and subordinates.
4. Control on subordinates can be tightened in a narrow span.

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Tall Structure: Limitations
1. It creates many levels in the organisation structure which complicates co-
ordination amongst levels.
2. More managers are needed to supervise the subordinates. This increases
the overhead expenditure (salary etc.). It is, thus, a costly form of structure.
3. Increasing gap between top managers and workers slows the
communication process.
4. Decision-making becomes difficult because of too many levels.
5. Superiors perform routine jobs of supervising the subordinates and have
less time for strategic matters.
6. Employees work under strict control of superiors. Decision-making is
primarily centralised. This restricts employees’ creative and innovative
abilities.
7. Strict control leads to low morale and job satisfaction. This can affect
productivity in the long-run.

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Downsizing & Restructuring

1. To overcome the limitations of a tall structure, many organisations

reduce the number of levels in the hierarchy by downsizing the
organisation.
2. Downsizing is “the process of significantly reducing the layers of middle
management, expanding spans of control and shrinking the size of the
work force.”
3. Many companies downsize their work force through the process of
restructuring.
4. Restructuring is “the process of making a major change in organisation
structure that often involves reducing management levels and also
possibly changing some major components of the organisations through
divestiture and/or acquisition.”

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Downsizing & Restructuring

“The most common and most serious symptom of mal-organisation is

multiplication of the number of management levels. A basic rule of
organisation is to build the least possible number of management levels
and forge the shortest possible chains of command.”

— Peter F. Drucker

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II. Flat Structure

 When superior supervises a larger number of subordinates, flat structure

is created with lesser number of hierarchical levels.
 A departure was made from tall structures to flat structures by James C.
Worthy who was a consultant in the L. Sears, Roebuck and company.

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II. Flat Structure: Example

 To illustrate, if organisations A and B, both have 256 workers and the

span of control for each managerial position is 2 for company A and 4 for
company B, there will be 9 levels in company A (requiring 128
supervisors at the lowest level, 64 at the next higher level and so on) and
5 levels in company B. A narrow span of control creates more levels in
the organisational hierarchy than the wide span of control.

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Flat Structure: Merits

1. There is low cost as less number of managers can supervise

organisational activities.
2. The decision-making process is effective as superiors delegate authority
to subordinates. They are relieved of routine matters and concentrate on
strategic matters. The decision-making is decentralised.
3. Subordinates perform the work efficiently since they are considered
worthy of doing so by the superiors.
4. There is effective communication as the number of levels is less.
5. It promotes innovative abilities of the top management.

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Flat Structure: Limitations

1. Superiors cannot closely supervise the activities of employees.

2. Managers may find it difficult to co-ordinate the activities of

subordinates.

3. Subordinates have to be trained so that dilution of control does not

affect organisational productivity.

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Factors Affecting Span of Management

1. Competence of managers:

 If managers are competent in their jobs, they can have a wide span of
management.
 Competence of managers is judged by their ability to make decisions
related to motivational plans, leadership styles, communication
channels and chains, techniques of control etc.
 Managers who rank high on these parameters can effectively
supervise larger number of subordinates.

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2. Nature of work:
 If employees perform similar and repetitive work, managers can supervise large
number of subordinates and, thus, have a wide span of control.
 Non-repetitive and challenging work requires narrow span of control.
 Changes in the nature of work also affects the span of management.

3. Assistance to managers:
 If managers have access to technical or secretarial assistance, a larger group of
subordinates can be managed.
 Span of control can, therefore, be wide.
 Staff assistance can be useful for collecting and processing information related to
various decisions and issuing orders to the subordinates.
 Managers save time in communicating with subordinates, direct the activities of
larger number of subordinates and focus on other strategic organisational
matters.

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4. Competence of subordinates:
 If subordinates are competent to manage their jobs without much assistance from
the superiors, span of control can be wide.
 Competent subordinates do not require frequent directions from the superiors
with respect to various organisational activities. Superiors can thus, manage a
larger group of subordinates.

5. Plans and policies:

 If plans clearly define the organisational/individual goals and policies, superiors
can supervise a larger group of subordinates and have a wide span of control.
 Clearly defined plans include well-formulated policies procedures, methods etc.
 Particularly, if standing plans are well defined, subordinates know the broad
guidelines within which they have to make decisions in similar and repetitive
situations.

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6. Organisational level:
 The top executives look after important and specialised activities and,
therefore, the span is narrow at the top level but at lower levels the span
can be wide, since supervisors are mainly concerned with routine jobs.

7. Authority-responsibility structure:
 If authority-responsibility structure is well-defined and understood,
superiors can supervise larger number of subordinates. People work within
the confines of their responsibility and take directions from superiors only
when required.
 Lack of clarity in authority-responsibility structure will create confusion in
the organisation.

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8. System of control:
 Effective techniques of control can enable the manager to supervise larger
number of subordinates.
 Effective system of control promotes decentralisation.
 Superiors do not actively involve in the decision-making processes as
decisions are taken at the levels where they are required.
9. Financial factors:
 Both narrow and wide structures have financial constraints.
 A narrow span requires more managers and is, thus, a costly form of
structure.
 Wide span, on the other hand, may result into organisational inefficiencies.
 Proper balance has to be maintained between the costs and benefits of the
span that a manager can effectively supervise.

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Graicunas Theory of Span of Control

 Vytautas Andrius Graiciunas (1898-1952) was a Lithuanian french

management consultant, management theorist and engineer published a
paper called "Relationship in Organisation" in 1933.

 He mentioned three types of Superior-Subordinate relationships, viz.,

 Direct Single Relationships,
 Direct Group Relationships, and
 Cross Relationships.

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1. Direct Single Relationship

 This refers to relationships that are easily and clearly recognized by the
individuals who are his immediate subordinates.

 They are equal to the number of subordinates supervised.

 For example, if A has three subordinates, there would be three direct

single relationships.

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2. Direct Group Relationship

 This means the group relationships between the superior and each
possible combination of subordinates.

 A manager has occasions to consult, confer, advise, inform or discuss

with every subordinate or any number of them or all of them in
attendance.

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3. Cross Relationships

 Cross relationships are mutual relationships among subordinates

necessary for working under the same superior.

 This result from the need of the subordinates of a common superior to

consult with one another.

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Graicunas Theory of Span of Control

 According to V.A. Graicunas, as the number of subordinates increases

arithmetically (like 1, 2, 3, 4, 5, 6, etc.) the number of relationships
which the superior has to control also increases almost
geometrically (like 1, 6, 18, 44, 100, 244, etc.).

 Therefore, a superior can only control a limited number of

subordinates, and anything beyond this limit is very hard to control.

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Graicunas Theory of Span of Control

 According to V.A. Graicunas, when the number of subordinates

increases then there is an increase in the Direct Single
Relationships, Direct Group Relationships and Cross Relationships.

 So, as the number of subordinates increases arithmetically, the number

of relationships among them also increases almost geometrically.

 So, according to him, a top-level manager can effectively manage only

222 relationships.

 Therefore, a top-level manager should not have more than 6

subordinates. Similarly, a lower-level manager should not have more
than 20 subordinates.

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Limitations of Graicunas Theory

The Graicunas Theory is criticised because of the following reasons:-

 He gives more importance to the numerical factor.

 He gives more importance to the relationships.

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Authority: Meaning

 Authority is the degree of discretion conferred on people to make it

possible for them to use their judgment.
 When an enterprise is small then decision-taking power is centralized
in few hands.
 As the enterprise grows there is a need to delegate authority to more
and more people to cope with the work.
 The main purpose of delegation is to make organization possible. “Just
as no one person in enterprise do all the tasks necessary for
accomplishment of group purpose.
 Authority is the legitimate right to give orders and get orders obeyed.

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Authority: Definition

 “The right or the capacity or both to have proposals or prescriptions or

instructions accepted without recourse to persuasion, bargaining or
force”.

 “Authority is the right to rule. It exists when subordinates acknowledge

the right of superiors to give orders. Authority is more than voluntary
compliance”.

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Elements of Authority

1. There exists a right in authority. The right is given by a superior to the

subordinate. It puts the persons in a position to regulate the behaviour
of his subordinates.
2. The right of giving of order is legitimate.
3. The right of decision-making also goes with authority. This will enable
in deciding what is to be done, when it is to be done and who is to do it.
4. Authority is given to influence the behaviour of subordinates so that
right things are done at right times.
5. The exercise of authority is always subjective. It is influenced by the
personality traits of the person on whom it is used.

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Classification of Authority

 Authority in management is key to the successful operation of any type

of organization.
 Without adequate management in place, that has the authority to get
things done, an organization falls flat before it can even get started.

Line Authority
Staff Authority
Functional Authority

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Classification of Authority

Line Authority
 The work of an employee is directed with the help of line authority.
 It takes the form of an employer-employee relationship that moves from
top to bottom.
 So certain decisions are made by the line manager without consulting
any other person.
 In some cases, line managers are differentiated from the staff managers
by using the word “line”.
 Hence the manager whose functions are linked directly with the
achievement of organizational objectives is called line manager.

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Staff Authority
 Staff authority is possessed by the staff managers.
 The objectives of the organization determine the line and staff nature of the
functions of any manager.
 When the size of the organization becomes larger and larger.
 Then the line managers feel that they cannot complete their jobs by the
existing skills.
 Along with experience and knowledge which are not updated accordingly.
 Therefore staff authority is generated for the staff whose main purpose is to
assist.
 As well as support, advise and decrease the work burden of the line
managers.

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Functional Authority
 The functional authority that is also known as functional control.
Moreover, included in the area of the line and staff aspects of HRM.

 As it is the special authority that is exercised by the personnel manager

in coordinating the personnel activities.

 Therefore the HR manager here performs his functions as the right arm of
the supreme executive.

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Functional Authority
 Functional authority is the right that is delegated to an individual or a
department to control specified processes, practices, policies, or other
matters about activities undertaken by persons in other departments.

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Advantages of Functional Authority

1. Specialization
 The functional organizational structure helps in achieving the benefits of
specialization of work.
 Every functional in charge is an expert in his area and can help the
subordinate to perform better in his area.
2. Production of Workload
 It reduces the burden on the top executives.
 There is pointed supervision in the enterprise, and every function in charge
looks after his functional area only.
3. Executive Development
 A functional manager is required to have expertise in one function only.
 This facilitates better executive development.

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4. Scope of Expansion
 It offers greater scope for expansion as compared to line Organisation.
 It does not face the problem of Limited capabilities of a few line managers.

5. More Efficiency
 It creates a high degree of efficiency as the groups of employees and the
functional heads perform their Limited and specialized operations.
 Thus, Thereby bringing expertise in performance and reduction in costs.

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Disadvantages of Functional Authority

1. Complexity
 The operation of the functional organizational structure is, complicated and
is not easily understood due to its various technicalities.
 Workers are surprised by a number of instructions from different functional
Heads.
2. Dual command
 It violates the principles of unity of command since a person is accountable
for more than one bosses.
3. Limited Perspective
 A functional manager tends to create boundaries around himself and thinks
only in terms of his own department rather than the whole enterprise.
 This results in a loss of overall perspective in dealing with business
problems.

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Disadvantages of Functional Authority

4. Delay in Decision Making

 There is a general lack of coordination among the functional executives
which causes the delay in decision making.
 When a decision problem requires the involvement of more than one
specialist.

5. Problem of Succession
 The functional organizational structure develops specialists rather than
generalists.
 This may create the problem of succession in top executives.

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Line and Staff Authority
 Authority is linked with ordering someone, and making certain decisions
to direct the work of others.
 The subordinate work is directed by the line manager.
 Staff managers assist line managers in achieving their basic objectives.
 So, HR managers fall into the category of staff managers.
 Mostly line managers have a responsibility to perform line functions,
some staff functions and coordination functions.
 The line manager specifies the qualifications required from the upcoming
employees for certain positions in the organization.

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Line and Staff Authority

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Line and Staff Authority

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Line and Staff Functions
The line and staff aspects of HRM obliged the line manager to perform the
following functions also.
 Placement
 Orientation
 Training
 Improving Job Performance
 Gaining Creative Cooperation
 Interpreting procedures and Policies
 Controlling Costs of Labor
 Developing employee abilities
 Creation and maintenance of Departmental Morale
 The health and physical condition of employees is protected.

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Line and Staff Authority

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Centralisation

 Centralization is an organizational structure that gives the ability of

decision-making responsibilities to higher management.
 Few selected members are given the authority to create and determine
strategies and goals.
 It also clarifies the motives and mission of the organization which must
follow to achieve its goals.
 In centralization, the type of organizational structure allows higher
management to create the rules including procedures that are used to
communicate with lower-level employees.
 Lower-level employees have to obey the rules made by the higher
management organization without doubting the rules and regulations.

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Advantages of Centralisation

1. A clear chain of command

 A centralized organization benefits from a clear chain of command because
every person within the organization knows who to report to.
 Junior employees know who to approach whenever they have concerns about
the organization. On the other hand, senior executives follow a clear plan of
delegating authority to employees who excel in specific functions.
2. Focused vision
 When an organization follows a centralized management structure, it can
focus on the fulfilment of its vision with ease.
 There are clear lines of communication and the senior executive can
communicate the organization’s vision to employees and guide them toward
the achievement of the vision.

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Advantages of Centralisation

3. Reduced costs
 A centralized organization adheres to standard procedures and methods
that guide the organization, which helps reduce office and administrative
costs.
 The main decision-makers are housed at the company’s head office or
headquarters, and therefore, there is no need for deploying more
departments and equipment to other branches.

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Advantages of Centralisation
4. Quick implementation of decisions
 In a centralized organization, decisions are made by a small group of people
and then communicated to the lower-level managers. The involvement of only
a few people makes the decision-making process more efficient since they can
discuss the details of each decision in one meeting.
 The decisions are then communicated to the lower levels of the organization
for implementation.
5. Improved quality of work
 The standardized procedures and better supervision in a centralized
organization result in improved quality of work.
 There are supervisors in each department who ensure that the outputs are
uniform and of high quality.

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Disadvantages of Centralisation
1. Bureaucratic leadership
 Centralized management resembles a dictatorial form of leadership where
employees are only expected to deliver results according to what the top
executives assign them.
 Employees are unable to contribute to the decision-making process of the
organization, and they are merely implementers of decisions made at a higher
level.
2. Remote control
 The organization’s executives are under tremendous pressure to formulate
decisions for the organization, and they lack control over the implementation
process.
 The failure of executives to decentralize the decision-making process adds a
lot of work to their desks.

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Disadvantages of Centralisation
3. Delays in work
 Centralization results in delays in work as records are sent to and from the
head office.
 Employees rely on the information communicated to them from the top, and
there will be a loss in man-hours if there are delays in relaying the records.

4. Lack of employee loyalty

 Employees become loyal to an organization when they are allowed personal
initiatives in the work they do.
 They can introduce their creativity and suggest ways of performing certain
tasks.

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Decentralisation
 Decentralization or decentralisation is the process by which the
activities of an organization, particularly those regarding planning
and decision making, are distributed or delegated away from a
central, authoritative location or group.
 Decentralisation is referred to as a form of an organisational structure
where there is the delegation of authority by the top management to
the middle and lower levels of management in an organisation.
 Decentralization is a systematic delegation of authority at all levels of
management and in all of the organization.
 In a decentralization concern, authority in retained by the top
management for taking major decisions and framing policies
concerning the whole concern.
 Rest of the authority may be delegated to the middle level and lower level
of management.

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Importance of Decentralisation

 Rapid decision making: Most of the decisions are taken on the spot, and
approval from the higher authority is not required. The ability to make a
prompt decision allows an organisation to function its operation quickly
and effectively.

 Administrative development: The decentralisation process questions

the manager’s judgement and techniques, when responsibility and
challenges to develop solutions are given to them. This questioning
method grows confidence, encourages self-reliance, and make them a
good decision-maker resulting in the development of the organisation.

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Importance of Decentralisation
 Development of executive skills: It allows the employee to perform task
individually, giving them invaluable exposure. This individual performance
creates an environment where an individual can enhance their expertise, take
ownership & more significant responsibilities, and be suitable for promotion.
 Promotes growth: Decentralisation also allows the heads of the department
to work independently. This independence helps the department to grow, have
a healthy competition between other departments. Ultimately, the competition
will lead to an improvement and enhancement in productivity.
 Higher control: It also evaluates and reviews the performances of each
department and gives them a comprehensive perspective of their work.
However, controlling is the biggest challenge of decentralisation and stabilised
management and scorecard are being developed.

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Importance of Decentralisation
 Development of executive skills: It allows the employee to perform task
individually, giving them invaluable exposure. This individual performance
creates an environment where an individual can enhance their expertise, take
ownership & more significant responsibilities, and be suitable for promotion.
 Promotes growth: Decentralisation also allows the heads of the department
to work independently. This independence helps the department to grow, have
a healthy competition between other departments. Ultimately, the competition
will lead to an improvement and enhancement in productivity.
 Higher control: It also evaluates and reviews the performances of each
department and gives them a comprehensive perspective of their work.
However, controlling is the biggest challenge of decentralisation and stabilised
management and scorecard are being developed.

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Advantages of Decentralisation
 1. Quicker and better decisions: it disperses decision making authority
close to unit managers who execute decisions. It reduces problems of
communication and red tape. This leads to quicker and better decision
making
 2. Diversification: decentralization facilitates diversification of products,
activities and markets. Profit centers can be established with independence
in decision making.
 3. Competitive organizational climate: Decentralization promotes
competitive climate for improving performance among divisions and profit
centers.
 4. Management development: decentralization encourages managers to
exercise freedom and independence in decision making. They learn to make
decisions and exercise judgment. This develops managerial competency.
 5. Environmental adaptation: Decentralization helps organizations to
adapt to fast-changing environment

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Disadvantages of Decentralisation

 1. As decentralization gives autonomy and liberation in choice making it lead

to discrepancies in plans, schedules and methods.

 2. High cost: Decentralization can occur in duplication of works and

exhaustion of resources. Social resources require to be instructed. This
results in extended expenses.

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Delegation

 The Delegation of Authority is an organizational process wherein, the

manager divides his work among the subordinates and give them the
responsibility to accomplish the respective tasks.
 Along with the responsibility, he also shares the authority, i.e. the power to
take decisions with the subordinates, such that responsibilities can be
completed efficiently
 Delegation of authority involves the sharing of authority downwards to the
subordinates and checking their efficiency by making them accountable for
their doings.
 In an organization, the manager has several responsibilities and work to do.

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Delegation

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Delegation

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Delegation

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Delegation

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Delegation Steps

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Principles of Organizing

1. Principle of objectives 10.Principle of unity of command

2. Principle of specialization 11.Principle of exception
3. Principle of co-ordination 12.Principle of simplicity
4. Principle of authority 13.Principle of efficiency
5. Principles of responsibility 14.Scalar principle
6. Span of control
7. Principle of balance
8. Principle of continuity
9. Principle of unity of direction

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1. Principle of objectives
 There is different department and the organizational department goals must
be clearly defined.
 All the objectives should be unified in such a way that it could facilitate to
concentrate all the efforts towards the attainment of organizational goals.
 Therefore unity of objectives is necessary.

2. Principle of specialization
 The concept of division of work is based on the principle of specialization and
efficiency.
 In the organization the term of specialization help to divide the whole work of
the organization into smaller components of the part.

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3. Principle of co-ordination
 In the organization, the coordination of different activities is an important
principle.
 For the activities of various departments, there should be some agency to
coordinate.
 In the organization, there are different department and the whole department
have to set their own goals in the absence of coordination.

4. Principle of authority
 This means by the right and power through which can be guided and directs
the organizational employees.
 So that the organization has achieved its desired goals. It can help the
manager to take decisions.

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5. Principle of responsibility
 In the organization, the subordinates performed the order of the top level of
management.
 Departmental managers and others personnel take the direction from the top
level of management to perform the task.
 In the organization there is also authority is necessary to perform the work.

6. Span of control
 In the organization, there are unlimited subordinates. So according to this
principle how many subordinates can be supervised by a manager.
 The number of subordinates should be such that the manager should be
able to control their work effectively.

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7. Principle of balances
 According to this principle, there should be an establishment and other
performance balances in work and activities and the size of the department
within the organization.
 Authority there should be a reasonable balance between centralization and
decentralization equally.

8. Principle of continuity
 In the organization, there are different types of departments then all
departments should be amendable according to the changing situations.
 In the organization production and marketing systems.
 There should always be a possibility of making the necessary adjustments.

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9. Principle of unity of direction
 In the organization, there is different department and the whole department
have the group of the worker.
 Then according to this principle, there should be one objective and one plan
for the group activities.
 If it could be a direction from the manager it will be the same for the whole
department of workers.

10. Principle of unity of command

 In the organization, there is most important the principle of unity of
command to achieve the organizational goals.
 For example, In the organization, there is different department and the whole
department of one manager or boss.

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11. Principle of exception
 According to this principle It is stated that when something is going wrong in
the organization then the top level of management should interfere.
 Principle of exception allows top management to concentrate on policy and
planning formulation. In an organization, the important time of management
is not to waste and avoidable supervision.

12. Principle of simplicity

 According to this principle in the organization, there is easy to understand
by each and every member of the organization because their organizational
structure should be simple.
 There may also be duplication and overlapping of efforts that may otherwise
be avoided. It helps in the smooth running of the organization.

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13. Principle of efficiency
 This principle states that the organization should be able to achieve
organizational objectives at a minimum cost.
 The standards of revenue and costs are performance and pre-determine
should be according to these goals.
 The organization should also enable the attainment of job satisfaction to
various employees.

14. Scalar principles

 According to this principle state that in the organization the vertical
placement of supervisors starting from the top and going to the lower level.
 The scalar chain is a prerequisite for efficient and effective organization.

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