POM Unit 3

Organizing
 Organizing is a process of engaging two or more

people, working together in a structured way to
achieve a specific goals or set of goals.
 That is organizing as the identification and

classification of required activities,
 the grouping of activities necessary to attain

objectives,
Organizing…
 the assignment of each grouping to a manager with
the authority (delegation) necessary to supervise it,
and
 the provision for coordination horizontally (same

organizational level) and
 vertically (different levels) in the organization

structure.
 It is a function in which the combination of human,

physical and financial resources takes place.
Organization
 It implies a formalized intentional structure of roles
and positions.
 That is people working together must fill certain

roles.
 The roles should be intentionally designed to ensure

that required activities are done and
 that activities fit together so that people can work

smoothly, effectively, and efficiently in groups.
Types of Organization
 Formal Organization
 Informal Organization.
Formal Organization
 An intentional structure of roles in which position,
responsibility, authority, accountability and the lines of
command are clearly defined and established.
 That is, a system of well defined jobs with a
prescribed pattern of communication and delegation
of authority.
Informal Organization
 Comes into existence due to social interactions and
interpersonal relationships and exists outside the
formal authority system, with out any set rigid rules.
 It exist in the shadow of formal structure as a
network of personal and social relations which must
be understood and respected by the management.

Formal and Informal Organization
Formal
organization
Informal
organization
Organizational Structure
 The way in which an organization’s activities are
divided, organized and coordinated with respect to
the task.
 The formal system of task and reporting relationship

that controls, coordinates and motivates employees,
 so that they all cooperate and work together to

achieve the organization goal.
Organizational Structure…
That is,
 Arrangement of task
 Position, role and relationships
 Hierarchy
 Responsibility and authority.

Benefits of Organizational
Structure
 Attainment of objectives
 Minimum conflicts
 Reduction in overlapping and duplication of work
 Reduction in runarounds
 Promotion of personnel
Benefits of Organizational
Structure…
 Wage and salary administration
 Easy communication
 Effective Planning
 Increased cooperation
 Increase in creativity.
Determinants of Organizational
Structure
 Every business needs a structure to operate.
 The structure will vary according to a firm’s mission,

purpose, strategy, size, technology, and
 also with the changes in environmental

circumstances.
 Although all organizations have the same basic

elements, each develops the structure that
contributes to the most efficient operations.
Span of Control
 Span of control, also called span of management,
refers to the number of subordinates that can be
managed effectively and efficiently by supervisors or
managers in an organization.
 The larger the number of the subordinates a manager

controls, the broader is his/her span of control.
 It is either narrow or wide resulting in a flatter or

more hierarchical organizational structure.
Narrow Span
Advantages:
 Have more levels of reporting in the organization,

resulting in a more hierarchical organization.
 Supervisors can spend time with employees and

supervise them more closely.
 Close control.
 Fast communication between subordinates and

supervisors.
Narrow Span…
Disadvantages:
 High cost due to more levels.
 More supervisory involvement in work could lead to

less empowerment and delegation.
 Result in communication difficulties and excessive

distance between the top and bottom levels in the
organization.
Wide Span
Advantages:
 Have fewer levels of reporting in the organization,

resulting in a more flexible, and flatter organization.
 Supervisors are forced to delegate.
 Encourages empowerment of employees by giving

more responsibility, delegation and decision making
power to them.
 Subordinates must be carefully selected.

Wide Span…
Disadvantages:
 May lead to overloaded supervisors if employees

require much task direction, support, and supervision.
 Danger of supervisors loss of control.
 May not provide adequate support to employees

leading to decreased morale or job satisfaction.
 Requires exceptional quality of managers.

Types of Organizational
Structure
Line Structure:
 Authority from top to bottom.
 Relationship in hierarchy connect positions and task

at each level.
 Clearly defined authority, responsibility and

accountability.
Types of Organizational
Structure…
Line and staff Structure:
 A line function is one that directly advances an

organization in its core work.
 Always includes production and sales, and sometimes

also marketing.
 Staff do not have authority over line manages.
 The power of command always remains with the line

executives and staff supervisors guide, advice and
council the line executives.
Line and Staff Structure
 The clearer the line of authority from the ultimate
management position in an enterprise to every
subordinate position,
 the clearer will be the responsibility of decision

making and the more effective will be organization
communication.
 The line authority is that relationship in which a

superior exercises direct supervision over a
subordinate.
Line and Staff Structure…
 The nature of staff relationship is advisory.
 The function of people in a pure staff capacity is to

investigate, research, and give advise to line managers.
 General Staff
 Executive Assistants to Director, Principal etc.
 Special Staff
 Advisory, Service or Control Capacity (IT, QC).

Conflict between line and staff
 Ideally it is difficult to differentiate between line and
staff functions and because of this, conflicts cannot be
avoided.
Different backgrounds:
 Line managers are senior to staff in terms of

organizational hierarchy.
 Staff managers are relatively younger and better

educated.
Conflict between line and staff…
Lack of demarcation between line and staff
authority:
 It is difficult to make a distinction between line and

staff authority.
 Overlapping and duplication of work creates a gap

between the authority and responsibility of line and
staff.
Lack of proper understanding of authority:
 Failure to understand authority causes
misunderstandings between line and staff.
 This creates conflict.

Arguments of line against staff:
 Staff interfere in the work of line managers and try to
advise them to how to do their work.
 Staff takes full credit of successful programs and lack
of accountability on their actions and put the line fully
responsible for unsuccessful activities.

 Staff fail to see the full picture accurately as they are
specialist in their specific areas only.
 Since staff do not involve in the real work situations,

so their ideas and suggestions are impractical.
 Staff emphasize about their area of specialisation

rather than the interest of the organization as a
whole.
 Staff are totally out of the reality and lacking practical

knowledge.
Arguments of staff against line:
 Line often takes decisions without taking inputs from

staff and informs staff just after taking the decision
and if it goes wrong make blame to the staff.
 Resistance to new ideas from staff and on the

assumption that implementing it means something is
wrong with the present way of working.
 Lack of proper authority and so are unable to

persuade the line managers to implement it.
Steps for overcoming the
line and staff conflict
Clarity in relationships:
 Duties and responsibilities of line and staff should

clearly laid down.
 Relationships of staff with the line and their scope of

authority need to be clearly defined.
 Line managers should also be made responsible for

decision making.
 Line should enjoy the freedom to modify, accept, or

reject the recommendations or advice of the staff.
line and staff conflict…
Proper use of staff:
 Line managers must know how to maximize

organizational value by utilising the expertise of staff
managers.
 Similarly, staff managers should also help the line to

understand how they can improve their activities.
Completed staff work:
 It denotes careful study of the problem, identifying

possible alternatives for the problem, and providing
recommendations based on the compiled facts.
 This will result in more staff work and practical

suggestions.
Holding staff accountable for results:
 Once staff becomes accountable, they would be

cautious about their recommendations.
 Line also would have confidence on staff

recommendations, as staff is accountable for the
results.
Functional Authority
 It is the right that is delegated to an individual or a
department to control specified process, practices,
policies, or
 other matters relating to activities undertaken by

persons in other departments.
 That is, it is an additional authority given to a line or

staff manager to do the new job.
 When this new job is completed, the functional

authority is taken away, and he/she has to go back to
his/her normal job.
Functional Authority…
 Functional authority is different from line authority
because line authority is given only for one particular
department.
 Eg: a production manager is given line authority only

for the production department.
 But functional authority may be given for a particular

department or for the full organization.
 Eg: the marketing manager is given functional

authority to conduct a new year party for the full
organization.
 Functional authority is different from staff authority.
 Because the manager that has staff authority cannot

do anything extra and can only give advice and
service.
 But the manager that has functional authority can do

something extra.
 Here, functional authority is similar to line authority

and a type of limited line authority.
 Organization use functional authority only when
necessary, because too much use of the authority will
have a bad effect on the Line authority.
 Functional authority is used only to perform

specialized functions, which cannot be performed by
line managers.
 In that case, staff managers or outside experts are

given the authority to perform these functions.
Departmentation
 Is a method of subdividing work and workers into
separate organizational units that take responsibility
for completing particular tasks.
 Traditionally, organizational structures have been
created by departmentalizing work according to five
methods.
Departmentation…
 Functional Departmentalization
 Product Departmentalization
 Customer Departmentalization
 Geographic Departmentalization
 Matrix Departmentalization.
Functional Departmentalization
 It organizes work and workers into separate units
responsible for particular business functions or areas
of expertise.
 A common functional structure might have individuals

organized into accounting, sales, marketing,
production, and human resources departments.
 Not all functionally departmentalized companies have

the same functions.
Functional Departmentalization…
 The functional departments in a company that uses
functional structure depends on the business or
industry a company is in.
 Advantages: it allows work to be done by highly

qualified specialists.
 Everyone in the same department having similar work

experience,
Functional Departmentalization…
 so communication and coordination will become less
problematic for departmental managers.
 Disadvantages: cross department coordination can be

difficult.
 Managers and employees are often more interested in

doing what’s right for their function than in doing
what’s right for the entire organization.
Product Departmentalization
responsible for producing particular products or
services.
 Advantages: it allows managers and workers to

specialize in one area of expertise.
 Managers and workers develop a broader set of

experiences and expertise related to an entire
product line.
 Disadvantage: the challenge of coordinating across the

different product departments.
Customer Departmentalization
responsible for particular kinds of customers.
 Advantage: is that it focuses the organization on

customer needs rather than on products or business
functions.
 Creating separate departments to serve specific kinds

of customers allows companies to specialize and
adapt their products and services to customer needs
and problems.
Customer Departmentalization…
 Disadvantage: difficult to achieve coordination across
different customer departments.
 The emphasis on meeting customers’ needs may lead
workers to make decisions that please customers but
hurt the business.

Geographic Departmentalization
responsible for doing business in particular
geographic areas.
 Advantage of geographic departmentalization is that

it helps companies respond to the demands of
different markets.
 It can reduce costs by locating unique organizational

resources closer to customers.
Geographic Departmentalization…
 Disadvantage of geographic departmentalization is
that it can be difficult to coordinate departments that
are literally thousands of miles from each other and
 whose managers have very limited contact with each

other.
 Also need to adapt products and marketing to

different geographic locations.
Matrix Departmentalization
 It is a hybrid structure in which two or more forms
of departmentalization are used together.
 The most common matrix combines the product and

functional forms of departmentalization,
 but other forms may also be used.
 The thing distinguish it from others traditional forms

of departmentalization are most employees report to
two bosses, one from each core part of the matrix.
Matrix Departmentalization…
 By virtue of their hybrid design, matrix structures
lead to much more cross functional interaction than
other forms of departmentalization.
 While matrix workers are typically members of only

one functional department (based on their work
experience and expertise),
 they are also commonly members of several ongoing

project, product, or customer groups.
 Because of the high level of cross functional
interaction, matrix departmentalization requires
significant coordination between managers in the
different parts of the matrix.
 Because of the ability to quickly pull in expert help

from all the functional areas of the company,
 matrix project managers have a much more diverse

set of expertise and experience in allocating
resources than managers in the other forms of
departmentalization.
 Disadvantage of matrix departmentalization is the
high level of coordination required to manage the
complexity involved in running large, ongoing projects
at various levels of completion.
 Disagreements or misunderstandings about schedules,

budgets, available resources, and
 the availability of employees with particular functional

expertise are common in matrix structures.
Organizational Authority
 Authority is the right to give commands, take action,
and make decisions to achieve organizational
objectives.
 Traditionally, organizational authority has been

characterized by the following dimensions:
Chain of Command:
 Is the vertical line of authority that clarifies who

reports to whom throughout the organization.
Organizational Authority…
 One of the key assumptions underlying the chain of
command is unity of command, which means that
workers should report to just one boss.
 That is, only one person can be in charge at a time.
 Matrix organizations, in which employees have two

bosses, automatically violate this principle.
 This is one of the primary reasons that matrix

organizations are difficult to manage.
Line versus Staff Authority:
 Line authority is the right to command immediate

subordinates in the chain of command.
 Staff authority is the right to advise but not command

others who are not subordinates in the chain of
command.
 That is, a manager in human resources might advise
the manager in charge of the Tax and Accounting
group on a hiring decision but cannot order him or
her to hire a certain applicant.
 The terms line and staff are also used to describe
different functions within the organization.

 A line function is an activity that contributes directly
to creating or selling the company’s products.
 Eg: activities that take place within the manufacturing

and marketing departments would be considered line
functions.
 A staff function, such as accounting, human resources,

or legal services, does not contribute directly to
creating or selling the company’s products but instead
supports line activities.
 Eg: marketing managers might consult with the legal
staff to make sure the wording of a particular
advertisement is legal.
Delegation of Authority:
 Is the assignment of direct authority and

responsibility to a subordinate to complete tasks for
which the manager is normally responsible.
 When a manager delegates work, three transfers
occur,
 First, the manager transfers full responsibility for the

assignment to the subordinate.
 The second transfer that occurs with delegation is

that the manager gives the subordinate full authority,
 over the budget, resources, and personnel needed to

do the job.
 The third transfer that occurs with delegation is the
transfer of accountability.
 The subordinate now has the authority and

responsibility to do the job and,
 in return, is accountable for getting the job done.
 That is, managers delegate their managerial authority

and responsibility to subordinates in exchange for
results.
Principles of Delegation
Functional clarity:
 The functions to be performed, the methods of

operations and the results expected must be clearly
defined.
 The authority delegated must be adequate to ensure

that these functions are well performed.
Principles of Delegation…
Matching Authority with Responsibility:
 Authority should be delegated as to be equal to

responsibility, consigned to the worker.
 Authority should be adequate and should not only

match the duties to be performed but also the
personal capabilities of the subordinate.
Principle of Result Expected:
 Before actually delegating the authority to the

subordinate, the manager must know the purpose of
such delegation and the results expected from it.
 It helps in determining the authority to be delegated

which is sufficient for completing the responsibility.
Unity of Command:
 A subordinate should be assigned duties and

delegated authority by only one superior and
 he/she should be accountable for the performance of

the assigned duties and exercise of the delegated
authority.
Principle of Communication:
 The responsibility and authority must be clearly
specified, openly communicated and
 must be continuously kept open for issuing directions
as well as for receiving feedback.

Principle of Absoluteness of Responsibility:
 The authority can be delegated, but responsibility

cannot be delegated.
 That is, even after delegating the authority to the

subordinate, the manager will be solely responsible
for the doings of the subordinate.
Principle of Management by Exception:
 Manager should delegate the authority and

responsibility for routing operations and decision
making to subordinates.
 The subordinates must make decisions and take

actions wherever they can and,
 should only raise matters to their superiors, which

are unique, and outside their domain of authority.
Process of Delegation
Assignment of Tasks
Entrustment of decision
making authority
Creation of Obligation
Creation of accountability
Process of Delegation…
Assignment of Tasks:
 Define clearly what subordinate need to do
 Consider capabilities
 Task not overburdened
 Divide among superior and subordinate.

Entrustment of Decision making Authority:
 Give authority to subordinate to make and

implement decisions.
 Authority must be clearly stated and if possible in

writing.
Creation of Obligation:
 To perform his/her duties satisfactorily.
 Timely completion of the task as well as maintain
quality output.
Creation of Accountability:
 Being answerable to any of your actions and being
held accountable for results.
 An obligation to accept the consequences whether
good or bad.
Advantages of Delegation
 Relieves managers from excessive work load.
 Managers get more time for strategic planning,

coordination, policy making, and control.
 It results in quick decisions.
 Motivational factor for the subordinates and will feel

proud of being given such responsibility.
 It will enhance the capabilities of the subordinates.

Why some managers have trouble
in delegating authority?
 They trust that they can do their work better than
their subordinates.
 They don’t have trust and believes that their

subordinates are not capable enough.
 Thinks that delegating will involve a lot of time in

explaining the responsibility to their subordinates.
 They fear that something will go wrong and someone

else may takes over a job.
Degree of Centralization:
 Centralization of authority is the location of most

authority at the upper levels of the organization.
 In a centralized organization, managers make most

decisions, even the relatively small ones.
 Decentralization is the location of a significant

amount of authority in the lower levels of the
organization.
 An organization is decentralized if it has a high degree
of delegation at all levels.
 In a decentralized organization, workers closest to

problems are authorized to make the decisions
necessary to solve the problems on their own.
 It develops employee capabilities throughout the

company and leads to faster decision making and
more satisfied customers and employees.
Advantages of Decentralization
 Relieves top executives from excessive work load.
 Provides foundation for development of future

executives.
 Highly motivational.
 Quick Decisions.
 Effective control over operations and process.

Factors determining the degree of
Decentralization of authority
Costliness of Decisions:
 The costliness of decisions is the most important

factor determining the extent of decentralization.
Economic Size:
 Larger the size of a business unit, the greater will be

the number of departments, and
Decentralization of authority…
 as a result, decentralization would be preferred in
large sized units.
Availability of Managers:
 The shortage of managerial manpower necessarily
restricts the extent of decentralization.

History of the Enterprise:
 If an organization has appointed a set of departments
with the departmental heads being vested with the
authority to achieve the objectives,
 it sets the example of decentralization.

The Philosophy of the Management:
 The character of the top leader and the philosophy
possessed by him/her will have an important influence
on the extent to which authority in an enterprise is
centralized or decentralized.
Decentralisation of Performance:
 If the enterprise activities are dispersed over to

different territories it will prosper by this policy of
decentralization.
Environmental Influences:
 Factors which are external to the business have an

impact on the degree of decentralization.
 Eg: government controls, tax policies and national

unionism.
 One rule of thumb is to stay centralized where
standardization is important and
 to decentralize where standardization is unimportant.
 Standardization is solving problems by consistently
applying the same rules, procedures, and processes.

References
 Koontz, H., & Weihrich, H. Essentials of Management, McGraw Hill Publishers.
 Williams. Management, (International edition) South-western Cengage Learning.
 Stoner, Freeman, Gilbert Jr. (2014). Management (6th edition), New Delhi: Prentice
Hall India.
 Daft, R. L. (2009). Principles of Management (1st edition), Cengage Learning.
 Gupta, R.S., Sharma, B.D., & Bhalla. N.S. (2011). Principles & Practices of Management
(11th edition). New Delhi: Kalyani Publishers.
 John R. Schermerhorn. Management,Wiley-India
 L M Prasad, (2007). Principles and Practices of Management, Himalaya Publishing

House
 Rao, P.S. (2009). Principles of Management, Himalaya Publishing House.
 Moshal, B.S. Principles of Management,Ane Books.

Thank You…
Dr. Ajai Krishnan G

POM Unit 3

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Organizing

 Organizing is a process of engaging two or more

 That is organizing as the identification and

 the grouping of activities necessary to attain

 the provision for coordination horizontally (same

 vertically (different levels) in the organization

 It is a function in which the combination of human,

 That is people working together must fill certain

 The roles should be intentionally designed to ensure

 that activities fit together so that people can work

responsibility, authority, accountability and the lines of

command are clearly defined and established.

 That is, a system of well defined jobs with a

prescribed pattern of communication and delegation

interpersonal relationships and exists outside the

formal authority system, with out any set rigid rules.

 It exist in the shadow of formal structure as a

network of personal and social relations which must

be understood and respected by the management.

 The formal system of task and reporting relationship

 so that they all cooperate and work together to

 Position, role and relationships

 Responsibility and authority.

 Reduction in overlapping and duplication of work

 The structure will vary according to a firm’s mission,

 also with the changes in environmental

 Although all organizations have the same basic

 The larger the number of the subordinates a manager

 It is either narrow or wide resulting in a flatter or

 Have more levels of reporting in the organization,

 Supervisors can spend time with employees and

 Fast communication between subordinates and

 High cost due to more levels.

 More supervisory involvement in work could lead to

 Result in communication difficulties and excessive

 Have fewer levels of reporting in the organization,

 Supervisors are forced to delegate.

 Encourages empowerment of employees by giving

 Subordinates must be carefully selected.

 May lead to overloaded supervisors if employees

 Danger of supervisors loss of control.

 May not provide adequate support to employees

 Requires exceptional quality of managers.

 Authority from top to bottom.

 Relationship in hierarchy connect positions and task

 Clearly defined authority, responsibility and

 A line function is one that directly advances an

 Always includes production and sales, and sometimes

 Staff do not have authority over line manages.

 The power of command always remains with the line

 the clearer will be the responsibility of decision

 The line authority is that relationship in which a

 The function of people in a pure staff capacity is to

 Executive Assistants to Director, Principal etc.

 Advisory, Service or Control Capacity (IT, QC).

 Line managers are senior to staff in terms of

 Staff managers are relatively younger and better

 It is difficult to make a distinction between line and

 Overlapping and duplication of work creates a gap

 Failure to understand authority causes

misunderstandings between line and staff.

 This creates conflict.

 Staff interfere in the work of line managers and try to