NATURE OF ORGANIZATION

&
MANAGEMENT

UNIT 1

Lav Nigam
Nature Of Organization

What is an organization?

An organization is a collection of
people who work together and
coordinate their actions
to achieve a wide variety of goals
Nature Of Organization
Formal & Informal Organization:
Formal organization characterized by intentional structure of
Roles & Responsibilities coordinated towards achievement of
common goals.
Informal organization is characterized by group of people within
the organization having common values, interests & desires.
Eg the various clubs in organizations, employees meeting
together during tea & lunch time.
Informal organization plays an important role in the formal
structure.
Principles Of Organization:
 Division of Labor
 Unity Of Command
 Authority & Responsibility
 Span Of Control
Nature Of Organization
Division Of Labor:
Breaking down of jobs into simple & repetitive tasks. Individual
specialize in part of job. Eg: Assembly line production.
Advantages:
1. Efficient use of diversity of skilled / unskilled labor
2. Repetition improves performance skill.
3. No time wasted in putting away tools & equipments while
changing jobs.
4. Training for specialization is more efficient from organization’s
perspective.
Disadvantages:
 Leads to boredom, fatigue, stress, low productivity, poor
quality, absenteeism & high turnover.
To overcome this, employees were given variety of activities.
Techniques like Job Enlargement & Job Enrichment are
practised.
Nature Of Organization
Unity Of Command:
No member of organization should report to more than one
superior. This is to ensure that conflicting demands &
priorities are not received by the employee.
Modern organizations have employees reporting to more than
one superior, eg in matrix organization structure.
Authority & Responsibility:
Authority is the right inherent in a manager to give orders & be
obeyed. Required to coordinate activities in an organization.
Can b e delegated to subordinates for proper functioning &
efficient performance.
Responsibility comes with authority. Two types of responsibility:
1. Operating Responsibility – can be delegated to subordinate
2. Ultimate responsibility – cannot be delegated. Remains with
the manager who is accountable for the actions & omissions
of his subordinates.
Nature Of Organization
Span Of Control:
Refers to the number of people the manager controls. Difficult to
determine the optimum number. Narrow span leads to many
hierarchies and a tall organization structure. Wide span will
result in few hierarchies and a wider structure.
Scalar principle: Authority & responsibility should flow in a clear
unbroken line from top to bottom.
Departmentalization: Breaking down activities into specialized
groups. Purpose is to specialize activities, simplify task of
managers & maintain control. Massie suggegsts following
criterion for departmentalization:
 Group simple activities together based on likeness of
persons, qualifications, or common purpose (medical etc)
 Activity may be grouped with other activities with which it is
used ( safety & production).
 Functions to be assigned to executives most interested

Nature Of Organization
Departmentalization: (contd)
 Activities to be grouped to encourage competition among
departments or avoid friction amongst departments.
 When difficulty in making definite distinctions in two activities,
group them together.
 Functions requiring close coordination should be grouped
together.
Span Of Management:
No ideal number for the management span. Davis identified two
spans: (1) Operative span of lower level managers & (2)
Executive span of middle & top management. Suggested that
operative span should be around 30 and executive span not
more than 6.
Today, focus is on identifying factors that make span more
effective.
Nature Of Organization
Forms Of Business Organizations:
Private Enterprise:
 Sole / Proprietary / Trader
 Partnership
 Company – Private Co or Public Co.
Co-operative Sector Enterprise:
 Co-operative Society
 Co-operative Store
Public Sector Enterprise:
 Government departments
 Government Companies
 Statutory Corporation
 Statutory Board Or Commissions
SAMPLE ORGANIZATION
STRUCTURE
Nature Of Management
Definition:
“ Effective & Efficient integration & coordination of
resources to achieve the desired objectives” .
Thus, management is a process by which managers create a
climate so that employee achieves both personal &
organizational growth.
This implies:
 Process by which personal & organizational goals achieved
 Process implies planning, organizing, staffing, leading &
controlling – functions of management
 Management process influenced by environment – external &
internal
 Managers act as facilitators for achievement of goals.
Nature Of Management
Goals Of Management:
Ultimate aim of any business organization is to make profit.
Desirable aim is to create a surplus. Achieved by creating &
maintaining an environment in which individuals can achieve
common organizational goals by spending minimum amount
of time, money, material & achieve maximum personal
satisfaction.
Thus, goal is task related & maintenance related (maintaining
personal satisfaction).
Another perspective of goal is to increase productivity.
Productivity = Output / Input
Productivity also implies effectiveness & efficiency.
Effectiveness gauged by attainment of objectives.
Efficiency gauged by attainment of objectives with minimum
resources.
Management concerned with not only achieving objectives but
achieving them efficiently.
Nature Of Management
Functions Of A Manager:
An individual who plans, organizes, staffs, leads & controls
resources effectively & efficiently to attain organizational
goals.
Planning: Futuristic perspective. Setting goals to meet the
organization objectives.
Involves forecasting, identifying threats & opportunities in
external environment, strengths & weakness in internal
environment, setting objectives & taking decision on course of
action to be taken to achieve the objectives. Determines
where we are & where we would want to be. How to bridge
the gap.
Manager plans to identify the most appropriate course of action to
meet the future conditions.
Corporate Planning department formulates strategic plan of
organization – long term objectives, strategy, product /
services. Subsequently, operational plan, delegate authority &
responsibility to various units.
Nature Of Management
Organizing: Grouping of activities, allocating authority among
members so that they can achieve the organization goals.
Function creates organization structure, delegation of
authority, creates hierarchy. Goals of organization determine
type of structure. Ex: Start-up require simple structure,
manufacturing organization require classical organization,
government department require bureaucratic organization.
Staffing: Involves manning & keeping the different positions
manned in the organization structure. Achieved by identifying
the skills required, recruiting, selecting, appraising, training
and developing organization personnel.
Leading: Most important function of the manager. Influence the
subordinates to direct efforts towards achievement of
organization goal – motivate and maintain an effective system
of communication. Manager should understand the needs of
subordinates & help them in satisfying them and coordinating
them with organizational objectives.
Nature Of Management
Controlling: Ensure that the actions of the subordinates are as
per plan & lead towards the organization goal. Involves
setting of standards of performance at strategic point,
leading, motivating, supervising employees , measuring
actual performance (monitoring & reviewing activities of
supervisor) & taking corrective action where ever required.
Managerial function performed at all levels – CEO to supervisor
in all organizations – small, large organization, hospital,
manufacturing, service, NGO etc.
Top level managers spend more time in planning & organizing.
First level manager (supervisor) spend more time in leading.
Top level manager function at the macro-level (organization),
lower level manager operate at micro-level (individual & work
group).
Nature Of Management
Time Distribution Of Manager
Top-Level Managers Planning Organizing Leading Controlling

Activity
Middle-Level Managers Planning Organizing Leading Controlling

Lower Level Managers Planning Organizing Leading Controlling

Time Distribution Of Managerial Function

Nature Of Management
Types Of Manager:
Hierarchy:
1. First Level Manager: Lowest level of managerial hierarchy.
Supervisor, foreman, junior manager. Supervise & direct non-
managerial employees.
2. Middle Manager: Can be of more than one level. Manage &
direct first level managers & other operating employees.
Major activity involve implementing policies of organization.
3. Top Manager: Responsible for overall management of
organization. Set long term goals for organization by studying
& forecasting the external environment.
Functional: Like Production, Marketing, Sales, HR etc.
responsible for one functional area.
General Manager responsible for all the activities of the
organization.
Nature Of Management
Management Skills: Katz identified 3 basic skills: technical,
human & conceptual.
Technical Skill: Ability to use tools, procedures, techniques &
knowledge of specialized skills. Ex: Accountants, engineers &
doctors.
Human Skill: Ability to work with, understand and motivate other
employees as individual & groups.
Conceptual Skill: Ability to see the organization as a whole, to
recognize significant elements in a situation, and to
understand the relationship among the elements. Cognitive
ability to coordinate & integrate all the activities of the
organization.
All skills are required at any level. Technical skills at lower
levels, conceptual skills at higher level and Human skill are
important at all levels.
 Nature Of Management

Top-Level Managers Technical Human Conceptual

Middle-Level Managers Technical Human Conceptual

Lower Level Managers Technical Human Conceptual

Management Skills
Nature Of Management
Roles Of Manager:
Position that is acted by an individual in an organization.
Manager plays several formal & informal roles.
Informal role not prescribed by organization. Same
person may have one role in one situation & another
role in another situation.
Mintzberg proposed three types of roles:
1. Interpersonal Role
2. Informational Role
3. Decisional Role
Nature Of Management

Formal Authority

Interpersonal Roles FigureHead

Leader
Liaison

Informational Roles Monitor

Disseminator
Spokesperson

Decisional Roles Entrepreneur

Disturbance
Resource Allocator
Negotiator

Mintzberg's Managerial Role

Nature Of Management
Interpersonal Role: Arises directly from Formal authority.
 Figurehead: Ceremonial role. President / Marketing
manager greets visitors / clients. Sales manager goes for
lunch with clients.
 Leader: Encourage subordinates to achieve organization
objectives. Achieved by hiring, training, motivating employees
& coordinating individual needs with that of organization.
 Liaison: Interacting with outside organization like suppliers,
government officials, business associates etc.
Informational Role: Giving & Receiving Information.
 Monitor: Scan environment for information.
 Disseminator: Give some information directly to
subordinates.
 Spokesperson: Send information to people outside the
organization.


Nature Of Management
Decision Maker:
 Entrepreneur: Initiates development of project & arrange for
the resources.
 Disturbance Handler: Acts as crisis manager reacting to
problems & pressures of the situation.
 Resource Allocator: Decides who gets what in his
department.
 Negotiator: Negotiates with his subordinates.

Another study by Luthans (Real Managers Study – 1988),

managerial activities noticed by trained observers.
Four management activities observed:
1. Communication – Exchanging information, handling
paperwork, mails (29%).
2. Traditional Management – Planning, decision making,
controlling (32%)
Nature Of Management
 Networking – Interacting with outsiders, socializing /
politicking (19%).
 Human Resource Management – Motivating / Reinforcing,
Disciplining / punishing, Managing conflict, Staffing, Training /
Development (20%).

Research also indicated that networking was an important activity

for manager’s success. But it did not contribute to the
manager’s effectiveness. Human Resources management
had a strong relationship to effectiveness.
Nature Of Management
Management Challenges:
Modern business functions in a complex & intricate environment
due to:
1. Liberalization of Indian economy opening entry of global
market. Resulted in new opportunities for growth &
expansion , increased threat of competition. Survival in the
highly competitive industry a real challenge.
Globalization: Phenomenon by which markets and production in
different country are becoming increasingly interdependent
due to dynamics of trade in goods & services & flow of capital
& technology. Entry of MNC’s in India (Honda, Ford,
McDonald etc). Indian companies went global (Infosys, Aditya
Birla etc). Indian companies linked to global market. Had to
follow regulations imposed by WTO, ISO, EU norms.
Challenge for organizations to re-invent themselves to meet
global competition.
1.
Nature Of Management
Knowledge Management: Process of discovering & harnessing
an organization’s intellectual resources. Process of creating,
capturing, sharing & using knowledge. Knowledge managers
identify these human assets & help them generate new ideas,
harness these ideas into successful innovations. Organization
that fails to develop a framework for utilization will not have a
long term competitive advantage. Biggest challenge is
managing intellectual capital.
Internet: Management influenced by growth of communication
facilities. Virtual teams breaking geographical boundaries,
management must happen via the web. Internet helps
managers keep in touch with partners, suppliers & customers.
Provides a challenge for identifying opportunities & exploilting
them quickly & more effectively than the competitor.
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