Meaning of organization


´An organization comes into existence when there are a number of persons in communication and relationship to each other and are willing to contribute towards a common endeavor.µ

What is organizing

Organizing 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 - L. A. Allen

and where decisions are to be made.Organisation is the establishment of authority and relationships with provision for coordination between them. . Koontz and O·Donnell . who is to do them.Definition € € Stephen P. both vertically and horizontally in the enterprise structure. how the tasks are to be grouped. who reports to whom. Robbins and Mary Coulter organizing is determining what tasks are to be done.

Organizing as process € ´Organizing involves the grouping of activities necessary to accomplish goals and plans.Koontz and O·Donnell . the assignment of these activities to appropriate departments and the provision for authority delegation and coordinationµ .

Process/steps of organizing € € € € € Determination of objectives Division of activities Fitting individuals into jobs Developing relationships Coordination of activities .

Nature/Characteristics € € € € € Division of work or specialization Orientation toward goals Composition of individual and groups Differentiated functions Continues process .

Purpose of organizing € € € € € Help to achieve organization goals Optimum use of resources To perform managerial functions Facilitates growth and diversification Human treatment of employees .

Principles of organization Principle of objectives. € Principle of unity of command. € Principle of division of work. € Principle of delegation. € Principle of span of control. € . € Principle of scalar chain. € Principle of absoluteness of responsibility.

€ Principle of efficiency.Principle of parity of authority and responsibility. € Principle of co-ordination. € Principle of exception € . € Principle of flexibility . € Principle of continuity.

Types of organization € Formal organization € Informal organization .

towards goals that mutually benefit the participants and the organization. . with a language of rules that ostensibly leave little discretion for interpretation.Formal Organization € € € Formal organization is a fixed set of rules of intra-organization procedures and structures. It is a group of people working together cooperatively. under authority. It is usually set out in writing.

Characteristics € € € € € € € Well defined rules and regulation Arbitrary structure Determined objectives and policies Status symbol Limitation on the activities of the individual Strict observance of the principle of coordination Messages are communicated through scalar chain .


Formal Vs Informal Organization Basis of Comparison General Nature Major Concepts Primary Focus Guidelines for Behavior Source of Leader Powers Formal Organization Official Authority and Responsibility Position Rules Delegation by Management Informal Organization Unofficial Power and Politics Person Norms Delegation by Management .

€ € . prejudices. likes and dislikes. Groups of people who decide to interact among themselves Informal organization refers to the relationship between people in an organization based on personal attitudes. etc.Informal Organization € A network of interpersonal relationships that arise when people associate with each other. emotion.

In other words. rather than official relationships. informal organizations are created by the group members themselves.€ It describes the pattern of behavior and interaction. that stems from personal. (for accomplishment of purpose may or may not be relevant to the organization) € .

Characteristics € € € € € € € € € Evolving constantly Dynamic and responsive Excellent at motivation Requires insider knowledge to be seen Treats people as individuals Flat and fluid Cohered by trust and reciprocity Difficult to pin down Essential for situations that change quickly or are not yet fully understood .

Within Organization .

between two or more .

Benefits of Informal Organization € To Employees € To Management .

Employees: € Sense of belonging € Aid on the job € Check on authority € Management: € Less supervision € An aid to management € .

Disadvantage of Informal Organization € € € € € Resistance to change Role conflicts Rumors Conformity Group think philosophy .

Span of control € It is also known as span of management ´The span of management or span of control is the number of subordinates who report directly to a specific manager. Martin It suggests how the relations are designed between a superior and a subordinate in an organization € € .µ Kathryn M. Bartol and David C.

The concept of span of control was developed in the united kingdom in 1992. and attention to devote their jobs. Based on assumption that individual (manager) have finite amount of time. energy. by sir Hamilton. € € .€ Previously used in military for control and supervision.

Factors Determining effective Span € Subordinate Training Clarity of Delegation of Authority Clarity of Plans Geographic Location Use of Objective Standards/ Type of work € € € € .

. € € € € € Communication Techniques Amount of Personal Contact Organization Level Economic Consideration Other Personal factors ( Capability. Personality) .Continue«.

Types of Span of Control € Wide span of control € Narrow span of control .

where more subordinates report directly to a given manager. tasks are highly interrelated € € .Wide span of control € Wide span of control is also known as Flat Organization (Structure) when there is relatively few hierarchical levels. In a flat structure.


Advantages of wide span«. policies and effective delegation.. € Clear goals. Fast reach of messages Less supervision and more responsibility High motivation Cost effective € € € € .

Disadvantages € Overloaded managers Lack of control over subordinates Decision making may affect Managerial skill € € € .

Narrow span of control € Known as tall or vertical span of control or organization. Narrow span is when there is relatively large number of hierarchical levels where each manager supervising a small number of employees More supervision and control is required to perform a job € € .


Advantages € € € € € Effective control and measurements Feedback Idea generation Fast communication within a level Less responsibility compared to wide .

1 4 16 64 1 8 64 256 512 1024 4096 4096 Operative 4096. Managers (Level 1-4) = 585 Operative 4096. Managers (Level 1-6) = 1365 .

Disadvantages € € € € Expensive Many level of management Low motivation Excessive gap between top and low level management Belongingness € .

Authority € Authority is seen as the legitimate right of a person to exercise influence or the legitimate right to make decisions. to carry out actions. and to direct others. € . Authority is a power to make decision which guide the action of others.

.Power of Authority«.

Characteristics of authority Basis of getting thing done € Legitimacy € Decision making € Implementation € Authority flow down the vertical hierarchy € Authority is vested on organization position not people € .

Authority is delegated downward Authority Top level Middle level Lower level Workers .

Sources of authority € The formal authority theory The acceptance of authority theory The competent theory € € .

Formal Authority BOD General Manager Department Manager Department Representative Line Employees .

dismissal or non acceptance results. Acceptance depends upon various factors like reward. confidence. subordinates behavior. special knowledge.Acceptance Theory € Authority flow from the superior to the subordinates whenever there is an acceptance on the part of the subordinates. and relation € .

or power. Person or organization that has the legally delegated or invested authority. capacity.Competent Theory € This type of authority is invested with the person by virtue of the office held by them. to perform a designated function. € .


´The obligation of a subordinate to whom a duty has been assigned to performµ ² Koontz O· Donnel Responsibility comes into existence because a person with authority, requires assistance from another and delegates authority to him.


Elements of Responsibility

It arises from superior ² subordinates relationship It ensures from contractual agreement The responsibility can not be transferred to anybody. It is created by acceptance of authority





There is essence of obligation The responsibility may be general or specific Responsibility is a continuing process by nature



Responsibility moves upwards Responsibility Top level Middle level Lower level Workers .

It is personal obligation . Responsibility always flows upward from juniors to seniors.Characteristics € € € € € € Responsibility is to assign duty to human beings only. . Responsibility is result of duty assigned. The manager remains responsible to his superiors for his job even after its delegation. Responsibility is the obligation to complete the job as per instruction.and absolute also.

Team Work«« .

.Imbalance in authority and responsibility Authority Responsibility If responsibility is greater than authority .then this could result in frustration.

Imbalance in authority and responsibility Responsibility Authority If authority is greater than responsibility .then this could result in autocratic behavior .

power and responsibility to another.Delegation of Authority € It·s a process of transferring responsibility for the performance of an activity from one individual to another while retaining the accountability for the outcome. Organizations encourage managers to delegate authority to lowest possible level. € € . Delegation is the entrusting of authority.

Delegation is the entrusting of authority. power and responsibility to another.The manager extends his area of operations. € . for without delegation. by his actions are confined to what he himself can perform.€ Delegation .

Types of delegation € General or Specific Written or Oral Formal or Informal Downward and Sideward € € € .


Manager delegated authority out of his authority Delegation may be specific or general. and withdrawn. reduced. Delegation of authority is always to the position created through organizing.Features € Delegation has dual characteristics. Authority once delegated can be enhanced. € € € € .

€ . € Provide authority with limitations and reporting requirements. job specification.Effective Delegation Know yourself and team members. weakness. situation and skills required. € Keep clear. complete and continues communication. € Assess strength. € Ensure that subordinates accept € Evaluate review for effective results.

Key Elements Select Right Person Evaluate and Rewards Maintain Feedback Delegation Give Instruction Responsibility = Authority Delegate whole task .

Principles of Delegation € € € € € € Delegation to conform to desired objectives Responsibility NEVER be delegated. Authority to match duties Unity of command Limits to authority to well-defined and level of authority Parity of authority and responsibility .

Process of Delegation Define assignment and what to delegate € Select the right person in the light of job to be done € Maintain open lines of communication € Establish proper control € Reward effectively (superior and subordinate) € .

Advantages of delegations It·s a art of getting work and done and best results € Lightens the burden of top executives € Quick (quality) decisions and time saving. aid to development and diversification € Development of second line leadership € . € Motivation and enhancement of subordinates with belongingness € Each level development.

Pitfalls/ Hindrances of Delegation € Organizational Personal € On the part of Superior € € On the part of Subordinates .

Authority actually«« .

´Everything that increasing the role of subordinates is decentralization and that decreases the role is centralizationµ .

€ . usually by holding it at the nearest top of the organization structure.Centralization & Decentralization € Centralization is the tendency to restrict delegation of decision making in an organization. It is a situation where the top management is the people who take all the organization decision.

Reason/Factors conducive Centralization Personal Factors: € Lack of confidence on subordinates € Lack of skills of subordinates € Insecure personality of superior person € Political Factors: € Legacy € Development € Defense activity € .

€ Economic Factors: Big budget € Foreign aid € Control over spending € Resources € .

Advantages of Centralization € Top down control Decision making Organizational change Fast execution Uniformity € € € € .


Definition: the process of transferring and assigning decision making authority to lower levels of an organizational hierarchy. Decision making move to lower level i.e. divisions, branches, department, and subsidiaries.


Factors affecting decentralization

Specialization Diversity of market Technology Geographical dispersion of the organization The quality of middle and junior level manager in subordinates.





Kind of Decentralization

Political Administrative Deconcentration Delegation Devolution





Advantage of decentralization € Learning dynamics Democratic and participative decision making Organizational change (dynamics) Flexible for change adoption Participative approach € € € € .


€ € € . Based on the supervisor-subordinate relationship as per organization structure. Line of authority flow top to bottom.Line and staff conflicts € Line organization: oldest and simplest form. Authority is maximum at top level and minimum at lower level.

Line ² Staff Organization .

Personal function is not independently organized. € € . All are in direct chain of command of these functions.€ Authority is created by the functional differentiation of the primary function such as production and marketing.

Characteristics € Unity of command Relationship is clear (authority) Strict discipline Rigid n traditional structure € € € .

€ Staff authority ² Staff refers to those elements of the Organisation which help the line to work most effectively in accomplishing the primary objectives of the enterprises. They help the line person work most effectively in accomplishing the objectives. No command over the function as known for support € € .

Characteristics € Staff share credit with line officials Loose discipline Number of Experts are more to assist line staff Based on planned specialization € € € .

Conflicts«. 3.. € Staff Dept Complains Line people are bullheaded. 2. 4. are noncooperative and sabotage line plans Lack of authority Line departments receive preferential treatment (payments) Staff people encroach on their authority Advice is academic in nature Credit of project.line Fail to see entire picture and operate in limited objectives 1.staff failure of project. 3. . Line Dept complains: 1. 2. resist new ideas Distrust. 5. 4.

) Well Define Power and Authority same Productive Right to Command Formal Via Authority (subordinates/Superior) Power May or may not be Legitimate Not so well Define Not arise from Authority Destructive Capacity to Command Not Formal Can be connected to anyone. .Criteria/Reasons for Conflicts Basis of Distinctions Source Definition Connection Purpose Nature Management Relationship Authority Legitimate (From Position in an orgnizt.

€ A plural executive could be built under the provisions of laws. € It is an executive branch with power divided among several independent officers. € .Plural Executive A position not held by a single person but is held by more than one . or may also on a decision from a superior.Koontz and O 'Donnel.

€ Authority Roles in policy making Roles on policy execution € € .

Plural Vs Individual Executive As per survey done by AMA (American Management Association) € Individual manager perform better managerial function. € For better outcome individual should be assisted by committee. € Individual is less good at formulating functions and strategies € For innovation both are good. € .

Committee .

as a group. A committee has no power. analysis. appointed by an agency. to whom a matter is referred. investigation. € . or larger assembly. or resolution. authority. except the power(s) assigned to it by its appointer. Individual or a group. some matter is committed. or is committed for attention.€ Definition: Group of persons to whom.

€ € € .Nature of committee € Some may undertake managerial functions. Committee can be formal or informal. Committee may be permanent of temporary in nature. A committee may be either line or staff depending upon authority.

Fear of too much authority in a single person. Consolidation of authority € € € . Sharing of information.Reasons for using committee € Group deliberation and judgment.

Avoidance of action. plans. Representation of interested groups and people. Coordination of departments. € € € . and policies.€ Motivation through participation.

Disadvantages of committees € High cost in time and money Compromise at the least common denominator Indecision Tendency to be self destructive Splitting of responsibility € € € € .