UNIT III

ORGANIZING
 Nature and purpose of organizing –
Organization structure – Formal and informal
groups/organization – Line and Staff authority
–Departmentation – Span of Control –
Centralization and Decentralization –
Delegation of authority – Staffing – Selection
and Recruitment – Orientation Career
Development – Career stages – Training –
Performance Appraisal.
 Nature of organizing
A group of individuals who are interacting
with each other and contributing their efforts
towards the attainment of certain goals or
objectives. In other words organization may be
defined as a co-operative & healthy relationship
amongist the groups which is built up by them
through proper network of communication
system with a view to achieve their specific or
common goals.
 Purpose of organizing

The purpose of achieving its own goals or

objectives in smooth way. It is the process of
ensuring healthy relationship among the
departments by the proper channel of
communication so that the personnel
(employees) of every department can give their
hundred percent contributions in the
accomplishment of desired goals. 
 Organizational Structures
Tall Organizations
• Many Layers of
Management Flat Organizations
• High Cost of – Current Trend
Management – Creation of Teams
• Narrow Span of – Broad Span of Control
Control
Organizational chart
Organizational process and Structures
Assigning Hierarchy
relations
 Formal and informal groups / organization
Point of View Formal Organization
Origin Created deliberately and consciously
Purpose For achieving legitimate objectives of
the organization.
Nature Planned and official
Size Can be quite large.
Nature of groups May be stable and continue for long.
Number groups More
Structure Definite structure, Mechanical &
rational.
Authority Flows from top & bottom
Communication Normally through prescribed chain.
Control Process Rigid rules and regulations.
 Point of View Informal Organization

Origin Created spontaneously and naturally.

Purpose Created by members for social and

psychological satisfaction.
Nature Unplanned & Unofficial

Size May be small in size.

Nature of groups Quite unstable.

Number groups Less

Structure Structure less, impersonal & emotional

Authority May flow vertically or horizontally

Communication Through informal channels.

Control Process Group norms and values.

 Three Types of Authority
• Line Authority
• Staff Authority
• Functional Authority
 Line Authority

Advantages Disadvantages
– Clear Authority & – Inflexible
Responsibility – Few Specialists for
– Easy to Advice
Understand – Long Line of
– One Supervisor Communication
Per Employee – Difficult to Handle
Complex Decisions
Line Structure/Organizations

Owner

Manager

Assistant
Manager

Hourly
Employees
 A Line-and-staff Organization

Authority Relationships
Line
President Staff
Functional
Director of Assistant to
Human
Resources
President

Director of Director of Other

Operations Purchasing Directors

Unit 1 Unit 2
Plant Manager Plant Manager

Sup.of Sup.of
Other Sup. Of Sup. of Other Sup. Of Sup. of
Human Human
Supervisors Operations Purchasing Supervisors Operations Purchasing
Resources Resources
 Line/Staff Authority

Line Personnel Staff Personnel

– Formal Authority – Advise Line
Personnel
– Make Policy
Decisions – Assist Line
Personnel
 Matrix Design

Contract
Design MFG Admin
Purchasing Accounting HR

Alpha Design MFG Contracts Purchasing Accounting Human

Resources
Project Group Group Group Group Group Group

Beta Design MFG Contracts Purchasing Accounting Human

Resources
Project Group Group Group Group Group Group

Gamma Design MFG Contracts Purchasing Accounting Human

Resources
Project Group Group Group Group Group Group

Omega Design MFG Contracts Purchasing Accounting Human

Resources
Project Group Group Group Group Group Group
 Matrix Organizations

Advantages Disadvantages
– Flexibility – Costly/Complex

– Cooperation & – Confusion in Loyalty

Teamwork
– Requires Good
– Creativity Interpersonal Skills
& Cooperation
– More Efficient Use of
Resources – Not Permanent
 Departmentation
• The process of grouping the activities known as departmentation
• Departmentation means the process by which similar activities of the
business are grouped into units for the purpose of facilitating smooth
administration at all levels
• According koontz & O,Donnell a departmentation is process of
dividing the large functional organization into small & flexible &
administrative unit.
• Choosing basis for departmentation
• Specialization
• Coordination
• Control
• Economy
• Recognition of local condition
• Adequate attention
• Human consideration
Departmentalization

• By Product
• By Function
• By Customer
Group
• By Geographic
Location
• By Process
 1. Departmentation by Product
• Product structure based on organizing employees and work on the basis of
the different types of products.

• if a company produce three different types of products, they will have three
different division for these products.

• Each division has its own internal departments & operates like a mini
business

• Each product line has its own functional organisation with production ,sales
,R& D & accounting
 Product departmentation

Chief Executive

Car Division Truck Division Bus division Long vehicle

production
Marketing finance HR
 2.Functional departmentation
• The grouping of common & homogeneous activities to form an
organizational unit is known as functional organization
• Function are two types basic function & secondary function
• basic function can be divided into sub-function
• Each department have a head with the title departmental manager
• The functional departmentation will include both line function as
well as staff function

Board of Director

Managing Director

Production Marketing Accounts Personnel IT

 3.Territorial /geographical departmentation
• Territorial Organization is especially attractive to large scale firms
or rather enterprises whose activities are physically or
geographically dispersed.

• All the activities of given area of operation are grouped into

zone ,division ,branches

• This structure is suitable for large scale organization or whose

activities are physically or geographically spread.

• This structure is most often used in sales & in production

 Territorial /geographical departmentation

Head Office
Mumbai

Eastern Zone Central Zone Northern zone Southern zone Western zone
Kolkata Kolhapur Delhi Chennai Mumbai

jalandhar chandigarh New delhi ajmer

branch branch branch branch

 4. Departmentation by customer
• Customer based departmentation is basically market –oriented
in which department are created around the market served or
around marketing channel
• CUSTOMERS ARE THE KEY TO THE WAY ACTIVITIES
ARE GROUPED

Marketing Manager

export
wholesale Retail Hire purchase
 5. Departmentation by process
• When production activities involve the use of several
distinctive process ,these can be used as the base for
grouping of activities

Production Manager

spinning dyeing Weaving Packaging

 Span of control
The number of people who report to one manager or
supervisor.

 Wide Span of Control

 Flat organization – large number of employees reporting to one
supervisor

 Narrow Span of Control

 Tall organization – a small number of employees report to a
supervisor, necessitating a larger number of supervisors
 Narrow span
Chief
Executive
Tall hierarchy
 Span of control
Organization with narrow span:
we have…
 close control
 Superiors tend to get too involved in subordinates
work.
 Many levels of management
 Excessive distance between lowest and top level.
 Wide span

Chief
Executive
Flat hierarchy
 Span of control
Organization with wide span:
We have:
 More load on superior level of management,
 Not many levels of management
 Danger of superiors loss of control
 Requires exceptional qualities of managers.
 Factors influencing span of control
• Considerable available assistance: Managers can supervise more people
when they have considerable additional help, such as assistant.
• High competency level: High job related skills and abilities of manager
and subordinates make it possible for manager to manage more
subordinates,
• Work similarity: when subordinates do similar work, it becomes easy for
a supervisor to give adequate supervision.
• Low problem frequency: When serious problems are infrequent, there is
less need for management attention.
• Few non supervisory duties of managers: Managers can handle more
subordinates when they have few non supervisory duties to perform.
 Span of Control - Narrow

Advantages Disadvantages
• More Control by • Less Empowerment
Top Management • Higher Costs
• More Chances for • Delayed Decision
Advancement Making
• Greater • Less Responsiveness
Specialization to Customers
• Closer Supervision
 Span of Control - Broad

Advantages Disadvantages
• Reduced Costs • Fewer Chances for
• More Advancement
Responsiveness to • Overworked
Customers Managers
• Faster Decision • Loss of Control
Making
• Less Management
• More Expertise
Empowerment
 Centralisation
Definition: where the decision
making authority is concentrated
amongst a small number of senior
managers at the top/centre of the
organisational structure.

•It limits the number of people involved in the decision

making process to a few senior executives
The executives are aware of the goals and corporate
objectives of the business and therefore their
decisions will have taken these into consideration, as
a result the final decision will be one
which helps the business in both the
long and short term.
•It is most likely to be the chosen strategy in times of crisis
when the survival of the business is at stake
 Decentralisation
• Where the authority for decision-making is
delegated to subordinates in the organisational
structure
• Sometimes inevitable as a business grows
• Occurs in order to increase the competitiveness of
a business
• Purpose is to delegate
decision-making to people
lower down the organisational
hierarchy
 Decentralisation Advantages
• Senior managers can concentrate on making long term
corporate decisions
• Subordinates are likely to have increased motivation
because their jobs are enriched
• Day – to – day problems and issues should be resolved
more quickly because those closest are making the
decisions
• Delegation increases
flexibility
• Middle and junior managers
are better prepared for more
senior roles within the
organisation
Advantages of Centralised Structure
• Senior managers enjoy greater control over the
organisation.
• The use of standardised procedures can results
in cost savings.
• The use of standardised procedures can results
in cost savings.
• The organisation can benefit from the decision
making of experienced senior managers.
 Drawbacks of Decentralisation
• Lower level managers may make decisions without
fully understanding the “big picture.”
• Lack of communication
• Lower level managers may have objectives that are
different from the objectives of the entire
organisation
• In a strongly decentralised organisation, it may be
more difficult to effectively spread innovative ideas
• Slower strategic decision-making
• More difficult to achieve economies of scale
 Drawbacks of Centralisation
• Due to the fact that all decisions are made at the top it might
result in delays in decision-making and communication.

• Centralised power and authority might be abused.

• Doesn’t give an opportunity to lower level

managers/supervisors to develop their managerial skills.

• Centralised organisation faces the problem of lower motivation

levels among workforce.

• The success of organisation depends on the competence of top

executives which might be quite risky.
 Delegation of authority
Delegation of Authority means division of
authority and powers downwards to the
subordinate. Delegation is about entrusting
someone else to do parts of your job.
Delegation of authority can be defined as
subdivision and sub-allocation of powers to
the subordinates in order to achieve effective
results.
 Elements of Delegation
• Authority - the power and right of a person to
use and allocate the resources efficiently, to take
decisions and to give orders so as to achieve the
organizational objectives
• Responsibility - is the duty of the person to
complete the task assigned to him
• Accountability - means giving explanations for
any variance in the actual performance from the
expectations set.
 Steps in Delegation of authority
• Assignment of tasks and duties
• Granting of authority
• Creating responsibility and accountability
 Staffing
• Staffing is defined as filling, and keeping
filled, positions in the organization structure.
• Staffing has been defined as follows by
Heneman and Judge in Staffing Organization
• Staffing is the process of acquiring, deploying,
and retaining a workforce of sufficient
quantity and quality to create positive impacts
on the organization’s effectiveness.
 Selection and Recruitment
• Reference Check
Steps involved in the selection • Medical Check
process • Final Interview
• Job Analysis • Job Offer
• Advertising the Job
• Initial Screening
• Application Bank
• Tests  
• Interview
 steps involved in the recruitment
process
• Preliminary • Psychological tests,
screening of • Employment
applicants, interview,
• Preliminary
interview, • Final approval /
• Application bank, selection,
• Placement and
induction.
• Checking references,
• Employment tests,
 Orientation, Career Development
• Orientation refers the activities involved in
introducing the new employees to the
organization and its policies, procedures, rules
and regulations.
• It provides the foundation for the new
employee to start working efficiently and
comfortably on the new job.
 Orientation Career Development
• Career Development is the life long process of
managing learning, work, and transitions in order to
move toward a personally determined and evolving
preferred future.
• In educational development, career development
provides a person, often a student, focus for selecting
a carrier or subject(s) to undertake in the future.
• Often educational institutions provide career
counselors to assist students with their educational
development.
 Training, Development
• Training is the act of increasing the knowledge and
skills of an employee for doing a particular job.
• Training has specific goals of improving one's
capability, capacity, productivity and performance.
Development means all round improvement on the
job performance, personality growth in proficiency,
advancement and progress in all other personality
traits which make an employee better.
 Training methods

• On-the-job Training Methods - new or

inexperienced employees learn through
observing peers or managers performing the
job and trying to imitate their behaviour.
• Off-the-Job Training Methods - conducted in
separate from the job environment, study
material is supplied, there is full concentration
on learning rather than performing, and there is
freedom of expression
 On-the-job Training Methods:
• 1. Coaching – one to one training
• 2. Job Rotation – movement of manager from one job to
another
• 3. Apprenticeship – trainers serve as apprentice to expert for
long periods.
• 4. Understudy – learning by doing, Superiors give training to
subordinate as his understudy like an assistant to a manager.
• 5.Temporary promotion – sometimes manager goes foreign
trip. Senior staffs takes as charge of acting manager with
temporary promotions.
 Off-the-Job Training Methods:
• 1. Lectures and Conferences – best and simple
technique to present and explain series of facts,
concepts and principles.
• 2. Conference & Seminars – meeting of several people
to discuss the subject of common interest.
• 3. Sensitivity Training – Different group of trainees are
allowed to mix-up with each other and communicate
with each other.
• 4. Case Studies – A real business problem is presented
to the group of members of trainees.
PERFORMANCE APPRAISAL:
It is a process by which managers and employees
Work together to plan, monitor and review an employees
work objectives and overall contribution to the
organization.

Methods of performance appraisal

• Critical incidence method
• Checklist method
• Graphic rating scale method
• Ranking method
• Forced distribution method
• Assessment centre method
• Appraisal by results
• Fixed review method
• Paired comparison method
• Confidential report method
 Methods of performance appraisal
• Critical incidence method – Evaluations based on key incidents.

• Checklist method – Appraisal involved in series of questions.

• Graphic rating scale method – most commonly used method.

Grouped under two factors – Employees characteristics, Employee
Contribution
• Ranking method – Oldest & Simplest Method, Ranked against other on
the basis of certain traits & characteristics.(out standing, good, below
average)
• Forced distribution method – Appraise according to the pattern of a
normal curve. (15% - excellent,15% - above average,40% -
average,25% - below average, 5% - poor)
 Methods of performance appraisal
• Assessment centre method – Basically meant for evaluating the
potential of the candidates to be considered for promotion,
training and development.
• Paired comparison method - In this method each employee is
rated with another employee in the form of pairs. The paired
comparison method compares each employee with every other
employee in a group.
• Confidential report method - Mostly used by government
departments, however its application in industry is not ruled out.
Here the report is given in the form of Annual Confidentiality
Report (ACR) and may record ratings with respect to following
items; attendance, self expression, team work, leadership,
initiative, technical ability, reasoning ability, originality and
resourcefulness etc.
 Career Planning and Management

Career as a sequence of separate but related work activities that

provide continuity, order and meaning in a personal life.

Types:
Individual career
Organization career

Career Management:
Process for enabling employees to better understand and develop their career skills
and interests most effectively both within the company and after they leave the firm.
 Career Development
It is a ongoing process by which individual progress
through a series of stages of each of which is
Characterized by a relatively unique set of issues,
themes or tasks.