MODULE – III

ORGANIZING
Definition:
Louis A. Allen defines organizing as- “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”.
Importance of Organizing
• Advantage of Specialization: Organizing helps in the classification of jobs systematically
amongst the workforce, which helps in the reduction of workload, as well as improved
productivity. This is because the organization will get the benefit of specialization wherein
workers will perform specific work on a regular basis, according to their competency.
• Describes work relationships: The definition of work relationships describes the flow of
communication and determine the superior-subordinate relationship. This removes confusion and
chaos, in getting orders and instructions.
• Effective utilization of resources: Organizing function ensures the best possible utilization of
resources whether it is human, material, financial or technical. This is because jobs are assigned to
the employees which avoid overlapping and duplication of work.
• Adaptation to change: Organizing process helps the organization to survive and adapt the changes,
by making substantial changes in the strategies, hierarchy, relationships, etc.
• Development of personnel: Organising encourages creativity in executives. Delegation of
authority reduce their workload and they get time to identify new methods to perform the work. It
also enables them to explore new areas for their growth and development.
 Principles of Organizing
1. Principle of Consideration of Unity of Objectives:
There must be unity of objectives so that all efforts can be concentrated on the set-goals.
2. Principle of Specialisation:
Effective organisation must include specialisation. Optimum output can be obtained when each
person concentrates on doing the thing for which he/she is best qualified. Precise division of work
facilitates specialisation.
3. Principle of Commensurate Authority and Responsibility:
According to this principle when an individual is responsible for a certain task, he should be given
the authority to carry out that task. Without commensurate authority and responsibility, he cannot be
held accountable for the unsuccessful completion of the task as he has very little control over the
situation. Authority should be equal to responsibility i.e., each manager should have enough
authority to accomplish the task.
4. Principle of Efficiency:
The organisation structure should enable the enterprise to attain objectives with the lowest possible
cost. An efficient organisation structure operates without wasting its scarce resources. It permits
maximum use of its human resources and their talents.
5. Principle of Delegation:
The chief executive, for obvious limitations, cannot do the whole work of the organisation himself
and hence he takes assistance from others to accomplish the objectives. He divides the whole work
into a number of activities and groups then on the basis of their similarity and thus he creates a
number of departments.
6. Principle of Communication:
A good communication network is essential for smooth flow of information and understanding and for
effective business performance. The line of authority offers a standing channel for downward and
upward communication.
7. Principle of Flexibility:
The structure of an organisation must be flexible so that adjustments necessitated by changed
circumstances may be planned and incorporated in it.
Process of Organizing
1. Identification and division of work: Organizing process begins with identifying the work and
dividing them as per the plans. Basically, the work is classified into different manageable activities,
to avoid redundancy, and sharing of work is encouraged.

2. Departmentalization: After classifying the work into different activities, the activities having a
similar nature are grouped together. This process is called as departmentalization which facilitates
specialization and forms the basis for creating departments.

3. Assignment of the task: After the formation of departments, employees are placed in different
departments under a manager, called as a departmental manager. Thereafter, employees are assigned
the jobs as per their skills, qualifications and competencies. For the effectiveness of the performance,
the manager must ensure that there is a proper match between the job and the incumbent, i.e. the
right person has to be placed at the right job.
4. Establishment of organizational hierarchy: Deployment of work is not all, the employees must
be aware of whom they have to report and who can give them orders. Hence, work relationships
need to be established clearly, which helps in the creation of a hierarchical structure of the
organization.

5. Provision of resources to the members: Arrangement and deployment of resources such as

money, materials, supplies, and machine, etc. which are important to carry out day to day operations
of the organization.

6. Coordination of efforts and scheduling of activities: The final step to this process is the
coordination of efforts and scheduling the activities in a logical and systematic manner so that the
common objectives can be achieved effectively.
 SPAN OF MANAGEMENT
The span of management refers to the ideal number of subordinates who
report to and are supervised by one manager. Also known as the span of control
(SOC), it determines how many subordinates are able to provide maximum output
without costing too much under one manager/supervisor.
Definition:
The Span of Management refers to the number of subordinates who can be managed
efficiently by a superior. Simply, the manager having the group of subordinates who
report him directly is called as the span of management.
 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.
Both these organizational structures have their advantages and the disadvantages. But however the tall
organizational structure imposes more challenges:
Factors Determining Span of Management:
The span of management can be determined on the basis of a number of relationships that a manager can
manage. These are:
1.Capacity of Superior: Here the capacity means the ability of a superior to comprehend
the problems quickly and gel up with the staff such that he gets respect from all. Also, the
communication skills, decision-making ability, controlling power, leadership skills are
important determinants of supervisory capacity. Thus, a superior possessing such capacity
can manage more subordinates as compared to an individual who lack these abilities.
2.Capacity of Subordinate: If the subordinate is trained and efficient in discharging his
functions without much help from the superior, the organization can have a wide span.
This means a superior can manage a large number of subordinates as he will be required
just to give the broad guidelines and devote less time on each.
3.Nature of Work: If the subordinates are required to do a routine job, with which they are
well versed, then the manager can have a wider span. But, if the work is complex and the
manager is required to give directions, then the span has to be narrower.
4. Degree of Decentralization: If the manager delegates authority to the subordinates then he is required to
give less attention to them. Thus, higher the degree of decentralization, the wider is the span of
management. But in case, subordinates do not have enough authority, then the manager is frequently
consulted for the clarifications, and as a result superior spends a lot of time in this.
5. Planning: If the subordinates are well informed about their job roles, then they will do their work
without consulting the manager again and again. This is possible only because of the standing plans that
they follow in their repetitive decisions. Through a proper plan, the burden of a manager reduces manifold
and can have a wider span of management.
6. Staff Assistance: The use of staff assistance can help the manager in reducing his workload by
performing certain managerial tasks such as collecting information, processing communications and issuing
orders, on his behalf. By doing so, the managers can save their time and the degree of span can be increased
7. Communication Techniques: The mode of communication also determines the span of management. If
in the manager is required to do a face to face communication with each subordinate, then more time will be
consumed. As a result, the manager cannot have a wider span. But in case, the communication is in writing
and is collected through a staff personnel; the manager can save a lot of time and can have many
subordinates under him.
 Formal Organizational Structure
Formal Organisation: 
Formal organisation is that type of organisation structure where the authority and responsibility are clearly
defined. The organisation structure has a defined delegation of authority and roles and responsibilities for the
members.
The formal organisation has predefined policies, rules, schedules, procedures and programs. The decision
making activity in a formal organisation is mostly based on predefined policies.
Formal organisation structure is created by the management with the objective of attaining the
organisational goals.
There are several types of formal organisation based on their structure, which are discussed as follows:
1. Line Organisation
2. Line and Staff Organisation
3. Functional Organisation
4. Project Organisation
5. Matrix Organisation
• Line Organisation:
Line organisation is the simplest organisation structure and it also happens to be the oldest organisation
structure. It is also known as Scalar or military or departmental type of organisation.
In this type of organisational structure, the authority is well defined and it flows vertically from the top to
the hierarchy level to the managerial level and subordinates at the bottom and continues further to the
workers till the end.
There is a clear division of accountability, authority and responsibility in the line organisation structure.
Advantages of Line organisation
1. Simple structure and easy to run
2. Instructions and hierarchy clearly defined
3. Rapid decision making
4. Responsibility fixed at each level of the organisation.
Disadvantages of Line organisation:
1. It is rigid in nature
2. It has a tendency to become dictatorial.
3. Each department will be busy with their work instead of focusing on the overall development of the organisation.
• Line and Staff Organisation:
Line and staff organisation is an improved version of the line organisation. In line and staff
organisation, the functional specialists are added in line. The staff is for assisting the line
members in achieving the target effectively.
Advantages of Line and Staff organisation
1. Easy decision making as work is divided.
2. Greater coordination between line and staff workers.
3. Provides workers the opportunity for growth.
Disadvantages of Line and Staff Organisation
1. Conflict may arise between line and staff members due to the improper distribution of authority.
2. Staff members provide suggestions to the line members and decision is taken by line members, it
makes the staff members feel ignored.
Functional Organisation:
Functional organisation structure is the type of organisation where the task of managing and
directing the employees is arranged as per the function they specialise. In a functional
organisation, there are three types of members, line members, staff members and functional
members.
Advantages of Functional organisation
1. Manager has to perform a limited number of tasks which improves the accuracy of the work.
2. Improvement in product quality due to involvement of specialists.
Disadvantages of Functional organisation
1. It is difficult to achieve coordination among workers as there is no one to manage them directly.
2. Conflicts may arise due to the members having equal positions.
Project Organisation:
A project organisation is a temporary form of organisation structure that is formed to manage
projects for a specific period of time. This form of organisation has specialists from different
departments who are brought together for developing a new product.
Advantages of Project organisation
1. The presence of many specialists from different departments increases the coordination among the
members.
2. Each individual has a different set of responsibilities which improves control of the process.
Disadvantages of Project Organization
1. There can be a delay in completion of the project.
2. Project managers may find it difficult to judge the performance of different specialists.
• Matrix Organisation:
Matrix organisation is the latest form of organisation that is a combination of functional and project
organisation. In such organisations there are two lines of authority, the functional part of the
organisation and project management part of the organisation and they have vertical and horizontal
flow of authority, respectively.
Advantages of Matrix Organisation
1. Since the matrix organisation is a combination of functional and project management teams, there
is an improved coordination between the vertical and horizontal functions.
2. Employees are motivated as everyone will be working towards one project.
Disadvantages of Matrix Organisation
1. Due to the presence of vertical and horizontal communication, there will be increased cost and
paperwork.
2.Having multiple supervisors for the workers leads to confusion and difficulty in control.
 Centralization
Centralization is said to be a process where the concentration of decision making is in a few
hands. All the important decision and actions at the lower level, all subjects and actions at the lower
level are subject to the approval of top management. According to Allen, “Centralization” is the
systematic and consistent reservation of authority at central points in the organization.
The implication of centralization can be :-
• Reservation of decision making power at top level.
• Reservation of operating authority with the middle level managers.
• Reservation of operation at lower level at the directions of the top level.
Under centralization, the important and key decisions are taken by the top management and the
other levels are into implementations as per the directions of top level. For example, in a business
concern, the father & son being the owners decide about the important matters and all the rest of
functions like product, finance, marketing, personnel, are carried out by the department heads and
they have to act as per instruction and orders of the two people. Therefore in this case, decision
making power remain in the hands of father & son.
 Authority
Delegation of authority refers to the transfer of authority from the level of supervisor to the level
of subordinates. In other words, delegation is the downward transfer of authority from the manager
to the subordinate.
It involves following steps:-
Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He
also has to define the result expected from the subordinates. Clarity of duty as well as result expected
has to be the first step in delegation.
Granting of authority - Subdivision of authority takes place when a superior divides and shares his
authority with the subordinate. It is for this reason, every subordinate should be given enough
independence to carry the task given to him by his superiors. The managers at all levels delegate
authority and power which is attached to their job positions. The subdivision of powers is very
important to get effective results.
Creating Responsibility and Accountability - The delegation process does not end once powers are
granted to the subordinates. They at the same time have to be obligatory towards the duties assigned
to them.
Responsibility is said to be the factor or obligation of an individual to carry out his duties in best
of his ability as per the directions of superior. Responsibility is very important. Therefore, it is that
which gives effectiveness to authority. At the same time, responsibility is absolute and cannot be
shifted.
Accountability, on the others hand, is the obligation of the individual to carry out his duties as
per the standards of performance. Therefore, it is said that authority is delegated, responsibility is
created and accountability is imposed.
Accountability arises out of responsibility and responsibility arises out of authority. Therefore,
it becomes important that with every authority position an equal and opposite responsibility should
be attached.
Therefore every manager, i.e.,the delegator has to follow a system to finish up the delegation
process. Equally important is the delegatee’s role which means his responsibility and accountability
is attached with the authority over to here.
 Delegation
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
1. Authority - in context of a business organization, authority can be defined as 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.
Authority must be well-defined. All people who have the authority should know what is the scope of their
authority is and they shouldn’t misutilize it. Authority is the right to give commands, orders and get the things
done. The top level management has greatest authority.
2. Responsibility - is the duty of the person to complete the task assigned to him. A person who is given the
responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was held
responsible are not completed, then he should not give explanations or excuses. Responsibility without
adequate authority leads to discontent and dissatisfaction among the person.
Responsibility flows from bottom to top. The middle level and lower level management holds more
responsibility. The person held responsible for a job is answerable for it. If he performs the tasks assigned as
expected, he is bound for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is
answerable for that.
3. Accountability - means giving explanations for any variance in the actual performance
from the expectations set.
Accountability can not be delegated. For example, if ’A’ is given a task with sufficient
authority, and ’A’ delegates this task to B and asks him to ensure that task is done well,
responsibility rest with ’B’, but accountability still rest with ’A’.
The top level management is most accountable. Being accountable means being innovative
as the person will think beyond his scope of job. Accountability, in short, means being
answerable for the end result. Accountability can’t be escaped. It arises from responsibility.
• For achieving delegation, a manager has to work in a system and has to perform
following steps : -
1.Assignment of tasks and duties
2.Granting of authority
3.Creating responsibility and accountability
 Responsibility
Meaning:
Responsibility refers to an obligation to do something.
“Responsibility is the obligation of a subordinate to carry out the duties assigned to him.”
characteristics or features of responsibility:
(i) Responsibility comes from superior-subordinate relationship.
(ii) It always flows upward from juniors to seniors.
(iii) It arises from duty assigned.
(iv) It cannot be delegated.
(v) It is the obligation to complete the job as per instructions. Responsibility may be continuing
obligation or it may be discharged by accomplishing single task. Responsibility is a personal
attribute. No person can shift his responsibility by delegating his authority to others.