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Fundamentals of Management

Management Principles

Prof. Rushen Chahal

Prof. Rushen Chahal


What is Organizing?
Can be defined as process of determining the activities to be performed, arranging these activities to administrative units, as well as assigning managerial authority and responsibilities to people employed in the organization

Prof. Rushen Chahal


Importance of organizing 
Focus on and facilitate the attaining of objectives  Arrangement of positions and jobs within the hierarchy  Define responsibilities and line of authority of all levels  Creating relationships that will minimize friction..
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Basic Elements of Organization 
Centralization and decentralization  Delegation of Authority  Span of Control  Division of Service  Departmentalization

Prof. Rushen Chahal


Elements of Formal organization
1. Centralization: Concentration of decision Centralization: making and actions at high level management 2. Decentralization: Consistent delegation of Decentralization: authority to the lower levels where the work is performed

Prof. Rushen Chahal


Advantages of Centralization 
Provide Power and prestige for manager  Promote uniformity of policies, practices and decisions  Minimal extensive controlling procedures and practices  Minimize duplication of function

Prof. Rushen Chahal


Disadvantages of Centralization 

Neglected functions for mid. Level, and less motivated beside personnel.  Nursing supervisor functions as a link officer between nursing director and firstfirstline management.
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Advantages of Decentralization 
Raise morale and promote interpersonal relationships  Relieve from the daily administration  Bring decision-making close to action decision Develop Second-line managers Second Promote employee s enthusiasm and coordination  Facilitate actions by lower-level managers lowerProf. Rushen Chahal 8

Disadvantages of Decentralization 
Top-level administration may feel it would Topdecrease their status  Managers may not permit full and maximum utilization of highly qualified personnel  Increased costs. It requires more managers and large staff  It may lead to overlapping and duplication of effort
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Delegation of Authority 
Process off assigning work from a top organizational level to a lower one or from superior to subordinate and giving that person the authority to accomplish them  A downward flow of authority from HIGHER level in the organization to LOWER level
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The Delegation Process
1. 2. 3. 4. Allocation of duties Delegation of authority Assignment of responsibility Creation of accountability

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The Delegation Process Contd: Contd: 
Authority: It is a right to take a final Authority: decision and command others. It moves in a downward direction  Responsibility: It is an obligation to Responsibility: perform a duty. It cannot be delegated.  Accountability: subordinates must be held Accountability: answerable to their carried out duties
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Types of Authority 
Formal: Delegated within an organization Formal: for e.g. superior-subordinate authority superior Functional: Authority based on specialized Functional: knowledge like staff authority or the authority delegated to assist line managers  Personal: Authority based on seniority and Personal: 13 Prof. Rushen Chahal relationship

Factors determining degree of authority delegation 
Organization s size...  Importance of duty or decision...  Task complexity...  Organizational culture...  Qualities of subordinates

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Main principles of Delegation 

Responsibility cannot be delegated 

Authority and responsibility should be equal in proportion

Prof. Rushen Chahal


Barriers to successful delegation 

Lack of superior s ability to direct the subordinates  Lack of confidence in subordinate  Absence of control
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Major Causes of manager·s refusal to delegate 
Tendency to do things personally  Desire to dominate the knowledge, information, and/or skill s  Unwillingness to accept risks of wrongs

Prof. Rushen Chahal


Reason·s for why subordinates avoiding delegation 
Decision-making is a hard mental work, Decisionand people seek ways of avoiding it  Fear of criticism for mistakes  Lack off necessary information and resources to do a good job  Overload of work  Positive incentives may be inadequate
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Types of organizational relationships 
The Line relation: presents levels of relation: hierarchy, Superior-subordinate Superiorrelationships, and provides the framework for the organization  The Staff relation: has no command, relation: personnel have only the right to advise, assist, support those in the line authority in the performance of their duties
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Span of Control 

Number of subordinates that can be adequately supervised by one supervisor  Span of control consists of two dimensions 
Narrow Span of control Wide span of control
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Narrow span of control
The Manager supervises a small number of people or subordinates

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Advantages of Narrow Span of control 

Close supervision  Close control  Fast communication between subordinates and superiors.
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Disadvantages of Narrow span of control 

Superiors tend to get too involved in subordinates work  Many levels of management  High costs due to many levels
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Wide span of control
The Manager supervises a large number of people

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Advantages of Wide span of control 

Superiors are forced to delegate  Clear policies must be made  Subordinates must be carefully selected

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Disadvantages of wide span of control 

Tendency of overload superiors to take most or all decisions  Danger of superior s loss of control  Requires exceptional quality of managers
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Factors determining span of control 
The competence of both the supervisor and the subordinate  The degree of interaction between the units or personnel being supervised  Other duties of the top manager  Lower-level managers have a wider range Lowerof span than top-level manager top The similarity or dissimilarity of activities being supervised
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Factors determining span of control contd: contd: 
The similarity or dissimilarity of activities being supervised  The incidence of new problems in the Unit  Availability of plans of work, policies and standardized procedures  The degree of physical distribution  The nature of work (stability, complexity, etc )
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Division of Service

Dividing large activities to be distributed among several people.

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Advantages of Division of service 
Allow an employee to master a task with a maximum skill  Dividing work among individuals according to their specialization leads to accuracy  Accomplishment of tasks within assigned period or deadline
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Disadvantages of Division of service 
Creates many different, narrow jobs, which need effective managerial coordination  Human problems have been created from division of service, fatigue and stress, and which lead to less quantity and quality of work, increased absenteeism and higher turnover
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Departmentation can be described as grouping of functions and tasks  Consisted of main methods such as: 
Functional Geographical Product or Service Customer
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Functional Departmentation 
Based on the functions or the operations carried within the organization  For e.g. production, selling, marketing, distributing and financing  Type of organization or an enterprise affects the formation of different departments
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Geographical Departmentation 
Division of activities among branches or subsidiaries that are away from the main office or the headquarters  A manager is put in-charge of the area inand made responsible for all the divisions  Results in lower cost of operating, but harder to control by the parent company Prof. Rushen Chahal or the head office


Product or service departmentation  Departmentation by product or service e.g. Production unit  A wide delegation of authority takes place from top management to a division or a plant  May have co-ordination problem and coduplication of service
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Customer Departmentation 
Usually found in sales or marketing departments  Involves division of customer base in terms of types of customers like individual buyers, industrial buyers or wholesalers  For e.g. banking services, credit card services, auto companies
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Process or equipment departmentation  Aims at achieving economies or effective utilization of the company s resources by grouping activities around a process  Similar types of labor and equipments are brought together  For e.g. Jewellery makers, shoe makers and oil companies
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