Organizing

Dr. Bansari Dave

Introduction
• Two senses:
a) Organization as a process
b) Organization as a structure
• It is a process means an ongoing activity of identifying,
classifying, grouping and assigning various activities required
to achieve org. objectives.
• Org. as a structure means a network of specific relationship
among individuals in an organization. i.e. superior-
subordinate relationship.
Definitions - Organizing

“ Organizing is a process of combining the work which individuals

and groups have to perform with the faculties necessary for its
execution that the duties so formed provide the best channels for
efficient, systematic, positive and coordinated application of
available efforts.” – Keith Davis

“ Organizing involves grouping of activities necessary to accomplish

goals and plans, the assignment of these activities to the appropriate
departments and the provisions for authority delegation and
coordination.” – Koontz & O’Donnell
 Definitions - Organization

“ Organization is any group of individuals, large or small, that is

cooperating under the direction of executive leadership in the
accomplishment of certain common objectives.” – Keith Devis

“ Organization is a process of identifying and grouping the work to be

performed, defining and delegating responsibility and authority and
establishing relationship for the purpose of enabling the people to
work most effective together in accomplishing objectives.” – Louis A
Allen
Organizing Process
• Determination of Objectives
• Identification of work
• Grouping of activities
• Creation of manager-ship
• Division of work within the departmental set-up
• Arrangement of physical facilities
• Developing relations
• Provision of a channel of communication
• Coordination of various activities
• Control and corrective action
Nature & Characteristics of Organization

• Organizing is the basic function of management

• Organization is always related to objectives
• Organization as an entity
• Organization as a group of people
• Organization as a process
• Organization as a structure
Importance of an organization
• Organization promotes specialization and division of labor
• It avoids omissions, overlapping and duplication of efforts
• It clarifies authority-responsibility relationships: it facilitates
staffing
• It facilitates coordination
• It establishes communication links
• It facilitates management by exception
• It increases efficiency of management
• others
Principles of Organization
• Principle of Delegation of Authority
• Principle of coordination
• Principle of continuity
• Principle of definition
• Principle of explanation
• Principle of equilibrium balance
• Principle of flexibility
• Principle of unity of objectives
• Principle of responsibility
• Principle of specialization
• Principle of span of control
• Principle of scalar chain
• Principle of simplicity & homogeneity
• Principle of unity command
• Principle of unity of direction
• Principle of uniformity
• Principle of efficiency
• Principle of leadership
• Principle of exception
• Principle of joint decision
Concept of Org. Chart
“An organizational chart is a diagrammatic form which shows
important aspect of an org., including the major functions and their
respective relationship, the channel of supervision and the relative
authority of each employee who is in charge of each respective
function.” – George Terry

a) Hierarchical Structure
b) Line-staff structure
c) Functional structure
d) Matrix structure
 Chief Executive

General Manager General Manager General Manager

Production Marketing Finance

Plant A Plant B Plant A Plant B Plant A Plant B

Manager Manager Manager Manager Manager Manager

F F F F S S S S C C C C

F = Foremen S = Salesmen C = Clerk

Types of Org. Charts

1. Vertical Chart
2. Horizontal Chart
3. Circular Chart
4. Tree Form of Chart
 1. Vertical Chart
• It is the most common and popular type of organizational chart. It shows
different levels of an org. with the senior executives at the top and
successive levels of mgmt. depicted in the form of a pyramid.
• A vertical chart shows different levels in the mgmt. hierarchy from top to
bottom, in which the authority flows from top to down. It depicts the
scalar chain or the line of communication and permits unity of command.
 2. Horizontal Chart

• In this type of chart authority

flows from left to right. It shows
different levels of an org. with
senior executives at the left and
the successive levels of mgmt.
depicted to the right of it.
 3. Circular Chart
• In this type of chart the top level is placed at the centre and the
successive levels of mgmt. are depicted in the form of concentric circles
around it.
 4. Tree form of Chart
• In this type of chart the top level
mgmt. is placed at the bottom
indicating the roots of a tree, the
stem of the tree represents
middle level managers, branches
represents the lower level
managers and leaves represents
the rank and file of workers.
Departmentation
“ Departmentation designates a distinct area, division or a
branch of an enterprise over which a manager has an
authority for the performance of specified activities.” –
Koontz and O’Donnell

• It means dividing a large and complex org. into smaller,

flexible, administrative units.
• The main purpose of dividing an org. into sections or
departments is to secure max possible efficiency in its
operations at a min cost through the division of labor &
specialization
 Advantages
• It leads to division of labor and specialization.
• It enables each person to know the particular role he is expected to
play in the total activities of the org.
• It facilitates communication, coordination and control and contributes
to the org. goals.
• It provides a platform around which the loyalties of org. members may
be built.
• It permits effective manpower planning.
• It helps the preparation of functional and master budgets.
• It also helps to fix the responsibility for the failure or delay in taking
action
 Bases of Departmentation
• Departmentation by Function Board of Directors

General Manager

Financial Marketing Production Personnel

Manager Manager Manager Manager

Board of Directors
• Departmentation by Product/Services
General Manager

Banking Merchant Personal Housing

Division Banking Loans Loans
 Bases of Departmentation
• Departmentation by Geographical Board of Directors
Coverage General Manager

Manager Manager Manager Manager

Eastern Western Southern Northern
Zone Zone Zone Zone

Board of Directors
• Departmentation by Process
General Manager

Manager Manager Manager Manager

Ginning Spinning Weaving Dyeing &
Printing
 Bases of Departmentation
• Departmentation by Customers Board of Directors

General Manager

Manager Manager Manager Manager

Wholesaler Retailer Government Foreigners

Board of Directors
• Departmentation by Time
General Manager

Manager Manager Manager

Day shift Evening Night shift
shift
 Bases of Departmentation
• Departmentation by Marketing Channel: This method is used when the
same product of the org. is marketed through different channels. For
example, there may be one department, which looks after direct selling and
the others may look after indirect channels.

• Departmentation by Numbers: It is an oldest kind of department. Under

this method each department is given a number. For example department 1,
2,3

• Hybrid Approach to departmentation: It calls for simultaneous use of two

or more departmentation strategies. This is used by very large org. whose
turnover is spread beyond the territory of the country of operation. i.e. MNC
 Delegation of
Authority &
Decentralization
 Definition & Meaning

Delegation is the dynamics of management; it is the process a

manager follows in dividing the work assigned to him so that he
performs that part which only he, because of his unique org.
placement, can perform effectively, and so that he can get others to
help him with what remains.
Principles of delegation of
authority
• Principle of functional definition
• Principle of non-delegation of personalized matters
• Principle of delegation by results expected
• Principle of unity of command
• Principle of scalar chain
• Principle of parity of authority and responsibility
• Principle of absolute responsibility
• Authority-level principle
• Principle of strategic control.
Elements of Delegation of
Authority

• Determination of results expected

• Assignment of duties to the subordinates
• Conferment of power of authority
• Creation of obligations or responsibilities
Advantages of delegation of
authority
• Basis of organization
• Enables superior to perform creative work
• Training and development
• Motivation and morale of subordinates
• Specialization through subordinates
• Quick and better decision-making
Barriers to effective delegation
Why managers do not delegate?
• “None better than I”
• “I will be exposed”
• “The company cant do without me”
• “I am the master
• “Why take the risk?”
• “What if he proves better than me?”
Why subordinates do not accept delegation?
• Love of spoon feeding
• Fear of criticism
• Inadequate information and resources
• Lack of self-confidence
• Inadequate incentives
Measures to make delegation
effective
• Observance of principles of delegation
• Establishment of definite goals
• Defining a definite responsibility
• Establishing conducive environment
• Proper motivation
• Proper timing
• Effective control system
 Centralization
&
Decentralization
Concept of Centralization
Centralization is the systematic and consistent reservation of
authority at central points in the organization. – Louis Allen”

Centralization is that organization where the role of

subordinates is reduced.” – Henry Fayol

•Centralization of authority refers to the concentration of

decision-making authority with the top management.
•This type of organization is ideal for small organization
where there are few employees or subordinates and the top
management can effectively supervise and control them.
Centralization of authority implies:
• Reservation of administrative authority of planning,
organizing, coordination and control at the top level of
management.
• Reservation of operating authority at the middle level of
management.
• Operations at the lower level are subject to command, consent
and control by higher authorities in the line.
• Sometimes, work may be delegated to subordinates, but
authority may be retained to the largest possible extent.
Advantages
• Quick decision-making
• No duplication of work
• Reduced paperwork
• Better coordination
• Ideal for small organization
• Uniformity among
departments
• Eliminates duplication of
activities
& Disadvantages
• Quick decision-making
• No duplication of work
• Reduced paperwork
• Better coordination
• Ideal for small organization
• Uniformity among
departments
• Eliminates duplication of
activities
Concept of Decentralization
Decentralization refers to a systematic effort to delegate to the
lowest levels, all authority except that which can only be exercised
at the central points.” – Louis A. Allen

Decentralization of authority is a fundamental phase of delegation

to the extent that the authority is not delegated, it is decentralised.
– Koontz & O’Donnell

• It means dispersal of decision-making power to the lowest

levels of the org.
• It is not same as delegation. Delegation means delegating
authority while decentralization means scattering of authority
throughout the org.
 Advantages of decentralization
• Decentralization reduces burden of top level.
• It promotes growth, expansion & diversification
• It simplifies the problem of mgmt succession
• It helps in taking prompt & right action
• It facilitates diversification of product-lines
• It motivates subordinates for higher goal
• It leads to effective control
Factors for degree of centralization
or decentralization

• Size of organization • Pattern of planning

• History of organization • Control techniques
• Geographical expansion • Structure of organization
• Management philosophy • Environmental influences
• Availability of managers
Centralization Vs. Decentralization
Delegation of authority Vs.
Decentralization
Thank You