Unit 3
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The document discusses various concepts related to organizing, including: 1. Definitions of organization, organizing process, and its key steps like determining objectives, enumerating activities, classifying activities, assigning duties, and delegating authority. 2. Principles of organization like division of work, attention to objectives, span of management, and flexibility. It also discusses departmentation, authority, responsibility, accountability, and span of control. 3. Bureaucratic management and adhocracy forms of organization structures.
Unit 3
- 2. DEFINITION According to Koontz and O'Donnell, "Organization involves the grouping of activities necessary to accomplish goals and plans, the assignment of these activities to appropriate departments and the provision of authority, delegation and co-ordination."
- 3. ORGANIZING PROCESS Organization is the process of establishing relationship among the members of the enterprise. The relationships are created in terms of authority and responsibility. To organize is to harmonize, coordinate or arrange in a logical and orderly manner.
- 5. a) Determination of Objectives: It is the first step in building up an organization. Organization is always related to certain objectives. Therefore, it is essential for the management to identify the objectives before starting any activity. Organization structure is built on the basis of the objectives of the enterprise. Determination of objectives will consist in deciding as to why the proposed organization is to be set up and, therefore, what will be the nature of the work to be accomplished through the organization.
- 6. b) Enumeration of Objectives: If the members of the group are to pool their efforts effectively, there must be proper division of the major activities. The second step in organizing group effort is the division of the total job into essential activities. Each job should be properly classified and grouped. This will enable the people to know what is expected of them as members of the group and will help in avoiding duplication of efforts.
- 7. c) Classification of Activities: The next step will be to classify activities according to similarities and common purposes and functions and taking the human and material resources into account. Then, closely related and similar activities are grouped into divisions and departments and the departmental activities are further divided into sections.
- 8. d) Assignment of Duties: Here, specific job assignments are made to different subordinates for ensuring a certainty of work performance. Each individual should be given a specific job to do according to his ability and made responsible for that. He should also be given the adequate authority to do the job assigned to him.
- 9. e) Delegation of Authority: Since so many individuals work in the same organization, it is the responsibility of management to lay down structure of relationship in the organization. Authority without responsibility is a dangerous thing and similarly responsibility without authority is an empty vessel. Everybody should clearly know to whom he is accountable; corresponding to the responsibility authority is delegated to the subordinates for enabling them to show work performance. This will help in the smooth working of the enterprise by facilitating delegation of responsibility and authority.
- 10. PRINCIPLES OF ORGANISATION Effective and efficient working of any organization depends on how the managerial function of organization is being performed. The function of organization can be carried effectively with the help of under mentioned principles: (i) Division of work : While structuring organization, division of work, at the very outset, should be considered as the basis of efficiency. It is an established fact that group of individuals can secure better results by having division of work. Therefore, while designing the organization we should aim at making suitable grouping of activities. This is also called the principle of specialization
- 11. PRINCIPLES OF ORGANISATION ii) Attention to objectives : An organization is a mechanism to accomplish certain goals or objectives. The objectives of an organization play an important role in determining the type of structure which should be developed. Clearly defined objectives facilitate grouping of activities, delegation of authority and consequently effective coordination
- 12. PRINCIPLES OF ORGANISATION (iii) Span of management : Span of management also refers to span of control signifying the number of subordinates reporting directly to any executive. It is an established fact that larger the number of subordinates reporting directly to the executive, the more difficult it tends to be for him to supervise and coordinate them effectively. This important principle of management should also be kept in mind. (iv) Unity of command : Organization structure should also be designed in such a way that there exists unity of command in the sense that a single leader is the ultimate source of authority. This facilitates consistency in directing, coordinating and controlling to achieve the end objectives.
- 13. PRINCIPLES OF ORGANISATION (v) Flexibility : While designing the organization it should be kept in mind that organizational structure should not be regarded as static. Every organization is a living entity in a living environment which is fast changing . As such there must be sufficient room for changing and modifying the structure in the light of environmental changes so that the ultimate objective of the organization is achieved. (vi) Proper balance : It is important to keep various segment or departments of an organization in balance. The problem of balance basically arises when an activity or a department is further divided and subdivided into smaller segments. The problems of balancing also crops up with the growing of any organization in its size and functioning.
- 14. PRINCIPLES OF ORGANISATION (vii) Management by exception : It is a fundamental principle that makes any organization effective in its true sense. This principle signifies that problems of unusual nature only should be referred upward and decided by higher level executives in the managerial hierarchy, whereas the routine problems should be passed on to lower levels and resolved there. Application of this principle as such, certainly requires adhering to the principle of delegation of authority. The principle of exception is thus of significant practical utility and applies to all levels in the organization structure.
- 15. PRINCIPLES OF ORGANISATION (viii) Decentralization : This principles is of great significance to big organizations. Decentralization implies selective dispersal of authority to help departments and units to run effectively and efficiently without frequent interruptions from the top of the enterprise. It requires very careful selection of what decisions to push down into the organization, of what to hold at or near the top specific policy making to guide the decision-making, selection and training of people and adequate control. (ix) Departmentation : Departmentation is the process of grouping activities into units for purposes of administration. In other words, it denotes grouping of related jobs and activities without violating the principle of homogeneity over which an executive has authority to exercise and assert. The main advantages of departmentation are that it enables individual executive to mange his subordinates effectively since a manageable number of persons are brought under the direct supervision of individual executive.
- 16. PRINCIPLES OF ORGANISATION (x) Efficiency : The organization should be able to attain the predetermined objectives at the minimum cost. It is done so, it will satisfy the test of efficiency. From the point of view of an individual, a good organization should provide the maximum work satisfaction. Similarly, from the social point of view, an organization will be efficient when it contributes the maximum towards the welfare of the society. (xi) Scalar principle : Scalar chain refers to the vertical placement of superiors starting from the chief executive at the top through the middle level to the supervisory level at the bottom. Proper scalar chain or line of command is prerequisite for effective organization
- 17. PRINCIPLES OF ORGANISATION (xii) Unity of direction : This means that each group of activities having the same objectives should have one plan and one head. There should be one plan or programme for each segment of work which is to be carried under the control and supervision of one head or superior. If different plans or policies are followed in one department by the subordinates, confusion is bound to occur. xiii) Continuity : The form of organization structure should be such which is able to serve the enterprise to attain its objectives for a long period of time. (xiv) Coordination : The principal of coordination underlines that there should be proper liaison and cooperation between different departments and units of work. Unity of efforts for the accomplishment of desired objectives is the main aim of organization. This can be achieved through the principle of coordination.
- 18. PRINCIPLES OF ORGANISATION (xv) Authority and responsibility : Authority should commensurate with responsibility. While assigning the responsibility, authority should also be assigned. If authority is not granted, the subordinates cannot discharge their responsibility properly
- 19. Departmentation The process of making departments in the organization is known as departmentation. It is the process of grouping related activities into different units. Departmentation further is the process of arranging, dividing and analyzing the activities in such a way so that they will be managed properly. It is the way of dividing long and complex organization into smaller administrative units. Departmentation may be done on the basis of product, function, territory, consumer, etc. Departmentation is the logical process of grouping similar nature activities into manageable units. It is the process of combining jobs into groups.
- 20. TYPES / METHODS OF DEPARTMENTATION Departmentation by function: It is the common and popular method of departmentation. Under this method, total organizational work can be divided into different functions such as production department, finance department, marketing department, human resource, etc. Such departmentation is essential for the survival and maintenance of the organization. The departmental managers are responsible for controlling the activity of their department and all these departmental heads are expert and specialize in their own area of work.
- 22. Departmentation by product or service: It is another suitable method of departmentation for an organization producing a variety of product. Under this method, the product or product line form the basis of departmentation. All the major functions such as production, marketing, finance, etc. are brought under a particular product for the proper management.
- 24. 4. Geographic departmentalization In geographic departmentalization, separate departments are made based on the company's (i.e. institution's) operations to be carried out either over a vast area or within some restricted area through branches or offices established at different zones or places in that area. First, an entire area of operation (e.g. world, country, state, city, etc.) is decided followed by division of that area into different zones. Secondly, a branch or an office is established in each geographical zone to manage local affairs of the company in that zone.
- 26. 5. Customer departmentalization In customer departmentalization, departments are separated from each other based on the types or groups of customers to be handled or dealt with. For example, customers can be classified under types such as, international or foreign customers, inland or domestic customers, bulk purchasing or wholesale customers, retail customers, etc. Each group of customers needs different tactics and strategies to handle them better. Hence, an appropriate customer departmentalization serves this purpose.
- 28. 6. Combined departmentalization or matrix In combined departmentalization, a company or an organization uses a mixture or combination or union of two or more different bases of departmentalization. For example, in practice, owing to rising market competition and emerging complexity of tasks most organizations often uses a combination of above- discussed (see point no. 1 to 5) types (i.e. methods or bases) of departmentalization.
- 30. Departmentation by time: In this method of departmentation, activities are grouped on the basis of the timing of their performance. This is the oldest form of departmentation generally used at lower levels of the organization. If it is the case of production department of any manufacturing department, the production function can be divided into different shifts like morning shift, day shift, and night shift. Even an educational institution may have a separate department for the day, evening and correspondence courses to import education to full-time students, locally employed students, and outstation students respectively.
- 32. Authority Henry Fayol – "Authority is the right to give orders and the power to exact obedience." It is a formal right of the superior to command and compel his subordinates to perform the works assigned to them. Authority is a kind of right and power – though the authority is different from power – to guide and direct the actions of others so that the organizational goals could be achieved. Authority is vested in a particular position not to the person, because, authority is given by an institution and is, therefore, legitimate or legal. Thus, authority denotes those legal, conventional and systematized rights and power through which any person, authorized or empowered, can perform his duty and responsibility, can compel other to perform the duty, order or direct the subordinates, motivate the people belonging to the organization and makes the organization legally responsible towards the third party for his action. Thus, we can understand the term ‘authority’ as the power to direct, issue orders, compel obedience, guide and utilize the organizational resources.
- 33. Responsibility Theo Heimann- "Responsibility is the obligation of a subordinate to perform the duty or required by his superior." The responsibility is an obligation to perform the certain function assigned to achieve certain results in the organization. Responsibility has two dimensions. One may be expressed as, ‘Responsibility for’ and another as ‘Responsibility to’. ‘Responsibility for’ relates to an obligation to perform certain duties written or given in his job description. Particularly, in an organization, two types of responsibilities are found, they are: operating responsibility and ultimate responsibility. The subordinates assigned to them, where the superior retains ultimate responsibility for getting the job done. If the subordinates fail to perform the job (operating responsibility), the superior is held responsible for the failure
- 34. Accountability Stephen P.Robbins- "Accountability is the obligation to one's superior to carry out the assignment in a satisfactory manner." Accountability is related with both authority and responsibility. It is neither authority nor responsibility. The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner. Accountability is something more than responsibility. It refers that a subordinate is answerable under his obligation. Every employee/manager is accountable for the job assigned to him. He is supposed to complete the job as per the expectations and inform his superior accordingly. Accountability is the liability created for the use of authority. It is the answerability for performance of the assigned duties.
- 35. SPAN OF CONTROL Span of Control means the number of subordinates that can be managed efficiently and effectively by a superior in an organization. It suggests how the relations are designed between a superior and a subordinate in an organization. Span of control is of two types: 1. Narrow span of control: Narrow Span of control means a single manager or supervisor oversees few subordinates. This gives rise to a tall organizational structure.
- 36. Narrow span of control
- 37. 2. Wide span of control: Wide span of control means a single manager or supervisor oversees a large number of subordinates. This gives rise to a flat organizational structure.
- 38. Bureaucracy Bureaucratic management is a theory set forth by Max Weber, a German sociologist and political economist whose theory contained two essential elements, including structuring an organization into a hierarchy and having clearly defined rules to help govern an organization and its members. Bureaucratic management can be thought of as a formal system within an organization that is distinctly based on precisely defined hierarchical roles and levels to help maintain efficiency and effectiveness.
- 39. ADHOCRACY The adhocracy is task or project-based and has to respond quickly and flexibly to changing demands. These demands may be driven by rapidly changing markets or by innovation. There is little formality, so direct supervision and defined processes are less important than in other organisation structures. Research and development can be a primary driver of adhocracies, as typified by new technology industries.
- 40. Adhocracy arises out of the need of formal organizations to be able to recognize, understand, and solve problems in highly complex and turbulent environments. The concept is of recent origin. The American futurist Alvin Toffler coined the term in 1970 to define an emerging system of organization appropriate to a world of swiftly advancing technologyand of societal impatience with the multi layered authority structure of the typical hierarchy. The Canadian author Henry Mintzberg more fully elaborated adhocracy as a type in 1979, arguing for its status as an important addition to the well-known forms, such as the simple structure, the professional bureaucracy, and the divisionalized form of organization.