Organizing

• Nature and Purpose of Organizing

• Bases of Departmentation
• Span of Management, Determinants of Span of Management
• Line and Staff Relationships, Line-Staff Conflicts
• Bases of Delegation, Kinds of Delegation, Delegation
• Decentralization, Methods of Decentralization
 Organizing
• This process places the enterprise into working order by defining and allocating the
duties and responsibilities of different employees and provides it with everything
useful to its function­ing—raw material, tools, capital and personnel.

• It thus combines and co-ordinates their ac­tivities for commonness of purpose. So

the term ‘organising’ implies co-ordination and arrangement of men and materials
of an undertaking in order to achieve a certain purpose.

• When used in the other sense, the term ‘Organising’ is understood as the creation
of a structure of relationships among various positions and jobs for the realisation
of the objec­tives and goals of the enterprise. In this sense, ‘Organisation’ is the
vehicle through which goals are sought to be attained.
 Organizing
• Thus Organizing is
– The identification and classification of required activities,
– The grouping of activities necessary to attain objectives,
– The assignment of each grouping to a manager with the authority
necessary to supervise it, and
– The provision of coordination horizontally and vertically in the
organization structure
 NATURE OF ORGANIZATION
• Division of work or specialization: The entire philosophy of organization depends on the concept of
specialization and division of work. In specialization, various activities are assigned to different people
who are specialists in that area.
• Orientation towards goals: Every organization has its own purposes and objectives. Organizing is the
function employed to achieve the overall goals of the organization.
• Composition of individuals and groups: Individuals form a group and the groups form an organization.
Individuals are grouped into departments and their work is coordinated and directed towards
organizational goals.
• Differentiated functions: The organization divides the entire work and assigns the tasks to individuals;
each one has to perform a different task and tasks of one individual must be coordinated with the tasks
of others.
• Continuous process: An organization is a group of people with defined relationship to each other.
These relationships do not come to end after completing a task. Organization is a never ending process
 PURPOSE OF ORGANIZING
• Divides work to be done into specific jobs and departments
• Assigns tasks and responsibilities associated with individual jobs
• Coordinates diverse organizational tasks
• Clusters jobs into units
• Establishes relationships among individuals, groups, and
departments
• Establishes formal lines of authority
• Allocates and deploys organizational resources
DEPARTMENTATION
 Meaning of Departmentation
• Departmentation is the foundation of organisation structure.
Departmentation means division of work into smaller units and their re-
grouping into bigger units (departments) on the basis of similarity of
features.
• Each department is headed by a person known as departmental manager.
• Division of work into departments leads to specialisation as people of
one department perform activities related to that department only.
• Departmentation provides scope for organisation’s growth (along the
same product lines) and expansion (addition of new product lines).
Bases of Departmentation
 Functional Departmentaion
• It is grouping of activities on the basis of similarities of functions.
• The nature of activities performed by different organisations is
different. Activities carried by a manufacturing concern are
production, finance, personnel and sales.
• For a trader, the major activities are buying and selling. A bank
performs the activities of borrowing and lending. The major
functional departments further have derivative departments.
Production department, for example, has departments to handle
purchasing, production planning and control, manufacturing etc.
 Merits of Functional Departmentation
• 1. Simple and logical basis of creating departments
• 2. Specialisaton
• 3. Co-ordination
• 4. Training and control
• 5. Supervision
• 6. Suitable for stable organisations
• 7. Suitable for small organisations
 Limitations of Functional Departmentation
• 1. Overall organisational goals
• 2. Delayed decisions
• 3. Co-ordination
• 4. Holding of accountablity
• 5. Unsuitable for dynamic organisations
• 6. Complexity
 Divisional Departmentation
• Divisional structures are created on the basis of smaller divisions where each
division has its own functional activities (production, finance, personnel and
marketing).
• Major divisions that determine the organisaion structure are
– 1. Product departmentation
– 2. Process or Equipment departmentation
– 3. Cutomer departmentation
– 4. Terriority or Geographic departmentation
– 5. Departmentation by Time
– 6. Departmentation by Size
– 7. Departmentation by Task Force
 Product Departmentation
• This form of departmentation is suitable for companies that
produce multiple products.
• Product departmentation is grouping of jobs and resources around
the products or product lines that a company sells.
• The focus is on the product line and all functional activities
associated with the product line.
• Departments are created on the basis of products and product
manager has the authority to carry out functional activities for his
department.
Product Departmentation
 Process Departmentation
• In manufacturing organisations, where the product passes
through different stages of production, each stage is
designated as a process and departments created on the basis
of processes is called process departmentation.
• For each process, departments are created and headed by
people who are skilled and competent to carry that process.
 Customer Departmentation
• When organisations sell goods to customers with different
needs, departments on the basis of customers is the suitable
form of departmentation.
• It is “the organising of jobs and resources in such a way that
each department can carefully understand and respond to the
different needs of specific customer groups”.
• Clear identification of customers and their needs is the basis of
departmentalisation.
 Geographic Departmentation
• In territorial departmentation, organisation creates departments (i)
close to its customers because they are geographically dispersed
over different areas, or (ii) near the sources of deposits.
• Each geographic unit has resources to cater to the needs of
consumers of that area.
• General Manager of every department looks after functional
activities of his geographical area while overall functional managers
provide supporting services to the managers of different areas.
SPAN OF MANAGEMENT
 Meaning of Span of Management:
• Depending upon the complexity of organisational activities and
relationships amongst superiors and subordinates, it becomes
important the superiors manage an optimum number of
subordinates that result in optimum organisational output.
• All the subordinates cannot be managed by one superior.
There has to be a limit on the number of subordinates who can
be effectively managed by one superior.
 Meaning of Span of Management:
• The number of subordinates that a superior can effectively
supervise is known as span of management or span of control. In
the 19th and middle of 20th century, management writers
determined 5 or 6 as the optimum number that a manager could
effectively manage at the upper level.
• Beyond this number, managers faced problems like:
– 1. Overburdened with work.
– 2. Difficulty in coordinating the activities of large number of people.
– 3. Difficulty in controlling.
 Determinants of Span of Management
• Competence of managers:
If managers are competent in their jobs, they can have a wide span of management. Competence of
managers is judged by their ability to make decisions related to motivational plans, leadership styles,
communication channels and chains, techniques of control etc. Managers who rank high on these
parameters can effectively supervise larger number of subordinates.
• Nature of work:
If employees perform similar and repetitive work, managers can supervise large number of
subordinates and, thus, have a wide span of control. Non-repetitive and challenging work requires
narrow span of control. Changes in the nature of work also affects the span of management.
• Assistance to managers:
If managers have access to technical or secretarial assistance, a larger group of subordinates can be
managed. Span of control can, therefore, be wide. Staff assistance can be useful for collecting and
processing information related to various decisions and issuing orders to the subordinates. Managers
save time in communicating with subordinates, direct the activities of larger number of subordinates
and focus on other strategic organisational matters.
 Determinants of Span of Management
• Competence of subordinates:
If subordinates are competent to manage their jobs without much assistance from the superiors, span of control
can be wide. Competent subordinates do not require frequent directions from the superiors with respect to
various organisational activities.
• Plans and policies:
If plans clearly define the organisational/individual goals and policies, superiors can supervise a larger group of
subordinates and have a wide span of control. Clearly defined plans include well-formulated policies procedures,
methods etc. Particularly, if standing plans are well defined, subordinates know the broad guidelines within
which they have to make decisions in similar and repetitive situations.
They do not approach the superiors every time they face a similar problem-solving situations. Superiors can,
thus, manage a larger group of subordinates. However, if most of the decisions are made by resorting to single
use plans (programmes, budgets, projects etc.), managers have to be frequently approached and the span can,
thus, be narrow.
•  Organisational level:
The top executives look after important and specialised activities and, therefore, the span is narrow at the top
level but at lower levels the span can be wide, since supervisors are mainly concerned with routine jobs.
 Determinants of Span of Management
• Authority-responsibility structure:
If authority-responsibility structure is well-defined and understood, superiors can supervise larger number of subordinates.
People work within the confines of their responsibility and take directions from superiors only when required. Lack of clarity in
authority-responsibility structure will create confusion in the organisation. Jobs and who will perform which job, who is
accountable to whom will not be clear. In such a situation, managers cannot supervise a large group of subordinates. The span
of management will, thus, be narrow.
• System of control:
Effective techniques of control can enable the manager to supervise larger number of subordinates. Effective system of control
promotes decentralisation. Superiors do not actively involve in the decision-making processes as decisions are taken at the
levels where they are required. There is extensive delegation, clarity of jobs, authority-responsibility relationships and freedom
to take decisions. The span of control can, thus, be wide.
•  Financial factors:
Both narrow and wide structures have financial constraints. A narrow span requires more managers and is, thus, a costly form
of structure. Wide span, on the other hand, may result into organisational inefficiencies. Proper balance has to be maintained
between the costs and benefits of the span that a manager can effectively supervise.
These factors are situational in nature and the span of management is also, thus, situational. Sometimes it can be narrow and
sometimes wide. For the same organisation, it can be different for different functional areas and different levels. The span is
usually narrow in the finance department and wide in the marketing department for the same level. It may be different in
different organisations for the same functional areas and levels.
LINE AND STAFF RELATIONSHIPS,
LINE-STAFF CONFLICTS
 Line and Staff Relationships
• Line and Staff are names given to different types of functions in
organizations.
• A "line function" is one that directly advances an organization in its
core work.
• They are always production and sales, and sometimes also marketing.
• A "staff function" supports the organization with specialized advisory
and support functions.
• For example, human resources, accounting, public relations and the
legal department are generally considered to be staff functions.
 Origin and Definition
• Both terms originated in the Military
• A military-type organizational structure, commonly employed in large, centralized corporations.
Line and staff management has two separate hierarchies:
• The Line hierarchy in which the departments are revenue generators (manufacturing, selling),
and their managers are responsible for achieving the organization's main objectives by executing
the key functions (such as policy making, target setting, decision making).
• The Staff hierarchy, in which the departments are revenue consumers, and their managers are
responsible for activities that support line functions (such as accounting, maintenance, personnel
management). While both hierarchies have their own chains of command, a line manager may
have direct control over staff employees but a staff manager may have no such power over the
line employees.
• In modern practice, however, the difference in the two hierarchies is not so clear-cut and jobs
often have elements of the both types of functions.
 LINE AND STAFF CONFLICT
• Line and staff relationship is based on the assumption that both support each
other and work harmoniously to achieve organizational objectives.
• However, there are frequent instances of conflict between line and staff in the
organization. This generates lots of friction and loss of time and consequently loss
of organizational effectiveness.
• Therefore, there is a need for analyzing the sources of line and staff conflict and
then to take actions to overcome the problem of conflict.
• These relations are often characterized more by conflict than cooperation. Staff
specialists complain that line managers are resistant to their ideas and the line
managers complain that staff managers are sky-gazing specialists with no
comprehension of practical situations.
ARGUMENTS OF LINE OFFICERS AGAINST STAFF OFFICERS

• Staff officers have only theoretical knowledge.

• Much of advice given is impractical because they are not
responsible for the results.
• They take into account only the departments goal, not the
organizations goal as a whole.
• Staff officers blame line officers when failures happen whereas
are keen on getting credit for success.
ARGUMENTS OF STAFF OFFICERS AGAINST LINE OFFICERS

• Line officers completely neglect the advice given by the

officers.
• Line officers hesitate to accept new ideas.
• They simply reject the advice without considering its validity.
• Some line officers are not ready to ask for any advice from the
staff officers.
BASES OF DELEGATION, KINDS OF DELEGATION
 Delegation
• Sharing or transfer of authority and the associated
responsibility from an employer or superior (who has the right
to delegate) an employee or subordinate.
 Bases of Delegation
• Activity Analysis
• Decision Analysis
• Relations Analysis
 KINDS OF DELEGATION
• General Delegation: the subordinate is granted authority to
perform all the functions in his department or division. However,
the subordinate will be under the overall guidance and control
of the superior.
• Specific delegation: a person is given authority regarding
specific function. For example, a sales person may be given the
authority to collect payments from debtors. Specific delegation
is precise and the subordinate clearly understands what he is
expected to do. But it may create inflexibility in the organisation.
 KINDS OF DELEGATION
• Formal Delegation: When authority is delegated as per the
organisation structure. Such delegation is effective because it
leaves no option to the subordinate but to obey the commands
of the superior
• Informal delegation: Takes place when an individual or a group
agrees to work under the direction of an informal leader. 
 KINDS OF DELEGATION
•  Written Delegation: Delegation made by written orders and
instructions is known as written delegation.
• Oral delegation: Unwritten or oral delegation is based in
custom and conventions.
 KINDS OF DELEGATION
• Downward Delegation: Downward delegation occurs when a
superior assigns duties and grants authority to his immediate
subordinate. This is the most common type of delegation.
• Sideward delegation: It takes place when a subordinate assigns
some of his duties and authority to another subordinate of the
same rank 
DECENTRALIZATION
 What is decentralization?
•  Decentralization refers to a specific form of organizational
structure where the top management delegates decision-making
responsibilities and daily operations to middle and lower subordinates.
• The top management can thus concentrate on taking major decisions
with greater time abundance.
• Business houses often feel the requirement of decentralization to
continue efficiency in their operation.
• Today, we are going to take a look at the basic advantages and
disadvantages of decentralization from an organizational point of view.