ORGANIZINGORGANIZING

Prof. Preeti BhaskarProf. Preeti BhaskarSymbiosis Centre for Management Studies, NoidaSymbiosis Centre for Management Studies, Noida

Prof. Preeti BhaskarProf. Preeti BhaskarSymbiosis Centre for Management Studies, NoidaSymbiosis Centre for Management Studies, Noida

Course outline• Meaning and importance

• Structure of organization- Functional, divisional and administrative

• Formal and informal organization, Matrix Organization

• Delegation: Meaning and Importance

• Elements of Delegation

• Concept-centralization and de-centralization

CLASSIFICATION OF MANAGEMENT FUNCTIONS

MANAGEMENT FUNCTIONS

Managerial functions

Operative functions

Organizing

A manager is responsible for organizing people, work processes, and equipment.

organizinggetting the resources arranged in an orderly and functional way to accomplish goals and objectives

According to Theo Haimman

Steps in organizing

Importance of organizing • Specialization• Well defined jobs• Clarifies authority • Co-ordination• Effective

administration • Growth and

diversification • Sense of security • Scope for new

changes

Organizational Structure

A formal system of task and reporting relationships that coordinates and motivates members so that they work together to achieve organizational goals

organizational chart

a chart that shows how the firm is structured and who is in charge of whom

Managing director

Finance Manager

Marketing Manager

Production Manager

Accounts

officer

Sales Manag

er

Factory Manag

er

Internal

auditor

Advertisi

ng Manag

er

Store Manag

er

Accountant

Sales Supervis

orforema

n

Accountant Clerks

Salesman

Store Keeper

foreman

Worker Worker

Sales Supervis

or

Salesman Accountant Clerks

ORGANIZATION STRUCTURE

• Formal structure

• Informal structure

• Functional organization

• Committee• organizatio

n

• Matrix organization

• Line organization

a) Pure line organization

b) Departmental organization

• Line and staff organization

• Divisional organization

Line organization

• Complaint

• Suggestion

• Order

• Authority

Pure Line organization

Production Manager

Foreman - A

Foreman- B

Worker Worker

General Manager

Worker Worker Worker Worker

Activities of all employees working in the same level happen to be similar

DEPARTMENTAL ORGANIZATION

Production Dept.

Foreman - A

Superintendent

Worker Worker

General Manager

Worker Worker Worker Worker

Finance Dept.

Marketing Dept.

HRDept.

Superintendent

Superintendent

Superintendent

Employee

Employee

Employee

Line and staff organization

Foreman - A

Superintendent

Worker Worker

Foreman - A

Production Manager

Shareholder

BOD

General Manager

Research officer

Public Relation Officer

Marketing Manager

Foreman - A

Superintendent

Salesman

Salesman

Foreman - A

Advertising officer

Production Officer

Quality control Officer

Sales officer

Divisional structures (based on product, geography, customer,

and process.)

advantages of divisional structures:

– More flexibility in responding to environmental changes

– Clear points of responsibility.

– Expertise focused on specific customers, products, and regions.

– Greater ease in restructuring.

disadvantages of divisional structures:

– Duplication of resources and efforts across divisions.

– Competition and poor coordination across divisions.

– Emphasis on divisional goals at expense of organizational goals.

Functional structures

– People with similar skills and performing similar tasks are grouped together into formal work units.

– Members work in their functional areas of expertise.

– Work well for small organizations producing few products or services.

Managing Director

Functional structures

advantages of functional structures:

– Economies of scale.

– Task assignments consistent with expertise and training.

– High-quality technical problem solving,

– In-depth training and skill development.

– Clear career paths within functions.

disadvantages of functional structures:

• Difficulties in pinpointing responsibilities.

• Functional problem.

• Sense of cooperation and common purpose break down.

• Narrow view of performance objectives.

• Excessive upward referral of decisions.

Committee organization

Matrix structure

– Combines functional and divisional structures to gain advantages and minimize disadvantages of each.

– Used in:• Manufacturing

• Service industries

• Professional fields

• Non-profit sector

• Multi-national corporations

Matrix structure in a small multi-project business firm.

advantages of matrix

structures:– Better cooperation across

functions.

– Improved decision making.

– Increased flexibility in

restructuring.

– Better customer service.

– Better performance

accountability.

– Improved strategic

management.

disadvantages of matrix structures– Two-boss system is

susceptible to power struggles.

– Two-boss system can create task confusion and conflict in work priorities.

– Team meetings are time consuming.

– Team may develop “groups”

– Increased costs due to adding team to structure.

Informal structures

– A “shadow” organization made up of the unofficial, but often critical, working relationships between organization members.

– Potential advantages of informal structures:

• Helping people accomplish their work.

• Overcoming limits of formal structure.

• Gaining access to interpersonal networks.

• Informal learning.

Span of controlSpan of controlSpan of controlSpan of control

Span of control

– The number of persons directly reporting to a manager.

– Organizing trend:• Many organizations are shifting to wider

spans of control as levels of management are eliminated.

• Managers have responsibility for a larger number of subordinates who operate with less direct supervision.

Spans of control

FACTORS GOVERNING SPAN OF CONTROL

• Ability of the Manager • Ability of a employees• Type of work • Well defined authority and

responsibility • Geographic location • Levels of Management

DelegationDelegationDelegationDelegation

Delegation

right of an individual to command his subordinates and right to take decision within the limits of his position”

The obligation of subordinate to perform the assigned job properly

Obligation to carry out responsibility and give reports about performance to the superior

Importance of Delegation

• Reduction of executives work load • Quick and better decision • Development of the skills of the

subordinated • High morale of subordinate • Effective Management• Employee Development • Motivation of Employees• Facilitation of growth• Basis of managerial hierarchy• Better coordination

Process of Delegation

Obstacles in Delegation

• Factors of Superior (Delegators)

• Factors of Subordinates(Delegate)

• Organizational factor

Obstacles in Delegation Boss is reluctant to delegation because he/she:

• Feels he can do better himself

• Dislikes gives other chance

• Lacks confidence in subordinates

• Does not have adequate control

• Unable to instruct subordinate

• Likes to depend on the boss

• Dislikes criticism

• Lacks self confidence

• Does not have adequate resources

• Has little positive incentives

Subordinated is reluctant to delegation because he/she:

Organizational factor :• Inadequate

planning

• Unclear authority relationship

• Splintered authority

• Non availability of competent managers

Guidelines for effective delegation:

– Carefully choose the person to whom you delegate.– Define the responsibility; make the assignment

clear.– Agree on performance objectives and standards.– Agree on a performance timetable.– Give authority; allow the other person to act

independently.– Show trust in the other person.– Provide performance support.– Give performance feedback– Recognize and reinforce progress.– Help when things go wrong.– Don’t forget your accountability for performance

results.

Centralization and Centralization and DecentralizationDecentralization

Centralization and Centralization and DecentralizationDecentralization

CEO

Dept.

Dept.

Dept.

Dept.

Dept.

Dept.

Dept.

Dept.

CEO

Dept.

Dept.

Dept.

Dept.

Dept.

Dept.

Dept.

Dept. ?Centralization

De- Centralization

FIG-1

FIG-2

Centralization means complete authority of decision making being at the top level.

Centralization

According to Allen, “Centralization” is the systematic and consistent reservation of authority at central points in the organization.

Advantages of Centralization

• Effective utilization of talents of the top management.

• It allows the development of a strong co-ordinates top management team.

• Uniformity of policies and plans across the organization.

• Duplication of functions and facilities is minimized which in turn reduces costs.

• Quick decision-making and communication.

• Doesn’t give an opportunity to lower level managers/supervisors to develop their managerial skills.

• Centralized organization faces the problem of lower motivation levels among workforce.

• The success of organization depends on the competence of top executives which might be quite risky.

Disadvantages of Centralization

Decentralization is a systematic delegation of authority at all levels of management and in all of the organization.

•  According to Kreitner,

“Decentralization is granting of decision making authority by top management to the lower level employees”

Advantages• Decentralization reduces the

workload of top executives.

• It improves job satisfaction and morale of lower level managers by satisfying their needs for independence, participation and status.

• Decision making is quicker.

• It facilitates growth and diversification. As each product division is given sufficient autonomy for innovation and creativity.

• It gives opportunity to subordinates to exercise their own judgment. They develop managerial skills which will be useful to the organization in the longer run.

Disadvantages• Decentralization increases the

administrative expenses and each division or department has to be sufficient in terms of physical facilities and trained personnel.

• As each department or division enjoys substantial autonomy it might lead to co-ordination problems.

• There might be lack of uniformity and inconsistent procedures as each department might have the authority to formulate its own policies and procedures.

• Is suitable for small business

Centralization• Is suitable

for large business

Decentralization

Difference between :Difference between :

Delegation and Decentralization Delegation and Decentralization

Difference between :Difference between :

Delegation and Decentralization Delegation and Decentralization

Delegation

A

Decentralization

A

D

CB

Basis Delegation Decentralization

MeaningManagers delegate some of their function and authority to their subordinates.

Right to take decisions is shared by top management and other level of management.

Scope

Scope of delegation is limited as superior delegates the powers to the subordinates on individual bases.

Scope is wide as the decision making is shared by the subordinates also.

ResponsibilityResponsibility remains of the managers and cannot be delegated

Responsibility is also delegated to subordinates.

Freedom of Work

Freedom is not given to the subordinates as they have to work as per the instructions of their superiors.

Freedom to work can be maintained by subordinates as they are free to take decision and to implement it.

Nature It is a routine functionIt is an important decision of an enterprise.

Need on purpose

Delegation is important in all concerns whether big or small. No enterprises can work without delegation.

Decentralization becomes more important in large concerns and it depends upon the decision made by the enterprise, it is not compulsory.

Grant of Authority

The authority is granted by one individual to another.

It is a systematic act which takes place at all levels and at all functions in a concern.

Grant of Responsibility

Responsibility cannot be delegated

Authority with responsibility is delegated to subordinates.

DegreeDegree of delegation varies from concern to concern and department to department.

Decentralization is total by nature. It spreads throughout the organization i.e. at all levels and all functions

ProcessDelegation is a process which explains superior subordinates relationship

It is an outcome which explains relationship between top management and all other departments.

EssentialityDelegation is essential of all kinds of concerns

Decentralization is a decisions function by nature.

SignificanceDelegation is essential for creating the organization

Decentralization is an optional policy at the discretion of top management.

WithdrawalDelegated authority can be taken back.

It is considered as a general policy of top management and is applicable to all departments.

Freedom of Action

Very little freedom to the subordinates

Considerable freedom