CONCEPT OF ORGANISING
Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively to together in accomplishing objectives.
PROCESS OF ORGANISING
1.Identification and division of work: The first step in the process of organizing involves identifying and dividing the work that has to be done in accordance with previously determined plans. The work is divided into management activities so that duplication can be avoided and the burden of work can be shared among the employees.
2.Departmentalization: Once work has been divided into small and manageable activities then those activities which are similar in nature are grouped together. Such sets facilitate specialization. This grouping process is called departmentalization. Departments can be created using several criteria as a basis. Examples of some of the most popularly used basis are territory (north, south, west, etc.) and products (appliances, clothes, cosmetics etc.)
3.Assignment of duties: It is necessary to define the work of different job positions and accordingly allocate work to various employees. Once departments have been formed, each of them is placed under the charge of an individual. Jobs are then allocated to the members of each department in accordance to their skills and competencies. It is essential for effective performance that a ability of an individual. The work must be assigned to those who are best fitted to perform it well.
4.Establishing authority and reporting relationships: Merely allocating work is not enough. Each individual should also know and to whom he is accountable. The establishment of such clear relationships helps to create a hierarchal structure and helps in coordination amongst various departments.
Importance of organising
1.Benefits of specialization: Organizing leads to a systematic allocation of jobs amongst the work force. This reduces the workload as well as enhances productivity because of the specific workers performing a specific job on a regular basis. Repetitive performance of a particular task allows a worker to gain experience in that area and leads to specialization.
2.Clarity in working relationships: The establishment of working relationships clarifies lines of communication and specifies who is to report to whom. This removes ambiguity in transfer of information and instructions. It helps in creating a hierarchical order thereby enabling the fixation of responsibility and specification of the extent of authority to be exercised by an individual.
3.Optimum utilization of resources: Organizing leads to the proper usage of all material, financial and human resources. The proper assignment of jobs avoids overlapping of work helps in preventing confusion and minimizing the wastage of resources and efforts.
4.Adaptation to change: the process of organizing allows a business enterprise to accommodate changes in the business environment. It allows the organization structure to be suitably modified and the revision of inter-relationship levels to pave the way for a smooth transition. It also provides much needed stability to the enterprise as it can then continue to survive and grow in spite of changes.
5.Effective administration: Organizing provides a clear description of jobs and related duties. This helps to avoid condusion and duplication. Clarity in working relationships enables proper execution of work. Management of an enterprise thereby becomes easy and this brings effectiveness in administration.
ORGANISATION STRUCTURE
An organization structure provides the framework which enables the enterprise to function as an integrated unit by regulating and coordinating the responsibilities of individuals and departments.
For example: Rita opened her own travel agency. The success of her travel agency depends on a harmonious relationship between the customer and the employees of the year travel agency. In order to achieve this objective she has divided the entire work of the agency into three subheads based on the functions namely operations, sales and administration. Operations include travel counselor, reservation and ticketing and customer care. Sales including the accounts executive. Administration includes Book Keeper, Cashier and utility personnel. This division of work on the basis of functions has resulted into an organizational structure specifying the line of authority and responsibility.
TYPES OF ORGANISATION STRUCTURES
Functional structure
Grouping of jobs of similar nature under functions and organizing these major functions as separate department creates a functional structure. All department report to a coordinating head.
For example, in a manufacturing concern division of work into key functions will include production, purchase, marketing, accounts and personnel. These departments may be further divided into sections. Thus, a functional structure is an organization design that groups similar or related jobs together.
Advantages:
- A functional structure leads to occupational specialization since emphasis is placed on specific functions. This promotes efficiency in utilization of manpower as employees perform similar tasks within a department and are able to improve performance.
- It promotes control and because of similarity in the tasks being performed.
- It helps in increasing managerial and operational efficiency and this results in increased profit.
- It leads to minimal duplication of effort which results in economies of scale and this lowers cost.
- It makes training of employees easier as the focus is only on a limited range of skills.
- It ensure that different functions get due attention.
Disadvantages:
- It may lead to problems in coordination as information has to be exchanged across functionally differentiated departments.
- A conflict of interests may arise when the interests of two or more departments are not compatible.
- It may lead to inflexibility as people with same skills and knowledge base may develop a narrow perspective and thus, have difficulty in appreciating by other point of view.
Divisional Structure:
In a divisional structure, the organization structure comprise of separate business units or divisions. Each will has a divisional manger responsible for performance and who has authority over the unit. Generally, manpower is grouped on the basis of different products manufactured. Each division is multifunctional because within each division functions like production, marketing, finance, purchase, etc.,
are performed together to achieve a common goal. Each division is self-contained as it develops expertise in all functions related to a product line.
Advantages: The divisional structure offers many benefits. Prominent among these are as follows:
- Product specialization helps in the development of varied skills in a divisional head and this prepares him for higher positions. This is because he gains experience in all functions related to a particular product.
- Divisional heads are accountable for profits, as revenues and costs related to different departments can b easily identified and assigned to them. This provides a proper basis for performance measurement.
- It promotes flexibility and initiative because each division functions as an autonomous unit which leads to faster decision making.
- It facilitates expansion and growth as new divisions can be added without interrupting the existing operations by merely adding another divisional head and staff for the new product line.
Disadvantages:
- Conflict may arise among different divisions with reference to allocation of funds and further a particular division may seek to maximize its profits at the cost of other divisions.
- It may lead to increase in costs since there may be a duplication of activities across products. Providing each division with separate set of similar functions increases expenditure.
- It provides manager with the authority to supervise all activities related to a particular division. In course of time, such a manager may gain power and in a bid to assert his independence may ignore organizational interests.
Formal organisation
Formal organization refers to the organization structure which is designed by the management to accomplish a particular task. It specifies clearly the boundaries of authority and responsibility and there is a systematic coordination among the various activities to achieve organizational goals.
The structure in a formal organization can be functional or divisional.
Features:
- It specifies the relationships among various job positions and the nature of their interrelationship. This clarifies who has to report to whom.
- It is a means to achieve the objective specified in the plans, as it lays down rules and procedures essential for their achievement.
- Efforts of various departments are coordinated, interlinked and integrated through the formal organization.
- It is deliberately designed by the top management to facilitate the smooth functioning of the organization.
- It plans more emphasis on work to be performed than interpersonal relationship among the employs.
Advantages: formal organization offers many advantages. Some of the important ones are:
- It is easier to fix responsibility since mutual relationships are clearly defined.
- There is no ambiguity in the role that each member has to play as duties are specified. This also helps in avoiding duplication of effort.
- Unity of command is maintained through an established chain of command.
- It leads to effective accomplishment of goals by providing a framework for the operations to be performed and ensuring that each employee knows the role has to play.
- It provides stability to the organization. This is because behavior of employees can be fairly predicted since there are specific rule to guide them.
Limitation: The formal organization suffers from the following limitations:
- The formal communication may lead to procedural delays as the established chain of command has to be followed which increase the time taken for decision making.
- Poor organization practices may not provide adequate recognition to creative talent, since it does not allow any deviations from rigidly laid down polices.
- It is difficult to understand all human relationships in an enterprise as it places more emphasis on structure and work.
INFORMAL ORGANISATION
Informal organization emerges from within the formal organization when people interact beyond their officially defined roles. When people have frequent contacts they cannot be forced into a rigid formal structure. Rather, based on their interaction and friendship they tend to form groups which show conformity in terms of interest. Examples of such groups formed with common interest may be those who take part in cricket matches on Sunday, meet in the cafeteria for coffee, are interested in dramatics, etc. informal organization has no written rules, is fluid in form and scope and does not have fixed lines of communication.
Features:
- An informal organization originates from within the formal organization as a result of personal interaction among employees.
- The standards of behavior evolve form group norms rather than officially laid down rules and regulations.
- Independent channels of communication without specified direction of flow of information are developed by group members.
- It emerges spontaneously and not deliberately created by the management.
- It has no definite structure or from because it is a complex network of social relationships among members.
Advantages: The informal organization offers many benefits. Important among them are given below:
- Prescribed lines of communication are not followed. Thus, the informal organization leads to faster spread of information as well as quick feedback.
- It helps to fulfill the social needs of the members and allows them to find like minded people. This enhances their job satisfaction since it gives them a sense of belongingness in the organization.
- It contributes towards fulfillment of organization objectives by compensating or inadequacies the formal organization. For example, employees reaction towards plans and policies can be tested through the informal network.
Disadvantages: The informal organization has certain disadvantages. Some of them are as follows:
- When an informal organization spreads rumours, it becomes a destructive force and goes against the interest of the formal organization
- The management may not be successful in implementing changes if the informal organization opposes them. Such resistance to change may delay or restrict growth.
- It pressurises members to conform to group expectations. This can be harmful to the organization if the norms set by the group are against organization interests.
DELEGATION
Delegation refers to the downward transfer or authority form a superior transfer of authority form a superior to a subordinate. It is a pre-requisite to the efficient functioning of an organization because it enables a manager to use his time on high priority activities. It also satisfies the subordinate’s need for recognition and provides them with opportunities to develop and exercise initiative.
Elements of delegation:
- Authority: Authority refers to the right of an individual to command his subordinates and to take action within the scope of his position. The concept of authority arises from the established scalar chain which links the various job positions and levels of an organization. Authority also refers to the right to take decisions inherent in a managerial position to tell people what do to and expect them to do it.
- Responsibility: It arises from a superior-subordinate relationship because the subor-dinate is bound to perform the duty assigned to him by his superior. Thus, responsibility flows upwards, i.e., a subordinate will always be responsible to his superior. An important consideration to be kept in view with respect to both authority and responsibility is that when an employee is given responsibility for a job he must also be given the degree of authority necessary to carry it out.
- Accountability: Accountability implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability. It cannot be delegated and flows upwards, i.e., a subordinate will be accountable to a superior for satisfactory performance of work. It indicates that the manager has to ensure the proper discharge of duties by his subordinates. It is generally enforced through regular feedback on the extent of work accomplished. The subordinate will be expected to explain the consequences of his actions or omissions.
IMPORTANCE OF DELEGATION
- Effective management: By empowering the employees, the managers are able to function more efficiently as they get more time concentrate on important matters. Freedom from doing routine work provides them which opportunities to excel in new areas.
- Employee development: As a result of delegation, employees get more opportunities to utilize their talent and this may give rise to latent abilities in them. It allows them to develop those skills which will enable them to perform complex tasks and assume those responsibilities which will improve their career prospects. It makes them better leaders and decision makers.
- Motivation of employees: Delegation helps in developing the talents of the employees the talent of the employees. It also has psychological benefits. When a superior entrusts a subordinate with a task, it is not involves trust on the superior’s part and commitment on the part of subordinate.
- Facilitation of growth: Delegation helps in the expansion of an organization by providing a ready workforce to take up leading positions in new ventures.
- Basis of management hierarchy: Delegation of authority establishes superior-subordinate relationships, which are the basis of hierarchy of management.
- Better coordination: The elements of delegation, namely authority, responsibility and accountability help to define the powers, duties and answerability related to the various positions in an organization.
DECENTRALISATION
Decentralization explains the manner in which decision making responsibilities are divided among hierarchical levels. Put simply, decentralization refers to delegation of authority throughout all the levels of the organization. Decision making authority is shared with lower levels and consequently placed nearest to the points of action. In other words decision making authority is pushed down the chain of command.
Centralization and Decentralization
An organization is centralized when decision-making authority is retained by higher management levels whereas it is decentralized when such authority is delegated.
Complete centralization would imply concentration of all decision making functions at the apex of the management hierarchy. Such a scenario would obviate the need for a management hierarchy. On the other hand, complete decentralization would imply the delegation of all decision making functions to the lower level of the hierarchy and this would obviate the need for higher managerial positions. Both the scenarios are unrealistic.
IMPORTANCE
- Develops initiative among subordinates: Decentralization helps to promote self-reliance and confidence amongst the subordinates. This is because when lower managerial levels are given freedom to rake their own decisions they learn to depend on their own judgment.
- Develops managerial talent for the future: Formal training plays an important part in equipping subordinates with skills that help them rise in the organization but equality important is the experience gained by handling assignments independently. Decentralization gives them a chance to prove their abilities and creates a reservoir of qualified manpower who can be considered to all up more challenging positions through promotions.
- Quick decision making: The management hierarchy can be looked upon as a chain of communication. In centralized organizations because every decisions is taken by the top management the flow of information is slow as it has to traverse many levels.
- Relief to top management: Decentralization diminishes the amount of direct supervision exercised by a superior over the activities of a subordinate because they are given the freedom to act and decide albeit within the limits set by the superior.
- Facilitates growth: Decentralization awards greater autonomy to the lower levels of managements as well as divisional or departmental heads. This allows them to functions in manner best suited to their department and fosters a sense of competitions amongst the departments.
- Better control: Decentralization makes it possible to evaluate performance at each level and the departments can be individually held accountable for their results.