Organising- it is a process that initiates implementation of plans by clarifying jobs and working

relationships and effectively deploying resources for attainment of identified and desired goals.
Organising steps
1. Identification and division of work
Work is identified and divided into manageable activity as per previously determined plans.
During this step, duplication of work is avoided and the burden of work is shared among the
employees.
2. Departmentalisation
In this step, those activities which are similar in nature are grouped together. This grouping
process is called departmentalisation. It facilitates specialisation.
3. Assignment of duties
Each department is placed under the charge of an individual. Jobs are than allocated to the
members of each department in accordance to their skills and competencies.
4. Establishing reporting relationships
In this step, Reporting relationships among the employees are established. Each individual
should know who he has to take orders from and to whom he is accountable. This helps to
create a hierarchal structure and helps in coordination amongst various departments.
Importance of Organising
1. Benefits of specialisation
Organising leads to a systematic allocation of jobs amongst the work force. This reduces the
workload as well as enhances productivity. Workers perform 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 specialisation.
2. Clarity in working relationships
Organizing clearly specifies the working relationships among the employees. It helps in creating
a hierarchical order so responsibility can be fixed. It also removes ambiguity in transfer of
information and instructions.
3. Optimum utilization of resources
Organising helps in proper usage of all material, financial and human resources. The proper
assignment of jobs avoids overlapping or duplication of work. This helps in preventing confusion
and minimising the wastage of resources and efforts.
4. Adaptation to change
Organising allows a business enterprise to accommodate changes in the business environment.
Organisation structure can be suitably modified for a smooth transition. It also provides much
needed stability to the enterprise.
5. Effective administration
Organising provides a clear description of jobs and related duties which avoids confusion and
duplication. Clarity in working relationships enables proper execution of work, makes
management easy and brings effectiveness in administration.
6. Development of personnel
Organising stimulates creativity amongst the managers. Effective delegation allows the
managers to reduce their workload by assigning routine jobs to their subordinates. Delegation
gives the managers the time to explore areas for growth and the opportunity to strengthen the
company's competitive position. On the other hand, delegation also develops the ability of
subordinate to deal effectively with challenges and helps them to realise their full potential.
7. Expansion and growth
Organising helps the organisation in taking up new challenges. It allows a business enterprise to
add more job positions, departments and even diversify their product lines. Organising helps in
adding new geographical territories to increase customer base, sales and profit.
Organisation structure
Meaning:
The organisation structure can be defined as the framework within which managerial and
operating task are performed. It specifies the relationships between people, work and
resources. It allows correlation and coordination among human, physical and financial
resources to accomplish desired goals.
Need:
As an organisation grows in size and complexity, coordination becomes difficult due to the
emergence of new functions and increase in managerial levels. So, for smooth functioning and
to face environmental changes, organisation needs and effective organisation structure.
A proper organisation structure is essential to ensure a smooth flow of communication and
better control over the operations of a business enterprise.
Span of management
The span of management gives shape to the organisation structure. Span of management
refers to the number of subordinates that can be effectively managed by a superior. This
determines the levels of management in the structure.
Types of organisation structures
(I) Functional structure
Functional structure can be defined as the structure in which jobs of similar nature are grouped
together under one department. These departments report to a coordinating head.
Advantages:
(i) It leads to occupational specialisation because employees perform similar tasks within a
department and are able to improve performance. This promotes efficiency in utilisation of
manpower.
(ii) It promotes control and coordination within a department.
(iii) it helps in increasing managerial and operational efficiency.
(iv) It leads to minimal duplication of efforts which makes the process economical and lowers the
cost.
(v) It makes training of employees easier because focus is only on a limited range of skills.
(vi) It ensures that different functions get due attention.
Disadvantages:
(i) A functional structure places less emphasis on overall enterprise objectives.
(ii) it may lead to problems in coordination.
(iii) A conflict of interest may arise between two or more departments.
(iv) Functional heads do not get training for top management positions because they don't have
experience in diverse areas.
Suitability:
Functional structure is suitable when
-size of the organisation is large
-high degree of specialisation is required.
(II) Divisional structure
Divisional structure may be defined as a structure which comprises of separate business units
or divisions. Each division works as a profit centre and it has a divisional head responsible for
profit or loss of his division.
Advantages:
(i) it leads to product specialisation which helps in the development of various skills in a
divisional head.
(ii)Divisional heads are accountable for profits. So,
This structure helps in performance measurement and fixation of responsibility.
(iii) it promotes flexibility and initiative because each division works independently which leads
to faster decision making.
(iv) it facilitates expansion and growth.
Disadvantages:
(i) Conflict may arise among different divisions.
(ii) it may lead to increase in costs due to duplication of activities.
(iii) Sometimes, division head, due to having more power, may ignore organisational interests.
Suitability:
Divisional structure is suitable when
-large variety of products are manufactured
-organisation grows and needs to add more employees
-organisation creates more departments and introduce new levels of management

Comparison between functional and divisional structure

Basis Functional structure Divisional structure

Formation Based on functions Based on product lines

Specialisation Functional specialisation Product specialisation

Responsibility Difficult to fix Easy to fix

Managerial Difficult, as each functional Easier, as each divisional head

development manager handles the activities performs multiple functions and
of only one department enjoys autonomy

Cost Economical Costly

Coordination Difficult for multi product Easy, because all functions

company related to a particular product in
one division

Formal organisation
Meaning:
It refers to the organisation structure which is designed by the management to accomplish a
particular task. Thus, formal organisation defines the job description and rules and procedures
related to work. It specifies clearly the boundaries of authority and responsibility. The structure in
Formal organisation can be functional or divisional.
Features:
-It helps to achieve the objectives specified in the plans.
-Efforts of various departments are co-ordinated, interlinked and integrated through the formal
organisation.
-It is deliberately designed by the top management.
-It emphasizes more on work to be performed then interpersonal relationships among the
employees.
Advantages:
(i) It makes easy to fix responsibility.
(ii) it helps in avoiding duplication/ambiguity.
(iii) It follows unity of command principle.
(iv) It helps in achieving the goals effectively.
(v) It provides stability to the organisation.
Limitations:
(i) It may delay the process.
(ii) It follows policies and rules rigidly. So, creative talent does not get adequate recognition.
(iii) It does not give space for human relationships.
Informal organisation
It refers to the organisation structure in which employees interact with each other at work,
beyond their officially defined roles, and develop social relationships.
Based on their interaction and friendship, different people form different groups as per their
interest. e.g. taking part in cricket matches on Sundays, meet in the cafeteria for coffee, etc.
Features:
(i) It originates from within the formal organisation.
(ii) The standards of behaviour of employees evolve from group norms.
(iii) Independence channels of communication are developed by group members.
(iv) It emerges spontaneously. It is not deliberately created by the management.
(v) It has no definite structure, written rules and does not have fixed line of communication.
(vi) It is a complex network of social relationships among members.
Advantages:
(i) It leads to faster spread of information as well as quick feedback.
(ii) It helps to fulfill the social needs of the members. This enhances their job satisfaction and
gives them a sense of belongingness in the organisation.
(iii) It helps in getting employees reaction towards plans and policies of the organisation. So, it
compensates the weaknesses of the formal organisation.
Disadvantages:
(i) It may spread rumours.
(ii) It may opposes the changes implemented by the management.
(iii) Sometimes, the norms set by the group are against organisational interests.
Delegation
Delegation refers to the downward transfer of authority from a superior to a subordinate. It
enables a manager to use his time on high priority activities. Thus, it is a prerequisite to the
efficient functioning. It also satisfies the subordinates need for recognition and provides them
with opportunities to develop themselves.
Even after delegating some of his authorities to subordinate, the manager shall still be
accountable for the performance of the assigned tasks.
Elements of delegation
(I) Authority:
Authority refers to the right of an individual to command his subordinates. It arises from the
established scalar chain. In the formal organisation authority originates by virtue of an
individual's position. Authority is highest at the top management level and reduces successively
as we go down. Thus, authority flows from top to bottom. Authority determines the superior
subordinate relationship. Authority is restricted by laws and the rules and regulations of the
organisation.
(ii) Responsibility:
Responsibility is the obligation of a subordinate to perform the assigned duty. Subordinate is
bound to perform the duty assigned to him by his superior. Thus, responsibility flows upwards
i.e. bottom to top.
Relation between authority and responsibility
For effective delegation, there should be proper balance between authority and responsibility. If
authority granted is more than responsibility, it may lead to misuse of authority, and if
responsibility assigned is more than authority, it may make a person ineffective.
(III) Accountability:
Accountability means being answerable for the final outcome. It cannot be delegated and it
flows upwards i.e. bottom to top. A subordinate will be accountable to a superior for satisfactory
performance of work.
While authority is delegated, responsibility is assumed, accountability is imposed. Responsibility
is derived from authority and accountability is derived from responsibility.
Comparison of elements of delegation

Basis Authority Responsibility Accountability

Meaning Right to command Obligation to perform Answerability for final

an assigned duty outcome

Delegation Can be delegated Cannot be entirely Cannot be delegated

delegated at all

Origin Derived from formal Derived from authority Derived from

position responsibility

Flow Flows downwards Flows upwards i.e. Flows upwards i.e.

i.e. from superior to from subordinate to from subordinate to
subordinate superior superior
Importance of delegation
(i) Effective management: Delegation allows the managers to get more time to concentrate on
important matters.
(ii) Employee development: Delegation allows the subordinates to show their talent and
develop their skills. It makes them better leaders and decision makers. Thus, delegation helps in
making future managers.
(iii) Motivation of employees: Delegation devlops the talent of employees and also provides
them psychological benefits. So, employees feel confident and encouraged and try to improve
their performance.
(iv) Facilitation of growth: Delegation devlops skills of subordinates and prepare them as
future manager. Thus, it facilitates expansion of organisation by providing ready workforce.
(v) Basis of management hierarchy: Delegation of authority establishes superior- subordinate
relationships which determines who has to report to whom.
(vi) Better coordination: All three elements of delegation help to define the powers, duties and
answerability related to the various positions in an organisation. This avoids overlapping of
duties and duplication of efforts. So, proper coordination is maintained amongst the
departments, levels and functions of management.
Centralisation
Those organisations in which decision-making authority lies with the top management are
known as centralised organisations.
Decentralisation
Those organisations in which decision-making authority is shared through out all lower levels
are known as the decentralised organisations. When decisions taken by the lower levels are
numerous as well as important an organisation can be regarded as greatly decentralised.
Extent of Centralisation and Decentralisation
Complete centralisation means concentration of all decision making authority at the top level of
the management. So, no need of management hierarchy in such organisation.
While, complete decentralisation means the delegation of all decision making functions to the
lower level of the management hierarchy. So, it will make higher managerial positions useless.
Therefore, an organisation can never be completely centralised or decentralised. A proper
balance should be maintained between these two forces. As organisation grows in size and
complexity, there is a tendency to move towards decentralised decision making.
Importance of decentralisation:
(i) Develops initiative among subordinates: A decentralisation policy helps to identify those
executives who have the necessary potential to become dynamic leaders. Decentralisation
helps to promote self-reliance and confidence amongst the subordinates.
(ii) Develops managerial talent for the future: Decentralisation allows the subordinates to
prove their abilities. It also creates a pool of qualified manpower who can fill more challenging
positions through promotions. It also helps to identify those who may not be successful in
assuming greater responsibility.
(iii) Quick decision making: In a decentralised organisation, decisions are taken at levels
which are nearest to the points of action, therefore, process is much faster. Also, information is
not distorted because it does not have to go through long channels.
(iv) Relief to top management: Decentralisation allows the top management with more time
which they can devote to important policy decisions.
(v) Facilitates growth: Decentralisation gives greater autonomy to its divisional or departmental
heads. This autonomy creates a sense of competition amongst the departments to do better
than each other. Thus, organisation is able to generate more returns which can be used for
growth and expansion purposes.
(vi) Better control: Decentralisation makes it possible to evaluate performance at each level.
Thus, departments can be individually held accountable for their results. So, Decentralisation
helps to maintain better control over activities in organisation.
Comparison between Delegation and Decentralisation
Basis Delegation Decentralisation

Nature Compulsory Optional

Freedom of action Less freedom to take Greater freedom to take

own decisions own decisions

Status Process to share tasks Policy decision of the top

management

Scope Narrow scope Wide scope

Purpose To reduce the burden of To increase the role of the

the manager subordinates by giving
them more autonomy