ORGANISING
Organizing is the function of management that involves developing an organizational structure and
allocating human resources to ensure the accomplishment of objectives. The structure of the organization
is the framework within which effort is coordinated.
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 together in accomplishing objectives.
Organising is that managerial process which seeks to define the role of each individual (manager and
operator) towards the attainment of enterprise objectives; with due regard to establishing authority-
responsibility relationships among all; and providing for co-ordination in the enterprise-as an in-built
device for obtaining harmonious groups action.
Organizing is the function of management which follows planning. It is a function in which the
synchronization and combination of human, physical and financial resources take place. All the three
resources are important to get results. Therefore, organizational function helps in achievement of results
which in fact is important for the functioning of a concern.
Definition
“Organising is the establishment of authority relationships with provisions for co-ordination between
them, both vertically and horizontally in the enterprise structure”. -Koontz and O ‘Donnell
“Organising is the process of identifying and grouping the work to be performed, defining and delegating
the responsibility and authority and establishing a pattern of relationship for the purpose of enabling
people work most effectively to accomplish the objective”. – Louis A. Allen.
According to Chester Barnard, “Organizing is a function by which the concern is able to define the role
positions, the jobs related and the co-ordination between authority and responsibility. Hence, a manager
always has to organize in order to get results.
Importance of Organizing Function
1. Specialization - Organizational structure is a network of relationships in which the work is divided into
units and departments. This division of work is helping in bringing specialization in various activities of
concern.
2. Well defined jobs - Organizational structure helps in putting right men on right job which can be
done by selecting people for various departments according to their qualifications, skill and experience.
This is helping in defining the jobs properly which clarifies the role of every person.
3. Clarifies authority - Organizational structure helps in clarifying the role positions to every manager
(status quo). This can be done by clarifying the powers to every manager and the way he has to exercise
those powers should be clarified so that misuse of powers does not take place. Well defined jobs and
responsibilities attached helps in bringing efficiency into managers working. This helps in increasing
productivity.
4. Co-ordination - Organization is a means of creating co-ordination among different departments of the
enterprise. It creates clear cut relationships among positions and ensure mutual co-operation among
individuals. Harmony of work is brought by higher level managers exercising their authority over
interconnected activities of lower level manager.
Authority responsibility relationships can be fruitful only when there is a formal relationship between the
two. For smooth running of an organization, the co-ordination between authority- responsibility is very
important. There should be co-ordination between different relationships. Clarity should be made for
having an ultimate responsibility attached to every authority. There is a saying, “Authority without
responsibility leads to ineffective behaviour and responsibility without authority makes person
ineffective.” Therefore, co-ordination of authority- responsibility is very important.
5. Effective administration - The organization structure is helpful in defining the jobs positions. The roles
to be performed by different managers are clarified. Specialization is achieved through division of work.
This all leads to efficient and effective administration.
6. Growth and diversification - A company’s growth is totally dependant on how efficiently and smoothly
a concern works. Efficiency can be brought about by clarifying the role positions to the managers, co-
ordination between authority and responsibility and concentrating on specialization. In addition to this, a
company can diversify if its potential grow. This is possible only when the organization structure is well-
defined. This is possible through a set of formal structure.
7. Sense of security - Organizational structure clarifies the job positions. The roles assigned to every
manager is clear. Co-ordination is possible. Therefore, clarity of powers helps automatically in increasing
mental satisfaction and thereby a sense of security in a concern. This is very important for job- satisfaction.
8. Scope for new changes - Where the roles and activities to be performed are clear and every person
gets independence in his working, this provides enough space to a manager to develop his talents and
flourish his knowledge. A manager gets ready for taking independent decisions which can be a road or
path to adoption of new techniques of production. This scope for bringing new changes into the running
of an enterprise is possible only through a set of organizational structure.
Formal and Informal Organizations
1. Formal Organization - This is one which refers to a structure of well defined jobs each bearing a
measure of authority and responsibility. It is a conscious determination by which people accomplish goals
by adhering to the norms laid down by the structure. This kind of organization is an arbitrary set up in
which each person is responsible for his performance. Formal organization has a formal set up to achieve
pre- determined goals.
2. Informal Organization - It refers to a network of personal and social relationships which spontaneously
originates within the formal set up. Informal organizations develop relationships which are built on likes,
dislikes, feelings and emotions. Therefore, the network of social groups based on friendships can be called
as informal organizations. There is no conscious effort made to have informal organization. It emerges
from the formal organization and it is not based on any rules and regulations as in case of formal
organization.
Relationship between Formal and Informal Organizations
For a concerns working both formal and informal organization are important. Formal organization
originates from the set organizational structure and informal organization originates from formal
organization. For an efficient organization, both formal and informal organizations are required. They
are the two phase of a same concern.
Formal organization can work independently. But informal organization depends totally upon the formal
organization.
Formal and informal organization helps in bringing efficient working organization and smoothness in a
concern. Within the formal organization, the members undertake the assigned duties in co-operation with
each other. They interact and communicate amongst themselves. Therefore, both formal and informal
organizations are important. When several people work together for achievement of organizational goals,
social tie ups tends to built and therefore informal organization helps to secure co- operation by which
goals can be achieved smooth. Therefore, we can say that informal organization emerges from formal
organization.
ORGANISATION STRUCTURE
An organization that is well structured achieves effective coordination, as the structure delineatesformal
communication channels, and describes how separate actions of individuals are linked together.
Organizational structure defines the manner in which the roles, power, authority, and responsibilities are
assigned and governed, and depicts how information flows between the different levels of hierarchy in an
organization.
The structure an organization designs depends greatly on its objectives and the strategy it adopts in
achieving those objectives.
An organizational chart is the visual representation of this vertical structure. It is therefore very important
for an organization to take utmost care while creating the organizational structure. The structure should
clearly determine the reporting relationships and the flow of authority as this will support good
communication – resulting in efficient and effective work process flow.
An organizational structure is a system that outlines how certain activities are directed in order to achieve
the goals of an organization. These activities can include rules, roles, and responsibilities. The
organizational structure also determines how information flows between levels within the company.
The key principle of an organizational structure is how authority is passed down and around the company.
Understanding what everyone's roles and responsibilities are helps to create accountability
for individuals, teams and departments.
Common Organization Structures
Managements need to seriously consider how they wish to structure the organization. Some of the
critical factors that need to be considered are −
• The size of the organization
• Nature of the business
• The objectives and the business strategy to achieve them
• The organization environment
Functional Organization Structure
The functional structure is the most common model found in most organizations. Organizations with such
a structure are divided into smaller groups based on specialized functional areas, such as operations,
finance, marketing, Human Resources, IT, etc.
The organization’s top management team consists of several functional heads (such as the VP Operations,
VP Sales/Marketing). Communication generally occurs within each functional department and is
communicated across departments through the department heads.
This structure provides greater operational efficiency as employees are functionally grouped based on
expertise and shared functions performed. It allows increased specialization as each group of specialists
can operate independently.
In spite of the above benefits there are some issues that arise with this structure. When different
functional areas turn into silos they focus only on their area of responsibility and do not support other
functional departments. Also expertise is limited to a single functional area allowing limited scope for
learning and growth.
Product Organizational Structure
This is another commonly used structure, where organizations are organized by a specific product type.
Each product category is considered a separate unit and falls within the reporting structure of an executive
who oversees everything related to that particular product line. For example, in a retail business the
structure would be grouped according to product lines.
Organization structured by product category facilitates autonomy by creating completely separate
processes from other product lines within the organization. It promotes depth of understanding within a
particular product area and also promotes innovation. It enables clear focus with accountability for
program results.
As with every model, this model also has a few downsides like requirement of strong skills specializing in
the particular product. It could lead to functional duplication and potential loss of control; each product
group becomes a heterogeneous unit in itself.
Geographic Organizational Structure
Organizations that cover a span of geographic regions structure the company according to the geographic
regions they operate in. This is typically found in organizations that go beyond a city or state limit and may
have customers all across the country or across the world.
It brings together employees from different functional specialties and allows geographical division. The
organization responds more quickly and efficiently to market needs, and focuses efforts solely on the
objectives of each business unit, increasing results.
Though this structure increases efficiency within each business unit, it reduces the overall efficiency of
the organization, since geographical divisions duplicate both activities and infrastructure. Another main
challenge with this model is that it tends to be resource intensive as it is spread across and also leads to
duplication of processes and efforts.
Matrix Organizational Structure
A matrix structure is organized to manage multiple dimensions. It provides for reporting levels both
horizontally as well as vertically and uses cross-functional teams to contribute to functional expertise. As
such employees may belong to a particular functional group but may contribute to a team that supports
another program.
This type of structure brings together employees and managers across departments to work toward
accomplishing common organizational objectives. It leads to efficient information exchange and flow as
departments work closely together and communicate with each other frequently to solve issues.
This structure promotes motivation among employees and encourages a democratic management style
where inputs from team members are sought before managers make decisions.
However, the matrix structure often increases the internal complexity in organizations. As reporting is not
limited to a single supervisor, employees tend to get confused as to who their direct supervisor is and
whose direction to follow. Such dual authority and communication leads to communication gaps, and
division among employees and managers.
ORGANIZATION CHARTS
Organization chart is a diagrammatical presentation of relationships in an enterprise. The functions and
their relationships, the channels of authority and relative authority of different managers etc. are
depicted in an organizational chart. An organization chart is a managerial tool. It helps in specifying
authority and responsibility of every position. As organization chart specifically defines authority and
responsibility of people in the enterprise there will be no duplication and overlapping of duties etc.
George Terry defines an organization chart as “a diagrammatical form which shows important aspects of
an organization, including the major functions and their respective relationships, the channel of
supervision and the relative authority of each employer who is in-charge of each respective function.”
So a chart is a pictorial and indicating functions and their relationship, clear lines of authority and
responsibility, channels of communication and span of control and supervision.
Org charts help to demonstrate clear reporting structures for all the employees in the organization. It
creates a road-map for how the work is to be done and the process required to ensure this information is
shared throughout the company, to the right individuals. Its purpose is to illustrate the reporting
relationships and chains of command within the organization.
