What is Organizing in
Management?
Organising can be defined as a process that initiates
implementation of plans by clarifying jobs, working
relationships and effectively deploying resources for
attainment of identified and desired results (goals).
Therefore, it is a process which coordinates human efforts,
assembles resources and integrates both into a unified whole
to be utilized for achieving specified objectives. Organizing
is the managerial function and this function of organizing is
known as process of organization.
To organize is to harmonize, co-ordinate or arrange in a
logical and orderly manner.
Definition of Organisational Design
Organisational Design, as the name suggests, is defined as a process of
identifying and designing the organizational structure. It reflects the efforts of a
company to integrate new and modern elements, respond to various changes,
enable flexibility and ensure collaboration.
The Organisational Design also refers to the way a business organization
achieves the right combination for integration and differentiation of
the operations in response to the uncertainties it faces in its external
surroundings.
Meaning of Organisational Design
The Organisational Design describes the creation of structures, processes,
and roles so that the goals and objectives of an organization can be realized.
It is also associated with the mechanical arrangement of reporting lines and
positions on the organizational chart.
The Organisational Design is, in fact, a methodology that helps to identify
dysfunctional aspects, realign to fit current goals and develop a plan to
implement new changes.
Functional organization has been divided to put the specialists in the top position throughout the
enterprise. This is an organization in which we can define as a system in which functional department are
created to deal with the problems of business at various levels. Functional authority remains confined to
functional guidance to different departments. This helps in maintaining quality and uniformity of
performance of different functions throughout the enterprise.
Features of Functional Organization
1. The entire organizational activities are divided into specific functions such as operations, finance,
marketing and personal relations.
2. Complex form of administrative organization compared to the other two.
3. Three authorities exist- Line, staff and function.
4. Each functional area is put under the charge of functional specialists and he has got the authority
to give all decisions regarding the function whenever the function is performed throughout the
enterprise.
5. Principle of unity of command does not apply to such organization as it is present in line
organization.
Merits of Functional Organization
1. Specialization- Better division of labour takes place which results in specialization of function
and it’s consequent benefit.
2. Effective Control- Management control is simplified as the mental functions are separated from
manual functions. Checks and balances keep the authority within certain limits. Specialists may
be asked to judge the performance of various sections.
3. Efficiency- Greater efficiency is achieved because of every function performing a limited number
of functions.
4. Economy- Specialization compiled with standardization facilitates maximum production and
economical costs.
5. Expansion- Expert knowledge of functional manager facilitates better control and supervision.
Demerits of Functional Organization
1. Confusion- The functional system is quite complicated to put into operation, especially when it is
carried out at low levels. Therefore, co-ordination becomes difficult.
2. Lack of Co-ordination- Disciplinary control becomes weak as a worker is commanded not by
one person but a large number of people. Thus, there is no unity of command.
3. Difficulty in fixing responsibility- Because of multiple authority, it is difficult to fix responsibility.
4. Conflicts- There may be conflicts among the supervisory staff of equal ranks. They may not
agree on certain issues.
5. Costly- Maintainance of specialist’s staff of the highest order is expensive for a concern.
Definition of Formal Organization
By the term formal organisation, we mean a structure that comes into existence when two or
more people come together for a common purpose, and there is a legal & formal relationship
between them. The formation of such an organisation is deliberate by the top level management.
The organisation has its own set of rules, regulations, and policies expressed in writing.
The basic objective of the establishment of an organisation is the attainment of the organisation’s
goal. For this purpose, work is assigned, and authorities are delegated to each member and the
concept of division of labour and specialisation of workers are applied and so the work is
assigned on the basis of their capabilities. The job of each is fixed, and roles, responsibilities,
authority and accountability associated with the job is clearly defined.
In addition to this, there exists a hierarchical structure, which determines a logical authority
relationship and follows a chain of command. The communication between two members is only
through planned channels.
Types of formal organization structure
Line Organization
Line and Staff Organization
Functional Organization
Project Management Organization
Matrix Organization
Definition of Informal Organization
An informal organisation is formed within the formal organisation; that is a system of
interpersonal relationships between individuals working in an enterprise, that forms as a result of
people meet, interact and associate with one another. The organisation is created by the members
spontaneously, i.e. created out of socio-psychological needs and urge of people to talk. The
organisation is featured by mutual aid, cooperation, and companionship among members.
In an informal organisation, there are no defined channels of communication, and so members
can interact with other members freely. They work together in their individual capacities and not
professional.
There is no defined set of rules and regulations that govern the relationship between members.
Instead, it is a set of social norms, connections, and interaction. The organisation is personal i.e.
no rules and regulations are imposed on them, their opinions, feelings, and views are given
respect. However, it is temporary in nature, and it does not last long.
Key Differences Between Formal and Informal Organization
The difference between formal and informal organisation can be drawn clearly on the following
grounds:
1. Formal Organization is an organisation in which job of each member is clearly defined, whose
authority, responsibility and accountability are fixed. Informal Organization is formed within the
formal organisation as a network of interpersonal relationship when people interact with each
other.
2. Formal organisation is created deliberately by top management. Conversely, informal
organisation is formed spontaneously by members.
3. Formal organisation is aimed at fulfilling organisation’s objectives. As opposed to an informal
organisation is created to satisfy their social and psychological needs.
4. Formal organisation is permanent in nature; it continues for a long time. On the other hand,
informal organisation is temporary in nature.
5. The formal organisation follows official communication, i.e. the channels of communication are
pre-defined. Unlike informal organisation, the communication flows in any direction.
6. In the formal organisation, the rules and regulations are supposed to be followed by every
member. In contrast to informal communication, there are norms, values, and beliefs, that work
as a control mechanism.
7. In the formal organisation, the focus is on the performance of work while in the case of an
informal organisation, interpersonal communication is given more emphasis.
8. The size of a formal organisation keeps on increasing, whereas the size of the informal
organisation is small.
9. In a formal organisation, all the members are bound by the hierarchical structure, but all the
members of an informal organisation are equal.
Conclusion
An informal organisation is just opposite of a formal organisation. The principal difference
between these two is that all the members of a formal organisation follow a chain of command,
which is not in the case of an informal organisation. Moreover, there exists a superior-
subordinate relationship (status relationship) in the former, whereas such relationship is absent in
the latter because all the members are equal (role relationship).
