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Organisation
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 takes 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. 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.
A manager performs organizing function with the help of following steps:-
1. Identification of activities - All the activities which have to be performed in a concern
have to be identified first. For example, preparation of accounts, making sales, record
keeping, quality control, inventory control, etc. All these activities have to be grouped
and classified into units.
2. Departmentally organizing the activities - In this step, the manager tries to combine
and group similar and related activities into units or departments. This organization of
dividing the whole concern into independent units and departments is called
departmentation.
3. Classifying the authority - Once the departments are made, the manager likes to classify
the powers and its extent to the managers. This activity of giving a rank in order to the
managerial positions is called hierarchy. The top management is into formulation of
policies, the middle level management into departmental supervision and lower level
management into supervision of foremen. The clarification of authority help in bringing
efficiency in the running of a concern. This helps in achieving efficiency in the running
of a concern. This helps in avoiding wastage of time, money, effort, in avoidance of
duplication or overlapping of efforts and this helps in bringing smoothness in a concern’s
working.
4. Co-ordination between authority and responsibility - Relationships are established
among various groups to enable smooth interaction toward the achievment of the
organizational goal. Each individual is made aware of his authority and he/she knows
whom they have to take orders from and to whom they are accountable and to whom they
have to report. A clear organizational structure is drawn and all the employees are made
aware of it.

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
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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
do 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.
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Principles of Organizing
The organizing process can be done efficiently if the managers have certain guidelines so that
they can take decisions and can act. To organize in an effective manner, the following principles
of organization can be used by a manager.
1. Principle of Specialization
According to the principle, the whole work of a concern should be divided amongst the
subordinates on the basis of qualifications, abilities and skills. It is through division of
work specialization can be achieved which results in effective organization.
2. Principle of Functional Definition
According to this principle, all the functions in a concern should be completely and
clearly defined to the managers and subordinates. This can be done by clearly defining
the duties, responsibilities, authority and relationships of people towards each other.
Clarifications in authority-responsibility relationships helps in achieving co-ordination
and thereby organization can take place effectively. For example, the primary functions
of production, marketing and finance and the authority responsibility relationships in
these departments shouldbe clearly defined to every person attached to that department.
Clarification in the authority-responsibility relationship helps in efficient organization.
3. Principles of Span of Control/Supervision
According to this principle, span of control is a span of supervision which depicts the
number of employees that can be handled and controlled effectively by a single manager.
According to this principle, a manager should be able to handle what number of
employees under him should be decided. This decision can be taken by choosing either
froma wide or narrow span. There are two types of span of control:-
a. Wide span of control- It is one in which a manager can supervise and control
effectively a large group of persons at one time. The features of this span are:-
i. Less overhead cost of supervision
ii. Prompt response from the employees
iii. Better communication
iv. Better supervision
v. Better co-ordination
vi. Suitable for repetitive jobs
According to this span, one manager can effectively and efficiently handle a large
number of subordinates at one time.
b. Narrow span of control- According to this span, the work and authority is
divided amongst many subordinates and a manager doesn't supervises and control
a very big group of people under him. The manager according to a narrow span
supervises a selected number of employees at one time. The features are:-
i. Work which requires tight control and supervision, for example,
handicrafts, ivory work, etc. which requires craftsmanship, there narrow
span is more helpful.
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ii. Co-ordination is difficult to be achieved.

iii. Communication gaps can come.
iv. Messages can be distorted.
v. Specialization work can be achieved.

Authority Flows from Top to Bottom

Managing Director
↓
Marketing Manager
↓
Sales/ Media Manager
↓
Salesmen

According to the above diagram, the Managing Director has got the highest level of authority.
This authority is shared by the Marketing Manager who shares his authority with the Sales
Manager. From this chain of hierarchy, the official chain of communication becomes clear which
is helpful in achievement of results and which provides stability to a concern. This scalar chain
of command always flow from top to bottom and it defines the authority positions of different
managers at different levels.

Line Organization
Line organization is the most oldest and simplest method of administrative organization.
According to this type of organization, the authority flows from top to bottom in a concern. The
line of command is carried out from top to bottom. This is the reason for calling this organization
as scalar organization which means scalar chain of command is a part and parcel of this type of
administrative organization. In this type of organization, the line of command flows on an even
basis without any gaps in communication and co-ordination taking place.
Features of Line Organization
1. It is the most simplest form of organization.
2. Line of authority flows from top to bottom.
3. Specialized and supportive services do not take place in these organization.
4. Unified control by the line officers can be maintained since they can independently take
decisions in their areas and spheres.
5. This kind of organization always helps in bringing efficiency in communication and
bringing stability to a concern.
Merits of Line Organization
1. Simplest- It is the most simple and oldest method of administration.
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2. Unity of Command- In these organizations, superior-subordinate relationship is

maintained and scalar chain of command flows from top to bottom.
3. Better discipline- The control is unified and concentrates on one person and therefore, he
can independently make decisions of his own. Unified control ensures better discipline.
4. Fixed responsibility- In this type of organization, every line executive has got fixed
authority, power and fixed responsibility attached to every authority.
5. Flexibility- There is a co-ordination between the top most authority and bottom line
authority. Since the authority relationships are clear, line officials are independent and
can flexibly take the decision. This flexibility gives satisfaction of line executives.
6. Prompt decision- Due to the factors of fixed responsibility and unity of command, the
officials can take prompt decision.
Demerits of Line Organization
1. Over reliance- The line executive’s decisions are implemented to the bottom. This
results in over-relying on the line officials.
2. Lack of specialization- A line organization flows in a scalar chain from top to bottom
and there is no scope for specialized functions. For example, expert advices whatever
decisions are taken by line managers are implemented in the same way.
3. Inadequate communication- The policies and strategies which are framed by the top
authority are carried out in the same way. This leaves no scope for communication from
the other end. The complaints and suggestions of lower authority are not communicated
back to the top authority. So there is one way communication.
4. Lack of Co-ordination- Whatever decisions are taken by the line officials, in certain
situations wrong decisions, are carried down and implemented in the same way.
Therefore, the degree of effective co-ordination is less.
5. Authority leadership- The line officials have tendency to misuse their authority
positions. This leads to autocratic leadership and monopoly in the concern.

Line and Staff Organization

Line and staff organization is a modification of line organization and it is more complex than line
organization. According to this administrative organization, specialized and supportive activities
are attached to the line of command by appointing staff supervisors and staff specialists who are
attached to the line authority. The power of command always remains with the line executives
and staff supervisors guide, advice and council the line executives. Personal Secretary to the
Managing Director is a staff official.
MANAGING
DIRECTOR
↓ ↓ ↓
Production Manager Marketing Manager Finance Manager
↓ ↓ ↓
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Plant Supervisor Market Supervisor Chief Assisstant

↓ ↓ ↓
Foreman Salesman Accountant
Features of Line and Staff Organization
1. There are two types of staff :
a. Staff Assistants- P.A. to Managing Director, Secretary to Marketing Manager.
b. Staff Supervisor- Operation Control Manager, Quality Controller, PRO
2. Line and Staff Organization is a compromise of line organization. It is more complex
than line concern.
3. Division of work and specialization takes place in line and staff organization.
4. The whole organization is divided into different functional areas to which staff
specialists are attached.
5. Efficiency can be achieved through the features of specialization.
6. There are two lines of authority which flow at one time in a concern :
a. Line Authority
b. Staff Authority
7. Power of command remains with the line executive and staff serves only as counselors.
Merits of Line and Staff Organization
1. Relief to line of executives- In a line and staff organization, the advice and counseling
which is provided to the line executives divides the work between the two. The line
executive can concentrate on the execution of plans and they get relieved of dividing their
attention to many areas.
2. Expert advice- The line and staff organization facilitates expert advice to the line
executive at the time of need. The planning and investigation which is related to different
matters can be done by the staff specialist and line officers can concentrate on execution
of plans.
3. Benefit of Specialization- Line and staff through division of whole concern into two
types of authority divides the enterprise into parts and functional areas. This way every
officer or official can concentrate in its own area.
4. Better co-ordination- Line and staff organization through specialization is able to
provide better decision making and concentration remains in few hands. This feature
helps in bringing co-ordination in work as every official is concentrating in their own
area.
5. Benefits of Research and Development- Through the advice of specialized staff, the
line executives, the line executives get time to execute plans by taking productive
decisions which are helpful for a concern. This gives a wide scope to the line executive to
bring innovations and go for research work in those areas. This is possible due to the
presence of staff specialists.
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6. Training- Due to the presence of staff specialists and their expert advice serves as
ground for training to line officials. Line executives can give due concentration to their
decision making. This in itself is a training ground for them.
7. Balanced decisions- The factor of specialization which is achieved by line staff helps in
bringing co-ordination. This relationship automatically ends up the line official to take
better and balanced decision.
8. Unity of action- Unity of action is a result of unified control. Control and its effectivity
take place when co-ordination is present in the concern. In the line and staff authority all
the officials have got independence to make decisions. This serves as effective control in
the whole enterprise.
Demerits of Line and Staff Organization
1. Lack of understanding- In a line and staff organization, there are two authority flowing
at one time. This results in the confusion between the two. As a result, the workers are
not able to understand as to who is their commanding authority. Hence the problem of
understanding can be a hurdle in effective running.
2. Lack of sound advice- The line official get used to the expertise advice of the staff. At
times the staff specialist also provide wrong decisions which the line executive have to
consider. This can affect the efficient running of the enterprise.
3. Line and staff conflicts- Line and staff are two authorities which are flowing at the same
time. The factors of designations, status influence sentiments which are related to their
relation, can pose a distress on the minds of the employees. This leads to minimizing of
co-ordination which hampers a concern’s working.
4. Costly- In line and staff concern, the concerns have to maintain the high remuneration of
staff specialist. This proves to be costly for a concern with limited finance.
5. Assumption of authority- The power of concern is with the line official but the staff
dislikes it as they are the one more in mental work.
6. Staff steals the show- In a line and staff concern, the higher returns are considered to be
a product of staff advice and counseling. The line officials feel dissatisfied and a feeling
of distress enters a concern. The satisfaction of line officials is very important for
effective results.

Functional Organization
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.
The concept of Functional organization was suggested by F.W. Taylor who recommended the
appointment of specialists at important positions. For example, the functional head and
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Marketing Director directs the subordinates throughout the organization in his particular area.
This means that subordinates receives orders from several specialists, managers working above
them.
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.

Planning Function of Management

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Planning means looking ahead and chalking out future courses of action to be followed. It is a
preparatory step. It is a systematic activity which determines when, how and who is going to
perform a specific job. Planning is a detailed programme regarding future courses of action.
It is rightly said “Well plan is half done”. Therefore planning takes into consideration available
& prospective human and physical resources of the organization so as to get effective co-
ordination, contribution & perfect adjustment. It is the basic management function which
includes formulation of one or more detailed plans to achieve optimum balance of needs or
demands with the available resources.
According to Urwick, “Planning is a mental predisposition to do things in orderly way, to think
before acting and to act in the light of facts rather than guesses”. Planning is deciding best
alternative among others to perform different managerial functions in order to achieve
predetermined goals.
According to Koontz & O’Donell, “Planning is deciding in advance what to do, how to do and
who is to do it. Planning bridges the gap between where we are to, where we want to go. It
makes possible things to occur which would not otherwise occur”.
Steps in Planning Function
Planning function of management involves following steps:-
1. Establishment of objectives
a. Planning requires a systematic approach.
b. Planning starts with the setting of goals and objectives to be achieved.
c. Objectives provide a rationale for undertaking various activities as well as
indicate direction of efforts.
d. Moreover objectives focus the attention of managers on the end results to be
achieved.
e. As a matter of fact, objectives provide nucleus to the planning process. Therefore,
objectives should be stated in a clear, precise and unambiguous language.
Otherwise the activities undertaken are bound to be ineffective.
f. As far as possible, objectives should be stated in quantitative terms. For example,
Number of men working, wages given, units produced, etc. But such an objective
cannot be stated in quantitative terms like performance of quality control
manager, effectiveness of personnel manager.
g. Such goals should be specified in qualitative terms.
h. Hence objectives should be practical, acceptable, workable and achievable.
2. Establishment of Planning Premises
a. Planning premises are the assumptions about the lively shape of events in future.
b. They serve as a basis of planning.
c. Establishment of planning premises is concerned with determining where one
tends to deviate from the actual plans and causes of such deviations.
d. It is to find out what obstacles are there in the way of business during the course
of operations.