Principles of

Management –
ME3104D
Organising
Organising is the process of

▪ identifying and grouping of works to be

performed,
▪ defining and delegating responsibility and
authority, and
▪ establishing relationships…
▪ for the purpose of enabling people to work
most efficiently
3
– Louis A. Allen
Steps in Organising
• Work is divided into manageable activities according
1. Identification and
to plan
division of work
• Duplication avoided, employee burden reduced

• Similar activities are grouped together –

2. Departmentalisation specialisation

• Each department under one in-charge

3. Assignment of duties • Jobs allocated according to skills & competencies

• Individual should know whom to take orders from

4. Establishing reporting
4
relationships • Creates hierarchy, helps in co-ordination
Nature of Organisation
1. Group of 2. Common 3. Division of
Persons Objectives Work

4. Cooperative 5. 6. Central
Effort Communication Authority

7. Rules and 8. Dynamic

5 Regulations Element
Nature of Organisation

1. Group of Persons: An organisation is a group of people

working together for the achievement of common objectives.
The group may be large or small. An organisation is a system of
cooperative relationships of two or more persons
2. Common Objectives: Every organisation has common
objectives distinct from personal objectives of the members.
The common goal is the basis of cooperation among the
members
3. Division of Work: An organisation comes into existence when
the total task is divided into the members of the group. This is
necessary not only because one individual cannot do all the
6
works, but specialisation results in efficiency and effectiveness
Nature of Organisation

4. Cooperative Effort: The members of an organisation are

willing to help each other for the achievement of desired goals.
Cooperative relationships are stabilized both vertically and
horizontally among different units of the organisation
5. Communication: People who form an organisation
communicate with each other in order to integrate or
coordinate their efforts. The structure must be such that people
can perform together efficiently
6. Central Authority: In an organisation, there is a central
directing authority which controls the concerted efforts of the
group. The chain of authority - responsibility relationships is
7
known as the chain of command
Nature of Organisation

7. Rules and Regulations: For the orderly and systematic working

of the members, rules and regulations are laid down and
enforced by central authority
8. The Dynamic Element: An organisation is not a mere
mechanical structure but more like a living organism arising out
of the sentiments, attitudes, and the behavior of people. The
people hold this structure together and give it vitality

8
Importance of Organising
1. Benefits of specialisation

2. Clarity in working relationships

3. Optimum utilisation of resources

4. Adaption to change

5. Effective administration

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6. Expansion and growth
Importance of Organising

1.Benefits of specialisation
▪ Leads to a systematic allocation of jobs among the
workforce
▪ Enhances productivity as specific workers perform
specific jobs on a regular basis
▪ Leads to specialisation – repetitive performance of a
particular task
2.Clarity in working relationships
▪ Working relationships  clarifies lines of communication
▪ Removes ambiguity in transfer of information and
10 instructions
Importance of Organising

3.Optimum utilisation of resources

▪ Proper usage of all material, financial and human
resources
▪ The proper assignment of jobs avoids overlapping
of work  best use of resources
4.Adaptation to change
▪ Allows a business enterprise to accommodate
changes
▪ Allows the organisation structure to be suitably
modified and the revision of inter-relationships
11
amongst managerial levels to pave the way for a
smooth transition
Importance of Organising

5.Effective administration
▪ Clear description of jobs and related duties
▪ Clarity in working relationships  execution of work
▪ Management of an enterprise becomes easy  brings
effectiveness in administration
6.Expansion and growth
▪ Growth and diversification of an enterprise deviate
from existing norms and take up new challenges
▪ Flexibility for growth without losing control over various
activities
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Organisational Structures
1. Line organisational structure

2. Staff or functional authority organisational structure

3. Line and staff organisational structure

4. Divisional organisational structure

5. Project organisational structure

6. Matrix organisational structure

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7. Hybrid organisational structure
Line Organisational Structure

▪ Has only direct, vertical

relationships between
different levels
▪ Authority flows from top to
bottom
▪ Supervisors have direct
authority over sub-
ordinates
▪ Also called military or
scalar organisation
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Line Organisational Structure
Advantages Disadvantages
▪ Simple and clear line of ▪ Ineffective as the firm grows in
authority, responsibility, & size
accountability ▪ Managers have to be experts
▪ Stable form of organisation in too many fields
▪ Decision-making  quick, ▪ Over-dependence on a few
economical, effective people  mis-use of authority
▪ Small size of line ▪ Rigidity of structure  lack of
organisations  closeness innovation
between managers and
employees
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Staff or Functional Authority
Organisational Structure

▪ Grouped based on
skills & knowledge
▪ Group  specialised
unit (department)
▪ Group employees –
report to group leader
▪ Group leaders – report
to top level

16
Staff or Functional Authority
Organisational Structure
Advantages Disadvantages
▪ Specialised groups  greater ▪ Competition between
efficiency, productivity departments
▪ Managers with same skills as ▪ Lack of co-ordination between
employees  can teach departments
employees ▪ Specialised departments 
▪ Clarity in roles & narrow scope of skills &
responsibilities  company knowledge
knows which dept. to ▪ 1D and monotonous work
approach for what problem
▪ Difficult to replace personnel
▪ Different standards in groups
 reduced costs of operation
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Line and Staff Organisational
Structure

▪ Most large orgs

▪ Line  similar to line
orgs., vertical
relationship
▪ Staff  experts assisting
line managers

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Line and Staff Organisational
Structure

Advantages Disadvantages
 Use of staff specialists   Conflict of authority
expertise, self-sufficiency between line and staff
 Greater focus on core  Coordination difficult
responsibilities between line and staff
 Span of control of line  Costly to maintain
managers can be increased specialists
– relieved of many functions
due to staff’s support

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Divisional Organisational Structure

▪ Departments based on
function, product, market,
geography, etc., or a
combination
▪ Divisional manager 
greater independence in
decisions, objectives,
finances
▪ Decentralised authority

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Divisional Organisational Structure

Advantages Disadvantages
 Product specialisation   Conflicts  allocation of
focus on one or a few funds by the top level
products
 Office politics over strategic
 Flexibility and autonomy  thinking in terms of
faster & effective decision- allocation of resources
making
 Possibility of duplication
 Accountability of manager  Divisions lead to
 Local competitive edge  compartmentalisation 
people knowing their incapabilities, narrow-
21 regions mindedness
Project Organisational Structure

▪ Temporary org designed to

achieve specific objectives
▪ Can have specialists from
different functional areas
▪ Focus on completion of the
project
▪ Once project is completed –
team members go back to
their previous positions, or
to new assignment
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Project Organisational Structure
Advantages Disadvantages
 Effective way of producing  Overlapping authority 
highly complex product conflicts
systems  Insecurity of employment as
 Best means of getting things the project ends
done right  Danger of over-
 Preferable for planning, specialisation
implementing, and control  Reduction in employee’s
in a turbulent environment loyalty to parent
 Diverse interests department
consolidated  creativity
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developed
 Strong teamwork
Matrix Organisational Structure

▪ Combination of different
types of organisational
structures

▪ Resources & personnel

shared across teams and
projects

▪ Dual chain of command 

functional manager and
project manager

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Matrix Organisational Structure
Advantages Disadvantages
 Decentralised decision-  High administration cost –
making multiple managers
 Strong product/project  Potential confusion over
coordination authority, responsibility, &
 Inter-departmental accountability
communication  High prospects of conflict
 Fast response to change  Power struggle among
 Flexible use of resources managers

 Employees can learn new  Excessive focus on internal

skills relations
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Hybrid Organisational Structure

▪ Combination of multiple
organisational structures

▪ World Bank defines – “Org in

which more than one
organisational design is
used”

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Hybrid Organisational Structure

Advantages Disadvantages

 Increased efficiency   Conflicts between corporate

optimum use of resources departments and units

 Functional expertise and  Excessive administration

efficiency overhead

 Adaptability and flexibility in  Slow response to

divisions exceptional situations

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Informal Organisation

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Informal Organisation

▪ Set of evolving relationships and patterns

of human interactions which are not
officially presented
▪ Informal relationships – created not by
managers, but by members at every level
▪ Managers cannot avoid informal
relationships
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Informal Organisation

Features
▪ Members work together to satisfy personal
needs
▪ Continuously changing  dynamic
▪ Involves members from various levels
▪ Affected by relationships outside the firm
▪ Pecking order – certain people have
greater importance than the others
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Informal Organisation
Advantages Disadvantages
 Accomplishes work faster  May work against the
 Removes weakness in the purpose of formal org
formal structure  Reduced degree of
 Lengthens effective span of predictability and control
control  Reduced no. of practical
 Compensates for violation alternatives
of formal principles  Increased activity
 Additional channel of completion time
communication
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Principles of Organising
1. Principle of 2. Principle of 3. Principle of
objective correspondence responsibility

4. Scalar 5. Principle of 6. Principle of

principle span of control specialisation

7. Principle of 8. Principle of
32 co-ordination definition
Principles of Organising

1. Principle of objective – All organisations and each part of

the organisation should be the expression of a purpose
(explicit or implicit)
2. Principle of correspondence – Formal authority and
responsibility must be co-terminus and equal
3. Principle of responsibility – The responsible of higher
authority for the acts of its subordinates is absolute
4. Scalar principle – There must be a clear line of formal
authority running from the top to the bottom of every
33 organisation
Principles of Organising

5. Principle of span of control – No supervisor can supervise

directly the work of more than five, or at the most six
subordinates, whose work interlock
6. Principle of specialisation – The work of every person
should be confined to the performance of a single leading
function
7. Principle of coordination – The final object of all
organisations is smooth, effective coordination
8. Principle of definition – Every position in every
34 organisation must be clearly described in writing
Span of Control
Span of control – number of sub-ordinates under a supervisor

Flat Organisation
Wide span

Tall Organisation
Narrow span

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Wide Span of Control

▪ Large number of ▪ Flexible, better adaption to

subordinates under one changes
supervisor ▪ Faster communications,
▪ Also called operative span – quicker changes,
primarily for lower-level responsiveness
managers ▪ Less administrative costs
▪36 Less hierarchical structures, ▪ Too much supervision time
flat structure
▪ Confusion over roles
Narrow Span of Control

▪ A few subordinates under one ▪ Effective managerial control,

supervisor reduce supervisory burden,
promote opportunities
▪ Also called executive span – for
mid and top-level managers ▪ High administrative costs
▪ More hierarchical structures, tall ▪ Slow and less effective comms.
structure. Higher levels are
narrower
▪ Inadequate contact between
37 managers and employees
Factors Influencing Span of Management

▪ Managers normally have three kinds of

interactions
1. Direct interaction with subordinates  one-to-one
2. Cross interaction among subordinates
3. Group interaction between groups of subordinates
▪ Number of possible interactions (𝐼𝐼) is given by
the formula
2𝑛𝑛
𝐼𝐼 = 𝑛𝑛 + 𝑛𝑛 − 1 where 𝑛𝑛 is the number
2
of
38
subordinates
Other Factors Influencing Span of
Management

 Nature of work,
 Knowledge, skills and ability (KSA) of the
subordinates,
 Competence and qualification of the managers,
 Availability of a standard operating procedure,
 Geographical location of the job,
 Stability of the organisation,
 Training facilities,
 Management’s philosophy, and
39 Managers’ attitude and preferences
Communication Process in an
Organisation

40
 1. Sender 5. Receiver
• Forms an idea • Person whom the message is
• Conveys the idea to others aimed at
2. Encoding 6. Decoding
• Understanding the contents
• Putting ideas into words
of the message
3. Message 7. Feedback
• Heart of communication • Analysing whether the
• Can be verbal (words, written receiver interpreted the
text, presentation) or non- message correctly
verbal (gestures, sights, 8. Noise
sounds) • Mismatch between sender’s
4. Medium/channel idea and receiver’s
• Means used to transmit interpretation
• Can be due to
message
misunderstanding, improper
• Oral, meeting, discussions, communication, or personal
41 email, informal meetings, differences
etc.
Barriers to Effective Communication

▪ Interrupt the flow of communication from

sender to receiver
▪ Causes severe problems in the
organisation
▪ Several types of barriers

42
Barriers to Effective Communication
1. Linguistic/semantic barriers
• Difficulty in understanding different language/dialect or technical
terms
• Most significant problem

2. Emotional barriers
• Emotionally mature person  better communicating
• Anger, jealousy, frustration  limit proper communication

3. Psychological barriers
• Premature evaluation and lack of attention  poor interpretation of
the
43 message

• Information passing through multiple people gets distorted

Barriers to Effective Communication
4. Organisational barriers
• Complex structure of management/ multiple managers
• Rules and regulations also lead to ineffective communication
5. Cultural barriers
• Diversity in cultures and beliefs  some words have
different/harmful meanings in different cultures
6. Physical barriers
• Noisy equipment, closed doors, walls
7. Physiological
44
barriers
• Conditions like dyslexia, nerve, speech, hearing disorders
Authority and Power

Power
▪ The ability to influence others
Authority
▪ The right in a position to exercise discretion in
making decisions that affect others
▪ Type of power, but in an organisational setting
Line/Staff Concepts and Functional
Authority

Line Authority
▪ Superior exercises direct supervision over a subordinate –
authority relationship in direct line/steps
▪ Gives the superior a direct line of authority over the
subordinate – exists in all orgs
Staff Relationship
▪ Advisory in nature
▪ Staff investigate, research, and advice line managers
Functional Authority

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▪ The right to control specified processes, practices, policies,
or other matters related to activities of other
persons/departments
Responsibility

▪ Obligation/duty to complete the tasks assigned

▪ Employee’s obligation to accept manager’s
delegated authority
▪ Subordinates must have just enough authority to
meet responsibility
▪ Too much responsibility without authority  job
stress, frustration, job dissatisfaction
▪ Too much authority w/o responsibility  employee
47
malpractice, recklessness, abusiveness
Accountability

▪ Makes employees answerable for satisfactory

completion of task
▪ A mechanism through which authority and
responsibility are aligned
▪ Managers must ensure that each employee clearly
knows what they are accountable for
▪ Ensures employees constantly report and justify their
actions
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Delegation
Determining the
need for delegation
▪ Delegation
occurs when a
manager assigns Follow-up through Assigning tasks and
specific tasks to feedback duties
employees
▪ Involves formal
transfer of
authority and Creating Transferring
responsibility responsibility and authority for task
accountability accomplishment
▪49 Is a multi-step
process Steps in delegation
Principles of Delegation

1. Principle of result expected

▪ Clearly define goals and results expected from
subordinates while delegating
▪ Clarity in goals, targets, and standards of performance
2. Principle of parity of authority and responsibility
▪ Manager should balance between authority and
responsibility
▪ Subordinate given responsibility  should also be
50 given enough independence and power
Principles of Delegation

3. Principle of absolute responsibility

▪ Authority can be delegated, but not responsibility
▪ Manager is answerable to superior  responsibility is
fixed
▪ Manager is responsible for task completion
4. Principle of authority level
▪ Manager should exercise authority within
jurisdiction/framework
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▪ Should consult superiors before taking important
decisions outside authority
Principles of Delegation

5. Principle of unity of command

▪ Subordinates must be commanded by only one
superior
▪ Obtain tasks from one superior, answerable to them
6. Principle of parity of authority and responsibility
▪ Authority flows from top to bottom
▪ Basis of relationship between superiors and
subordinates
52
▪ Emphasises relation between them  makes
delegation easier
 Types of Delegation

53
 1. Administrative delegation
• A few administrative functions delegated to subordinates

2. General delegation
• General managerial functions are delegated

3. Specific delegation
• Particular function/task delegated
• Eg: Departmental managers given departmental duties

4. Formal delegation
• Part of organisational structure
54 • Along with the task, authority is also given to a person
• Eg: Production manager gets power to increase production
 5. Informal delegation
• Arises not due to position, but due to circumstances
• A person takes the task not assigned to them – but necessary
to complete

6. Written delegation
• Given in writing – letters, circulars etc.

7. Unwritten delegation
• Given not in writing, but by conventions, customs, and usages

8. Downward delegation
55 • Superior’s delegation of authority to subordinate
• Common type of delegation
 9. Upward delegation
• Subordinate assigns tasks to superiors
• Uncommon

10. Geographic delegation

• When enterprise is located at multiple locations
• Authority to different subordinates located at different places

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Challenges to Delegation
Attitude of the executive

• Lack of confidence in subordinates

• Fear of comparison

Attitude of the subordinate

• Refusal by the subordinates

• Difficulties to justify surplus time
57
Delegation vs Decentralisation

▪ Delegation  entrustment of duties and

authority from one individual to another
▪ Decentralisation  systematic delegation
of authority in an org wide setting
▪ Complete delegation to all the people with
specific kind of authority
▪ Delegation is the process,
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decentralisation is the result
Delegation vs Decentralisation

Delegation Decentralisation
▪ From person to person ▪ A complete block
▪ Is a must in an ▪ Is optional
organisational structure
▪ Control lies in the
▪ Control lies at the top decentralised unit

59
Decentralisation of Authority

Centralisation and Decentralisation Tendencies

Complete centralisation Complete decentralisation

(no org structure) (no org structure)

Authority delegated

Authority not delegated

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Kinds of Centralisation

1. Centralisation of performance
▪ Geographic concentration
▪ Eg: company operating in a single location
2. Departmental centralisation
▪ Conc. of specialised activities, generally in one
department
▪ Eg: Plant maintenance carried out by one dept.
3. Centralisation of management
▪ Tendency to restrict decision making
61 ▪ High-degree of authority held by managers at higher
levels
Advantages of Decentralisation

▪ Relieves burden of decision-making on the top level

▪ Encourages decision-making, authority, and
responsibility
▪ Freedom and independence in decision-making
▪ Promotes establishment, use of controls to increase
motivation
▪ Comparison of performance of different units
▪ Facilitates setting up profit centres
▪ Facilitates diversification
▪62 Promotes development of general managers
▪ Aids in adapting to fast-changing environment
Limitations of Decentralisation

▪ Difficult to have a uniform policy

▪ Increases complexity of coordination
▪ Loss of control at the upper level
▪ Inadequate control techniques
▪ Constrained by inadequate planning and control
▪ Limited by lack of qualified managers
▪ Considerable expenses for training managers
▪ Limited by external forces (unions, govt. etc)
▪63 May not be favoured by economies of scale