ORGANISING

9.1 MEANING OF ORGANISATION

Organising is the process of identifying and grouping various activities,
bringing together physical, financial and other resources, and establishing
authority relationships among job positions.
9.2 IMPORTANCE OF ORGANISATION
1. Specialisations: In the process of organising, work is divided and
sub-divided into compact and convenient jobs. Thus, organising
promotes specialisation which in turn leads to efficient and speedy
performance of tasks.
2. Optimum Use of Human Resources: All jobs are clearly defined and
differentiated. This helps selection of employees and fitting the right
person to the right job.
3. Coordination and Cooperation:The organisation structure serves as
a mechanism for unifying and harmonising the efforts of individuals
and work groups. Lines of authority prescribed in the organisation
structure serve as channels of communication. Each manager knows
to whom he is responsible and to whom he can issue orders.
4. Security and Support: It provides a definite status and position to
each one of them.
5. Growth and Diversification: Organisation provides the framework
within which an enterprise can expand and grow.Sound organisation
helps in keeping various activities under control.
6. Adaptation to Changes: A properly designed organisation structure
is flexible. It facilitates adjustment to changes in workload caused by
changes in external environment. These changes may relate to
technology, products, resources and markets.
7. Training and Development of Personnel: It facilitates development
of managerial talent at lower levels through adequate delegation of
authority.
8. Aid to Management: Organisation focusses managerial attention on
the achievement of enterprise objectives.
9.3 STEPS IN THE PROCESS OF ORGANISING
1. Division of Work: The first step in organising is to divide the total work
to be done into specific jobs. Dividing the work into jobs is necessary
because the entire work cannot be done by one individual. Division of work
facilitates specialisation of efforts and skills.
2. Grouping Jobs or Activities: Similar or related activities are combined
and grouped into larger units called departments, divisions or sections.
3. Assigning Duties: Each group of activities is assigned to an individual
best suited to perform it. While assigning duties the qualifications,
experience and aptitudes of people should be given due consideration.
4. Delegation of Authority: After assignment of duties, appropriate
authority is delegated to each individual. Without such authority a person
cannot carry out the assigned job. As it flows downwards, it decreases in its
content gradually. Thus, delegation of authority creates authority
relationships among various job positions and job-holders. It creates
superior- subordinate relationships which also serve as channels of
communication.
5. Coordinating Activities: The activities and efforts of different individuals
are so that everybody knows from whom he is to take orders and to whom
he can issue orders.
9.4 FORMAL EDUCATION
Formal organisation means the organisation structure designed and
established by management to achieve organisational goals. It is an official
system of clearly defined activities and relationships which are intended to
divide and integrate the activities of the organisation.
Features:
1. It is deliberately created by the top management.
2. It is based on specialisation or division of labour.
3. It defines clearly the authority and responsibility of every individual.
4. It is developed through delegation of authority.
5. It has written rules and procedures.
6. It consists of a structure of jobs and positions.
Advantages:
1. The duties and role of each member is clearly defined. This helps to
avoid duplication of effort.
2. Unity of command is maintained through the scalar chain.
3. It is easy to fix responsibility as mutual relationships are clearly
defined.
4. It provides stability to the enterprise. There are specific rules to guide
the behaviour of members.
5. It provides a framework for the performance of all the activities.
Disadvantages:
1. It may create rigidity due to prescribed policies and rules. Creative
talent may not be adequately recognised.
2. Formal communication has to follow the established chain of
command. Procedural delays may increase time taken for
decision-making.
3. Due to focus on structure and work, human relationships may not be
fully understood.
4. It does not provide a complete picture of how an organisation works.
9.5 INFORMAL ORGANISATIONS
Thus, informal organisation is the system of social relationships among the
members of a formal organisation. It emerges on its own in a natural
manner within the formal organisation.
Features:
1. It is unplanned and arises spontaneously due to coming together of
persons with common interests and attitudes.
2. It reflects human or social relationships among people.
3. It is based on common taste, language, religion, culture, etc.
4. It is not portrayed on the organisation chart of the company because
there is no definite structure.
5. It may cut across departments. For example, an accounts clerk, a
salesman and a factory supervisor may be members of an informal
group.
9.5.2 ADVANTAGES/FUNCTIONS OF INFORMAL ORGANISATION
1. Sense of Belonging:In a formal organisation, an employee is one
among several people. He has little sense of belonging and personal
worth. Informal organisations provide a sense of belonging and self
worth. It recognises an individual's personality and boosts his self
image.
2. Relief from Monotony: A formal organisation requires employees to
perform jobs of a routine nature which cause monotony and boredom.
An informal organisation provides them an opportunity to socialise
with each other. Such socialisation helps to improve their social
satisfaction.
3. Solution of Work Problems: Members of informal organisations
share job knowledge and assist each other in performing jobs.
4. Protection from Outside Pressure: Informal organisations provide
protection to its members from pressure of top management. Informal
organisations serve as a check on arbitrary actions of managers.
5. Communication Channel: Members of an informal organisation
share their tensions, joys and frustration with one another.
6. Innovation and Creativity: Informal organisations provide a scope
for development of personality and leadership skills.
 7. Social Control: Informal organisations protect and promote common
interests and values of its members
8. Support to Formal Organisations: An informal organisation lends
flexibility and humanism to formal organisation. More competent
members of informal organisation can help overcome gaps in the
abilities of management.
9.5.3 LIMITATIONS OR DISADVANTAGES OF INFORMAL
ORGANISATION
1. Conflicting Norms: An informal organisation evolves its own norms.
These norms may be contrary to the standards of behaviour and
performance in formal organisation.
2. Resistance to Change: An informal organisation generally prefers
status quo and existing work routine. Changes are regarded as a
threat to its beliefs and values.
3. Role Conflict: When an employee is a member of both formal and
informal groups he faces a conflict.
4. Conformity: An informal organisation forces its members to conform
to its norms and values even if it is harmful to the interests of the
formal organisation.
5. Rumour: An outbreak of rumour can cause serious harm to the
enterprise and its management.
9.5.4 MEANING OF ORGANISATION STRUCTURE
Thus, organisation structure means a system of job positions, the roles
assigned to them and the authority relationships between the various
positions. The structure facilitates the flow of work and communications in
the enterprise.
1. Two or More Persons: An organisation is a system of cooperative
relationships of two or more persons. The group may be large or small.
2. Common Objectives: An organisation exists to achieve some common
objectives. It is not an end in itself but a means to attain common objectives.
3. Division of Work: The total work of the organisation is divided among
different persons to improve the efficiency of work.
4. Communication: People who form the organisation are in a position to
communicate with each other.
5. Cooperative Efforts: The members of an organisation are willing to
cooperate with each other for achievement of common objectives.
6. Rules and Regulations: Rules and regulations lay down the formal
structure of the organisation. They define the authority and responsibility
among the members.
9.9 FUNCTIONAL STRUCTURE
Under functional structure each major or basic function is organised as a
separate department. Basic or organic functions, are the functions the
performance of which is vital and essential to the survival of the
organisation.

Advantages of Functional Structure:

1. It is the most logical, time-proven and natural form of an organisation
structure.
2. It provides occupational specialisation which makes optimum
utilisation of manpower and promotes efficiency in operations.
3. It permits effective control over performance.
4. It eliminates costly duplication of effort.
Disadvantages of Functional Structure:
1. Specialists working in different departments may not be able to see
the perspective of the organisation as a whole.
2. It becomes difficult to hold a particular department responsible for
any problem.
3. Functional heads do not obtain experience required for top
management positions.
4. As the organisation grows, departments may also become too large
causing delay in decision-making.
5. The functional structure is more useful to large organisations wherein
operations require a high degree of specialisation. Very often the
 functional basis is used at the top level and some other basis is
applied at lower levels.
9.10 DIVISIONAL STRUCTURE
In divisional organisation structure, the activities of the organisation are
grouped into a number of divisions (Fig. 9.7). Divisions are created on the
basis of products. Every major product is organised as a separate division.
Each division looks after the production, sales and finance of one product
line.

Advantages of Divisional Structure:

1. Product departmentation can reduce the problem of coordination
between departments. All activities concerning a particular product
line are integrated together.
2. It focuses individual attention on each product line which facilitates
product expansion and diversification.
3. Responsibility for the performance of divisions can be fixed on
divisional heads.
Disadvantages of Divisonal Structure:
1. There is a duplication of physical facilities and functions.
2. There may be underutilisation of plant capacity when the demand for
a particular product is not adequate.
3. Managers in each department may focus on their own product
without thinking of the total organisation.
4. Conflict may arise between different divisions on allocation of funds
and other resources.
On the whole, divisional structure is suitable for those big enterprises which
supply a wide variety of products with different manufacturing technologies
and marketing methods.
9.11 DELEGATION OF AUTHORITY
Meaning: Delegation of authority takes place when a manager assigns a
part of his work to others and gives them the authority to perform the
assigned tasks.
Importance of Delegation:
1. Relief to Top Executives: By transferring routine work to
subordinates, a manager can concentrate on important policy
matters.
2. Scalar Chain: Delegation of authority creates a chain of
superior-subordinate relationships among managers. It provides
meaning and content to managerial jobs.
3. Specialisation: Through delegation, an executive can assign jobs to
his subordinates according to their abilities and experience.
4. Quick Decisions: When authority is delegated, lower level employees
can take decisions quickly without consulting senior executives.
5. Motivation of Subordinates: Delegation provides a feeling of status
and recognition to subordinates. Their independence and job
satisfaction increases due to the authority they enjoy and the rewards
they get for good performance. Responsibility for work improves
self-esteem and confidence of employees. Thus, delegation promotes a
sense of initiative and responsibility among employees. It inspires
employees to make full use of their skills.
 6. Executive Development: It helps to improve the quality of
personnel at lower levels because they are required to handle
situations and solve managerial problems.
7. Growth and Diversification: As the quality of managerial talent at all
levels improves, the organisation can face the future challenges better.
9.12 CENTRALISATION AND DECENTRALISATION OF AUTHORITY
9.12.1 CENTRALISATION
Centralisation of authority refers to a systematic and consistent relation or
concentration of authority for decision making at top or higher levels of
management.
9.12.2 DECENTRALISATION
Decentralisation of authority means systematic dispersal of authority in all
departments and at all levels of management for taking decisions and
actions appropriate at the respective levels.
The top management retains the authority for taking major decisions and
formulating policies for the organisation as a whole.
9.12.3 MERITS AND DEMERITS OF DECENTRALISATION
MERITS:
1. Reduction in Burden of Top Executives: Decentralisation helps to
reduce the workload of top executives. They can devote greater time
and attention to important policy matters by Decentralising Authority
for routine operational decisions.
2. Motivation of Subordinates: Decentralisation helps to improve the
job satisfaction and morale of lower levels of managers by satisfying
their needs for independence, participation and status. It also faster
team spirit and group cohesiveness among the subordinates. It gives
them a sense of importance and recognition as they can take
decisions without seeking approval from higher levels.
3. Better Decisions: Under decentralisation, authority to take decisions
is placed in the hands of those who are responsible for executing the
decisions. As a result, more accurate and faster decisions can be
taken as the subordinates are well aware of the realities of the
situation. This avoids red-tapism and delays.
4. Innovation and Creativity: Each product division is given sufficient
autonomy for innovations and creativity. The top management can
extend leadership over a giant enterprise. A sense of competition can
be created among different divisions or departments. Decentralisation
facilitates the growth of diversification of the enterprise.
 5. Development of Managers: When authority is decentralised,
subordinates get the opportunity of exercising their own judgement.
They can learn the art of exercising decision making authority. As a
result, The problem of succession is overcome and the continuity and
growth of the organisation are ensured. There is better utilisation of
lower level executives.
6. Effective Communication: Under decentralisation, the span of
organisation is wider and there are fewer levels of organisation.
Therefore, communication system becomes more efficient. Intimate
relationships between superior and subordinate can be developed.
7. Efficient Supervision and Control: managers at lower levels have
adequate authority to make changes in work assignment, to change
production schedule, to recommend supervision, and take disciplinary
actions. Therefore, more effective supervision can be exercised.
Control can be made effective by evaluating the performance of each
decentralised unit in the light of clear and predetermined standards.
Decentralisation permits management by objectives and self control.
8. Democratic Management: Decentralisation of authority, distributes
decision making authority at all levels and in all departments.
Therefore, it creates democracy in the management of an organisation.
People at all levels are involved in decision making.
DEMERITS:
1. Lack of Coordination: decentralisation may create problems in
coordination among different units of the enterprise. Semi
autonomous division 10 to adopt narrow outlook and sectional
interest may overshadow the organisational objectives. There may be
loss of control and disintegration of the enterprise.
2. Lack of Uniformity: decentralised units may not follow uniform
policies and procedures. As a result, inconsistencies may arise in
organisational activities.
3. Heavy Overloads: moreover, many staff functions and facilities may
have to be duplicated.
4. Unsuitable for Small Firms: Creation of autonomous decentralised
unit requires broad product lines, which is not possible in small firms.
The centralisation may restrict timely action in case of emergencies.
Some activities cannot be decentralised, Example handling
government authorities or trade union negotiations.
5. External Constraints: A company may be subject to frequent
uncertainties.