FUNDAMENTALS OF

ORGANIZING, ITS NATURE,

IMPORTANCE AND PROCESS
WHAT IS ORGANIZING?

"Organization is the process of

identifying and grouping of the
works to be performed, defining
and delegating responsibility
and authority and establishing
relationships for the purpose of
enabling people to work most
efficiently".
- Louis A. Allen
 FUNDAMENTAL CONCEPT OF
ORGANIZING:

 DIFFERENTIATION: It means that an organization is

composed of units that work on specialized tasks using
different work methods and requiring employees with
unique competencies.

 INTEGRATION: It means that the various units must

be put back together so that work is coordinated.
 NATURE OF ORGANIZING:

1. Group of Persons
2. Common Objectives
5. Communication
3. Division of Work
6. Central Authority
4. Cooperative Efforts
7. Rules & Regulations
8. Dynamic Element
 NATURE OF ORGANIZATION:
 Group of Persons: An organization is a group of people
working together for the achievement of common
objectives. The group may be large or small. An
organization is a system of cooperative relationships of
two or more persons.

 Common Objectives: Every organization has a common

objectives distinct from personal objectives of the
members. The common goal is the basis of cooperation
among the members. The objectives of the organization are
usually are made explicit
CONTD:
 Division of Work: An organization comes into existence
when the total task is divided into the members of the
group. Division of work is necessary not only because one
individual cannot do all the work but specialization results
in efficiency and effectiveness.

 Cooperative Efforts: The members of an organization 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
organization:
 CONTD:
 Communication: People who form an organization
communicates with each other in order to integrate or
coordinate there efforts. The structure must be such that
people can perform together efficiently.

 Central Authority: In an organization, there is a central

directing authority which controls the concerted efforts
of the group. The chain of authority- responsibility
relationships is known as the chain of command.
 Rules and Regulations: For the orderly and systematic
working of the members, rules and regulations are laid
down and enforced by the central authority.

 The Dynamic Element: An organization is not a mere

mechanical structure but a living organism arising out of
the sentiments, attitudes, and behavior of people. The
people are the material of construction that holds the
structure together and gives it vitality.
 1. Facilitates
Administration

7. 2. Encourages
Coordination Growth &
Diversification

IMPORTANCE OF
ORGANIZING
6. Ensures
3. Optimum
Continuity of
Use of
Enterprise
Technology

5. Encourages 4. Stimulates
Good Human Innovation &
Relations Technology
 IMPORTANCE OF ORGANIZING:
 Facilitates Administration: Achievement of the objectives
of an enterprise by providing a framework of coordination
and control. It provides a system of authority and network
for effective communication. Individual goals can be
coordinated towards group goals. A properly balanced
organization facilitated both management and operation of
the enterprise.
 Encourages Growth & Diversification: It has enabled
organizations to grow and expand to giant sizes. Systematic
division of work and consistent delegation of authority
facilitate taking up of new activities and meeting new
demands. It provides flexibility for growth without losing
control over various activities.
CONTD…
 Optimum Use of New Technology: It is made through a
sound structure manned with competent employees. In
addition, Optimum use of technology permits optimum
utilisation of human resources. Sound organization ensures
that every individual is placed on the job for which one is
best suited.
 Stimulates Innovation & Creativity: It stimulates
creative thinking and initiative on the part of employees. It
provides for effective management of change and responds
favourably to changes in environment. It provides
recognition for the professional and the specialist in terms
of their achievement.
 Encourages Good Human Relations: The assignment of
right jobs to right person improves job satisfaction and
inter-personal relations. Well-defined jobs and clear lines
of authority and responsibility ensure good human
relations.
 Ensures Continuity of Enterprise: It provides scope for
the training and development of future management. It
provides avenues for development and promotions through
delegation and decentralisation.
 Coordination: It facilitates order and cohesiveness in the
enterprise. Division of labor, better utility of technology
and human talent helps to improve the efficiency and
quality of work. Clear channels of communication among
the members of the organization leads to coordination.
 PROCESS:

IDENTIFICATION GROUPING OF
OF ACTIVITIES ACTIVITIES

2.

1. 3.

4.

ASSIGNMENT OF DELEGATION OF
DUTIES AUTHORITY
 PROCESS OF ORGANIZING:
1. Identification of Activities: First step is to determine the
tasks that must be performed to achieve the established
objectives. Activities and jobs are building blocks of any
organization. The activities to be performed depends
upon the objectives, nature and size of the enterprise.

2. Grouping of Activities: The various activities are the

grouped into departments or divisions according to
similarity and common purpose. Such grouping is
necessary for the purpose of specialization, coordination
and control. It may be grouped on various basis i.e.
functions products, territories, customers etc depending
on requirements.
3. Assignment of Duties: Groups of activities or
departments are then allotted to different positions. Every
position is occupied by an individual best suited for it.
The assignments of activities creates responsibility and
ensures certainty of work performance. The process
should be carried down to the lowest levels. It is basically
done to avoid duplication of work and over-lapping
efforts.
4. Delegation of Authority: Every individual is given the
authority required to carry out the responsibility assigned
to him. A chain of command is created through
successive delegation of authority. Different positions are
linked vertically and horizontally by establishing formal
authority. Every individual must know to whom he is
accountable and who are his subordinates.
ORGANIZATION STRUCTURE

A DESIGN OF ORGANIZATION
MOVEMENT OR BLUEPRINT,
DEFINITION

ORGANIZATION STRUCTURE
EXPLAINS THE POSITION AND
OFFICIAL RELATIONSHIP
BETWEEN VARIOUS
INDIVIDUALS IN THE
ORGANIZATION.
ORGANISATION CHART

It is a diagrammatic
representation of organization
structure show names
designation functions of
personnel in a organization.
PURPOSE OF ORGANISING

Aids to management
It facilitates growth &creativity
It ensures optimum use of resources
Establishes relationship among
individual groups
Clusters job into units
Coordinates.
FORMAL AND INFORMAL GROUPS

FORMAL GROUP- A formal group is a

structured group, which has a plan and
positions each job’s objective and
functions
CHARACTERISTICS OF FORMAL GROUP

Formal means something systematic.

It is in an official structure
It provides official relationship between
individual.
It is objective oriented
It abides with rules and regulations
ADVANTAGES:

The line of communication is very clear

It is accuracy of the information.
systematic
It is objective oriented.
It has a heirarchial pattern
INFORMAL GROUPS

It is the outcome of personal ,social and

friendly relationship and it develops
spontaneously.
It arises naturally on the basis of friendship
or some common interest which may or may
not be related with work
DEFINITION

According to chester bernard

“informal organisation is joint
personal activity with our
conscious common purpose though
contributing to common purpose”
CHARACTERISTICS OF INFORMAL GROUP

Informal group is created by the

member of the organisation for their
social and psychological satisfaction
Informal groups are unstable in
nature ,it is not permanent
Informal groups are greater in
numbers than the formal groups
Free interaction
 FORMAL GROUPS INFORMAL GROUPS
It is concisiously deliberate in It arises spontaneously
nature
It is based on delegation of It arises on account of social
authority interaction or it arises from account of
personal factors like friendship
Rules responsibilities are written Just unwritten rules and regulations
and clearly defined

It shown in organization chart It has no place in organization chart

It provides a definite structure It is structure less because it is social

Formal authority is attaches to a Informal authority attaches to a

position person out of social interactions

It flows downwards ( top to lower It flows upwards

level)
TYPES OF ORGANIZATION STRUCTURE

LINE STRUCTURE
LINE AND STAFF STRUCTURE
FUNCTIONAL STRUCTURE
COMMITTEE STRUCTURE
PROJECT STRUCTURE
MATRIX STRUCTURE
LINE STRUCTURE

It flows from top to lower level .

It is the simplest and oldest method
followed in many organization.
It is also called as military
organization.
 GENRAL MANAGER

PRODUCTION MANAGER

ASSISTANT MANAGER

SUPERVISORS

WORKERS
MERITS OF LINE STRUCTURE

Simple and easy to establish.

Authority and responsibility is clearly defined
Prompts decision.
Speedy action taken.
Unity of command since each will have full
control over subordinates.
Ensures Better discipline.
It is very economical since it is less elaborate.
It provides better scope for supervision.
DEMERITS OF LINE STRUCTURE

Lacks specialization
Overburden with lots of administrative work
It may result in autocratic control
Manager enjoys monopoly in the matter of
decision making ( he himself take decision)
Always downward communications is possible
Lacks upward communication
It is suitable for small concerns employing few
persons
LINE AND STAFF ORGANIZATION

The staff is attached to line

The staff are experts specialized in
specific areas
They give ideas to personnel
The staff supports the line personnel
MERITS OF LINE AND STAFF

Expert advice
Relief to top executives.
Quality decisions.
Flexible.
Specialization is not violated.
Unity of command is not violated.
DEMERITS OF LINE AND STAFF

Often arises conflicts between line and staff.

Leads to confusion since responsibility is
not well defined.
Ineffective staff .
Suitability ( in large organization).
FUNCTIONAL ORGANIZATION

There will be a separate department

for different actions or activities.
MERITS OF FUNCTIONAL ORGANIZATION

Specialization is possible
Work load is less
Better control over subordinates
Scope for expansion
Higher efficiency
DEMERITS

Unity of command is violated.

Interdepartmental conflicts.
Delay in decision making.
COMMITTEE ORGANIZATION

A group of persons entrusted in a task

Types:
Standard or permanent committee.
Temporary or ad hoc committee.
Executive committee.
Advisory committee.
Formal committee.
Informal committee.
MERITS

Scope of group judgment .

Proper coordination and control among
individuals and departments.
Motivation through participation is
possible.
Various interest groups.
Check against misuse of powers.
DEMERITS

Expensive affair to constitute a

committee
Time consuming or slow decision
Compromise decision
Suppression of ideas
PROJECT ORGANIZATION

It varies from one organization to

organization.
Any organization execute a large project for
a long period of time adopt this project
organization.
Usually some company have large number
of small projects.
The term leader organize the expert or
specialist.
MERITS

Maximum use of specialized knowledge and skills.

Unity of command exist in this organization
Flexibility of operation.
Fixation of individual responsibility for results.
Focuses attention on the specific projects.
Provides better coordination.
DEMERITS

Difficulty in decision making.

Pressure and uncertainty due to some
several specialist.
Difficulty in coordination.
Evaluation of performance of various
specialist is difficult.
MATRIX ORGANIZATION STRUCTURE

It is suitable where there is large number of

small projects.
It is also called as multiple command
system.
It is also called as linking pins.
45
MERITS

BEST UTILISATION OF
ORGANIZATIONAL RESOURCES.
BENEFIT TO BOTH FUNCTIONAL AND
TECHNICAL SPECIALIST .
IT PROMOTES COMMUNICATION
PERMITS HIGHER DEGREE OF
FLEXIBLITY AND ADAPTABILITY.
DEMERITS

Its against principle of unity of command.

Quick decision may not be possible
It gives scope for conflicts.
SPAN OF MANAGEMENT
It is also called as
span of control or
span of supervision.

It refers to the
number of
subordinates that
report directly to a
single manager or
supervisor.
 TWO TYPES OF SPAN
NARROW SPAN OF MANAGEMENT
Tall organization.
Manager oversees “few” subordinates.
better communication.
example : handicraft , ivory work , etc.
WIDE SPAN OF MANAGEMENT
Flat organization .
Manager oversees “large” number of
subordinates.
Less overhead cost.
example: large firms .
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NARROW SPAN WIDE SPAN

OF CONTROL OF CONTROL
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THEORY OF GRAICUNA’S
He was a French
management
consultant.
He developed a
formula for
analyzing superior
subordinate
relationship.
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THREE TYPES OF RELATIONSHIP

Direct relationship (superior has direct link with

subordinates).

Direct group relationship(arises between

manager and group of subordinates ).

Gross relationship ( relationship among

subordinates).
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DIRECT SINGLE RELATIONSHIP

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DIRECT GROUP RELATIONSHIP

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GROSS RELATIONSHIP
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MATHEMATICAL FORMULAS
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FACTORS DETERMING SPAN OF

MANAGEMENT
Nature of work
Type of technology
Ability of the manager
Capacity of subordinates
Degree of decentralization
Quality of planning
Staff assistant
Communication techniques
Time available for supervision
Geographical dispersion of
subordinates
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DEPARTMENTATION
It is a process of grouping
individual jobs into
departmentation.

TYPES:
Departmentation by function.
Departmentation by products.
Departmentation by territory.
Departmentation by customers.
Departmentation by process.
Departmentation by time and
numbers.
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DEPARTMENTATION BY FUNCTIONS
Deparmentation done by the functions.
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MERITS & DEMERITS

Provides scope of specialization.
Eliminates cost of duplication of work.
Effective control over performance.
Facilitates delegation of authority.

Interdepartmental conflicts.
Difficulty in coordination of activities.
Increases responsibility of departmental heads.
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DEPARTMENTATION BY PRODUCTS
It is suitable for different lines of products.
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MERITS & DEMERITS

Reduces problem of coordination.
It leads to specialization.
Performance evaluation can be done easily.
It is flexible and adaptable to change .

Chance of duplication is more.

There may be underutilization of plant capacity
when the demand of product is not adequate.
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TERRITORIAL DEPARTMENTATION
Used for large scale enterprises whose
activities are geographically spread over.
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MERITS & DEMERITS

It helps in achieving benefits of local operation.
Better coordination of activities.
Provides effective span of control.
Opportunity to train managers.
Facilitates expansion of business to various
regions

Due to geographical distance problem of

communication.
Coordination and control becomes less
effective.
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DEPARTMENTATION BY CUSTOMERS
Each department will serve the particular
type or class of customers.
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MERITS & DEMERITS

Offer scope of specialization.

Enterprise gain ultimate knowledge about
needs of various categories of customers.

Lead to duplication of activities.

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DEPARTMENTATION BY PROCESS OR
EQUIPMENT
The activities are grouped according to process or
equipment.
It is generally used in manufacturing industries.
Lead to specialization.
No confusion.
Proper utilization of manpower and machine
engaged in proper way.
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TIME AND NUMBER

DEPARTMENTATION
TIME:
The activities or group on basis
of time
EXAMPLE: Call centers or any
factory.

NUMBER:
The activities or group on basis
of performance by certain
number of persons.
CENTRALIZATION & DECENTRALIZATION

70
 Centralization

Decision authority is located near the top of

the organization.

71
 Decentralization

Decision authority is pushed down the chain

of command to lower levels.

72
 Decentralization Tends To
Make greater use of human resources

Reduce burdens of top managers

Cause decisions to be made close to the

action

Permit rapid response to changes.

73
 Centralization versus
Decentralization
•Greater change and uncertainty in the
environment are usually associated with
decentralization.

•The amount of centralization or decentralization

should fit the firm’s strategy.

•In times of crisis or risk of company failure,

authority may be centralized at the top. 74
 Factors That Influence
Centralization/Decentralization
Amount of change and uncertainty
Availability of competent managers
Corporate culture
Geographical dispersion
Size of organization
Efficiency of communication and control systems.
Cost and risk of failure

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