CHAPTER 5

ORGANISING

Que. Explain the meaning and process of Organising.
Ans. Organising refers to the process of bringing together physical financial & human resources & establishing productive relations among them for the achievement of predetermined goals. It is concerned with building a structure of various inter-related parts. The main aim of organising is to enable the people to relate to each other to work together for a common purpose.

PROCESS

The organizing process involves the following steps:-
(1) Identification and division of work: The first step in the process of organising involves identifying and dividing the work that has to be done in accordance with previously determined plans. It is necessary because all the work cannot be done by one individual. Division of work results in specialization.
(2) Departmentation:-The second step in organizing is to group similar job into larger units called departments, divisions or sections. This grouping process is called departmentation. It can be done on function basis, geographical basis, customer basis, customer basis & process basis.
(3) Assignment of duties: It is necessary to allocate work to various employees. Once departments have been formed, each of them is placed under the charge of an individual. Jobs are then allocated to the members of each department in accordance to their skills and competencies.
(4) Establishing reporting relationships: Merely allocating work is not enough. Each individual should also know who he has to take orders from and to whom he is accountable. The establishment of such clear relationships helps to create a hierarchal structure and helps in coordination amongst various departments.

Que. Explain the importance of Organising.
Ans. The functions of organizing and that of organization are important in several ways which are outlined as follows:
(i) Benefits of specialization : - In the process of organizing care is taken to see that the activities are grouped into compact and convenient jobs. These are also grouped on the basis of similarity. Organising thus promotes tasks and efficiency.
(ii) Clarity in working relationships: - The jobs of managers and non-managers are clearly defined and differentiated. Job description clarifies what role a person, managing the job is supposed to perform. It helps to remove duplication of work. It also helps the process of looking for and selecting the employees and fitting the right person to the right job.
(iii) Optimum utilization of resources: Organising leads to the proper usage of all material, financial and human resources. The proper assignment of jobs avoids overlapping of work and also makes possible the best use of resources.
(iv) Adaptation to change: - Organising function when becomes manifest in organizational structure adapts itself to various changes.
(v) Effective administration: Organising provides a clear description of jobs and related duties. This helps to avoid confusion and duplication. Clarity in working relationships enables proper execution of work. Management of an enterprise thereby becomes easy.
(vi) Development of personnel: Organising stimulates creativity amongst the managers. Effective delegation allows the managers to reduce their workload by assigning routine jobs to their subordinates.. It gives them the time to explore areas for growth and the opportunity to innovate.
(vii) Expansion and growth: Organising helps in the growth and diversification of an enterprise by enabling it to deviate from existing norms. It allows a business enterprise to add more job positions, departments and even diversify their product lines. New geographical territories can be added to current areas of operation and this will help to increase customer base, sales and profit.

Que. Define the term ‘Organising Structure’
Ans. The organization structure may be defined as a system of jobs position the duties assigned to them and the authority relationships among the various jobs positions. The structure provides a basis for managers & other employees to perform their function. Its shape is like a pyramid.

Que. What factors should to be kept in mind while building an organisational structure?
Ans. Factors should to be kept in mind while building an organisational structure are as follows
(i) Job design: - Since the manager has to get jobs, he must specify what activities and related tasks are contained in each of these jobs. What each individual must do to contribute to the organizations overall task and objectives is an important managerial decision.
(ii) Departmentation:- Once the jobs are defined they are to be grouped together to form a department. Coordination of different jobs becomes much easier if similar jobs are under one department and one manager.
(iii) Span of control: - The term span of control refers to the number of subordinates placed under a manager’s direct supervision & control. This also clarifies the chain of command and establishes who will report to whom. Some jobs are very specialized and require a great deal of interaction between the manager and his subordinates.
(iv) Delegation of authority:- Since jobs have been assigned then some degree of authority is required to get the job completed. This degree of authority is the crucial decision.
Que. Explain different types of organisational structure.
Ans. Management scholars and practitioners have developed different types of organizational structures to suit diverse needs of companies. The two most commonly found forms are functional and divisional organizational structures.

Functional Structure.
The functional structure is formed by grouping together the entire work to be done into major functional departments. That is to say all related work of one kind is placed in one organization part under one coordinating head. In functional organization structure each major function of business is organized as a separate department. Within each department, work can be divided into different sections and subsections. Within each section work can be organized from top to bottom by entrusting the work to lower levels. These organizations take the pyramidal shape.

Advantages
1. An expert can manage each department since all the jobs performed are specialized activities and require specialists. Thus making possible efficiency in operations,
2. Supervision is facilitated since an individual manager becomes familiar with related tasks and activities.
3. Coordination within the department is easier since, all are specialists and understand the perfect nature of job involved.
4. It eliminates duplication of work.
5. It makes training of employees easier as the focus is only on a limited range of skills.
6. It ensures that different functions get due attention.

Disadvantages
Specialists are working in their respective areas they may not be able to see the perspective of the organization as a whole.
As organization grow, departments may also grow, departments may also become too large which may lead to difficulty in coordination and delay in decision making.
Managers may try to build their own functional empires leading to conflicts.
It becomes difficult to hold a particular department accountable for any problems or issues that may arise.
Suitability: It is most suitable when the size of the organisation is large, has a diversified activities and operations require a high degree of specialisation.

Divisional Structure
In many large diversified organizations activities and personnel are grouped on the basis of different products manufactured. This allows personnel to develop total expertise in researching, manufacturing, and distributing one product line. The top management is able to efficiently coordinate all activities. particular product line. Further, each division works as a profit center where the divisional head is responsible for the profit or loss of his division. For example, a large company may have divisions like cosmetics, clothing etc.
Advantages: The divisional structure offers many benefits. Prominent among these are as follows:
(a) Product specialisation helps in the development of varied skills in a divisional head and this prepares him for higher positions.
(b) Divisional heads are accountable for profits, as revenues and costs related to different departments can be easily identified and assigned to them. This provides a proper basis for performance measurement.
(c) It promotes flexibility and initiative because each division functions as an autonomous unit which leads to faster decision making.
(d) It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.
Disadvantages: The divisional structure has certain disadvantages. Some of them are as follows:
(a) Conflict may arise among different divisions with reference to allocation of funds and further a particular division may seek to maximise its profits at the cost of other divisions.
(b) It may lead to increase in costs since there may be a duplication of activities across products.
(c) It provides managers with the authority to supervise all activities related to a particular division. In course of time, such a manager may gain power and in a bid to assert his independence may ignore organisational interests.

Suitability: Divisional structure is suitable for those business enterprises where a large variety of products are manufactured using different productive resources. When an organisation grows and needs to add more employees, create more departments and introduce new levels of management, it will decide to adopt a divisional structure.

Comparative view: Functional and Divisional Structure
Basis
Functional Structure
Divisional Structure
Formation
Formation is based on functions
Formation is based on product lines and is supported by functions.
Specialisation
Functional specialisation.
Product specialisation.
Responsibility
Difficult to fix on a department.
Easy to fix responsiblity for performance.
Managerial Development
Difficult, as each functional manager has to report to the top management.
Easier, autonomy as well as the chance to perform multiple functions helps in managerial development.
Cost
Functions are not duplicated hence economical
Duplication of resources in various departments, hence costly.
Coordination
Difficult for a multi-product company.
Easy, because all functions related to a particular product are integrated in one department.

Que. In an Electrical Goods Manufacturing Company there are four main activities – marketing, production, finance, personnel. The G.M. is planning to structure the organisation. Which type of organisation structure should be adopted? Why?
Ans) Since Electrical Goods Manufacturing Company the company have activities like marketing, production, finance, personnel so functional structure of organization is suitable in this situation because in a functional structure all the related work of one kind is placed under one department here each major function of business is organised as a separate department. In an Electrical Goods Manufacturing Company the major functions are marketing, production, finance and personnel. Therefore the organisation may be
divided into respective major departments headed by production manager, marketing manager, finance manager and personnel manager.

Que. Jindal Industries Ltd is manufacturing steel, cement and chemical. What type of organizational structure would be suitable for the company and why?
Ans. Since Jindal Industries Ltd is manufacturing different products like steel, cement and chemical so a divisional structure of organization is suitable because in divisional structure of organization the activities are grouped on the basis of different products manufactured by the company. Here separate divisions are made for each other product or product group and each product group has its own marketing, production, finance and

Que. Explain the concept of Formal Organisation. State its features, advantages and limitations.
Ans. Formal Organisation:-The organization structure designed & established by management is called formal organization. It is an officially set up to achieve predetermined goals. Various activities & relationship are clearly defined. In this type of organization authority flows from top to bottom.

Features
(a) It specifies the relationships among various job positions This clarifies who has to report to whom.
(b) It is a means to achieve the objectives specified in the plans, as it lays down rules and procedures essential for their achievement.
(c) Helps in coordination efforts of various departments.
(d) It is deliberately designed by the top management to facilitate the smooth functioning of the organisation.
(e) It places more emphasis on work to be performed than interpersonal relationships among the employees.
Advantages: Formal organisation offers many advantages. Some of the important ones are:
(a) Fixing responsibility is easier since mutual relationships are clearly defined.
(b) Helps in avoiding duplication of effort as the role that each member has to play as duties are specified.
(c) Unity of command is maintained through an established chain of command.
(d) It leads to effective accomplishment of goals.
(e) It provides stability to the organisation.

Limitations: The formal organisation suffers from the following limitations:
(a) The formal communication may lead to procedural delays as the established chain of command has to be followed.
(b) Poor organisation practices may not provide adequate recognition to creative talent, since it does not allow any deviations from rigidly laid down polices.
(c) It is difficult to understand all human relationships in an enterprise as the formal organisation does not provide a complete picture of how an organisation works.

Que. Explain the concept of Informal Organisation. State its features, advantages and limitations.
Ans. Informal Organisation:-When several individuals work together they communicate among themselves during their work. They develop friendly relations & small social groups. The network of these social groups based on friendship is known as informal organization. The informal organization is the part of formal organization. They are linked with each other.
Features
Informal organisation can be better understood with the help of the following features:
(a) It originates from within the formal organisation as a result of personal interaction among employees.
(b) The standards of behaviour evolve from group norms.
(c) Independent channels of communication without specified direction of flow.
(d) It emerges spontaneously and is not deliberately created by the management.
(e) It has no definite structure.

Advantages: The informal organisation offers many benefits which are as follows
(a) Prescribed lines of communication are not followed. Thus, the informal organisation leads to faster spread of information
(b) It helps to fulfill the social needs of the members and allows them to find like minded people.
(c) It contributes towards fulfillment of organisational objectives by compensating for inadequacies in the formal organisation.

Disadvantages: The informal organisation has certain disadvantages which are as follows:
(a) It is source of spreading rumours.
(b) The management may not be successful in implementing changes if the informal organisation opposes them.
(c) It pressurises members to conform to group expectations.

Conclusion.
Informal organisation cannot be altogether eliminated. Thus, it would be in the best interest of the organisation if the existence of such groups is recognised and the roles that their members play are identified.



Que. Differentiate between Formal and Informal Organisation.
Ans.


Difference between formal and informal organisation

Basis
Formal organization
Informal organization
1. Formation
Deliberately planned & created by management
It is a result of social interaction among people.
2. Purpose
To achieve predetermined goals
Satisfy social needs & fulfill common interest.
3. Degree of rigidity & flexibility
More rigid
More flexible
4. Structure
It has well defined structure of jobs & relationships
Does not have clear cut structure. It has complex network of relations.
5. Behavior of members
Standard of behavior & performance are in forced by management.
Standard of behavior & performance are decided by mutual consent among members.
6. Communication
It has formally established official lines of communication.
It has informal communications based upon convenience.
7. Leadership
Managers are leaders
Leaders are voluntarily chosen.
8. Emphasis
On jobs & positions
On emotions & social needs of members.
9. Flow of authority
From top to bottom
Vertical
10. Tenure
Long
Short.

Que. Explain the concept of Delegation of Authority. State its importance.
Ans. Delegation of authority is a process of sharing of work & authority between manager & subordinates. Delegation takes place when a manager passes on to his subordinates some of his work, with the necessary authority to perform the work. Delegation of authority is based upon the principle of division of work, No manager can perform the entire work assigned to him. So he has to pass part of his work to his subordinates. A manager does not delegate all his work. He retains important authorities with himself. For example – authority to make important decisions, authority to supervise etc. Thus, the process of delegation involves the assignment of works, entrustment of authority & imposition of accountability by a manager with respect to his subordinate. Authority can be delegated by a superior to his subordinate. But responsibility is absolute and can never be delegated. When a superior delegates his authority to a subordinate he continues to be responsible to his own superiors.

Delegation of Authority Importance

Delegation is an important part of the organizing function. The importance of delegation of authority is listed as follows:
1) Reduces work load of managers:- In the process of delegation of authority a manager shifts some of his work to his subordinate. Manager can concentrate on important works. Delegation also helps in proper division of managerial work.
2) Basis of superior subordinate relations:-By the process of delegation of authority superior subordinate relations among manager are established. The authority flows form top management to lower level management.
3) Improves managerial effectiveness: - By the process of delegation of authority efficient of manager is improved. With the help of this process manager can perform more with the help of their subordinate. They are able to concentrate more on important matters. Hence, the effectiveness of mangers increases.
4) Motivates Subordinates: - In this process of delegation of authority subordinate are given some authority. As a result subordinate have a sense of importance. They are motivated to perform their best. They derive job satisfaction.
5) Develops managers:-Delegation of authority is a source of development of managers. Managers are given opportunities to acquire leadership & other skills. Managers got practical situations to solve managerial problems. They are required to get work done by their subordinates by motivating & guiding. Through this experience manager are prepared for taking up higher responsibilities.
6) Facilitates organizational growth:-Delegation of authority facilitates the growth of the organization. By the delegation organization is able to perform more & more additional work. New departments can be created & new managers can be appointed. Hence, the organization is expanded.

Que. Explain the elements of Delegation of Authority.
Ans. Delegation involves three elements as a process of delegation. This includes entrusting, responsibility, authority to another person and creating accountability.
(1) Responsibility: Responsibility is the work assigned to a person, position or job. This includes all those physical and mental activities which are to be performed to carry out a certain duty. A manger entrusts responsibility to his subordinates by assigning them duties to takes and defining the work to be carried out by them.
(2) Authority: Authority is the sum of powers and rights regarding use of financial, material and human resources as well as the right to decide, to act or not to act. No responsibility can be carried out without proper authority.
(3) Accountability: Accountability is the obligation to carry the assigned tasks, duties or responsibilities. Accountability is the obligation of an individual to give an account of how much he has completed his responsibility to his superior. It can not be delegated. The person making the delegation remains accountable to his superior for his own as well as the work of his subordinates. It is an upward process. A person is accountable only for that responsibility which is delegated to him.
Overview of the elements of delegation

Basis
Authority
Responsibility
Accountability
Meaning
Right to command.
Obligation to perform an assigned task.
Answerability for outcome of the assigned task.
Delegation
Can be delegated.
Cannot be entirely delegated.
Cannot be delegated at all.
Origin
Arises from formal position .
Arises from delegated authority.
Arises from responsibility.
Flow
Flows downward from superior to subordinate.
Flows upward from subordinate to superior.
Flows upward from subordinate to superior


Que. Explain the concept of ‘Decentralisation of Authority’. State its importance.
Ans. Decentralisation of authority means systematic delegation of authority at all levels of management for taking decision. In a decentralized organization, authority for taking major decision is kept by the top management with themselves. Top management also retains the authority of over all control & coordination of the organization. At the same time, the middle & lower level managers are also given authority for taking various decisions.

Importance of Decentralisation

Deceentralisation is an important part of the organizing function. The importance of Deceentralisation is listed as follows:

(1) Reduction in work load of top executives: - In a decentralized organization Manager can concentrate on important works as they are not involved in, day to day problems. Therefore, they have enough time of plan ahead, develop new strategies and concentrate on coordination and control.
(2) Improving motivation: - A decentralized organization improves motivation of employees because it encourages lower levels to take decisions without seeking approval from higher levels. As a result subordinate have a sense of importance. They are motivated to perform their best. They derive job satisfaction.
(3) Improved team work: - In decentralized organizations managers at different levels are given autonomy. Decentralized managers make special efforts to seek the participation of subordinates in decision-making, have constant, open communication and take personal interest in their welfare. These factors lead to superior team-work.
(4) Executive development: - Managers are given opportunities to acquire leadership & other skills. Managers got practical situations to solve managerial problems. They are required to get work done by their subordinates by motivating & guiding. Through this experience manager are prepared for taking up higher responsibilities.
(5) Quick decision making:-Since decision making authority is entrusted nearest to the point of action quick decision making is facilitated. Often it provides competitive edge to the company.
(6) Promotes initiative and creativity: - Managers with greater degree of autonomy take initiative develop better ingenious ways of doing the work. Thereby creativity and experimentation are encouraged.


Que. Neither complete cenralisation or decentralization is possible nor desirable. Explain. Or
It can be said that every organisation will be characterised by both centralisation and decentralisation. Explain.
Ans. An organisation is centralised when decision-making authority is retained by higher management levels whereas it is decentralised when such authority is delegated.

Complete centralisation would imply concentration of all decision making functions at the top level of the management. Such a situation would eliminate the need for a management levels. On the other hand, complete decentralisation would imply the delegation of all decision making functions to the lower level of the management and this would eliminate the need for higher managerial positions. Both the scenarios are unrealistic.

An organisation can never be completely centralised or decentralised. As it grows in size and complexity, there is a tendency to move towards decentralised decision making. This is because in large organisations. making functions to the lower level of the hierarchy and this would obviate the need for higher managerial positions. Both the scenarios are unrealistic.

An organisation can never be completely centralised or decentralised. As it grows in size and complexity , there is a tendency to move towards decentralised decision making. Hence, there is a need for a balance between these co-existing forces. Thus, it can be said that every organisation will be characterised by both centralisation and decentralisation.

Que. Distinguish between Delegation of Authority and Decentralisation of Authority.
Ans. Difference between Delegation and Decentralisation

Basis
Delegation
Decentralisation
Nature
Delegation is a compulsory act because no individual can perform all tasks on his own.
Decentralisation is an optional policy decision. It is done at the discretion of the top management.
Freedom of action
More control by superiors hence less freedom to take own decisions.
Less control over executives hence greater freedom of action.
Status
It is a process followed to share tasks.
It is the result of the policy decision of the top management.
Scope
It has narrow scope as it is limited to superior and his immediate subordinate.
It has wide scope as it implies extension of delegation to the lowest level of management.
Purpose
To lessen the burden of the manager.
To increase the role of the subordinates in the organisation by giving them more autonomy.