5 H

CHAPTER-5

ORGANISING

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  Concept and Importance of Organising

Ø A sound form of organisation is the answer to every business problem, that a poor organisation could run a good product in to the ground and that good organisation with a poor product could run a good product out of the market.

Ø Steps in the process of organising :

(i) Identification and division of work : The total work is divided into various activities.

(ii)Departmentalisation : The work of same nature are grouped together and assigned to particular department.

(iii)Assignment of duties : The responsibility of each individual or post is decided.

(iv)Establishing reporting relationships : Each individual should also know from whom he has to take orders and to whom he is accountable. It helps in coordination among various departments.

Ø Importance of organising : It helps in the growth and survival of an enterprise in a dynamic environment by providing the following benefits:

(i)        Benefits of specialisations.

(ii)      Clarity in working relationships.

(iii)    Optimum utilisation of resources.

(iv)    Adaptation to changes.

(v)      Expansion and Growth.

(vi)    Development of personnel.

(vii)     Effective administration

    Organization Structure

Ø Types of Organization Structure :

On the basis of Grouping of Activities

I.   Functional Structure : It is formed by grouping of activities of similar nature under one department.

Suitability :

(i)     Large organizations producing one line of product;

(ii)   Organizations which require high degree of functional specialization with diversified activities.

Advantages :

(i)     Leads to occupational specialization.

(ii)   Promotes coordination within a department.

(iii) Increases managerial and operational efficiency.

(iv) Leads to economies of scale which reduces cost.

(v)   Makes training of employees easier.

(vi) Ensures that different functions get due attention.

(i)     More emphasis on departmental objectives rather than organizational objective.

(ii)   Difficulty in inter-departmental coordination.

(iii) Leads to inter-departmental conflicts.

(iv) Leads to inflexibility in functioning of an organization.

II.  Divisional structure : It is formed by grouping activities related to one product under one department/division.

Suitability :

(i)       Multi product (Tata, Reliance);

(ii)     When an organization grows and needs to add more employees more departments or introduce new level of management.

(i)     Leads to product specialization.

(ii)   Helps in fixation of responsibility for divisional performance.

(iii) Promotes flexibility, new initiatives and faster decision making.

(iv) Facilitates expansion and growth of organization.

Disadvantages :

(i)     Divisional conflicts over funds allocation.

(ii)   Increase in cost due to duplication of work.

(iii) Ignorance of organizational interest.

Formal and Informal Organisation

I.  Formal Organisation : It is a network of jobs and positions with clearly defined functions and relationships, designed by management to accomplish objectives of the enterprise.

Features :

(i)     Specifies working relationship.

(ii)   Means to achieve the objectives of the organisation.

(iii) Coordinates and integrates diverse activities.

(iv) Emphasis on work rather than on interpersonal relationship.

(v)   Deliberately created by top management.

(i)     Easier to fix responsibility.

(ii)   Avoids duplication of efforts.

(iii) Effective accomplishment of goals.

(iv) Stability of the organisation.

(v)   Established chain of command.

Disadvantages :

(i)     Leads to procedural delays in decision making.

(ii)   Does not allow any deviations from rigidly laid down policies.

(iii) Ignores psychological and social needs of the employees.

II.  Informal Organisation : It is a network of social relationships among the employees which emerges spontaneously within the formal organisation.

Features :

(i)     Originates within the formal organisation.

(ii)   Standards of behaviour evolves from the group norms.

(iii) Independent channels of communication are developed by the group members.

(iv) Emerges spontaneously, not deliberately created by the management.

(i)     Faster speed of communication.

(ii)   Fulfils social needs of the members.

(iii) Fills wide gaps of formal structure.

(i)     Spreads rumours

(ii)   Resists changes

(iii) Peer Pressure

Delegation

Ø Elements of Delegation :

(i)     Authority : It is the right of an individual to command his subordinates and to take decisions and actions within the scope of his position.

(ii)   Responsibility : It is the obligation of a subordinate to properly perform the assigned duty.

(iii) Accountability : It means being answerable for the final outcome.

Ø Importance of Delegation :

(i)     Effective management : Managers get rid of routine work.

(ii)   Employee development : Career prospects of subordinates improve.

(iii) Motivation of employees : Superior’s trust improves employee’s self-esteem and confidence.

(iv) Facilitation of growth : Provides ready workforce for leading positions in new ventures.

(v)   Basis of management hierarchy : Establishes superior-subordinate relationship.

(vi) Better co-ordination : Clarifies powers, duties and answerability.

    Decentralization

Ø Importance of Decentralisation :

(i)     Develops initiative among subordinates.

(ii)   Develops managerial talent for the future.

(iii) Quick decision making.

(iv) Relief to the top management.

(v)   Facilitates growth.

(vi) Better control.

    Know the Terms

Ø Organising : Identifying and grouping different activities in the organization and bringing together the physical, financial and human resources for the achievement of specific goal of organisation.

Ø Organisation Structure : It is the network of job positions, responsibilities and authority at different levels of organisation.

Ø Formal Organisation : It is deliberately designed by the management on the basis of Scalar chains or Formal chains of command to achieve organisational goals.

Ø Informal Organisation : It is a network of social relationships among the employees which emerges spontaneously within the formal organisation.

Ø Delegation : It is the process of giving responsibility, and authority to the subordinates and fixing accountability on them for work performance.

Ø Centralisation : It refers to the concentration of all decision making powers at the apex of the management hierarchy.

Ø Decentralisation : It refers to the even and systematic distribution of managerial authority at every level of the management.

Ø Span of management : Number of subordinates that can be effectively managed by a superior.

    ØOrganization chart : Chart showing organization structure.