3.

ORGANIZING
Mr. Raghavendra G G

Dept. Of Commerce

UPMC, Kunjibettu, Udupi

Meaning and Definitions:

Meaning:

➢ The term organisation or organising which includes an entity, a group of people, a

structure, a process and a function of management

➢ In other words the term organisation can be used in different sense, it can be used
as a group of persons working together in process of management

➢ In others words organising refers to the process of determining, arrangement, of a

man, material, machines, money, market opportunities required by an enterprise to
accomplish its goals

➢ It is a group of people organised for some purpose such as business or political

activities

➢ It involves determination and arrangement for achievement of certain goals.

Definitions:
• According to Theo Haiman, “ Organising is the process of defining and grouping of
activities of enterprise and establishing authority relationship among them”.

• According to Kootz O Donnel “ organisation involves the grouping of activities

necessary to accomplish goals and plans, the assignments of these activities to a
particular appropriate departments, and the provision for authority, delegation and
co-ordination”.
Characteristics or Features of ORG:
• Organisation concerned with grouping of people
• It is concerned with division of labours
• Organising is a management process
• It integrate and co-ordinate the various activities of organisation
• Organisation leads to co-ordination
• It is a social system
• It is a social system it consist of set of interrelated elements i.e., Input,
transformers them into output.
 1. Inputs:
• Men
• Money
• Material
• Machines
• Marketing information
• Management and
• Methods
2. Transformer ( organisation)
3. Outputs:
• Profit
• Productivity
• Goods
• Services
• Relationship
• Social responsibility towards employees, customers, govt, public.
PROCESS OF ORGANIZING
OR
STEPS IN ORGANIZING
1. Determination of objectives.
2. Identification of work
3. Grouping the work
4. Appointment of suitable personnel
5. Establishing formal relationship
6. Delegation of authority and responsibility
7. Co-ordination of activities

1. Determination of objectives:
• The first step in the organizing process is to determine the enterprise objectives or
goals.
• Objectives identify the purpose of the proposed organization to be set up.
• Decision on the type of organization needed and various activities to be performed
is made on the basis of the enterprise objectives.
• Thus, objectives serve as guidelines for the management for building an
organization structure.
2. Identification of work:
• After determining the objective, the next step is to identify the activities necessary
to achieve those objectives.
• The total work of the enterprise must be divided or classified according to their
nature like manufacturing activities, purchasing activities, financial activities,
marketing activities etc.,
• Identification and classification of work helps the management to assign them to
various individuals according to their skills and experience.
3. Grouping of work:
• After identifying the activities all closely related and similar activities must be
grouped together into departments like production department, marketing
department, financial department, human resource department etc.
• Again activities of each department must be sub divided into sections like human
resource department may be sub-divided into recruitment section, training section,
wages and salary section, transfer section etc.
4. Appointment of suitable personnel.
• After grouping the activities into departments and sections, the next step in the
organizing process is to appoint qualified persons to various jobs.
• Personnel must be appointed according to the job description and job satisfaction.
5. Establishing formal relationship:
• In order to run the enterprise smoothly and to coordinate various activities, the
reporting relationship must be established among jobs and departments.
• It helps individuals to know what is his area of work, what work must be done, to
whom the matter must be referred and how his job related to other jobs I the
organisation.
• Thus establishing formal relationship among various positions and jobs provided a
framework for assigning duties and responsibilities to the individuals.
6. Delegation of authority and responsibility:
• The next step in the organizing process is to assign duties and responsibilities to
the individuals.
• Each individual must be given a specific job according to their abilities and made
responsible for that.
• Again he must be given proper authority or power to perform the task assigned to
him.
• The manager must clearly specify the authority and responsibility limits of each
individual position.
7. Co-ordination of activities:
• It involves establishing integration system i.e linking the various managerial
positions and groups.
• Integration can achieved horizontally i.e between the departments and vertically
i.e between the managers and supervisors and through communication systems.
• Coordination helps to achieve unity of objectives, team work and team spirit.
 SPAN OF MANAGEMENT
MEANING
• The term Span of management is also referred to as span of control, span of supervision,
span of responsibility or span of authority.
• Span of management means the number of subordinates a manager can effectively
manage.
FACTORS WHICH DETERMINE THE SPAN
• Ability of the superior
• Ability of subordinate
• Nature of task
• Degree of decentralization & delegation of authority
• Communication system
• Organizational plans and policies
• Staff assistance
• Time available for supervision
• Control techniques used

1. Ability of superior: An able manager with leadership qualities like decision making
ability, communication skills, ability to control the employees, ability to solve complex
problems can manage many subordinates. On the other hand, less span if the manager is
not competent.
2. Ability of subordinate: Subordinate who are well trained, knowledgeable, competent
and cooperative need less supervision and hence span of management can be larger. New
recruits who need more supervision and guidance need smaller span.
3. Nature of task: If the work is simple, routine and standardized the span of control
may be wider. On the other hand, if the work is complex and interrelated, if requires close
supervision and control the span of management must be narrow.
4. Degree of decentralisation and delegation of authority:
• In a decentralized organisation, where decisions are made at different levels, manager is
free from taking routine operative decisions, such organisations have wider span of
management.
• An organisation where there is less decentralisation of authority, span of management will
be narrow.
• Delegation of authority also influences the span of management.
• It there is clear delegation of authority, manager spends less time on supervising the
subordinates and more number of subordinates can be assigned to a single manager.
• On the other hand, if there is no delegation of authority, much of the superior's time is
spent on consultations and guidance to the subordinates.
• So, manager can manage a limited number of subordinates.
5. Communication System: The communication facilities established in the organisation
also affect the span of management. If there is direct, free and quick mode of
communication, span of management can be wider. On the other hand, if the system of
communication is not effective then the span of management must be narrow.
6. Organisational Plans and Policies: An organisation with clear and definite plans,
policies, procedure, rules and methods facilitates better superior- subordinate
relationships and such organisation can have wider span of control.
7. Staff Assistance: A manager who is provided with staff specialists can handle more
number of subordinates because managerial workload can be shared with staff specialists.
8. Time available for supervision: Top management will have narrow span of
management because they have no time for supervision. Top management involved in
planning, organising, decision making and controlling the entire organisational activities
and thus gets limited time for supervision.
9. Control techniques used: Control mechanisms used in the organisation also influence
the span of control. If a manager has to supervise more number of employees, then
narrow span of management is needed.

Meaning and Definitions of Delegation of Authority

Meaning:
• To delegate means to grant or to confirm.
• Therefore managers grants or confirm on others (subordinates) in certain duties in
the form of work and authority.
• Delegation is an act of assigning formal authority and responsibility to a subordinate
for the completion of specific activities.
Definitions:
• According to L.A.Allen, “Delegation as entrustment of a part of the work or
responsibility and authority to another and the creation of accountability for
performance”.
Features or nature or characteristics of Delegation of Authority
• It implies manager’s sharing of power or authority with his subordinates for the
performance of certain duties.
• Manager delegates the right to make decisions to acquire the resources and
information from subordinates
• Delegation is two way process delegator i.e manager must be willing to give a part
of his authority, delegatee i.e., subordinate must accept the order and he is
responsible to his manager.
• Manager maintain trust and respectful relationship with subordinates
• It creates accountability and creativity
• It can be in oral or written communication, delegation is more effective only through
written communication.

PROCESS OF DELEGATION
• STEP-1 ASSIGNMENT OF TASKS/RESPONSIBILITY

• STEP-2 TRANSFER OF AUTHORITY

• STEP-3 ACEPTANCE OF RESPONSIBILITY AND AUTHORITY

• STEP-4 CREATION OF ACCOUNTABILITY

Principles of Delegation of Authority

1. Principle of delegation by results expected.
• This principle suggests that goals of delegation must be properly determined in
advance and communicated to the delegatee.
• The delegator must make sure that the subordinate knows what is expected of him.

2. Principle of functional definition.

• For better delegation of authority, organization must divide the activities into
departments and manager of each department must have enough authority to
coordinate the activities with those of the organisation as a whole.
• Which requires the principle of functional definition.
• The functions of each department, positions and relationship must be clearly
defined and to avoid confusions.
3. Scalar principle:
• Scalar principle refers to the line of direct authority from top manager to every
subordinate position in the organization.
• A clear line of authority enables the organization to take appropriate decisions at
the right time and promotes organizational communication.
• Clear understanding of the scalar principle is necessary for the proper functioning
of the organization.
4. Principle of parity of authority and responsibility:
• Authority is the power to discharge the assigned task and responsibility is the
obligation to accomplish them.
• Effective delegation requires that the authority given to carry out the task must be
equal to responsibility assigned to subordinates.’
• Responsibility for actions cannot be greater than that of authority delegated nor
should it be less.
• Balance between authority and responsibility will make the delegation meaningful
and effective.
5. Principle of Unity of Command:
• According to this principle, each subordinate should have only one boss to whom
he should be accountable.
• The principle of unity of command makes authority responsibility relationships more
clear and specific.
6. Authority level principle:
• According to this principle, decision making should remain at the level at which it
is delegated.
7. Other principle:
• Principle of adequate communication
• Principle of trust and confidence
• Principle of competence
• Principle of receptiveness
• Principle of reward
• Principle of control
Benefit or use of Delegation of Authority:
1. Delegation of authority is the key to the organisation.
Without delegation of authority there would be only one person to do everything and hence
would be no organisation. Thus organisation will come into existence only through
delegation.
2. Top management can concentrate on their functions.
Delegation relieves the top management from operational responsibilities. Top
management can concentrate on their functions of planning, decision making, controlling,
by delegating the routine functions to their subordinates.
3. Better management and control:
Delegator gets more time to plan, motivate and control the subordinates. Thus, delegation
leads to better management and control
4. Motivates the subordinates.
Delegation allows the subordinates to grow, develop their knowledge and capacities. It
also provides scope for job promotion. It is an important tool to motivate the subordinates
to contribute their best to achieve the enterprise objectives.
5. Subordinates initiation.
Delegation permits the subordinates to work independently without the interface of their
boss. This enables the subordinates to take initiative in their work and project their hidden
creative talents.
6. More peace of mind.
It offers concerned manager and their subordinates additional peace of mind in their
department. Thus there is harmonious relationship (unity in strength) between employer
and employees.
7. Higher production.
Delegation is a management technique to extract more work with less worries and tension
and with less risk to health. Thus it leads to more production.
8. Speeds up decision making.
Subordinates are given independent authority to take decisions. It enables quick decisions
at all levels.
9. Executive development.
Delegation produces skilled and talented executives and supervisors at various levels of
the organisation. Thus, it helps in developing managers for the future.
Barriers/Cause/Problems of delegation of Authority
• Why manager unwilling to delegate authority
• Why subordinates unwilling to accept delegation

1. Why manager unwilling to delegate authority:

a. I can do better myself feeling: some manager feel that they can do the for
better than their subordinates
b. Lack of trust on ability of the subordinates: if a manager has no confidence
in the capacity and skills of subordinates will not delegate authority to his
subordinates
c. Fear of loss of authority: some managers are very much concentrate on power
and status. Therefore if manager delegate the authority to his subordinates they
feel insecure. And fear of loosing their power
d. Lack of self confidence: if the manager lack of confidence of his own ability
he hesitate to delegate authority
e. Poor organisation facility: their may not be proper facilities for delegation like
clear policies, rules and regulations, communication system, lack of training and
development programme, lack of motivation, lack of control etc
f. Unwilling to accept risk: even after carefull delegation there is no guarantee
that delegation will be successful therefore manager has to bare the risk of
wrong decisions of subordinates
g. Continuous guidelines takes too much time:Delegation consumes a lot of
time for determining the goals, assigning the task, communication of goals,
training, supervision, and control of delegated work.

2. Why subordinates unwilling to accept delegation:

a. Fear of criticism: subordinate avoid to taking the responsibility if boss criticize
them for inefficiency or for any mistake
b. Easy to depend on the boss for decision: delegation requires the
subordinates to take decisions independently making decision may be quite
difficult. Therefore subordinates find it more convenient and easy to depend on
decisions of boss instead of their own decision
c. Lack of self confidence: subordinate may hesitate
 To accept the delegation due to lack of self confidence he fears that he may
commit mistakes while performing delegated task.
d. Lack of adequate reward: lack of incentives in form of recognition, monetary
benefits other rewards are another reason for reject delegation
e. Hesitate to bear the responsibility and risk: people always accept minimum
responsibility and people always hesitate to face risk in future.
f. Lack of adequate information and resource:
Lack of adequate information and resources to do the delegated duties also
make the subordinates hesitate to accept the delegation.
Guidelines for effective delegation:
a. Establish work climate free from fear and frustration:
• Delegation of authority requires an organisation climate free from fear and
frustration.
• Managers must have the feeling that delegation will reward them instead of
penalizing them.
b. Decide the goals of delegation with intelligent planning:
• Decide the tasks to be assigned to the subordinates with intelligent planning.
• Authority can be delegated only after goals are made clear.
• Communicate the goals to the subordinates so that they will clearly know what
they have to achieve.
c. Make the delegator feel secure.
• Delegator who feels insecure does not delegate authority
• Organisational policies must be framed in such a way that there is no threat from
the subordinates to the delegator’s position.
d. Clearly define authority and responsibility:
• Authority and responsibility of managers should be clearly defined.
• They should be in a written form to avoid vagueness and misunderstanding.
e. Maintain open lines of communication:
• Manager must maintain open lines of communication with his subordinates.
• There should be free flow of information between superior and subordinates.
f. Choose the delegatee wisely:
• Select the delegatee carefully in the light of task to be performed.
• The delegatee must qualified and possess ability to perform the task
delegated.
g. Provide necessary training:
• Necessary training must be provided to the managers to acquire the skills of
delegation and to the subordinates to accept the delegation.
h. Provide proper reward and appreciation:
• Rewards may be in the form of recognition, promotion, participation in
management etc.
 • Subordinates must also be motivated through incentives to accept the
delegation of authority.
• Motivation may be through monetary non monetary incentives.
i. Establish proper controls:
• Provide an effective system of control to ascertain that authority is being used
properly.
j. Follow or observe the principles of delegation:
• Strict observance of the principles of delegation like principle of results
expected, scalar principle, unity of command, parity between authority and
responsibility, authority level principle etc.,.
Principles of Organising: (15 marks question)
1. Unity of objective
2. Division of work and specialization3
3. Principle of functional definition
4. Scalar principle
5. Delegation
6. Parity of authority and responsibility
7. Unity of command
8. Unity of direction
9. Span of control
10. Principle of balance
11. Efficiency
12. Simplicity
13. Flexibility
14. Communication
15. Leadership facilitation
16. Exception principle
1. Unity of objective:
• Every organisation aims to achieve certain objectives
• Objectives must be set for each department
• After determine the objectives a organisation structure must be developed that will
help to achieve those objectives
2. Division of work and specialization:
• Good organisation can be built on the basis of specialization
• The entire work of the business must be divided into different departments on the
basis of functions
• Each department must be assigned to persons or employees according to their
specialization. (specialized knowledge in particular area)
• For Eg: specialized knowledge in marketing become marketing manager, knowledge
in HR become HR manager, knowledge in A/C finance manager etc.
• And also maintained good co-ordination of all departments and activities.
3. Principle of functional definitions:
• The duties and responsibilities of each positions, their authority and responsibilities
and relationships with others positions must be clearly defined
• So as to avoid confusion and over lapping or handling of functions
4. Scalar principle:
• Scalar principle refers to the chain of superiors from top positions to lower positions
of organisation it facilitates better communication.

5. Delegation:
• An individual cannot perform all the work of his department
• He has to share his authority, responsibility and duties with his subordinates
• A sound and good organisation requires delegation of authority to the subordinate.
6. Parity of authority and responsibility:
• Authority is the right to give orders
• Responsibility is the task, a job assignment to workers
• Each subordinates must have sufficient authority to carry the responsibility.
7. Unity of command:
• According to this principle each subordinates should have only one boss.
• One boss and one subordinate principle must be followed while designing the
organisation structure
• A subordinate must be obey the orders of superior, therefore if a persons receives
orders and instructions from many bosses it results to confusion.
8. Unity of direction:
• There should be one objective and one plan of activity for a group
• These goal must be guided by one person, therefore there should be one head and
one plan for a group working for a particular objective.
9. Span of control:
• It means the number of subordinates are managed by manager effectively.
• A good, sound organisation leads to less supervision
• Care should be taken to see that a superior should not be over loaded or burned
with subordinate activities.
10. Principle of balance:
• This principle suggest that proper balance must be maintained in the organisation
structure
• For example, balance in size of various department economic balance, demand and
supply balance in production department, human resource acquired and required
balance
11. Efficiency:
• An organisation structure is efficient when it facilitates the accomplishment or
achievement of objectives with minimum cost and time.
 • An efficient organisation structure contribute higher productivity, provide maximum
satisfaction to employees and also contributes welfare of the society.
12. Simplicity:
• Organisation structure should be simple i.e., it must be understand by each and
every person in the organisation
• It implies minimum number of levels and clearly defined positions
• So as to avoid confusion among the people, it facilitates effective communication
and co-ordination.
13. Flexibility:
• Organisation structure must be flexible, so that it can be easily adopted to the
changes taking place in internal and external environment.
14. Communication:
• This principle suggest that there should be two way communication system between
manager and subordinates.
15. Leadership facilitation:
• Organisation structure must promote leadership
• Leadership in the areas like effective allocation of authority and structural
arrangement of resources.
16. Exception principle.
• This principle suggest that the exceptionally complex or rigid problems must be
referred to higher level of the management
• All routine and casual matters must be dealt with by the lower level management.
• This help the top level manager to concentrate on planning and policy decisions.

Organisation structure
NETWORK ORGANIZATION STRUCTURE
• The network organization structure is a new organizational structure which is less
hierarchical and more decentralized, flexible and flat structure.
• It is also called virtual or modular organizational structure, built around alliance between
the organizations within a network.
• Network based organization means that the firm outsource most of its major processes to
other companies and coordinates their activities from head office of the organization.
• In other words an enterprise subcontracts its major operations to separate enterprise and
coordinates their activities from the headquarters of the enterprise.
 FEATURES OF NETWORK ORGANIZATION STRUCTURE
• Network structure is working on cooperative relationship with suppliers, distributors and
other business partners.
• There is no horizontal and vertical boundary within the organization. Central organization
(HUB) of the network controlling the networked organizations.
• Central management is especially involved in strategic decisions of developing
relationship.
• Sharing information among the constituents of networking organization is facilitated by
electronic technology.
• Each unit in the network organization is depending on other for its survival and growth.
• Net working organizations may be permanent or temporary arrangements.

ADVANTAGES OF NETWORK ORGANIZATION STRUCTURE

• Focus in core competency: An organization can have focus on core competency
i.e what it does the best.
• Less costs and better service: In network organization different activities are
outsourced to other enterprises which are specialized in their work. The firm not
only reduce the cost but also receive good quality services.
• Excellent quality is assured: each unit puts its core competency in its production
process and produce world class products or services.
• Flexible operation: by outsourcing the work an enterprise will be I flexible
position. Enterprise can change its production techniques, change product designs
and discontinue failed products.

DISADVANTAGES OF NETWORK ORGANIZATION STRUCTURE

• Difficult to control: When there are many net worked enterprise and firms spread
out in various places it is very difficult to control such a widespread network.
• Unreliable network: some of the networked companies may be operating from
other countries which give rise to difficult to communicate and deliver the things.
• Difficult to maintain business secrecy: The networked firm may also be working
for other firms which are your competitor. There are chances of information getting
leaked out to your competitor.
• Loss of control over the operation: When an enterprise outsourcing its
operations to outside firms, it loses control over its own operations. At the same
time other networked enterprises will have a significant power over your enterprise.
• It may prove costly: it is possible that the cost of outsourcing is costly than the
enterprise done it by itself.
• Duplication of efforts: there is high potential for duplication of efforts.

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