Organizing

Identification & classification of required activities

Grouping of activities for attaining objectives
Assignment of each group to a Manager with the
authority necessary to supervise it
Provision for coordination horizontally & vertically
 Formal & Informal Organization
Formal Organization means the intentional
structure of roles in a formally organized enterprise.
A formal organization must be flexible.

Informal Organization is a network of

interpersonal relationships that arise when
people associate with each other.
 Organization
A formalized structure of roles or positions
An organization structure is to
clarify who is to do what tasks
who is responsible for what results
remove obstacles to performance caused
by confusion & uncertainty of assignment &
furnish decision making & communication
 Span of Control
Refers to the no. of people a manager can
effectively supervise.

There is no definite no. of people a manager can

always effectively supervise. The number depends
on several underlying factors e.g., the degree of
training, the amount of personal contact needed,
the use of objective standards, then rate of change,
the effectiveness of communication techniques etc.
 Organization with Narrow Spans
Advantages Disadvantages
Close supervision Superiors tend to get too
involved in subordinates work
Close control
Many levels of management
Fast communication High costs due to many levels
between subordinates & Excessive distance between
superiors lowest level & top level
 Organization with wide Spans
Advantages Disadvantages
Superiors can delegate Danger of supervisors
to the subordinates loss of control
Clear policies can be Tendency of overloaded
made & implemented superiors to become
Subordinates must be decision bottlenecks
selected carefully Requires exceptional
quality managers
Factors influencing the Span of Control
Narrow span:
Little or no training of subordinates
Inadequate or unclear authority delegation
Unclear plans
Non verifiable objectives & standards
Fast changes in external & internal environment
Ineffective interaction of superior & subordinate
Factors influencing the Span of Control

Narrow span:
Use of poor/inappropriate communications
Ineffective meetings
Grater no.of specialists
Complex tasks
Immature subordinates
Subordinates unwillingness to assume
responsibilty & reasonable risks
Factors influencing the Span of Control

Wide span:
Thorough training of subordinates
Clear delegation & well defined tasks
Well defined plans for repetitive operations
Verifiable objectives used as standard
Effective meetings
Competent & trained manager
Simple tasks
Mature subordinates
 Organizing Process
Establishing enterprise objectives
Formulating supporting objectives, policies & plans
Identifying & analyzing the activities
Grouping these activities in the light of the human &
material resources available & the best way of using them
Delegating to the head of each group the authority to
perform these activities
Tying the group together through authority relationships
& information flows
 Organization Structure
Grouping people and activities into
departments by function, territory or
geography , customer group or by product
Product organization grouping, Matrix or grid
organization, project organization and the
strategic business unit

Organization structure for global environment

 Functional Departmentation
Production, Sales, Finance, Marketing etc.
It is the most widely used basis for
organizing activities
Coordination of activities among
departments may be achieved through
rules & procedures, goals & budgets,
organizational hierarchy etc.
 Functional Departmentation
Advantages Disadvantages
Logical reflection of Slow adaptation to
functions changes in environment
Follows principle of Reduces coordination
specialization Between functions
Simplifies training Overspecializes and
Furnishes means of narrows viewpoints
tight control at top Limits development
 Territorial Departmentation
It is common for enterprises that operate
over wide geographic areas (Departmentation
based on territory or geography)
Activities in a given area or territory are
grouped and assigned to a Manager.

Most oftenly used in Sales, Production (not in

Finance, which is usually located at the headquarters)
 Territorial Departmentation
Advantages Disadvantages
Places responsibility at Requires more persons
lower level with GM abilities
Places emphasis on local Increases problem of
markets & problems top mgmt control
Improves coordination Tends to make mainte-
Takes advantage of nance of economic
economies of local central services difficult
operations
 Departmentation by Product
Grouping activities on the basis of products
or product lines (especially in large, multiline
enterprises)
This structure permits top management to
delegate to a division executive extensive
authority over the manufacturing, sales,
service and engineering functions that relate
to a product or product line.
 Departmentation by Product
Advantages Disadvantages
Places attention and Requires more persons
effort on product line Tends to make
Improves coordination maintenance of
of functional activities economical central
Places responsibility for services difficult
profits at the division
level
 Matrix Organization
Matrix Organization is a combination of
functional and project or product
patterns of departmentation in the same
organization structure
This form is common in Engineering and
Research and Development organizations
 Matrix Organization
Advantages Advantages
Oriented towards end Conflict in organization
results authority exists
Professional Requires mangerial
identification is effectiveness in
maintained humasn relations
Pinpoints product- Possibility of disunity
profit responsibility of command exists
Management By Objectives(MBO)
A comprehensive managerial system that
integrates many key managerial activities
in a systematic manner and is consciously
directed towards the effective & efficient
achievement of objectives
It is a planning & controlling device
It is a comprehensive, goal driven,
success oriented management system
 Benefits of MBO
Motivational aspects of clear goals
Improvement of managing through results
oriented planning
Clarification of organizational roles & structures
Encouragement of commitment to goals
Development of effective controls that
measure results & lead to corrective actions
Management By Objectives(MBO)
MBO has been widely used for performance
appraisal & employee motivation
It results in better managing
It encourages people to commit to the goals
It helps develop effective controls
 Line & Staff Relationship
Line authority is the relationship in which a superior
exercises direct supervision over a subordinate
It gives a superior a line of authority over a subordinate

Functional Authority is the right delegated to an

individual or a department to control specified
processes, practices, policies or other matters
relating to activities undertaken by persons in other
departments (with specialized knowledge, ability to
supervise specified processes etc.)
 Line & Staff Relationship
Scalar Principle : The clearer the line of
authority, the clearer will be the responsibility
for decision making & the more effective will
be the organizational communication.
Staff Relationship: The nature of staff
relationship is advisory. The function of people in a
pure staff capacity is to investigate, research and
give advice to line managers
Power & Distribution of Authority
Power is the ability to induce or influence the
beliefs or actions of other persons or groups

Authority is the right in a position to exercise

discretion in making decisions affecting others

Power may also come from the expertise of a

person or a group.
Delegation & Decentralization of Authority

Decentralization is the tendency to disperse

decision making authority in an organized structure.
It is a fundamental aspect of delegation

Authority is delegated when a superior gives a

subordinate discretion to make decisions

Delegation is in a way an elementary act of managing

Poor delegation is one of the causes of managerial failures

 The Process of Delegation
Determining the results expected from a position

Assigning tasks to the position

Delegating authority for accomplishing these tasks

Holding the person in that position responsible for
the accomplishment of the tasks
 Delegation
Delegation is, in a way, an elementary act of managing

Failures in effective delegation are often due to

personal attitudes

Poor or inept delegation is one of the causes of

managerial failures
Weak delegation can be overcome by considering the tasks &
goals, maintaining open communication, establishing proper
controls & motivating through appropriate rewards.
 Successful Delegation
Define assignments & delegate authority in
light of results expected
Select the person in light of the job to be done
Maintain open lines of communication
Establish proper controls
Reward effective delegation and successful
assumption of authority
 Organizing
In Organizing, there is no one best way.

It depends on the specific situation.

Establishment of objectives and orderly
planning are necessary for good organization.
Enterprises should develop and nurture an
appropriate organizational culture.