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Principles of Management
Chapter 4: Organizing
Organizing Function of Management
Organizing is the function of management which follows planning
...
All the three resources are important to get results
...
According to Chester Barnard, “Organizing is a function by which the
concern is able to define the role positions, the jobs related and the co- ordination
between authority and responsibility
...

A manager performs organizing function with the help of following steps:1
...
For example, preparation of accounts, making
sales, record keeping, quality control, inventory control, etc
...

2
...
This
organization of dividing the whole concern into independent units and departments is
called departmentalization
...
Classifying the authority - Once the departments are made, the manager likes to
classify the powers and its extent to the managers
...
The top management is into
formulation of policies, the middle level management into departmental supervision
and lower level management into supervision of foremen
...
This helps in
achieving efficiency in the running of a concern
...

4
...
Each individual is made aware of his
authority and he/she knows whom they have to take orders from and to whom they
are accountable and to whom they have to report
...


Importance of Organizing Function
1
...
This division of work is helping in
bringing specialization in various activities of concern
...
Well defined jobs - Organizational structure helps in putting right men on right
job which can be done by selecting people for various departments according to
their qualifications, skill and experience
...

3
...
This can be done by clarifying the
powers to every manager and the way he has to exercise those powers should be
clarified so that misuse of powers does not take place
...
This
helps in increasing productivity
...
Co-ordination - Organization is a means of creating co- ordination among
different departments of the enterprise
...
Harmony of work
is brought by higher level managers exercising their authority over interconnected
activities of lower level manager
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Authority responsibility relationships can be fruitful only when there is a formal
relationship between the two
...
There should be
co- ordination between different relationships
...
There is a saying,
“Authority without responsibility leads to ineffective behavior and responsibility
without authority makes person ineffective
...

6
...
The roles to be performed by different managers are clarified
...
This all leads to efficient and
effective administration
...
Growth and diversification - A company’s growth is totally dependant on how
efficiently and smoothly a concern works
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In addition to this, a company
can diversify if its potential grows
...
This is possible through a set of formal structure
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Sense of security - Organizational structure clarifies the job positions
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Co- ordination is possible
...
This is very important for job- satisfaction
...
Scope for new changes - Where the roles and activities to be performed are clear
and every person gets independence in his working, this provides enough space to
a manager to develop his talents and flourish his knowledge
...
This scope for bringing new changes into the
running of an enterprise is possible only through a set of organizational structure
...
To organize in an effective manner, the
following principles of organization can be used by a manager
...
Principle of Specialization
According to the principle, the whole work of a concern should be divided
amongst the subordinates on the basis of qualifications, abilities and skills
...

2
...
This can be
done by clearly defining the duties, responsibilities, authority and relationships of
people towards each other
...
For example, the primary functions of production, marketing and
finance and the authority responsibility relationships in these departments should
be clearly defined to every person attached to that department
...

3
...
According to this principle, a manager should be able to handle
what number of employees under him should be decided
...
There are two types of span
of control:a
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The features of
this span are:a
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Prompt response from the employees
c
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Better supervision
e
...
Suitable for repetitive jobs
According to this span, one manager can effectively and efficiently handle
a large number of subordinates at one time
...
Narrow span of control- According to this span, the work and authority
is divided amongst many subordinates and a manager doesn't supervises
and control a very big group of people under him
...

The features are:a
...
which requires craftsmanship, there
narrow span is more helpful
...
Co-ordination is difficult to be achieved
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Communication gaps can come
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Messages can be distorted
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Specialization work can be achieved
...
Managerial abilities- In the concerns where managers are capable,
qualified and experienced, wide span of control is always helpful
...
Competence of subordinates- Where the subordinates are capable and
competent and their understanding levels are proper, the subordinates tend
to very frequently visit the superiors for solving their problems
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Hence wide
span is suitable
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Nature of work- If the work is of repetitive nature, wide span of
supervision is more helpful
...

f
...
In such cases, wide span of control is
suitable and the supervisors can manage and control large number of subordinates at one time
...
Degree of decentralization- Decentralization is done in order to achieve
specialization in which authority is shared by many people and managers
at different levels
...
There are
certain concerns where decentralization is done in very effective way
which results in direct and personal communication between superiors and
sub- ordinates and there the superiors can manage large number of
subordinates very easily
...

4
...

With a chain of authority available, wastages of resources are minimized,
communication is affected, overlapping of work is avoided and easy organization
takes place
...
As the authority flows from top to
bottom, it clarifies the authority positions to managers at all level and that
facilitates effective organization
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Principle of Unity of Command
It implies one subordinate-one superior relationship
...
This helps in avoiding
communication gaps and feedback and response is prompt
...

Authority Flows from Top to Bottom

Managing Director

↓
Marketing Manager

↓
Sales/ Media Manager

↓
Salesmen

According to the above diagram, the Managing Director has got the highest level
of authority
...
From this chain of hierarchy, the official chain
of communication becomes clear which is helpful in achievement of results and
which provides stability to a concern
...

Classification of Organizations
Organizations are basically classified on the basis of relationships
...
Formal Organization - This is one which refers to a structure of well defined
jobs each bearing a measure of authority and responsibility
...
This kind of organization is an arbitrary set up in which
each person is responsible for his performance
...

2
...
Informal
organizations develop relationships which are built on likes, dislikes, feelings and
emotions
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There is no conscious effort made to have
informal organization
...

Relationship between formal and informal organizations
For a concerns working both formal and informal organization are important
...
For an efficient organization, both formal and
informal organizations are required
...
Formal
organization can work independently
...
Formal and informal organization helps in bringing efficient
working organization and smoothness in a concern
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They interact
and communicate amongst themselves
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When several people work together for achievement of
organizational goals, social tie ups tends to built and therefore informal organization
helps to secure co-operation by which goals can be achieved smooth
...

Line Organization
Line organization is the oldest and simplest method of administrative organization
...
The line of command is carried out from top to bottom
...
In this type of organization,
the line of command flows on an even basis without any gaps in communication and coordination taking place
...

2
...

4
...

Line of authority flows from top to bottom
...

Unified control by the line officers can be maintained since they can
independently take decisions in their areas and spheres
...

Merits of Line Organization
1
...

2
...

3
...
Unified control
ensures better discipline
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Fixed responsibility- In this type of organization, every line executive has got
fixed authority, power and fixed responsibility attached to every authority
...
Flexibility- There is a co-ordination between the top most authority and bottom
line authority
...
This flexibility gives satisfaction
of line executives
...
Prompt decision- Due to the factors of fixed responsibility and unity of
command, the officials can take prompt decision
...
Over reliance- The line executive’s decisions are implemented to the bottom
...

2
...
For example, expert
advices whatever decisions are taken by line managers are implemented in the
same way
...
Inadequate communication- The policies and strategies which are framed by the
top authority are carried out in the same way
...
The complaints and suggestions of lower
authority are not communicated back to the top authority
...

4
...
Therefore, the degree of effective co- ordination is less
...
Authority leadership- The line officials have tendency to misuse their authority
positions
...

Line and Staff Organization
Line and staff organization is a modification of line organization and it is more complex
than line organization
...
The power of command
always remains with the line executives and staff supervisors guide, advice and council
the line executives
...


MANAGING DIRECTOR

↓

↓

↓

Production Manager Marketing Manager Finance Manager

↓

↓

↓

Plant Supervisor

Market Supervisor

Chief Assistant

↓

↓

↓

Foreman

Salesman

Accountant

Features of Line and Staff Organization
1
...
Staff Assistants- P
...
to Managing Director, Secretary to Marketing
Manager
...
Staff Supervisor- Operation Control Manager, Quality Controller, PRO
2
...
It is more
complex than line concern
...
Division of work and specialization takes place in line and staff organization
...
The whole organization is divided into different functional areas to which staff
specialists are attached
...
Efficiency can be achieved through the features of specialization
...
There are two lines of authority which flow at one time in a concern :
a
...
Staff Authority
Power of command remains with the line executive and staff serves only as counselors
...
Relief to line of executives- In a line and staff organization, the advice and
counseling which is provided to the line executives divides the work between the
two
...

2
...
The planning and investigation which is related to

3
...


5
...


7
...


different matters can be done by the staff specialist and line officers can
concentrate on execution of plans
...
This
way every officer or official can concentrate in its own area
...
This
feature helps in bringing co- ordination in work as every official is concentrating
in their own area
...
This gives a wide scope to
the line executive to bring innovations and go for research work in those areas
...

Training- Due to the presence of staff specialists and their expert advice serves as
ground for training to line officials
...
This in itself is a training ground for them
...
This relationship automatically ends up the line
official to take better and balanced decision
...
Control and its
effectively take place when co- ordination is present in the concern
...
This
serves as effective control in the whole enterprise
...
Lack of understanding- In a line and staff organization, there are two authorities
flowing at one time
...
As a result, the
workers are not able to understand as to who is their commanding authority
...

2
...
At times the staff specialist also provides wrong decisions which the line
executives have to consider
...

3
...
The factors of designations, status influence sentiments which are
related to their relation, can pose a distress on the minds of the employees
...

4
...
This proves to be costly for a concern with
limited finance
...
Assumption of authority- The power of concern is with the line official but the
staff dislikes it as they are the one more in mental work
...
Staff steals the show- In a line and staff concern, the higher returns are
considered to be a product of staff advice and counseling
...
The satisfaction of line
officials is very important for effective results
...
This is an organization in which we can define as a system in
which functional department are created to deal with the problems of business at various
levels
...
This helps in maintaining quality and uniformity of performance of different
functions throughout the enterprise
...
W
...
For example, the
functional head and Marketing Director directs the subordinates throughout the
organization in his particular area
...

Features of Functional Organization
1
...

2
...

3
...

4
...

5
...

Merits of Functional Organization
1
...

2
...
Checks and balances keep the authority within
certain limits
...

3
...

4
...

5
...

Demerits of Functional Organization

1
...
Therefore, co- ordination becomes
difficult
...
Lack of Co- ordination- Disciplinary control becomes weak as a worker is
commanded not by one person but a large number of people
...

3
...

4
...

They may not agree on certain issues
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Costly- Maintenance of specialist’s staff of the highest order is expensive for a
concern
...
In order to meet the
targets, the manager should delegate authority
...
Delegation is about entrusting
someone else to do parts of your job
...

Elements of Delegation
Authority - in context of a business organization, authority can be defined as the
power and right of a person to use and allocate the resources efficiently, to take
decisions and to give orders so as to achieve the organizational objectives
...
All people who have the authority should know what is the
scope of their authority is and they shouldn’t misutilize it
...
The top level management has
greatest authority
...
It explains how a
superior gets work done from his subordinate by clearly explaining what is expected
of him and how he should go about it
...
Delegating the authority to someone else doesn’t
imply escaping from accountability
...

1
...
A person who is given the responsibility should ensure that he
accomplishes the tasks assigned to him
...
Responsibility without adequate authority leads to discontent and
dissatisfaction among the person
...

The middle level and lower level management holds more responsibility
...
If he performs the tasks
assigned as expected, he is bound for praises
...


2
...
Accountability can not be delegated
...
The top level management is
most accountable
...
Accountability, in short, means being
answerable for the end result
...
It arises from
responsibility
...
Assignment of tasks and duties
2
...
Creating responsibility and accountability
Delegation of authority is the base of superior-subordinate relationship, it involves
following steps:1
...
He also has to define the result expected from the subordinates
...

2
...
It is for this reason; every
subordinate should be given enough independence to carry the task given to him
by his superiors
...
The subdivision of powers is very important to get
effective results
...
Creating Responsibility and Accountability - The delegation process does not
end once powers are granted to the subordinates
...
Responsibility is said to be the
factor or obligation of an individual to carry out his duties in best of his ability as
per the directions of superior
...
Therefore, it is
that which gives effectiveness to authority
...
Accountability, on the others hand, is the
obligation of the individual to carry out his duties as per the standards of
performance
...
Accountability arises out of responsibility
and responsibility arises out of authority
...

Therefore every manager, i
...
, the delegate has to follow a system to finish up the
delegation process
...


Relationship between Authority and Responsibility
Authority is the legal right of person or superior to command his subordinates while
accountability is the obligation of individual to carry out his duties as per standards of
performance Authority flows from the superiors to subordinates, in which orders and
instructions are given to subordinates to complete the task
...
In a way through exercising the control the superior is
demanding accountability from subordinates
...
If the above standards are not
accomplished, it is the marketing manager who will be accountable to the chief executive
officer
...
Accountability is a result of responsibility and responsibility is
result of authority
...

Differences between Authority and Responsibility
Authority

Responsibility

It is the legal right of a
person or a superior to
command his subordinates
...


Authority is attached to the
position of a superior in
concern
...


Authority can be delegated
by a superior to a
subordinate

Responsibility cannot be shifted and is
absolute

It flows from top to
bottom
...


Importance of Delegation
Delegation of authority is a process in which the authority and powers are divided and
shared amongst the subordinates
...
This is how delegation of authority
becomes an important tool in organization function
...
The
importance of delegation can be justified by 1
...
This helps in reducing his work load so that he can work on
important areas such as - planning, business analysis etc
...


3
...


load on superior, he can concentrate his energy on important and critical issues of
concern
...
This affectivity helps a manager to prove his ability and skills in the best
manner
...
An organization functions as the authority flows from top
level to bottom
...
The flow of authority is from top to
bottom which is a way of achieving results
...
Through delegating powers, the subordinates
get a feeling of importance
...
Job satisfaction is an important criterion
to bring stability and soundness in the relationship between superior and
subordinates
...
Delegation of authority is not only
helpful to the subordinates but it also helps the managers to develop their talents
and skills
...
Through granting powers and
getting the work done, helps the manager to attain communication skills,
supervision and guidance, effective motivation and the leadership traits are
flourished
...

Delegation of authority is help to both superior and subordinates
...
With effective results, a concern can think
of creating more departments and divisions flow working
...
This helps in both virtual as well as horizontal
growth which is very important for a concern’s stability
...

Principles of Delegation
There are a few guidelines in form of principles which can be a help to the manager to
process of delegation
...
Principle of result excepted- suggests that every manager before delegating the
powers to the subordinate should be able to clearly define the goals as well as
results expected from them
...

For example, a marketing manager explains the salesmen regarding the units of
sale to take place in a particular day, say ten units a day have to be the target

sales
...

Principle of Parity of Authority and Responsibility- According to this
principle, the manager should keep a balance between authority and
responsibility
...

According to this principle, if a subordinate is given a responsibility to perform a
task, then at the same time he should be given enough independence and power to
carry out that task effectively
...
The authority
should be given in such a way which matches the task given to him
...

3
...
The manager at every level, no matter what is
his authority, is always responsible to his superior for carrying out his task by
delegating the powers
...
He will always remain responsible till the completion of task
...
If repairmen is not
able to get repair work done, production manager will be responsible to CEO if
their production is not completed
...
Principle of Authority level- This principle suggests that a manager should
exercise his authority within the jurisdiction / framework given
...
This principle
emphasizes on the degree of authority and the level upto which it has to be
maintained
...
All the important decision and actions at the lower level, all subjects and
actions at the lower level are subject to the approval of top management
...
The implication of centralization can be :1
...

2
...


3
...

Under centralization, the important and key decisions are taken by the top management
and the other levels are into implementations as per the directions of top level
...
Therefore in this case, decision making power remain in the hands of
father & son
...
In a decentralization concern, authority in
retained by the top management for taking major decisions and framing policies
concerning the whole concern
...

The degree of centralization and decentralization will depend upon the amount of
authority delegated to the lowest level
...

Decentralization is not the same as delegation
...
Decentralization pattern is wider is scope and the authorities are diffused to
the lowest most level of management
...
While decentralization is complete only when
fullest possible delegation has taken place
...

The general manager delegates this work to the personnel manager who is now
responsible for receiving the leave applicants
...
On the other hand, on the request of the personnel manager, if the general
manager delegates this power to all the departmental heads at all level, in this situation
decentralization has taken place
...

Decentralization is wider in scope and the subordinate’s responsibility increase in this
case
...

Implications of Decentralization
1
...

2
...
This way the organization is able to
process reserve of talents in it
...
In decentralization, diversification and horizontal can be easily implanted
...
In decentralization, concern diversification of activities can place effectively since
there is more scope for creating new departments
...


5
...

6
...

7
...
e
...

Centralization and decentralization are the categories by which the pattern of
authority relationships became clear
...
The larger the size of a
concern, a decentralization set up is suitable in it
...


Right to take decisions is shared
by top management and other
level of management
...


Scope is wide as the decision
making is shared by the
subordinates also
...


Freedom of
Work

Freedom is not given to the
subordinates as they have to
work as per the instructions of
their superiors
...


Nature

It is a routine function

It is an important decision of an
enterprise
...

No enterprises can work without
delegation
...


Grant of
Authority

The authority is granted by one
individual to another
...


Grant of
Responsibility

Responsibility cannot be
delegated

Authority with responsibility is
delegated to subordinates
...


Decentralization is total by
nature
...
e
...


Essentiality

Delegation is essential of all
kinds of concerns

Decentralization is a decisions
function by nature
...


Withdrawal

Delegated authority can be
taken back
...


Freedom of
Action

Very little freedom to the
subordinates

Considerable freedom

Decentralization can be called as extension of delegation
...




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