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Welcome to Bus 211 (Introduction to Management)


6 Study Session 6: Organising Function of Management

Study Session 6: Organising Function of



You would recall that the word Organising had earlier been introduced to you in Study Session One of
Module One as one of the functions of management. You also learnt from the previous session that
before you carry out any business activity you must plan. After planning then comes organisation. This
session will teach you how to organise your business or your organisation. All these will be useful when
you want to find out how well you have done and that will be covered in Session Three of this module.

Learning Outcome for Study Session 6

After studying this session, you should be able to:
6.1 Define and use correctly all the key words printed in bold.
6.2 Highlight characteristics of organising
6.3 Discuss Theories of Organisation.
6.4 Explain Methods of Structuring
6.5 Explain and draw organisation charts
6.6 Discuss merits and demerits of the various charts.

6.1 Definition and Characteristics of Organising

BUS 211

1 Study Session 1: Meaning
and Significance of
2 Study Session 2:
Development of
Management Thoughts (Part
3 Study Session 3:
Development of
Management Thoughts (Part
4 Study Session 4:
Management Levels, Skills,
Responsibilities and Their
5 Study Session 5: Planning
Functions of Management
6 Study Session 6:
Organising Function of
7 Study Session7: Influencing
(Authority, Responsibility
and Accountability)
8 Study Session 8: Managerial
Decision Making
9 Study Session 9: Control
Functions of Management
10 Study Session 10:
Motivation and Human
Behaviour (Part one)
11 Study Session 11:
Motivation and Human
Behaviour (Part two)

Organisation can be defined as a social entity or as a process. As a social entity, organising is the
interaction of people in an organisation in a way to achieve a specific goal.

12 Study Session 12:

Leadership and Group

Organising is the grouping of people around a technology which is operated in order to convert inputs of
the environment into required goods and services for the society.

13 Study Session 13: Organic

Functions of Business

Organisation has the following characteristics:

14 Study Session 14:

Management Principles and

Interaction among people

Specific goal or objective to be achieved
Division of labour
Boundary must exist
Hierarchy of authority and responsibility
A two way communication.
Continuous existence of the organisation.
Accomplishment of goals by maintaining order through observations of rules, policies and




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As a process, organising involves the systematic way of establishing relationships among people, position
and physical factors in order to direct efforts towards common goals.
Structure or organisation structure is the orderly arrangement showing the authority and responsibility
relationship among people and positions. It also shows the formal communication channels.

An establishment is said to be unorganised when certain elements are lacking. What do you think
those elements are?
Organising as you were taught, is the systematic process of establishing relationships among
workers, the positions they occupy and the physical factors in such a way as to channel every ones
effort towards achievement of organisations goals. Some of the elements that could be lacking in
an unorganised business include the following: no division of labour, no interrelationship among
people, no communication between lower, middle and top management levels, absence of
hierarchy of authority and responsibility in the organisation.

6.2 Theories of Organisation

Approaches to design of organisation are varied and diverse. Four theories are categorised broadly as
classical, behavioural, organic, and contingency

6.2.1 The Classicalists

It encompasses scientific, administrative and bureaucratic management.
It has the following mechanistic characteristics
Hierarchical structure of control, authority, and communication. That is, pyramid of positions
from superior to subordinate.
Specialised differentiation of task well defined activities and responsibilities demanding
specialised competence and authority.
Obligation of position ultimate control rests at the top of hierarchy.
Rigidity in behavior maintained by rules, regulations, standard operating procedures, which
describe the exact manner in which duties are to be performed.
Loyalty to the concern and obedience to superior.

6.2.2 The Behaviorists

The behavioral approach argues that organisational effectiveness is achieved by arranging matters
so that people feel that they count; that they belong, and that work can be done more meaningfully.
More goes into an organisation design than rules and regulations and strict rationality. Some
characteristics include:
Informal structure
Less narrow specialisation
Less emphasis on hierarchy participation to be encouraged.

6.2.3 The Organic Theory

They criticize the classical mechanistic school and suggested:
Minimum of formal division of labour
The emphasis in hierarchy communication consists of information and advice rather than
decision and instruction.
Vertical differentiation according to rank and role but flexible and functional according to skill and
professional training.
Temporary task forces in which membership switches as needs and problems change.
Commitment to the organisations task seen to be more important than loyalty and obedience.




6.2.4 Contingency Theory

Contingency approach to organisation says that there is no best method to design an organisation. It
suggests various considerations that determine whether organisation will be mechanistic or organic.
These factors include:
The strategy of the organisation. The strategy in use by the organisation affects organising. Strategy
means long term setting of objectives and designing appropriate methods of harnessing resources to
achieve such goal.

The size and complexity of the firm A firm with small size may go mechanistic but a complex
organisation needs to be organic to be able to achieve results.

Environment A stable environment may make mechanistic structure suitable, while a dynamic,
turbulent environment required organic designing in order to accommodate changes.
Technology The technology in use affects structuring. For a routine technology in large batch
production, mechanistic structuring is suitable while complex process technology may need less rigidity
hence organic structuring.

Values of managers The personality of the manager, his background, knowledge, education and
experience determines his use of organic or mechanistic design.

The values of subordinates Likewise the subordinates desire for independence, motivation, skill,
willingness to assume responsibility, education, experience, knowledge all affects the manner the
organisation is designed.

Your manager is given the responsibility of reorganizing your company for better productivity. He
seeks your opinion in the choice of organisation theory to apply. What would be your suggestion
and why?
There are various reasons behind any choice of organization theory that can be applied out of the
four discussed. However, contingency approach seems to be more realistic because it teaches you
to consider some important factors before deciding whether your company should be mechanistic
or organic. Contingency approach says that there is no best way to organize and that it depends
on the circumstances, hence factors such as: values of managers and supervisors, size and
complexity of the firm, the environment, existing technology, and type of strategy to be

6.3 Methods of Structuring

There are many methods of structuring an organization. An organization can be structured in either a
simple or complex method.

6.3.1 Simple Structure

This involves very little structure and is typically used to accomplish a single function. Examples
are artisans shop. It is often found in entrepreneurial situation in which the organisations need change
Coordination and task assignment are handled personally by the entrepreneur.

Fig.6.3.1 Simple Structure Organisation:




Ease of control
Adaptation to market and organisation needs
Rapid decision making
Informality in relationship
Difficult in dealing with complex environment
Overload of owner/manager
Solving only short term problems
Failure to develop other managers

6.3.2 Functional Structure

This is division of labour or departmentation of organisation into identifiable specialised portions of the
entire task. The organic functions of business include production, marketing, finance, and personnel.
Fig. 6.3.2 Functional Structure

As the goals of organisations differ, organic functions performed by business organisation also
differ, for example, a wholesale establishment does not produce, hence production department will not
be in the structure.

Clarity in task assignment
Opportunity for specialization
It facilitates supervision of work
It enhances the provision of required skill and experience for workers.

It narrows the scope of experience of managers
It does not facilitate effective coordination
Difficulty in determining accountability and judging performance.

6.3.4 Divisional Organisation

The size of the organisation and diversity of products makes functional organisation unwieldy.
An organisation arrangement that enables functional specialists to focus their attentions on the
unique technologies and problems of a single product/market therefore becomes increasingly
Similarly, as the geographic distribution of the companys market expands, the logistics of
managing widely separated sales centres becomes burdensome if handled on a centralised functional





Patterns of divisional organisation could be either by product, geographical location, customers,

process, equipment, time or by a mixture of more than one structure.

Merits of Divisional Structure

Suited for growing organizations
Meaningful delegation of decision making
Effective coordination
Frees top management of work overload
Adaptation to local peculiar needs.

Demerits of Divisional Structure

Competition for resources causes conflict and suboptimal performance.
High cost of structure
Interest of division may conflict with overall organisational interest.

By Product: It entails establishment of division that will be responsible for design, engineering,
and manufacturing of different products. The notion is that products manufactured are different, and
therefore requires different production and marketing strategies.
Fig 6.3.4 Organisational Structure by Product

By Geographical Location: This type of structure is based on geographical locations, and it is

used by large organizations whose activities are physically or geographically dispersed.

By Customer: This type of structure is for organizations with different customers with peculiar
needs and requirements.




Process: This type of structure is according to specific production processes performed. For
example a canning factory processing cooked meat from raw beef may have different processes thus.

Equipment: This type of structure is according to equipment used. It is related to process, where
arrangements are grouped around equipment utilized, mechanic working furniture and so on.

Time: This type of structuring is for organisation working for unusually long hours and individuals are
different, performing shift work.

Mixed Structure: This is a combination of the various structures identified into one structure.

Product A




6.4 Matrix Organisation

It is a form of grouping used by highly technical and diversified organizations. It is a combination
of product and functional grouping.
The structure requires two managers, the project managers and functional managers to exercise
equal authority over the use of organisation resources.
The project mangers exercise horizontal authority while the functional managers exercise
vertical authority.


It enables organisation to utilize specialised staff

Technical excellence can be achieved with innovation
Flexibility to changing environment
Broad experience for managers




Conflict of authority arising from violation of unity of command principle.
Stress on the part of subordinates.

6.5 Organisation Chart

It is a diagram showing the functions and departments in an organisation as well as how they are
It reveals the following:

functions performed through labeling

grouping of function
authority responsibility relationship
levels of management.

6.5.1 Types of Organisation Charts

There are various ways organization chart can be drawn, and they include the following:

Vertical Charts: Pyramid with authority proceeding from top down to the lower levels.

Horizontal charts: the line of authority flows horizontally

from left to right. it is an attempt to deemphasis hierarchy of

Circular Chart: Reveals org. in form of circle with spheres within spheres, with size of each sphere
representing the comparative level of authority and responsibility.




6.5.2 Merits of Charts

Provide information relating to organisation activities at a glance
Assist O & M department (organisation & method dept) in carrying out their functions. They
design structure and method of work for organisation.
It may reveal defects, conflicts in arrangement and thus appropriate modification made.
Pinpoint where a person may be found.

6.5.3 Demerits
Inflexibility Environmental changes may render it useless
Confusion as a result of bad charts
Cost the cost of developing charts may out way its benefits.
Lack of information regarding informal groups.

Summary of Study Session 6

1. Organisation can be termed to be formal or informal structure of specialisation, saddle with

authority and responsibility through effective communication in order to accodmplish specific
goals or objectives.
2. However, there is no consensus on a particular theory or one best way that established approach
to organisation. Therefore, each organisation adopts its own best way to accomplish its goals
while forms of organisational structure like simple, functional, matrix and divisional were
3. Again, organisation can be more effective and efficient in service delivery by adopting patterns of
divisional organisation such as; by product, geography, customer, process, equipment, time and
mixed designs.
4. In addition, organizational chart as a visual device was described as a diagram showing
relationship between functions and departments in an organization while vertical, horizontal and
circular were considered as various forms of organizational charts with their merits and

Self Assessment Questions (SAQs) for study session 6

Now that you have completed this study session, you can assess how well you have achieved its Learning
Outcomes by answering the following questions.
Write your answers in your study diary and discuss them in your Tutorial at the next study support
Meeting. You can check your answers with the Notes on the Self Assessment Questions at the end of
the module.

Self Assessment Questions (SAQs) for Study Session 6

SAQ 6.1 (tests Learner Outcome 6.1)
Define organization?

SAQ 6.2 (tests Learner Outcome 6.2.)

Mention and explain five characteristics of organization

SAQ 6.3 (tests Learner Outcome 6.3.)



SAQ 6.3 (tests Learner Outcome 6.3.)

Briefly explain any four theories of organization known to you.

SAQ 6.4 (tests Learner Outcome 6.4)

Briefly explain methods of organizational structuring known to you

SAQ 6.5 (tests Learner Outcome 6.5)

With the aid of example, define functional structure

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