ORGANIZATION

- Meaning & Definition

- Principles of Organization
- Formal & Informal Organization
- Organization Structure & their Features
- Types of Organization
- Span of Management
- Factors influencing the Span of Management
- Authority & Responsibility

ORGANIZATION

Delegation

- Principles of Delegation
- Centralization & Decentralization & their Advantages & Disadvantages

Departmentation

- Significance of Departments
- Methods / Basis of Departmentation

Creative phase of planning

What is to be done?

Who will do it?

Since the work is done by no of people working
together, manager has to define

Who will do what?

What will be the relationship?
This aspect is taken up by the managers in the form of organizing.
Which is basically involves analysis of activities performed for
achieving organizational objectives.

Organization
Organization is the structural framework of duties

and responsibilities required of personnel in

performing various functions with a view to achieve
business goals through organization.
Definition
Louis Allen
Organization is the process of identifying and grouping work
to be performed, defining and delegating responsibility and
authority and establishing relationships for the purpose of
enabling people to work most effectively together in accomplishing
objectives.

Organization
To Sum-up

Organization is the establishment of authority

relationship among persons so that it helps in
the achievement of organizational objectives.

Characteristics of Organization
Division of work
Co-ordination
Common objectives
Co-operative relationship
Well-defined authority-responsibility
relationships

Principles of Organization

Taylor and Fayol have derived certain principles on the basis

of their past experiences for a sound business organization.
Objective
Specialization
Co-ordination
Authority and Responsibility
Definition
Span of control
Balance
Continuity
Uniformity
Unity of command
Exception
Simplicity

Efficiency
Scalar Principle

Formal & Informal organization:

Differen
ce

Formal

Informal

Consciously
Spontaneous personal
Meanin
coordinated
g
relationships
relationships
Delegation of
Personal needs,
authority,
Basis
Attitudes, Like &Dislike
Procedures &
etc
Regulations
Stable &
Unstable &
Nature
Predictable
Unpredictable
Definite structure & Structure less and full
Form
well defined jobs
of discretions
Source
of
Informal, without

Organization Structure:
Every business sets some goals
Some activities are to performed.
Classified and Grouped.
Assigned to individuals / groups.

Authority and Responsibility is assigned

A system of Co-ordination is established among various

activities & persons

Framework of organization structure.

Developing an Organization Structure:

The two variables i.e.

Basic Structure & Operating

Mechanism
The Basic structure involves issues such as how the work of the
organization is to be divided and assigned among positions, groups,
departments, divisions etcand how to bring the required co-ordination
for achieving organizational goals.
The Operating mechanism includes factors like
information system, control procedures & application of
organizational principles and practice.

Developing an Organization Structure:

Basic Structure

Operating Mechanism

How the work of the

organization is to be divided

Information system

Assigned among positions,

groups, departments,
divisions

Control procedures

How to bring the required

co-ordination

Application of organizational
principles and practice.

Role of Organization Structure

Encourages efficiency
Communication
Optimum utilization of resources
Job satisfaction
Creative thinking
Facilitates management

Features of a good organization structure

Clear Line of Authority
Less Managerial Levels

Simple and Flexible

Types of Organization
An organization structure is mainly concerned with the allocation of
duties and responsibilities and delegation of authority. It represents
hierarchial arrangement of various positions in the organization.
Line organization.

Line organization
This organization is a vertical structure where one person delegates
authority to his subordinate and who in turn delegates to his
subordinate and so on.
Authority flows vertically from top level person to all the persons
responsible for the execution of work.
Responsibility, on the other hand, flows upwards. Everybody is
responsible for his work and is accountable to his boss.
Since authority and responsibility flows in an

unbroken straight line

it is called line organization.

Line organization
Chief Executive Officer
G.M
R&D

RM-1

G.M.
Finance

G.M.
Marketing

G.M.
Production

RM-2

RM-3

RM-4

ASM -1

ASM -2

ASM -3

G.M.
Human
Resources

RM-5

Types of line organization

The line organization is of two types

Pure line organization &

Departmental line organization

Types of line organization

Pure line organization
Production Manager

Foreman - A

Worker-1

Foreman - B

Worker-2

Foreman - C

Worker-3

Worker-4

Types of line organization

Departmental line organization

General Manager

Marketing
Manager

Finance
Manager

Production
Manager

Deputy Manager -1

Supervisor-1
Worker-1

Personnel
Manager

Deputy Manager -2

Supervisor-2

Supervisor-3

Worker-2

Supervisor-4
Worker-3

Merits of line Organization

Simplicity
Identification of authority and responsibility
Co-ordination
Effective communication
Economical
Quick decisions
Unity of command
Effective control and supervisions
Flexibility

Demerits of line organization

Excess work / overloading
Lack of specialization
Lack of co-ordination
Lack of initiative
Favoritism
Instability

Staff / functional organization

The functional organization often called functional foremanship was
originated by F. W. Taylor to bring about specialization of
management.
Taylor suggested the division of supervisory functions into two
groups

Office specialists & Shop specialists.

Staff / Functional Organization

Office specialists:
They are concerned with the design, scheduling recording and planning
of work.
The office staff consists of following persons.
Route clerk
Instruction card clerk
Time and cost clerk
Disciplinarian
Shop specialists:
They guide and supervise the work in the factory.
The following are the shop specialists.
Gang boss
Speed boss
Repair boss
Inspector

Merits of staff Organization

Specialization
Increase in efficiency
Flexibility
Relief to top executives
Economy of operations
Better supervisions
Scope for growth

Demerits of Staff Organization

Conflict in authority
Lack of co-ordination
Difficulty in fixing responsibility
Delay in taking decisions
Expensive
Group rivalries

Line & Staff Organization

Both line and staff organization suffers from some drawbacks.
Line organization is autocratic and Staff organization has loose control.
Hence, there was need for a new system which could avoid the defects of
these systems. This need has fulfilled by

Line and Staff Organization

The staff which is responsible for Planning and the Line for the Actual
execution of the work. The staff is attached to the line to assist the line
in discharging its duties efficiently.
This method clearly distinguishes the difference between two aspects of
administration i.e. Planning and Execution.
The staff officials prepare plans and recommend to the line officials who
implement them with the help of their departmental personnel. Thus, the
staff members are thinkers while the line officials are doers.

Merits of Line &staff Organization

Specialization
Better Discipline
Sound Decisions
Growth & Expansion
Development of employees
Quick actions

Demerits of Line & Staff Organization

Expensive
More dependence on staff
Lack of Responsibility

Demerits of Line & Staff Organization

Conflicts between Line & Staff
The line view point:
The line managers have the following to say about staff people.
Staff authority undermines line authority and interferes in the
work of line managers.
Advice given by the staff is not always sound. Advice is only
theoretical and unrealistic.
Staffs takes credit if the programme is successful & blame the line
if it is not successful.

Demerits of Line & Staff Organization

Conflicts between Line & Staff
The Staff view point:
The staff authorities have the following complaints against line officers
Line officers do not make proper use of advice given by staff.

Line officers are slow to accept new ideas and they

resist change.
Line officers reject the advice without giving
reasons.

Improving of Line & Staff

The limit of authority of both line and staff should be prescribed
clearly.
Staff authority should be restricted to a purely advisory role.
Line officers should give due consideration to staff advice. They
should state reasons in case they cannot accept the advice.
The advice of staff should be realistic and practicable.
Both line staff should try to understand each others
responsibilities and difficulties and try to co-operate with each other for
achievement of enterprise objectives.

Line and Staff Organization:

Line Organization Staff Organization
Centralized authority

Decentralized authority

One superior- One

subordinate

Several advisors to one

subordinate

Responsibility is always
fixed

No fixed responsibility

Less expensive

More expensive

Suitable for Small Business

Suitable for Big Business

Span of Management
Space between two supports of a
structure
When applied to management span refers to the numbers of
subordinates a manager or superior can supervise / manage or
control effectively and efficiently.

Therefore, refers to the optimum number of

subordinates that a manager or supervisor can
manage or control effectively.

Span of
Supervision

Span of Control
Span of Management
Span of Responsibility

Span of Authority
Span of Direction

Factors influencing the Span of Supervision:

The capacity and ability of the executive
Competence and training of subordinates
Nature of work
Degree of decentralization and extent of delegation
Quality of planning
Effectiveness of communication system
Degree of physical dispersion
Rate of change

Difference Between Authority and Responsibility

Differen
ce
Meaning
Basis
Delegatio
n
Duration

Authority

Difference

Authority

Responsibility
Responsibility

It is the right of a
superior to command
the subordinate
It normally arises either
from legal provisions &
formal contract.
Can be delegated from a
superior to a
subordinate

It is the obligation of a
subordinate to perform an
assigned task.
It arises from superior
subordinate relationship.

It may continue for a

long period

It is over when the assigned

task is completed

It can not be delegated.

Delegation:
Delegation is an administrative process of getting things done by
others by giving them responsibility.
Board of Directors.
Chief executive

Marketing
Manager

Production
Manager

Finance
Manager

HR
Manager

Delegation
Every superior delegates the authority to subordinates for getting a
particular work done. The process goes to the level where actual work
is executed.

A manager is not judged by the work he actually performs on

his own but the work he gets done through others. He assigns
duties and authority to his subordinate and ensures the
achievement of desired organizational goals.

Delegation
Allen
The entrustment of a part of the work or responsibility and
authority to another, and the creation of accountability for
performance.
Hiner O.S.
Delegation takes place when one person gives anther the right to
perform work on his behalf and the second person accepts
corresponding duty / obligation to do what is required of him.

Characteristics of Delegation
Delegation takes place when a manager grants some of his powers
to
subordinates.
Delegation occurs only when the person delegating the authority
himself that authority.
Only a part of authority is delegated to subordinates.
A manager delegating authority can reduce, enhance or take it back.
He exercises full control over the activities of the subordinates even
after delegation.
It is only the authority which is delegated and not the responsibility.

Centralization & Decentralization

They refer to the location of DECISION-MAKING authority in
an organization.
Centralization implies the

Concentration of authority at the top level

While Decentralization means

dispersal of authority
throughout the organization.

Centralization & Decentralization

Henry Fayol
everything which goes to increase the importance

of the subordinates role is decentralization;

everything which goes to reduce it is centralization.

Advantages of Centralization:
Effective utilization of talents of the top leader.

Helpful in achieving uniformity of action.

Effective in handling emergencies.

Duplication of functions and facilities are

minimized.

Disadvantages of Centralization:
Destroys individual initiative

Over burden of few

Slow down the operation

No scope for specialization

Advantages of Decentralization:
Reduces burden of top executives

Quick Decisions

Facilitates diversification

Motivation of subordinates

Disadvantages of Decentralization:
Lack of co-ordination

Difficulty in control

Expensive

Lack of able managers

Centralization Vs Decentralization
Sl
No
1

Centralization

Authority in the hands of top

Management
Minimum delegation
Span of control is narrow,
management levels are
many, and Organization
tends to centralized.
Most of the subordinates
under this system perform
routine activities. They
cannot perform meaningful
and challenging work.
Hence, they are dissatisfied.

Sl
No

1
2

Decentralization

Authority in the hands of

subordinates
Extensive delegation
Span of control is wider,
Management levels are only
few and organization tends to
be decentralized.
Under this system,
subordinates are freedom to
act & freedom to make
decisions. This increases
their dedication,
commitment, their feeling of
status and loyalty towards
organization. This leads to

Departmentation
Process of grouping of similar activities of a
business concern into small units for the purpose of
facilitating administration.
Definition
Koontz & ODonnell
Departmentation is a process of dividing the large
monolithic functional organization into small and flexible
administrative units.

Significance of Departmentation
It increases the efficiency of the enterprise since
various activities are grouped into workable units.
It renders the task of fixation of accountability for
results very easy since activities are well defined and
responsibilities are clearly laid.
It provides for fixation of standards for performance
appraisal and thus ensures effective control.
It creates opportunities for the departmental heads to
take initiative and thus develop managerial facilities.

Methods / Basis of Departmentation:

Functional Departmentation.
Product wise Departmentation.
Territorial / Geographical Departmentation.

Customer wise Departmentation.

Process / Equipment wise Departmentation.

Methods / Basis of Departmentation:

Functional Departmentation.
Managing Director

GM
Finance

GM
Marketing

GM
Production

GM
R&D

Methods / Basis of Departmentation:

Product wise Departmentation.
Director Marketing

Mktg Mgr
Agro
products

Mktg Mgr
Electronics
products

Mktg Mgr
Audio
products

Mktg Mgr
Video
products

Methods / Basis of Departmentation:

Geographical Departmentation.
G M ( Marketing)

Mktg Mgr
North
Region

Mktg Mgr
Southern
Region

Mktg Mgr
Western
Region

Mktg Mgr
Eastern
Region

Boundary less organization

Aboundary less organizationis a contemporary approach

inorganization

design. It is an organization that is not

defined by, or limited to, the horizontal, vertical, or external

boundaries imposed by a predefined structure. This term was
coined

by

formerGeneral

ElectricchairmanJack

Welchbecause he wanted to eliminate vertical and

horizontal boundaries within the company and break down
external barriers between the company and its customers
and suppliers.

Many companies are finding that a flexible and unstructured

approach are effective means to running a company

Virtual Organization
Virtual organizations
outsource all non-essential
functions

A flexible network of independent entities linked by

information technology to share skills, knowledge and
access to others' expertise in non-traditional ways
A form of cooperation involving companies,
institutions and/or individuals delivering a product or
service on the basis of a common business
understanding. The units participate in the
collaboration and present themselves as a unified
organization.

Thanking You