Concept of Organization
Organizing is the process of maintaining structural relationships among various positions of an enterprise. In other words, it is the process of accumulating together all the organizational resources and establishing productive relation among them to achieve predetermined objectives. The organizational resources involve money materials, machines, and manpower. It involves proper division of work, assigning job to employees, formulation of rules and regulation, developing working procedures and system. It also involves defining authority and responsibility of all the employees of the enterprise.
Principles of Organization
A sound organization can be stated by keeping in view some basic principles. The major principles of organization are:
- unity of objectives,
- authority and responsibility,
- unity of command,
- scalar chain,
- span of control,
- personal ability
Importance of Organizing as a Management Function
Organization is the process of defining and grouping the organizational activities and establishing formal relationship among all the activities. An effective organization structure encourages for the expansion, promotion and diversification of business. The following are the common importance of organization:
- efficient and effective management,
- facilitates specialization,
- avoids overlapping and duplication,
- optimum use of resources,
- defines authority-responsibility relation,
- basis of coordination,
- establish channels of communication,
- leads to growth and diversification
- productivity and job satisfaction.
As a process, organizing involves classification of works into manageable units and establishing formal relationship among members. Organizing is a continuous process and involves series of activities rather than one-stop work. The steps of organizing process includes
- determination of objectives,
- determination of activities
- grouping of activities,
- establishing formal relationship,
- creation of managerial position,
- assignment of works
- establishment of communication and coordination
Concept: Organizational structure is concerned with development of hierarchy of positions from top level to subordinate levels of management of an enterprise. It involves creation of different departments and sections on the basis of nature of work. It maintains formal relationship among various positions of an enterprise, Importance of Organisational Structure: A good organizational structure encourages the expansion, promotion, and diversification of business. The common advantages of organizational structure are:
- effective management,
- develop specialization,
- avoid overlapping
- proper use of resources,
- defines authority and responsibility,
- and support for business,
Line Organizational Structure
Concept: In line organization structure there is direct line of authority from top level to the subordinate levels through unbroken chain of authority. In other words, all managers have direct control over their respective subordinates through the chain of command. In this structure, the business activities of an organization are divided into different departments on the basis of common nature of works. A departmental head is appointed in each department who is responsible for each and every activity of the concerned department
Advantages: The following are the main points of advantages of line organization:
- quick decision and implementation,
- maintain discipline,
- fixation of responsibility,
- flexibility in operation
- effective management,
- economic organization.
Disadvantages: The following are the main points of disadvantages of line organization:
- over loading on manger,
- lack of specialization,
- autocratic leadership,
- problems of coordination,
- lack of stability,
- unsuitable under present day environment.
Concept: In functional organization, all business activities of an enterprise are divided into a number of functions and each function is entrusted to a specialist Each specialist, to whom a function is entrusted, is known as functional specialist and authority delegated to each specialist is known as his functional authority. For, instance, the business activities of an enterprise might be divided into various functions ‘like production, personnel, marketing etc. In the similar manner, a particular function is entrusted to a functional specialist like production function to production manager, and so on.
Advantages: The following are some points of advantages of functional organizations:
- benefit of specialization,
- increase efficiency,
- healthy competition among experts,
- relief to executive,
- facilitates growth and expansion,
- suitable for present environment.
Disadvantages: The following, are some points of disadvantages of functional organisation are:
- multiple command system,
- lack of coordination,
- high adminin cost,
- delay in decision making
- spoil human relation,
- narrow outock specialists,
- shifting responsibility,
Line and Staff Organizational Structure
Concept: In line and staff organization structure, there is the provision of chain of commands, and besides, there is the provision of functional specialist to provide Line and Staff Organizational Structure suggestions to line managers in decisions making. Works of the organization are broadly divided into two: line and staff. The staffs are responsible for preparation af plans whereas line authorities are responsibly for implementation of plans. Ths structure is suitable for large scale organizations.
Advantages: The following are advantages of line and staff organization:
- managerial specialization,
- better coordination,
- limited functional authority,
- practical decision facilitates for growth,
- better utilization of resources,
- greater flexibility.
- problem of conflict,
- greater confusion,
- high costly structure,
- over dependence on staffs,
- in-effective staff
- lack of responsibility,
- complication for management
Meaning: The process of logical grouping of similar nature functions into manageable units for the purpose of overall coordination of organizational resources is departmentation. Departmentation divides the large and complete organizational functions into smaller units to complete the work efficiently. Works are divided into small manageable units according to their nature and entrusted to a departmental head. Departmental head is responsible for each and every work of the concerned department. Departmentation facilitates to maintain communication, coordination and control among all the resources.
Methods: The followings are the major bases of departmentation of an organization:
- Departmentation by function: In this method, various departments have been created on the basis of nature of functions like production, finance, personnel, marketing, R&D etc.
- Departmentation by products/service: In this method, a separate department is created for a single product or product line and all functions of one department are brought together
- Departmentation by customers: In this method, types of customers are the key basis of departmentation of the enterprise.
- Departmentation by territory: In this method, departments are formed on the basis of geographical locations of business.
- Departmentation by process: This method of departmentation is used in large-scale manufacturing enterprises such as textile, cement, chemicals, medicines etc.
- Departmentation by time: In this method, departments are formed on the basis of shifts such as day, evening and night.
Concept of Authority, Responsibility and Accountability
Authority: Authority is the right vested in managerial position. It is the right to take decision and use resources to achieve organizational goals. It is formal in nature. It forms hierarchy from top-level to subordinate level. Managers need to consider rules, regulations, and procedures of the organization for using authority. Some of the common features of authority are:
- it lies in managerial position,
- it is hierarchical in nature,
- it defines superior-subordinates relationship etc.
- it is mean of managerial job
- Managers need to consider legal, social, and organisational limitations for using authority.
Responsibility: Responsibility refers to the obligation to perform the given work to the best of one’s ability and knowledge. It is a personal obligation and it is absolute. It can not be delegated to others. It is the obligation that a subordinate has to complete for the achievement of organizational objectives. The common features of responsibility are:
- it is obligation,
- it is static and absolute,
- it arises due to superior subordinate relationship
- it is corollary of authority
Accountability: Accountability is the obligation of a subordinate to report back to his superior about the job entrusted to him and that has been completed. When a superior assigns a certain job to his subordinates and delegates necessary authority to complete the assigned works, it becomes responsibility of the subordinates to complete the job according to the prescribed standard report back to superior in due time. Accountability cannot be delegated to others even to subordinates. It is the formal obligation to complete assigned job with prescribed standard, it follows
- an anti-hierarchical route,
- it can not be delegated to others,
- it needs formal report
Delegation of Authority
Concept: Delegation of authority is assigning work to subordinates and giving them necessary authority to do the given works effectively. The expansion of business volume and diversification of line of business makes impracticable to handle all the business by a single manager. Therefore, the concept of delegation of some of managerial authority to subordinates on the basis of efficiency comes into practice. This concept minimizes the work load of manager and develops overall working efficiency of the organization.
Importance: The common importance of delegation of authority for organization are
- minimize workload of managers,
- benefits of specialization,
- motivation and morale,
- training and development,
- facilitates growth and expansion,
- quick and better decision and
- basis of organizing.
Principles: The principles suggested for effective delegation of authority are
- functional definition,
- delegation by the result expected,
- scalar chain,
- unity of command,
- absolute responsibility,
- partly authority and responsibility,
- strategic control,
- authority level.
Barriers: Delegation of authority barriers may arise both from executive and subordinates. The common barriers in delegation of authority are
- reluctant to delegate,
- fear of losing importance,
- loss of control,
- mutual distrust
- fear of subordinates,
- incompetent subordinates,
- lack of motivation,
- authoritarian tendency.
Decentralization of Authority;
Concept: Decentralization is the systematic delegation of authority to the level where the actual work is done. It is the systematic and scientific delegation of managerial authority to middle and lower level according to their weightage of responsibility. However, management has to decide how much authority should be centralized to the chief executive and how much should be distributed to the lower level managers. The top level management has to delegate such degree of authority to the lower level so that quick decision and its implementation become possible.
Needs: The rational and importance of decentralization of authority are
- relief to top management,
- facilitates managers’ development,
- possibility of better decisions,
- effective control,
- high morale and motivation,
- facilitates diversification,
- environmental adaptation.
- Organization history,
- philosophy of management,
- size of the organization,
- availability of competent subordinates,
- dispersion of operation,
- ability of top management,
- nature of management function,
- cost of decentralization etc.
are the factors that should be taken into consideration for decentralization of authority.