Chapter 5: Organising

Introduction

Organising is a fundamental function of management that involves the systematic arrangement of resources and activities to achieve the organization’s objectives efficiently. It establishes a framework within which tasks are allocated, authority is delegated, and responsibilities are defined, ensuring a coordinated effort towards common goals. By structuring the organization effectively, managers can optimize resource utilization, streamline workflows, and facilitate effective communication, leading to enhanced productivity and goal attainment.

Key Terms

1. Organising: The process of identifying and grouping work to be performed, defining and delegating authority, and establishing relationships to enable people to work effectively towards organizational objectives.
2. Organization Structure: The formal arrangement of jobs within an organization, detailing how tasks are divided, grouped, and coordinated.
3. Span of Management: The number of subordinates that a manager can effectively supervise; also known as span of control.
4. Delegation: The process by which a manager assigns responsibility and grants authority to subordinates to accomplish specific tasks.
5. Decentralization: The systematic delegation of authority throughout all levels of the organization, allowing decision-making at lower levels.
6. Formal Organization: The official, structured, and planned relationships in an organization, defined by its organizational chart.
7. Informal Organization: The network of personal and social relationships that arise spontaneously as people associate within the organization.
8. Departmentalization: The process of dividing an organization into different departments, which perform tasks according to the departments’ specializations.
9. Authority: The right to make decisions, issue orders, and allocate resources to achieve organizational objectives.
10. Responsibility: The obligation to perform assigned tasks and be accountable for their outcomes.

Importance of Organising

Organising plays a pivotal role in the effective management of an organization. Its significance can be highlighted through the following points:

1. Clarity in Working Relationships: By defining roles and responsibilities, organizing ensures that every employee knows what is expected of them, reducing ambiguity and potential conflicts.
2. Optimum Utilization of Resources: Proper organization facilitates the efficient use of resources—human, financial, and material—by allocating them where they are most needed and can be used most effectively.
3. Facilitates Coordination: Organising integrates the activities of various departments and individuals, ensuring that all parts of the organization work harmoniously towards common objectives.
4. Adaptability to Change: A well-organized structure allows the organization to respond swiftly to environmental changes, market dynamics, and technological advancements.
5. Development of Personnel: Through delegation and decentralization, organizing provides opportunities for employees to develop their skills and take on greater responsibilities, preparing them for higher roles.
6. Efficient Administration: Clear organizational structures streamline decision-making processes and administrative procedures, leading to increased efficiency.

Steps in the Process of Organising

The organizing process involves a series of steps that systematically structure the organization’s activities and resources:

1. Identification and Division of Work: The total work is divided into manageable activities or tasks to prevent duplication and ensure that all necessary tasks are covered. For example, in a manufacturing company, tasks can be divided into production, quality control, marketing, and finance.
2. Departmentalization: Similar or related tasks are grouped together into departments or divisions. This can be based on functions (e.g., HR, finance), products (e.g., electronics, clothing), geography (e.g., domestic, international), or processes. For instance, a company might have separate departments for domestic and international sales.
3. Assignment of Duties: Specific tasks are assigned to individuals based on their skills, competencies, and job roles. This ensures accountability and clarity. For example, the marketing manager is assigned the duty of developing and implementing marketing strategies.
4. Establishing Reporting Relationships: A clear hierarchy is established, defining who reports to whom. This creates a structured chain of command and facilitates effective communication. For instance, sales executives report to the sales manager, who in turn reports to the director of sales.

Organizational Structure

An organizational structure defines how activities such as task allocation, coordination, and supervision are directed toward achieving organizational goals. It determines the flow of information and delineates the authority-responsibility relationships within the organization.

Types of Organizational Structures

1. Functional Structure: In this structure, the organization is divided into departments based on specific functions or activities, such as production, marketing, finance, and human resources. Each department is managed by a specialist in that function.

Example: A manufacturing company may have separate departments for production, quality control, marketing, and finance, each headed by a functional expert.

Advantages:

1. • Specialization leads to operational efficiency.
   • Simplifies training as employees focus on a single function.
   • Facilitates better coordination within departments.

Disadvantages:

1. • May lead to departmental silos, hindering inter-departmental communication.
   • Overemphasis on departmental goals can compromise organizational objectives.
   • Limited exposure to other functions may restrict employees’ development.

2. Divisional Structure: Here, the organization is divided into semi-autonomous units or divisions, each focusing on a specific product line, market, or geographic area. Each division operates as a self-contained unit with its own resources.

Example: A conglomerate like Tata Group may have separate divisions for automobiles, steel, and telecommunications, each operating independently.

Advantages:

1. • Product specialization enhances focus and performance.
   • Quick decision-making due to decentralized authority.
   • Facilitates accountability as each division functions as a profit center.

Disadvantages:

1. • Duplication of resources across divisions can lead to inefficiencies.
   • Higher costs due to independent management teams for each division.
   • Lack of coordination between divisions may lead to inefficiencies.

Delegation of Authority

Meaning: Delegation refers to the process by which a manager assigns tasks and grants authority to a subordinate while retaining accountability. It enables managers to focus on higher-level tasks and allows subordinates to develop their skills.

Elements of Delegation:

1. Authority – The power to make decisions and direct resources.
2. Responsibility – The obligation to perform assigned tasks.
3. Accountability – The ultimate responsibility for task completion remains with the manager.

Importance of Delegation:

Example: A CEO delegates marketing decisions to the Chief Marketing Officer (CMO), who further delegates ad campaign responsibilities to a team leader.

Decentralization

Meaning: Decentralization refers to the systematic delegation of decision-making authority to lower levels in an organization. Unlike delegation, which is a one-time process, decentralization is an organizational policy.

Features of Decentralization:

1. Authority is delegated at multiple levels (e.g., from top management to middle and lower levels).
2. Greater decision-making power for lower levels, promoting autonomy.
3. Reduces burden on top management by distributing responsibilities.

Difference Between Delegation and Decentralization:

Example: A multinational company like Reliance delegates authority to regional managers in different states to make operational decisions.

Formal and Informal Organization

Formal Organization

A structured framework that defines job roles, relationships, and responsibilities officially.

Features:

• Clearly defined authority and hierarchy.
• Established through deliberate planning.
• Objectives align with the organization’s goals.

Example: An IT company’s organizational chart outlining roles from CEO to interns.

Informal Organization

An unstructured, spontaneous social network among employees.

Features:

• Evolves naturally through personal interactions.
• No official rules or structure.
• Enhances communication and teamwork.

Example: A group of employees forming a lunch club or sports team.

Conclusion

Organizing is a crucial function of management that ensures clarity, efficiency, and structured operations. Through concepts like authority delegation, decentralization, and organizational structures, businesses can optimize their workflows and improve decision-making. While formal structures provide stability, informal organizations foster creativity and employee bonding.

By implementing effective organizing principles, companies can enhance productivity, ensure smooth operations, and adapt swiftly to changing environments.