Organizing:

 Organizing: 

1. Nature and Purpose  

2. Departmentation

 3. Line and Staff Authority

 4. Decentralization and Coordination

Books:

1. Essentials of Mgt.[5^th edition]                        Koontz – O’Donnell – Weihrich

Definition of Organisation:

• ‘Is the place where managers practice the art of Mgt. ‘  

• ‘A formalized intentional structure of roles or/and positions’

• ‘A consciously coordinated social unit composed of people that function on a relatively continuous basis to achieve a common goal or set of goals’
• Is a group of people who wish to achieve common goals / objectives through their joint efforts.
• Is a social unit or human grouping structured for the purpose of attaining specific goals.

Definition of Organising:

ü  Grouping of activities, necessary to attain objectives, the assignment of each grouping to a manager, with authority necessary to supervise it and the provision for coordination horizontally & vertically in the enterprise structure

ü  Establish a formal system of roles that people can perform, so that they may best work together to achieve enterprise objectives.

ü  Is the identification and classification of required activities, the grouping of these activities, assigning them to the right person / group, along with the authority to perform and providing for coordination – vertical and horizontal in the organisation structure 

1. Process of organizing
2. Result of the process

1. Process of organizing:
1. To decide duties and Responsibilities of people working – differentiates and integrates the activities on the basis of homogeneity [similar or comparable] – authority relationships
2. To remove obstacles – due to uncertainty and confusion
3. To furnish network – for decision making, communication, informal support,
2. Organizing:

1.      Good people

2.      Vagueness in organisation – forces them to work in teams –

3.      Roles – clear and related to one another – verifiable - role of the manager is organising

4.      Designing and maintaining this system – direction – tools like information

5.      Pervades/Spread all important phases of human life

6.      Satisfy various needs: security, social, monotonous jobs and lack of autonomy,

7.      To work effectively and efficiently

8.      Natural laboratory for behaviour sciences

The cause and purpose of organizing:

ü  Efficiency

ü  Unity of objective

ü  Principle of span of control

The structure of organisation:

ü  Authority

ü  Group control

ü  Direction

ü  Environment creation

Principles of Organisation: Essential criteria for effective organizing

Not infallible laws - scholars and practitioners agree about them – truth about general applicability

1.      Unity of Objective: Common, verifiable – clear idea to those involved – about major duties, activities – these are identified, classified, grouped and division of work is conducted

2.      Unity of action / efforts

3.      Division of work – Parity [relation between a pair of integers] authority and responsibility – scalar chain principle

4.      Leadership and facilitation   

5.      Parity Authority and Responsibility: delegation by results - well defined, understood by concerned people - with absoluteness of responsibility – eqitable

6.      Unity of Command:  Acts as facilitators – span of control

7.      Flexibility: a social unit – impact of formal and informal interaction –– in centralization and decentralization

8.      Communication

9.      Personal Development –Relatively continuous activity/functioning Development of Org. and people [career growth]

10.  Balance: as there is a lot of interdependence  

Organisational Division – the Departments

One aspect of organizing is the establishment of departments

‘A distinct area, division, or branch of an enterprise over which a manager has authority for the performance of specified activities’

Formal Organisations and Informal Organisations:

Definition:

Formal Organisation: the intentional structure of roles in the formally organized enterprise, to achieve the results.

1. Not inherently inflexible – room for discretion, to use creative talents, recognize individuals’ likes and capabilities 
2. Environment for individuals and group efforts to be most effective and efficient.
3. Channel – individual efforts in group achievements.
4. Room for discretion  - creative talent – recognition

Informal Organisation:

Joint personal activity without conscious joint purpose, even though contributing to joint results’  Chester Barnard

‘A network of personal and social relations, not established or required by the formal org. but arising spontaneously as people associate with one another.’ Keith Devis

e.g. morning coffee regulars at canteen

1. A network of personal and social relations not established or required by the formal organisation, but arising spontaneously as people associate with one another.
2. Any joint personal activity without conscious joint purpose even though contributing to the joint results. 
• Does not appear on the organisation chart
• Contributes to the joint efforts - Use it. – Social - Facilitates successive subordinate groupings
• Helps to build better formal relations
• Influenced by number of people in the group - Actual personnel involved - Be aware of

I.                   The nature and purpose of Oraganising.

A.    Formal and Informal Org.

B.     Organisational division – Departments

C.     Organisational levels – span of Mgt. – factors determining the effective span.

D.    Organizing as a process

II.                Basic departmentation

A.    Departmentation by simple numbers

B.     Departmentation by time

C.     Departmentation by enterprise function

D.    Departmentation by territory/geography

E.     Departmentation by product

F.      Departmentation by customers

G.    Market oriented Dept.

H.    Process/ equipment oriented Dept.

I.       Matrix Organisations

J.       Strategic Business units -SBUs

K.    Choosing the pattern of Depart.

III.             Line and Staff authority Relationship

A.    Authority and Power

B.     Line and Staff concept

C.     Functional Authority

D.    Staff and the Small business

E.     Benefits of Staff

F.      Making Staff work effectively

IV.             Decentralisation of Authority

A.    Delegation of Authority

B.     The art of Delegation

C.     Factors determining the degree of delegation of Authority

D.    Re-centralization of Authority

E.     Obtaining the desired degree of decentralization – by clarifying – approved authorization

F.      Balance – the Key to decentralization

V.                Making Organising effective

A.    Some mistakes in Organising

B.     Planning – to avoid mistakes

C.     Avoiding organisational inflexibility

VI.             Organising as a process

A.    Structure must reflect objectives and plans

B.     – Reflect authority available

C.     – Its environment – eco. Technological, Political, social, ethical

D.    Designed to work and contribute

E.     Org. is staffed with people – take into account people’s limitations, customs

Org. Process       

Feasibility studies and Feed back

	3. Identification & classification of required activities		4. Grouping of activities in the light of resources & situation
					5. Delegation of Authority

			8 Leading

The structure and process of organizing should reflect:

• Objectives of the organisation
• Authority available
• Environment / Premises
• Peoples’ limitations / customs

Process:

1. Objectives: major – minor / supportive
2. Identifying and classifying activities –
3. Grouping these activities - creating roles
4. Delegation of Authority and Responsibility - roles
5. Tying - Horizontally – vertically – through authority and responsibility relationship and information flow

Basic Departmentation:

• Mgt. Of huge org. possible
• Limiting factor - Span of Control.
• No single solution – for all org./size
• Avoiding conflicts – by clarification
• Ensuring understanding of organizing
• Promoting an appropriate org. culture

A. Departmentation by simple numbers:

By tolling off persons who are to perform the same duties – putting them under a manager

• Technology demands Skills – not just numbers
• Knowledge workers – differently managed
• Suitable at apex level
• E.g. org. of tribes, clans, armies, manual workforce [construction industry, Agri.]

B. Departmentation by time:

Group activities on the basis of time – shifts – factories, hospitals, fire fighting dept; process industries [chemical indu; steel furnace,

• Extended time need of the job
• Process pressure
• Optimal utilization of capital equipment
• Convenience – security, electricity,
• Fatigue affects quality of supervision, coordination, communication, cost etc.

3. Departmentation by enterprise function:

Grouping of activities as per the functions

• Basic activities could differ
• No generally accepted terminology

4. Departmentation by territory/geography: [pg. 185 – fig. 9 – 2]

Wide geographical area - MNCs

5. Departmentation by product: [pg 187 – fig. – 9.3]

With multi products – types – variety

6. Departmentation by customers: [pg 189 fig. 9-4]

Different customers – age, sex, nationality, needs, industrial

7. Market oriented Dept. [pg. 191 fig. 9.5]

Rural, urban, industrial, for masses, customized

8. Process/ equipment oriented Dept. [pg.

Continuous process

9. Matrix Organisations: [Matrix - orderly arrangement of elements by rows and columns]

[Grid - A network of horizontal and vertical lines that provide coordinates for locating points on an image – combination of org. - product/project –dept. etc.] Most common. [pg. 278/9 fig. 10 – 6/7]

• Define objectives –
• Clarify the roles, authorities, responsibilities
• Role for information & knowledge – rather than rank
• Balance power – functional & project managers
• Experienced – able - leadership
• Org. & team development given priority
• Controls – deviations - cost, time, quality – timely.
• Rewards – fair – project managers and team members.

10. Strategic Business units –SBUs: [pg. 283 fig. 10 – 8]

SBUs are distinct little businesses set up as units in a large co. to ensure that a certain product/product line is promoted and handled as though it were an independent busi. [General Electric Co.]

Specific criteria:

• Its own/distinct mission
• Definable groups of competitors
• Own integrative plan
• Manage its resources in key areas
• Proper size – neither too large nor too small

11. Choosing the pattern of Depart. – [For global environment]
• Degree of international orientation & commitment
• Not an end in itself – to achieve objectives
• Each style – advantages/costs – at different levels –
• No need to look pretty
• ‘Maintaining control’ – need not be the prime objective
• Decentralization of authority: Organisation authority is merely the discretion conferred on people to use their judgment to make their decisions and issue instructions.
• It is an tendency to disperse decision – making authority in an org. structure

Different kinds of centralizations

                                                              i.      Cen. Of performance – operating at single location

                                                            ii.      Departmental Cen. – of specialised activity –e.g. maintenance, housekeeping, security, transport

                                                          iii.      Cen. As an aspect of Mgt. – tendency to restrict delegation of decision-making – a high degree of authority held at the top – e.g. family managed business.

Organisation theory / design

• Good people make any org. pattern work
• Vagueness in org. – promotes team work
• Formal structure promotes efficiency

‘ To design, maintain & make work these systems of role, is basically the managerial function of organising’

Consider –

• Variable objectives in planning
• Clear idea of – duties/activities
• Area of authority/discretion
• Supply of need information and tools

Span of Management - Span of Control

Definition: ‘is the number of subordinate to be controlled and managed effectively by each supervisor / manager.

Organisational levels and the Span of Mgt.

·         Reasons for levels – limitations of Span of Mgt. – limit would vary with situation – would affect the E & E – wide span / narrow span [many levels of hierarchy]

·         Coordination & cooperation

Narrow Span – problems

• Expensive
• Complicated for communication / flow of information – administration
• Hampers H R D – opportunities – de-motivating
• Discourages team work
• Impractical 

Devices to expand the span – without destroying quality of supervision

1.      Training: to manage complex situations

2.      Clarity: Plans – Authority & Responsibility, with calculated marginal extentions

3.      Use of objective standers: deviations – critical points

4.      Rate of change: risk involved – cost of error

5.      Communication techniques: trust – personal contacts – attitude / culture / moral

Variations by organisational levels and types of jobs: balance – rewards for risk takers, achievers, develop intrapreneuring sprit,  

Org. with narrow span

					3		3

Advantages

• Close supervision and control
• Fast communication

Disadvantages

• Many levels of Mgt. – distance between top mgt. & lower levels & digonal
• Too close supervision
• High cost

Org. with wide Span

Advantages

• Forced to delegate
• Need for clear policies
• Need for Talented workforce – major challenge

Disadvantages

• Superiors overloaded - bottleneck
• Danger of loss of control

Choosing the Span – [4-8] or [8-15]

• Expensive
• Complications in communication
• Act as filters of information/knowledge

Factors determining an effective span:

• Training: Understand
• Clarity in authority – adequacy, conceived and perceived ideas, org. structure
• Unclear/ Verifiable – policies/plans/objectives/standards – non-repetitive operations,
• High rate of changes – external/internal
• Communication/interaction techniques – e.g. merit rating, performance appraisals, counseling, balance score cards, competency mapping
• Complex tasks – more the knowledge workers - more time for interactions - lower span of control
• Selection of Efficient employees
• Promotion policies: delegation skills need to be appriciated

Balance recommended –

• Flexibility
• Multi combinations - within an org.
• Training – updating – upgrading
• Feed-back system
• Secrete lines in the art of delegation

Delegation of authority: major constrain –

Steps:

• Determination of results expected from a position
• Assignment of task – to a position
• Defining of authority for accomplishing tasks
• Holding responsible for the results

ü  Written delegation – inflexibility, conflicts, overlaps

ü  Oral Delegation –

Recovery and re-delegation – with changes

Re-centralization: to centralize authority once decentralized – need not be complete reversal – may be only over a certain type of activity/function

Obtain the desired degree of decentralization: to push the authority down as far as it will go –

• Understand decentralization
• Verifiable objectives
• Span of Mgt.
• Efficient selection of employees
•  

Principles to delegation – for efficiency and effectiveness

• By results expected
• By defining the job
• By scalar principle – refers to the chain of direct authority relationships – from superior to subordinate – [clear picture of who delegates to whom]
• Authority level principle – downwards delegation is not reversed –
• Principle of unity of command – one master/subordinate – for a job/task/function
• Principle of absoluteness of responsibility - 
• Principle of parity of authority and responsibility – correspond

The art of delegation

• Personal attitudes

§  Receptiveness – chance to ‘try’ or ‘invent’ minimum of NIH – Not Invent Here

§  Willingness to let go – release the right to make decisions – law of Comparative Managerial Advantage

§  Willingness to let others make mistakes – investment in HRD

§  Willingness to trust subordinates – proper selection

§  Willingness to establish and use broad controls – through planning, feedback

Weak Delegation – managed with Principles + Attitude

Factors determining the Degree of Decentralization of Authority:

1. Cost: in terms of resources, reputation, goodwill, competitive position, employees morale – e.g. capital expenditure, exp. For diversification, quality inspection,
2. Desire for uniformity of policy: e.g. Customer Service/Relations, contract with union, - non-uniformity generates promotable managers – who think outside the box.
3. Size of the Org. larger need to decentralize
4. History, Philosophy and culture of the Org. despotic [absolute rule/sovereignty] tolerating no interference
5. Desire for independence: coming away from mental, physical, and cultural
6. Availability of managers
7. Control Techniques
8. Decentralized activities/performance
9. Busi. Dynamics: changes, complexities, and cost of errors
10. Environmental influences – Govt. controls, unions, tax policies

3. Line and Staff authority

4. Decentralization Coordination