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Unit-III Organizing: Concept, nature, process and significance; Authority and Responsibility relationships; Centralization and decentralization; Departmentalization; Organization structure - forms and contingency factors.

Organizing Any situation involving two or more persons working collectively requires organising. The act of organising involves integrating, balancing and coordinating the activities of people working together for seeking common goals. The organizing process, thus, establishes working relationship among employees by assigning those tasks and giving them enough rights (i.e. authority) to perform those tasks. It is because when employees accept assigned work, they become responsible for performing it, and for discharging responsibility they are given requisite authority. The person who gives authority is called ‘superior’ and the person to whom authority is given are known as ‘subordinate’. Thus, the process of organising gives rise to a network of authority-responsibility relationships among members of the organisation. This network of authorityresponsibility relationships is called ‘organisation structure’. Process Of Organizing 1. Identification of activities: At the first stage of organising process, a manager identity and determines those activities that are to be performed for achieving common goals. Those activities are determined on the basis of common goals. For example, an organisation producing and distributing washing machines has to perform large number of activities that may be related to production, distribution, finance, purchase and personnel, etc.

2. Division of activities: After determining and enumerating activities, these are to be divided and subdivided into small components known as jobs and tasks. 3. Grouping-up of activities: Once the activities have been broken into small elements, these can be easily put into various groups on the basis of their relationship and similarities. For example, each job and task related to production is to be grouped up into production group, and elements that are related to marketing, finance and purchase are to be grouped-up in the respective groups. 4. Assignment of group of activities: After putting various activities into several groups, these are to be assigned or allotted to the various departments created for this purpose, or to the employees if the activities are limited. At the time of making such assignment, it is ensured that the department has required competence and resources for performing that group of activities. 5. Granting necessary rights: Assignment of group of activities among various departments is followed by giving them adequate rights so that they can perform assigned work in a satisfactory manner. The rights are granted through the process of delegation. In this process higher level manager gives away some of his right in favour of other who becomes his subordinate and it continues till the last level of management. 6. Coordinating the functioning of various departments: In the process of organising, attempts are also made for coordinating working of individual with respective department, and finally to coordinate functioning of various departments towards the achievement of common goals.

Types of Organisation There exist two types of organisation: Formal Organisation Informal Organisation

Formal Organisation In every enterprise, there are certain rules and procedures that establish work relationships among the employees. These facilitate the smooth functioning of the enterprise. Further, they introduce a systematic flow of interactions among the employees. Effectively, all of this is done through a formal organisation. Notably, the management is responsible for designing the formal organisation in such a way that it specifies a clear boundary of authority and responsibility. Coupled with systematic coordination among various activities, it ensures achievement of organisational goals. Again, the management builds the formal organisation. It ensures smooth functioning of the enterprise as it defines the nature of interrelationships among the diverse job positions. Additionally, these ensure that the organisational goals are collectively achieved. Also, formal organisation facilitates coordination, interlinking and integration of the diverse departments within an enterprise. Lastly, it lays more emphasis on the work to be done without stressing much on interpersonal relationships. Advantages  The formal organisation clearly outlines the relationships among employees. Hence, it becomes easier to rack responsibilities.  An established chain of commands maintains the unity of command.

 As the duties of each member is clearly defined, there is no ambiguity or confusion in individual roles whatsoever. Further, there is no duplication of efforts which eliminates any wastage.  In a formal organisation, there is a clear definition of rules and procedures. This means that behaviours and relationships among the members are predictable. Consequently, there is stability and no chaos existing in the enterprise.  Finally, it leads to the achievement of organisational goals and objectives. This is because there exist systematic and well thought out work cultures and relationships.

Disadvantages  Decision making is slow in a formal organisation. It is important to realise that any organisational need has to flow through the respective chain of commands before being addressed.  Formal organisation is very rigid in nature. This means that there prevails perfect discipline coupled with no deviations from the procedures. Hence, this can lead to low recognition of talent.  Lastly, the formal organisation does not take into account the social nature of humans as it talks about only structure and work. Interestingly, we cannot eliminate this integral part of our nature. Hence, it does not entirely display the functioning of the organisation.

Informal Organisation It’s easy to understand that if we interact with certain people regularly we tend to get more informal with them. This is because we develop interpersonal relationships with them which are not based solely on work purposes. Rather, these relationships might arise because of shared interests, like if you get to know that your colleague likes the same football club of which you’re a fan of.

As a matter of fact, informal organisation arises out of the formal organisation. This is because when people frequently contact each other we cannot force them into a rigid and completely formal structure. Instead, they bond over common interests and form groups, based upon friendship and social interactions. Unlike formal organisation, informal organisation is fluid and there are no written or predefined rules for it. Essentially, it is a complex web of social relationships among members which are born spontaneously. Further, unlike the formal organisation, it cannot be forced or controlled by the management. Also, the standards of behaviour evolve from group norms and not predefined rules and norms. Lastly, as there are no defined structures or lines of communication, the interactions can be completely random and independent lines of communication tend to emerge in informal organisation. Advantages  In this type of organisation, communication does not need to follow the defined chain. Instead, it can flow through various routes. This implies that communication in an informal organisation is much faster relative to formal organisation.  Again, humans are social animals. The needs to socialize exists deep within our existence. The informal organisation ensures that there is socialization within the enterprise. Consequently, members experience the sense of belongingness and job satisfaction.  Informal organisation, getting true feedbacks and reactions is not easy. Hence, in informal organisation, various limitations of formal organisation is covered up.

Disadvantages  The informal organisation is random and can result in the spread of rumours. Again, we cannot manage and control informal organisation. Consequently, this may result in chaos within the enterprise.  It is important to realise that it is not possible to effect changes and grow without the support of the informal organisation. This can work in both ways, for growth or decline of the enterprise.  To point out again, informal organisation conforms to group standards and behaviours. If such behaviours are against the organisational interests, they can eventually lead to disruption of the organisation.

Delegation Of Authority The Delegation of Authority is an organizational process wherein, the manager divides his work among the subordinates and give them the responsibility to accomplish the respective tasks. Along with the responsibility, he also shares the authority, i.e. the power to take decisions with the subordinates, such that responsibilities can be completed efficiently. In other words, a delegation of authority involves the sharing of authority downwards to the subordinates and checking their efficiency by making them accountable for their doings. In an organization, the manager has several responsibilities and work to do. So, in order to reduce his burden, certain responsibility and authority are delegated to the lower level, i.e. to the subordinates, to get the work done on the manager’s behalf. Under the delegation of authority, the manager does not surrender his authority completely, but only shares certain responsibility with the subordinate and delegates that much authority which is necessary to complete that responsibility. the need/importance of delegation can be summarized as: (a) Delegation leads to better decisions.

(b) Delegation relieves the manager from heavy work load. (c) Delegation helps to improve the motivation and morale of subordinates. (d) Delegation speeds up decision making. (e) Delegation facilitates training of subordinates. (f) Delegation creates a formal organisation structure. Key Differences Between Centralization and Decentralization 1. If the command of powers and authorities, in the hands of high-level management only, is known as Centralization. Decentralization means distribution, transfer or flow of powers and authorities by the top level to the functional level management or lower level management. 2. Centralization is the systematic and consistent concentration of authority at central points. Unlike, decentralization is the systematic delegation of authority in an organization. 3. Centralization is best for a small sized organization, but the large sized organization should practice decentralization. 4. Formal communication exists in the centralized organization. Conversely, in decentralization, communication stretches in all directions. 5. In centralization due to the concentration of powers in the hands of a single person, the decision takes time. On the contrary, decentralization proves better regarding decision making as the decisions are taken much closer to the actions. 6. There are full leadership and coordination in Centralization. Decentralization shares the burden of the top level managers. 7. When the organization has incomplete or insufficient control over the management, then centralization is implemented, whereas when the organization has full control over its management, decentralization is implemented.

Departmentalization: Departmentalization means grouping activities and people into departments, making it possible to expand organizations, at least in theory, to an indefinite degree. Departmentalization refers to the formal structure of the organization, composed of various departments and managerial positions and their relationships with each other. As an organization grows, its departments grow and more sub-units are created, which in turn add more levels of management. This often creates less flexibility, adaptability, and units of action within the firm. Departmentalization is the efficient and effective grouping of jobs into meaningful work units to coordinate numerous jobs—all for the expeditious accomplishment of the organization’s objectives. Two particular things need to consider before setting the formal structure of the organization or the Departmentalization. They are; basic organizational units and coordinating structure. Types of Departmentalization Departmentalization results from the division of work and the desire to obtain organization units of manageable size and to utilize the managerial ability. An organization structure and design are shaped significantly by the Departmentalization followed. The means of Departmentalization are by 1. Functional Departmentalization. 2. Departmentalization by Territory. 3. Departmentalization of the organization by customer group.

4. Matrix departmentalization. 5. Planning Task Force. An organizer is free to use any means of departmentalization in constructing an organization structure. In fact, in any given structure several means are typically used. 1. Functional Departmentalization Functional departmentalization groups together jobs which are involving the same or similar activities. It allows the organization to staff all important positions with functional experts and facilitates coordination and integration. 2. Departmentalization by Territory Departmentalization by Territory method is followed where; unless to local conditions appear to offer advantages, such as low cost of operation and opportunities to capitalize on attractive local conditions as they arise. Territorial departmentalization is especially popular for sales where division appears feasible according to some geographic market segregation. 3. Departmentalization of the organization by customer group. Customer departmentalization is where the organization’s activities are ready to respond to and interact with specific customers or customer groups. This organizational form is used when the great emphasis is placed on effectively serving different customer types. 4. Matrix departmentalization Matrix departmentalization attempts to combine functional and task force (project) departmentalization designs to improve the synchronization of multiple components for a single activity (i.e., a moon launch), to improve the economics of scale, and to better serve the customer and company.

5. Planning Task Force The planning task force is most often formed when the organization requires addressing special circumstances. It is more preferable, and efficient than maintaining a different planning staff or department. How Departmentalization Works in an Organization Basic Organization units The basic pattern of many organization structures revolves around three fundamental activities: production, marketing, and finance. The terminology may vary from firm to firm, and in non-business organizations, the functions may be more obscure but essentially all the three activities must be implemented for the organization to survive. Why are these three activities fundamental? Most companies are concerned with producing a product or service for use by others. Since it is produced for use by others, it must be distributed or marketed; that is, people must be found who want the product or service and are willing to accept it at terms mutually agreeable to the seller (enterprise) and the buyer. Also to produce and to distribute the product or service necessitate raising and maintaining sufficient capital; that is, the financing activities must be performed by some members of the enterprise. The scope of the three fundamental organization units and the complexity of the enterprise give rise to additional organization units. These types result mainly from such things as the nature and amount of the work to be done, the degree of specialization practiced, and the people and the workplaces available for the work. To illustrate,

Under the fundamental unit of marketing, the scope of the work may be so broad that it is believed advantageous to divide the work into advertising, sales promoting, and selling. Hence, the manager in charge of sales splits advertising and sales promoting activities, and for each, places a subordinate in charge. A sales manager is appointed to manage the selling work in the field. These three additional units appear in the organization structure at the level immediately below that of the fundamental unit of sales. In like manner, assume that the manager in charge of production has established units of engineering and research, factory work, and also purchasing. Coordinating structure As was stressed in the discussion of division of labor, an organization must be viewed by all managers at all levels as a cohesive whole, never as separate, independent functional units. The organization is a system of integrated parts, and to give undue emphasis to any functional part at the expense of the entire organization creates organizational islands, thus resulting in inefficiency and significant behavioral problems. Astute managers must recognize the potential for these gaps to exist (and their actual existence) and develop programs to integrate supportive functions to accomplish overall organizational objectives. Interdepartmental committees comprised of employees from 

finance, accounting, marketing, production, and other departments;

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management development programs for all management and supervisory personnel that teach basic management principles from an overall organizational perspective;

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job rotation, in which employees perform different jobs; and

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task forces composed of personnel to work on specific projects within time parameters are all methods that can aid in achieving this desired integration.

Choosing the Best Type of Departmentalization No one way of departmentalizing is suitable for all organizations and all situations. If the CEOs know the various departmentalization patterns and the advantages, disadvantages, and dangers of each, they should be able to design the program most suitable for their particular operation. They may determine what is best by looking at the situation they face the jobs to be done and the way they should be done, the people involved and the level of their skill, the technology being used, and other internal and external environmental factors in the situation. It must be remembered, that the objective of departmentalization is not to build a rigid structure, balanced in terms of levels and characteristics by consistency and identical bases, but to group activities in the manner that will best contribute to achieving enterprise objectives.

Organisation Structure Have you ever searched up an organisation chart of an enterprise, for example, ONGC? A short glance at the organisation chart would give you loads of information about the various departments, the people the apex, the flow of responsibilities etc. In a nutshell, it’ll tell you about the organisation structure of the enterprise.

What is an Organisation Structure? First and foremost we must remember that an organisation structure is a result of the organising process. The organisation structure consists of the various jobs, departments and responsibilities in the enterprise coupled with the definition of the extent of control, management and authority. It also consists of the relationships between various members of the enterprise. All in all, an organisation structure is a framework within which managerial and operating tasks are performed. This is because it defines the extent of management or the span of management. In other words, it specifies authority by clearly stating the subordinates to a superior and to whom the superior is a subordinate himself. In effect, this highlights the levels of management in an enterprise and allows for correlation and coordination among individuals. Talking about the significance of an organisation structure, it facilitates growth and changes within an enterprise. As a matter of fact, an enterprise with a static structure and thus resistance to change can soon go out of fashion in the dynamic business world. Thus it is important to realise that an enterprise needs a cha...