Organising

Summary

• Organising is the process of defining and grouping activities and establishing authority relationships among them.
• Process of Organising:
  • Identification and division of work
  • Departmentalisation
  • Assignment of Duties
  • Establishing reporting relationships
• Importance of Organising:
  • Leads to division of work
  • Clarity in reporting relationships
  • Optimum utilization of resources
  • Growth and better administration
  • Greater creativity
• Organisational Structure: Framework for managerial and operating tasks; can be functional or divisional.
• Span of Management: Number of subordinates under a superior.

Functional Structure

• Advantages:
  • Specialisation
  • Better control
  • Managerial efficiency
  • Ease in training employees
• Disadvantages:
  • Functional empires
  • Conflict of interest
  • Inflexibility
  • Restriction in managerial development

Divisional Structure

• Advantages:
  • Integration
  • Product specialisation
  • Greater accountability
  • Flexibility
  • Better coordination
  • More initiative
• Disadvantages:
  • Departmental conflicts
  • Costly process
  • Ignoring of organisational interests
  • Increase in requirements of general managers

Formal Organisation

• Designed by management to achieve goals.
• Advantages:
  • Fixation of responsibility
  • Clarity of roles
  • Unity of command
  • Effective accomplishment of goals
• Disadvantages:
  • Procedural delays
  • Inadequate recognition of creativity
  • Limited in scope

Informal Organisation

• Arises from interaction among people at work.
• Advantages:
  • Speed
  • Fulfillment of social needs
  • Fills inadequacies of formal structure
• Disadvantages:
  • Disruptive force
  • Resistance to change
  • Priority to group interests

Delegation

• Transfer of authority from superior to subordinate.
• Elements: Authority, Responsibility, Accountability.
• Importance: Effective management, employee development, motivation, growth, and coordination.

Decentralisation

• Delegation of authority throughout the organisation.
• Importance: Development of managerial talent, quick decision making, reducing burden on top management, development of initiative, growth, and better control.

Organising

Definition of Organising

Steps in the Process of Organising

1. Identification and Division of Work: Identify and divide the work that has to be done according to previously determined plans.
2. Departmentalisation: Group similar activities together to facilitate specialisation.
3. Assignment of Duties: Define the work of different job positions and allocate work accordingly to various employees.
4. Establishing Reporting Relationships: Ensure each individual knows who to take orders from and to whom they are accountable.

Importance of Organising

• Benefits of Specialisation: Leads to systematic allocation of jobs, reducing workload and enhancing productivity.
• Clarity in Reporting Relationships: Helps in establishing authority and accountability.
• Optimum Utilisation of Resources: Ensures resources are used effectively to achieve goals.
• Growth and Better Administration: Facilitates the growth of an enterprise and improves administrative efficiency.
• Greater Creativity: Encourages innovation and adaptability in a dynamic business environment.

Organisational Structure

• Definition: The framework within which managerial and operating tasks are performed.
• Types: Can be functional (grouped by functions) or divisional (grouped by products).
• Span of Management: Refers to the number of subordinates under a superior.

Types of Organisation

Functional Organisation

• Advantages: Specialisation, better control, managerial efficiency.
• Disadvantages: Functional empires, conflict of interest, inflexibility.

Divisional Organisation

• Advantages: Integration, product specialisation, greater accountability.
• Disadvantages: Departmental conflicts, costly process, increase in general manager requirements.

Formal Organisation

• Definition: Designed by management to achieve organisational goals.
• Advantages: Clarity of roles, unity of command.
• Disadvantages: Procedural delays, limited scope.

Informal Organisation

• Definition: Arises from social interactions among employees.
• Advantages: Speed, fulfillment of social needs.
• Disadvantages: Resistance to change, may spread rumors.

Delegation and Decentralisation

Delegation

• Definition: Transfer of authority from superior to subordinate.
• Elements: Authority, Responsibility, Accountability.

Decentralisation

• Definition: Distribution of decision-making authority to lower levels of management.
• Comparison with Delegation:
  • Nature: Delegation is compulsory; Decentralisation is optional.
  • Freedom of Action: More control in delegation; greater freedom in decentralisation.
  • Scope: Narrow in delegation; wide in decentralisation.

Key Terms

• Organising
• Organisational structure
• Departmentalisation
• Delegation
• Authority
• Responsibility
• Accountability
• Functional structure
• Divisional structure
• Formal organisation
• Informal organisation
• Span of management
• Centralisation
• Decentralisation

Common Mistakes and Exam Tips

Common Pitfalls

• Misunderstanding Authority and Responsibility: Students often confuse authority with responsibility. Remember, authority is the right to command, while responsibility is the obligation to perform assigned tasks.
• Neglecting Accountability: Failing to recognize that accountability flows upward can lead to confusion in reporting relationships.
• Overlooking the Importance of Delegation: Many students underestimate the significance of delegation in management, which can lead to inefficiencies in task completion.

Exam Tips

• Clarify Definitions: Ensure you understand key terms such as authority, responsibility, and accountability. Use definitions from the excerpts to reinforce your understanding.
• Use Examples: When discussing concepts like delegation or decentralization, refer to examples provided in the text, such as Wipro's restructuring.
• Focus on Structure Types: Be prepared to differentiate between functional and divisional structures, including their advantages and disadvantages, as outlined in the excerpts.
• Understand Organisational Changes: Be ready to discuss how changes in organisational structure can impact a company's performance, especially in response to market pressures.