Introduction and Organising Process.


Meaning: - Organizing is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them.

Organizing is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of accomplishing objectives.


Steps in the process of organizing:

  1. Identifying and dividing the work into manageable activities so that duplication can be avoided.
  2. Departmentalization/ departmentation is when activities of similar nature are grouped together.
  3. Assignment of duties to job positions.
  4. Establishing reporting relationships so that each individual knows who he has to take orders from and to whom he is accountable

Describe the steps involved in the process of Organizing.

  1. Identification and division of work:
    • One individual cannot do the entire work.
    • Therefore Work is divided into small tasks called job
    • So that  burden of work can be shared
    • The repetitiveness of work  brings speculation
  2. Departmentalization:
    • Activities similar in nature are grouped together on the basis of their interdependence
    • Departments are formed
    • Example ( quality control, purchase, inventory management can be placed in the production department)
  3. Assignment of duties:
    • Defining the work of different job positions (defining responsibility and authority)
    • Jobs specification is prepared showing the type of competence required. (Age, experience, Education, Skills)
  4. . Establishing reporting relationships:
    • Establishment Reporting Relationships means
    • Who will work under whom
    • Who will get the order from whom
    • Creation of superior-subordinate relationship

Feature & Importance of Organising


Importance of Organizing

  1. Specialization:
    • Due to the division of task, every person performs a particular task.
    • Repetitive performances give them experience and bring specialization.
  2. Effective administration:
    • Provides a clear picture of jobs and related duties. 
    • Reduces overlapping and confusion and brings effectiveness in administration.
  3. Expansion and growth:
    • Helps in the growth and diversification by adding new departments, employees, and products
  4. Growth of personnel:
    • Delegation reduces the workload of managers by assigning routine jobs to their subordinates.
    • Managers can concentrate on important tasks.
  5. Optimum utilization of resources:
  • Well defined job helps each employee to know their role and duties
  • It reduces duplication of work  and  prevents confusion
  1. Adaptation to change:
    • When any employee retires or quit
    • It is easy for a new employee to adjust quickly because the job profile is clearly defined.

Organisation structure


Organization Structure:-Defined as the relationships between people, work and resources and can be shown in the organizational chart.

Factors affecting organizational structure

  1. Job design:-Total work is divided into various jobs like sales, finance, production, etc  and the results expected from it
  2. Departmentation:-Jobs are grouped together to form departments on the basis of similar tasks like per unit  cost,   quality control under the purchase department
  3. Span of management:-No of employees that can be effectively managed by superior
    1. Narrow span:- when the size of the organization is large
    2. Wide-span: - when the size of the organization is small
  4. Delegation of authority:-Sharing of authority between the superior and subordinate and clearly specifying who is responsible for whom

Types of Organization Structures

  1. Functional structure and
  2. Divisional structure


Functional structure

  • In a functional organization, all identical works are placed together under one functional head.
  • For example, production, marketing, finance, and marketing are considered essential functions of a manufacturing enterprise.

Suitability: It is most suitable when the size of the organization is large, has diversified activities and operations require a high degree of specialization.


  1. Specialization (Occupational):-Employees perform similar tasks within a department and get knowledge in a specific field. Sales, production, etc.
  2. Promotes control and coordination Within a department because of similarity in the tasks
  3. Improves employee training: Training of employees is easier due to limited work
  4. Cost-effective Leads to minimize duplication of effort which results in economies of scale
  5. Equal importance to all departments Provides equal attention and importance to different functions (department).


  1. Functional Empires Functional head may give importance to their own departments and stop thinking about the interest of the organization.
  2. Limited Growth Functional heads do not get training for top management positions because they work in a particular area (like production or sale).
  3. Inter-departmental Conflicts Can arise when the interests of two or more departments are not the same or regarding sharing of resources
  4. Problem of Responsibility. Functional head is responsible for a particulars function and if some things go wrong it becomes very difficult to fix responsibility.


Divisional Structure: -Organization structure comprises separate business units or divisions. Each unit has a divisional manager responsible for the performance and who has authority over the unit.

Suitability:-Suitable for those business enterprises where a large variety of products are manufactured using different productive resources.


  1. Responsibility fixing as divisional heads is accountable for profits. Revenues and costs related to different departments can be easily identified and assigned to them.
  2. Initiative and flexibility because each division functions as an independent unit which leads to faster decision making.
  3. Specialization (Product) helps in the development of different skills in a divisional head and this prepares him for higher positions.
  4. Expansion and growth as new divisions can be added without interrupting the existing operations.


  1. Conflict May arise among different divisions regarding the allocation of funds
  2. Add-In Costs Since there may be a duplication of activities across products
  3. Difficulty in Employee Training Due to various products training employees is quite difficult.

Distinguish between Functional and Divisional structure

Formal & Informal organisation


Deliberately Planned By the Top Management to Achieve the Specified Objectives Through the Network of Authority Responsibility Relationship


  • Created deliberately by management.
  • Results in the creation of a scalar chain.
  • Extra emphasis on work than on interpersonal relationships among employees.
  • Assigned a specific job to each individual and a fixed authority.
  • Motives to organizational goals.


  1. Avoid duplication of effort as each member knows their duties.
  2. Responsibility can be fixed due to well established authority responsibility relationship
  3. Establish unity of command through a chain of command.
  4. Accomplishment of goals by providing a structure where each employee knows their role
  5. Stability to the organization by well-defined job and ensure growth and survival


  1. Talent and creativity of worker is reduced  due to rigid policies
  2. Rigid structures do not allow deviation due to fixed roles assigned to employees
  3. Inter-personal relationship gaps between persons issuing orders and subordinates following orders
  4. Procedural delays increase the time taken for urgent decision-making.


Informal Organization: -Complex network of social relationships which appear unexpectedly to fulfill social and human needs. Features

  • Created automatically without any purposeful efforts by the management.
  • Originates from within the formal organization as a result of personal interactions among employees.
  • Does not follow any fixed path of authority.
  • Employee's behavior is based on convenience  with no definite structure.


  1. Fast:-Information travels very fast as  there is no procedural and language barrier
  2. Add flexibility: - Serves the purpose not fulfilled by the formal organization.
  3. Social needs of the members are fulfilled and give them a sense of belongingness in the organization.
  4. Timely feedback Prescribed lines of communication are not followed and quick feedback gets from informal channels.


  1. Opposition The management may not be successful in implementing changes if the informal organization opposes them.
  2. Promotes groups: - Compels members to agree with the group expectations. This can be harmful  if the rule set by the group are against organizational interests.
  3. Spread rumors: - Due to the fast flow of information it can spread rumors which may work against the goodwill of the formal organization



Delegation:-Delegation is the process a manager shares some of his routine work with his subordinates so that he can concentrate on an important issue which requires his active role.

  • Note: -The manager still is accountable for the performance of the assigned tasks.
  • The authority granted can be taken back and re-delegated to another person.

Elements of Delegation


  1. Right of an individual to command his subordinates and to take action within his powers
  2. Flows from top to bottom, i.e., the superior has authority over the subordinate.
  3. Maintain order in the organization by giving the managers the right to give directions.
  4. Determines the superior-subordinate relationship wherein the superior communicates his decision to the subordinate, expecting fulfillment from him.


  1. The obligation of a subordinate to properly perform the assigned duty.
  2. Arises from a superior-subordinate relationship because the subordinate is bound to perform the duty assigned to him by his superior.
  3. Flows upwards i.e., a subordinate will always be responsible to his superior.
  4. Delegation the authority must be equal to the assigned responsibility. If authority granted is more than responsibility, it may lead to misuse of authority, and if responsibility assigned is more than authority it may make a person ineffective.

Accountability (answerability):

  1. Means being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot refuse accountability.
  2. Cannot be delegated and flows upwards i.e., a subordinate will be accountable to a superior for satisfactory performance of work.
  3. Generally forced through regular feedback on the amount of work done.

Differences in the elements of delegation

“Authority can be delegated but responsibility cannot”. Explain the statement in brief–

According to the principle of absolute responsibility, authority can be delegated but responsibility and accountability cannot be delegated by a manager. The manager is responsible or accountable to his own superior for both, the tasks that he has assigned his subordinates and the acts of his subordinates. In other words, only authority can be delegated but responsibility and accountability are absolute.

For example: if a foreman fails to get 100 units produced by the workers on any day, he is responsible to his superior. He cannot escape by saying that the workers were at fault. Similarly, the factory manager remains responsible to his superior for the work he entrusted to this foreman. He cannot escape from the responsibility by passing on the blame to his foreman.

Importance of delegation

  1. Basis of management hierarchy:
    • Establishes superior-subordinate relationships, which are the basis of the hierarchy of management which in long run facilitates decentralization
  2. Effective management:
    • By delegating routine tasks managers can concentrate on important tasks and concentrate in new areas.
  3. Coordination:
    • Help to define the powers, duties and answerability related to the various positions in an organization
    • Which reduces duplication of effort
  4. Assist In growth:
    • Subordinate gets to experience new areas for the work assigned to them
    • When new products and new departments are created they can be appointed.
  5. Motivation of employees:
    • Trust on the part of the superior and commitment on the part of the subordinate motivate the subordinate to perform better and improve his confidence
  6. Employee development:
    • Employees get opportunities to  gain experience and develop them for higher positions



Decentralization:-delegating authority at all management levels and all departments of the organization to take decisions and appropriate action on tasks assigned to them within their powers.

Centralization:-Decision-making authority is retained by higher management levels

 Difference between delegation and decentralization

Importance of decentralization

  1. Decision making becomes fast
    • Decisions are taken to the nearest points of action and there is no requirement for approval from many levels
    • Information sent is cleared because it doesn’t have to go through long channels
  2. Relief to top management
    • Reduces direct supervision by a superior
    • Top management can concentrate on major policy decisions instead to day to day work
  3. Enhance initiative among subordinates
    • Promotes confidence among the subordinates due to freedom to make their own decisions
    • Brings more creativity and new ideas to the organization.
  4. Assist in growth
    • Awards greater independence to divisional or departmental heads.
    • This allows them to develop team spirit and a sense of competition amongst the departments.
  5. Managerial talent for the future develops
    • Gives employees a chance to prove their abilities in their own working
    • Helps to develop multi-skills talents due to greater autonomy
  6. Smooth control
    • Decentralization evaluates performance at each level and can be accountable for their results.
    • Organization goals can be effectively achieved

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