Module 2 - Organizing PDF

Module 2 Organizing Concept of Organizing Organizing is the function of management that involves developing an organizational structure and allocating human resources to ensure the accomplishment of objectives. The structure of the organization is the framework with...

Module 2 Organizing Concept of Organizing Organizing is the function of management that involves developing an organizational structure and allocating human resources to ensure the accomplishment of objectives. The structure of the organization is the framework within which effort is coordinated. The structure is usually represent ted by an organization chart, which provides a graphic representation of the chain of command within an organization. Decisions made about the structure of an organization are generally referred to as organizational design decisions. Organizing process has the following steps: 1. Identification and Division of Work. This step involves identification of the work considered to be necessary for implementing a plan, thereby, achieving desired objective. Each work contains various types of activities. In identifying work, generally, deductive method is applied, that is, for achieving the desired objectives, what work must be performed. Thus, for a business organization, work is related to production, marketing finance, and human resources. Since each work is quite broad in a large organization is divided into relevant activities. These activities may be further divided into sub-activities. For example, marketing work may be divided into product pricing, product promote sales, and product distribution. Similarly, product promotion is divided into advertising sales promotion, and personal selling. This process goes on till the level beyond which division of work is not desirable. Division of work is required because it cannot be performed by a single person or group of persons in a large organization. Division of work enhances work efficiency because of specialization in performing a small number of activities instead of performing the whole work. 2. Departmentation. Departmentation, also known as departmentalization, involves creating various departments, divisions, and sections by grouping similar activities together in example, grouping all activities related to marketing together to constitute marketing department. While grouping activities, three considerations are taken into account (i) all necessary activities are performed, (ii) there is no duplication in performing the activities and (iii) activities are performed in a coordinated way. Departments are created on different bases which have been discussed later. 3. Assigning Duties. Assignment of duties involves giving responsibility to various organizational positions for performing the activities relevant to the positions. Based this responsibility, job specification for each position is prepared which shows the typed competence (education, experience, skills, etc.) which the position holder must possess. Along with assigning duties, authority is delegated to each position which will be discussed in the next chapter. 4. Creating Hierarchy. Hierarchy is a system in which members of an organization ranked according to their relative status or authority. This creates superior- subordinate relationships among organizational members and establishes reporting relationship specifying 'who will work under whom', that is, 'who will get orders from whom and report his work performance to whom'. Thus, in an organization, there is a chain superior-subordinate relationships in a single chain of command because everyone is both superior and subordinate, except the person at the top and persons at bottom. The very great extent, length of a chain of command (also known as scalar chain) depends span of management which has been discussed later.  Advantages of Organizing There are many advantages of organizing which are as follows: 1. Advantages of Specialization. Organizing offers advantages of specialization because it divides broad activities into smaller activities and each person performs only these smaller activities. As a result, he becomes specialized in performing these activities. 2. Role Clarity. Role is the expected behaviour of a person while performing a given role. Organizing brings role clarity because what contribution an organizational position is expected to make is defined precisely. When the role of a position is clear, the position holder tends to contribute to his maximum. 3. Clarity in Reporting Relationships. Organizing establishes reporting relationships. Therefore, every person in the organization is very clear about from whom he will get orders and other relevant information and to whom he has to report about his performance and problems. This brings efficiency in work performance. 4. Effective Management. Organizing leads to effective management by ensuring that all necessary activities are performed, there is no duplication in performing activities and activities are performed in a coordinated way. Besides specialization, role clarity, and clarity in reporting relationships also add to effective management. 5. Optimum Utilization of Resources. Organizing ensures optimum utilization of resources by prescribing their allocation to points where these have their optimum utilization. In organizing, importance is given to various activities according to their contributions to achieve organizational objectives. Resources are allocated according to the importance of activities. 6. Development of Human Resources. Organizing leads to development of human resources by ensuring match between a job and job performer. Thus, the job performer develops relevant skills and gets mastery in his job. Further, while doing the job, he can develop creative skills to find out innovative ways of working. 7. Growth and Expansion. Organizing facilitates growth and expansion of an organization. Expanding the existing businesses or adding the new business is easily absorbed as new departments/sections can be created by organizing. Organization Structure An organizational structure is a system that outlines how certain activities are directed to achieve the goals of an organization. These activities can include rules, roles, and responsibilities. The organizational structure also determines how information flows between levels within the company. Organization structure is the pattern of relationship between people and work within which organizational activities are performed to achieve stated objectives. Need for Organization Structure Need for organization structure arises because of the following reasons: 1. Growth in Size of Organization. When an organization grows in size, number of its employees also increases. Similarly, more functions may be added in the organization take advantages of specialization. In order to manage the increased number of employees and functions, a suitable organization structure is needed. 2. Overcoming Communication Problems. In a large organization, distance between decision making centres and decision-implementation centres increase because of lengthy managerial hierarchy resulting in increased number of superior-subordinate relationships in a vertical line. This poses communication problems which can be overcome by suitable organization structure as it establishes reporting relationships through which communication flows. 3. Overcoming Coordination Problems. Organization structure is required to ensure coordination between different organizational functions as well as between sub-functions of a function. If various functions and sub-functions of the organization are coordinated there is orderly organizational working leading to achievement of organizational objectives. 4. Need for Control. Need for suitable organization structure is felt to ensure that functioning of each organizational position is controlled suitably, Organization structure facilitates this by prescribing which position is subject to control by which position. Principles of Organizing In organizing, certain principles are followed which are as follows: 1. Principle of Unity of Objectives. Objectives in an organization at various levels organizational level, divisional/departmental level, and individual level - must be clearly defined. There must be unity among these objectives, that is, there must be uniformity among these objectives. Unity of objectives is necessary for achieving organizational objectives because achievement of objectives of a lower level contributes to achievement of objectives of its next higher level. 2. Principle of Specialization. This principle states that there should be required specialization throughout the organization. When there is specialization, employees with specialized knowledge and skills are put on the jobs. This leads to higher productivity of the employees. 3. Principle of Unity of Direction. This principle suggests that each group of activities with the same objectives should have one boss and one plan. This leads to better way of performing these activities. 4. Principle of Coordination. Organizational activities should be grouped in such a way that these activities are performed in a coordinated way. Coordinated way of performing related activities leads to higher efficiency. 5. Principle of Efficiency. This principle puts emphasis on efficiency in performing organizational activities. Efficiency emerges when a given level of output is achieved with minimum possible cost. This can be achieved when organizational resources are used efficiently. 6. Principle of Authority and Responsibility. Authority of an organizational position should be based on the responsibility of the position. Thus, there should be match between authority and responsibility. In the absence of this match, work performance suffers. Authority of a position emerges due to delegation of authority from a higher position while responsibility of the position emerges due to work assignment. 7. Principle of Unity of Command. This principle states that a subordinate should receive orders from a single superior and reports work performance and problems to him. This brings clarity in responsibility and subordinate is in a better situation to discharge his responsibility. 8. Principle of Span of Control. Span of control indicates the number of subordinates who can be put under a superior. Principle of span of control states that number of subordinates under one superior should be appropriate so that he can manage them effectively. 9. Principle of Communication. Communication is the process of transferring information from one person to another. Communication flows in an organization through specified channel of communication. For making better transmission of information organization- wide, organizing should provide proper channel of communication. 10. Principle of Balance. Organizing should make attempt to maintain balance of various aspects of organization which are relevant for organizing. Thus, there should be balance among various organizational functions, balance between centralization and decentralization, balance in resource allocation to various organizational units/ departments, etc. 11. Principle of Flexibility. Organizing should ensure that the organization structure is flexible so that necessary changes can be incorporated in it without disturbing it too much. Changes in organization structure are required because of changes in environment in which an organization operates. 12. Principle of Simplicity. This principle states that the organization structure should be as simple as possible. Thus, there should not be numerous levels of management. committees, large manual on organization structure, etc.  ORGANISATION AS A STRUCTURE According to classical theorists (Fayel, Taylor, Weber), structure is essential for achieving stated goals. The manager determines the work activities to get the job done, writes job descriptions, and puts people into stoups aid assigns them to superiors. She/He then, fixes goals, issues deadlines and establishes standards of performance. The whole structure takes the shape of a pyramid. Thus, the term organisation structure describes the organisation's framework. It is nothing but a chart of relationships. However, organisation is much more than a network of formal, superior subordinate relationships. Informal relationships also play an important role in processing work. Organisation as a structure, has the following features: I. Two or more persons: Organisation is a form of human association(partnership) for achieving common goals. The human association consists of two or more persons. II. Common goals: The organisation exists to achieve some common goals. Structure ensures the smooth achievement of goals. III. Cooperative efforts: Structure permits members to work in a cooperative way, without any friction. The members combine their efforts with a view to achieve goals. IV. Division of work: The work is divided into small parts and assigned to people working at various levels. This ensures speedy execution of work. V. Communication: People communicate along specified routes. Mainly downward communication takes place in the form of superiors issuing commands, orders, directives, etc. VI. Rules and regulations: Rules and regulations define the territorial jurisdiction of members. Members have to observe and implement these rules consistently. VII. Pyramidal shape: Organisation structure takes a pyramidal shape, generally. Each superior will have a limited number of people reporting to him, at any point of time. ORGANISATION AS A GROUP Organizing is the process of identifying and grouping of the work to be performed Defining and Delegating Responsibility and Authority and Establishing Relationships for the purpose of evaluating people to work more effectively together in accomplishing their objectives. Thus we can say that “Organization is a group of people who are co-operating under the direction of leadership for the accomplishment of common end”. In the words of Barnard, "Organisation is a system of consciously coordinated activities or forces of two or more persons." Etzioni, in a similar vein expressed thus: 'Organisations are social units (or human groupings) deliberately constructed and reconstructed to seek specific goals.' A more refined version is provided by W J. Duncan, “An organisation is a collection of interacting and interdependent individuals who work toward common goals and whose relationships are determined according to a certain structure.  Features of Organizations These definitions clearly bring out five essential features common to all organisations: An organisation always refers to people. An organisation is developed for people. People interact with one another in some way. These interactions are specified by some sort of structure. Interactions are ordered to achieve joint objectives. Importance of Sound Organisation Sound organisation is an essential prerequisite of efficient management. It helps an organisation in the following ways: I. Enlarges abilities:  It helps individuals to enlarge their capabilities.  Division of work enables an individual to specialise in the job, in which he is proficient, leading to better utilisation of resources and talents. II. Facilitates administration:  It facilitates administration by avoiding waste motions, overlapping work and duplication of effort.  Departmentation enables proper planning of work.  Confusion and misunderstanding, over who is to perform what work, is avoided by specifying the role of managers clearly.  Proportionate and balanced emphasis is put on various activities. III. Facilitates growth and diversification:  Sound organisation helps in keeping activities under constant vigil and control. The organisation can undertake more activities without dislocation. Talents and resources are put to good use.  Opportunities are seized quickly and exploited fully, when ultimately pave way for growth and diversification. IV. Permits optimum use of resources:  Human, technical and material resources are put to good use.  Right persons are given right jobs.  There is proper allocation of work. People know that they are supposed to do, well in advance.  Necessary functions are determined and assigned, so that personnel and physical facilities are utilised effectively. V. Stimulates creativity:  It offers stimulating opportunities to people at all levels, to use their skills on jobs best suited to their nature.  Delegation helps people at lower levels to do more challenging work. VI. Facilitates coordination:  Organisation is an important way of achieving coordination among different departments of an enterprise.  Clear authority relationships and proper assignment of work facilitates the task of achieving coordination at all levels.  Poor organisation leads to improper arrangement of duties and responsibilities.  As a result, unimportant and trivial issues are given top priority.  Activities that should be integrated or centralised are spread out and put to improper supervision. Incompetent individuals are overused while talented people are under-utilised.  Delays, duplications and waste motions occur with frustrating regularity.