ORGANIZINGORGANIZINGProf. Preeti BhaskarProf. Preeti BhaskarSymbiosis Centre for Management Studies, NoidaSymbiosis Centre for Management Studies, Noida
Course outline• Meaning and importance• Structure of organization- Functional, divisionaland administrative• Formal and informal organization, MatrixOrganization• Delegation: Meaning and Importance• Elements of Delegation• Concept-centralization and de-centralization
Importance of organizing• Specialization• Well defined jobs• Clarifies authority • Co-ordination• Effectiveadministration • Growth anddiversification• Sense of security • Scope for new changes
Organizational StructureA formal system of taskand reporting relationshipsthat coordinates andmotivates members so thatthey work together toachieve organizationalgoalsorganizational charta chart that showshow the firm isstructured and who isin charge of whom
• Formalstructure• Informalstructure• Functionalorganization• Committee• organization• Matrix• Line organizationa) Pure lineorganizationb) Departmentalorganization• Line and stafforganization• Divisional
Line organization• Complaint• Suggestion• Order• Authority
Pure Line organizationProductionManagerForeman - A Foreman- BWorker WorkerGeneralManagerWorker Worker Worker WorkerActivities of all employees working in the same level happen to be similar
Line and staff organizationForeman - ASuperintendentWorker WorkerForeman - AProductionManagerShareholderBODGeneral ManagerResearchofficerPublicRelationOfficerMarketingManagerForeman - ASuperintendentSalesman SalesmanForeman - AAdvertisingofficerProductionOfficerQualitycontrolOfficerSalesofficer
Divisional structures(based on product, geography, customer, andprocess.)
advantages ofdivisional structures:– More flexibility inresponding toenvironmental changes– Clear points ofresponsibility.– Expertise focused onspecific customers,products, and regions.– Greater ease inrestructuring. disadvantages ofdivisional structures:– Duplication of resourcesand efforts acrossdivisions.– Competition and poorcoordination acrossdivisions.– Emphasis on divisionalgoals at expense oforganizational goals.
Functional structures– People with similar skills and performingsimilar tasks are grouped together intoformal work units.– Members work in their functional areas ofexpertise.– Work well for small organizations producingfew products or services.
advantages offunctionalstructures:– Economies of scale.– Task assignments consistentwith expertise and training.– High-quality technicalproblem solving,– In-depth training and skilldevelopment.– Clear career paths within disadvantages offunctionalstructures:• Difficulties in pinpointingresponsibilities.• Functional problem.• Sense of cooperation andcommon purpose break down.• Narrow view of performanceobjectives.• Excessive upward referral ofdecisions.
Matrix structure– Combines functional and divisional structures togain advantages and minimize disadvantages of each.– Used in:• Manufacturing• Service industries• Professional fields• Non-profit sector• Multi-national corporations
Matrix structure in a small multi-projectbusiness firm.
advantages of matrixstructures:– Better cooperation acrossfunctions.– Improved decision making.– Increased flexibility inrestructuring.– Better customer service.– Better performanceaccountability.– Improved strategicmanagement. disadvantages ofmatrix structures– Two-boss system issusceptible to powerstruggles.– Two-boss system cancreate task confusion andconflict in work priorities.– Team meetings are timeconsuming.– Team may develop “groups”– Increased costs due toadding team to structure.
Informal structures …– A “shadow” organization made up of theunofficial, but often critical, workingrelationships between organization members.– Potential advantages of informal structures:• Helping people accomplish their work.• Overcoming limits of formal structure.• Gaining access to interpersonal networks.• Informal learning.
Span of control– The number of persons directly reportingto a manager.– Organizing trend:• Many organizations are shifting to widerspans of control as levels of management areeliminated.• Managers have responsibility for a largernumber of subordinates who operate withless direct supervision.
right of an individual to command hissubordinates and right to take decisionwithin the limits of his position”The obligation ofsubordinate to performthe assigned jobproperlyObligation to carry outresponsibility and givereports aboutperformance to thesuperior
Importance ofDelegation• Reduction of executives work load• Quick and better decision• Development of the skills of the subordinated• High morale of subordinate• Effective Management• Employee Development• Motivation of Employees• Facilitation of growth• Basis of managerial hierarchy• Better coordination
Obstacles in Delegation• Factors of Superior (Delegators)• Factors of Subordinates(Delegate)• Organizational factor
Obstacles in DelegationBoss is reluctant todelegation becausehe/she:• Feels he can dobetter himself• Dislikes gives otherchance• Lacks confidence insubordinates• Does not haveadequate control• Unable to instruct• Likes to depend onthe boss• Dislikes criticism• Lacks selfconfidence• Does not haveadequate resources• Has little positiveincentivesSubordinated isreluctant to delegationbecause he/she:Organizationalfactor :• Inadequateplanning• Unclear authorityrelationship• Splinteredauthority• Non availability ofcompetentmanagers
Guidelines for effectivedelegation:– Carefully choose the person to whom you delegate.– Define the responsibility; make the assignment clear.– Agree on performance objectives and standards.– Agree on a performance timetable.– Give authority; allow the other person to actindependently.– Show trust in the other person.– Provide performance support.– Give performance feedback– Recognize and reinforce progress.– Help when things go wrong.– Don’t forget your accountability for performanceresults.
Centralization means completeauthority of decision makingbeing at the top level.Centralization
According to Allen,“Centralization” is the systematic and consistentreservation of authority at central points in theorganization.
Advantages ofCentralization• Effective utilization of talentsof the top management.• It allows the development of astrong co-ordinates topmanagement team.• Uniformity of policies andplans across the organization.• Duplication of functions andfacilities is minimized which inturn reduces costs.• Quick decision-making andcommunication.• Doesn’t give an opportunity tolower level managers/supervisorsto develop their managerial skills.• Centralized organization facesthe problem of lower motivationlevels among workforce.• The success of organizationdepends on the competence oftop executives which might bequite risky.Disadvantages ofCentralization
Decentralization is a systematicdelegation of authority at all levels of management and in all ofthe organization.
• According to Kreitner,“Decentralization is granting ofdecision making authority by topmanagement to the lower levelemployees”
Advantages• Decentralization reduces theworkload of top executives.• It improves job satisfaction andmorale of lower level managers bysatisfying their needs forindependence, participation andstatus.• Decision making is quicker.• It facilitates growth anddiversification. As each productdivision is given sufficient autonomyfor innovation and creativity.• It gives opportunity to subordinatesto exercise their own judgment. Theydevelop managerial skills which will beuseful to the organization in thelonger run.Disadvantages• Decentralization increases theadministrative expenses and eachdivision or department has to besufficient in terms of physicalfacilities and trained personnel.• As each department or divisionenjoys substantial autonomy itmight lead to co-ordinationproblems.• There might be lack of uniformityand inconsistent procedures as eachdepartment might have theauthority to formulate its ownpolicies and procedures.
• Is suitablefor smallbusinessCentralization• Is suitablefor largebusinessDecentralization
Difference between :Difference between :Delegation and DecentralizationDelegation and Decentralization
Basis Delegation DecentralizationMeaningManagers delegate some of theirfunction and authority to theirsubordinates.Right to take decisions is shared by topmanagement and other level ofmanagement.ScopeScope of delegation is limited assuperior delegates the powers to thesubordinates on individual bases.Scope is wide as the decision making isshared by the subordinates also.ResponsibilityResponsibility remains of themanagers and cannot be delegatedResponsibility is also delegated tosubordinates.Freedom of WorkFreedom is not given to thesubordinates as they have to work asper the instructions of theirsuperiors.Freedom to work can be maintained bysubordinates as they are free to takedecision and to implement it.Nature It is a routine functionIt is an important decision of anenterprise.Need on purposeDelegation is important in all concernswhether big or small. No enterprisescan work without delegation.Decentralization becomes more importantin large concerns and it depends upon thedecision made by the enterprise, it is notcompulsory.Grant ofAuthorityThe authority is granted by oneindividual to another.It is a systematic act which takes place atall levels and at all functions in a concern.
Grant ofResponsibilityResponsibility cannot be delegatedAuthority with responsibility isdelegated to subordinates.DegreeDegree of delegation varies fromconcern to concern and departmentto department.Decentralization is total bynature. It spreads throughout theorganization i.e. at all levels and allfunctionsProcessDelegation is a process whichexplains superior subordinatesrelationshipIt is an outcome which explainsrelationship between topmanagement and all otherdepartments.EssentialityDelegation is essential of all kinds ofconcernsDecentralization is a decisionsfunction by nature.SignificanceDelegation is essential for creatingthe organizationDecentralization is an optionalpolicy at the discretion of topmanagement.WithdrawalDelegated authority can be takenback.It is considered as a general policyof top management and isapplicable to all departments.Freedom ofActionVery little freedom to thesubordinatesConsiderable freedom