This PPT describes Organization function

1. Organization- A Quick Recap
Dr. SK Prasad

2. Definition of Organization
Organization is
An identified group of people contributing their efforts towards the
attainment of goals is called an organization.” Mc Farland
“Organizing is the establishment of effective behavioral relationships
among persons so that they may work together effectively and gain
personal satisfaction in doing selected tasks under given environmental
conditions for the purpose of achieving some goal or objective”.
George R. Terry,

3. Organization is
1. A group of people united by a common purpose
2. An entity, an ongoing business unit engaged in utilizing resources to
reach a goal or task accomplishment
3. A structure of relationships between various positions in an
enterprise
4. A process by which employees, facilities, and tasks are related to
each other, with a view to achieving specific goals

4. Organizing as a Process
• Organizing as a process…
• The identification and classification of required activities
• Grouping of activities required for attaining objectives
• Assignment of each group to a manager with authority to supervise
and issue necessary instructions and obtain compliance
• Provision for coordination horizontally and vertically
• Organization is described as a formalized intentional structure-Formal
with clearcut reporting relationships and a deliberate creation that
aims to attain pre-set goals and objectives

5. Functions of Organization
The functions of the organization include the following:
• determination of activities
• grouping of activities
• allotment of duties to specified persons
• delegation of authority
• defining relationship
• coordination of various activities

6. Formal Vs Informal Organizations
• Formal Organization means the intentional structure of roles in a
formally organized enterprise. Formal does always mean rigid and
inflexible structure. The structure must furnish an environment in
which individual performance- present and future contributes most
effectively to attain group goals and thereby enterprise goals.
• Informal Organization is described as any joint personal activity
without conscious joint purpose, although contributing to joint
results. It is a network of interpersonal relationships that arise when
people associate with each other in formal setups.

7. Formal Organization Informal Organization
It arises due to delegation of authority. •
It arises due to social interaction of people.
It gives importance to terms of authority and
functions. •
It gives importance to people and their relationships.
It is created deliberately. It is spontaneous and natural.
•
It is created for technological purposes. It arises from man’s quest for social satisfaction.
•
Rules, duties and responsibilities of workers
are given in writing.
No written rules and duties are followed.
It comes from outsiders who are superior in the
line of organization.
•
It comes from those persons who are objects of its
control.
•
Formal authority flows from upwards to
downwards.
Informal authority flows from upwards to downwards
or horizontally.
The formal authority is attached to a position. •
The informal authority is attached to a person.
•
It grows to the maximum size. •
It tends to remain smaller.
•
It is permanent and stable. No permanent nature and stability.

8. Organizational Levels and Span of
Management
The span of management refers to the number of subordinates that a
manager can efficiently manage.
The number of subordinates directly reporting to a manager is
known as span
The span of management is important for
• determining the complexity of an individual manager’s job and
• determining the shape and structure of the organization

9. Factors Influencing Span of Management
Narrow Spans
• Little or no training of
subordinates
• Inadequate or unclear authority
delegation
• Unclear plans for non- repetitive
operations
• Unverifiable objectives and
standards
Wide Spans
• Thorough training required for
subordinates
• Clear delegation and well-
defined tasks
• Well-defined plans for repetitive
operations
• Verifiable objectives used as
standards

10. Factors Influencing Span of Management
Narrow Spans
• Fast changes can take place in
external and internal operational
environments
• Use of poor or inappropriate
communication techniques,
including vague instructions
Wide Spans
• Slow changes in external and
internal operational
environments
• Use of appropriate techniques
such as proper organization
structure written and oral
communication

11. Factors Influencing Span of Management
Narrow Spans
• Ineffective interaction of
superiors and subordinates
• Ineffective meetings
• Greater number of specialties at
lower and middle levels
Wide Spans
• Effective interaction between
superiors and subordinates
• Effective meetings
• Greater number of specialties at
upper levels( top managers are
concerned with the external
environment)

12. Factors Influencing Span of Management
Narrow Spans
• Incompetent and untrained
managers
• Complex task
• Subordinates’ unwillingness to
assume responsibility and
reasonable tasks
• Immature subordinates
Wide Spans
• Competent and trained
managers
• Simple Task
• Subordinates’ willingness to
assume responsibility and
reasonable tasks
• Mature subordinates

13. Factors affecting the span of management:
• Capacity of manager
• Capacity of subordinates
• Nature of work
• Delegation of authority
• Fixation of responsibility
• Methods of communication
• Degree of planning
• Level of management

14. Need for a balance between Narrow and
Wide spans
• Although Wide spans with flat organizations are the most desirable
ones

16. DEPARTMENTATION
Meaning:
It is a process of division of an enterprise into different
parts. It divides activities into different divisions
(Departments) such as production, sales, marketing,
finance etc. Further, in the marketing department there
can be advertising, marketing research, customer service
etc departments.
These divisions are managed by the heads of divisions.

17. DEPARTMENTATION
R & D Director
Dyeing
Marketing Coarse
Textiles Division
Production
Director
Marketing Woolen
Chemical division
Bleaching
Marketing North
CHIEF EXECUTIVE
Finance
Director
Marketing
Director
Human Relations
Director
Marketing fine
and super dine
Ginning weaving
Marketing south
Spinning

18. Bases of Departmentation
• Nine bases of departmentation are common among managerial choices:
• (1) Departmentation by numbers: Perhaps this is the simplest way to create groups or
units within the organization, if we assume that all the individuals available are
possessing same skills, abilities and other required qualifications. If so, and if the
manager has a fair idea of how many people might be required to carry out the task, the
grouping by size is ready. Given this nature, we might guess that this method is more
useful where the task requires more of a muscle force (for example, an army battalion,
or the building contractors' work-force) rather than use of specialized skill.
• (2) Departmentation by time of duty: Generally this basis is chosen when the operation
or organizational activity is required to be carried on round the clock. The staff which is
divided as per the time or shift basis might possess a set of different skills and abilities.
Usually we find departmentation using this method at the lower levels of the
organization, including manufacturing operations at the plant level, various security
and control operations. Within the service sector, we find medical or firefighting
services available round the clock, all days of the week.

19. Bases of Departmentation
• (3) Departmentation by function: This widely used method of departmentation is found
in almost all organizations at some level and to some degrees. Groups are created such
that within a group, people perform same function or activity, which at the lower level
can even be identical. Example is a production department where all the jobs are focused
on one activity, and the machine operators or workers assigned to a particular job such
as machining or turning might be doing the same work. When work is divided like this,
we have different groups performing different activities, so after functional
departmentation, coordination among these groups is required.
• (4) Departmentation by Process or Equipment: This basis of departmentation is
sometimes required by the technology itself as part of the production activity, where the
transformation of raw material into finished goods is achieved through performance of
various processes. Example is production unit of textiles, where workshops dedicated to
processes like spinning, weaving, dying etc. sequentially operate to manufacture the
finished goods. For other organizations also, sometimes the cost of specialized
technology makes more sense for some facilities to be organized by process and be
shared. Example is the Electronic Data Processing unit in small a organization.

20. Bases of Departmentation
• (5) Departmentation by Location or territory: If an organization's activities are scattered
and if the differences across locations are significant in terms of customer preferences or
the difficulty in handling complex scheduling issues, or the importance of local
participation in decisionmaking , it makes sense to use departmentation by territory or
location. The Indian Railway, for example is divided along territorial lines into central
railway, western railway and so on. This method of departmentation is observed in the
sales and service departments of many organizations where the major departmentation
at the first level below the head of the organization is along functional line, but at the
sub-department level, the sales department would have geographic regions or zones
catered to by regional or zonal offices.
• (6) Departmentation by Product: as the name suggests, the grouping of activities is by
the product, which evolves mainly in organizations that have grown into multi-product
set-up. The usually preceding functional organization might not be supporting the
growth and spread of business across different types of products. The head of the
organization might be supported by product managers, in turn who might be supported
by various functional sub-department

21. Bases of Departmentation
• (7) Departmentation by Customer: One more method to pay close
attention to the needs of the customer is to create departments by
customer types. We have within banks this type of departments - retail
banking for retail customers, corporate banking for business clients,
separate services for high net worth individuals, and so on.
• (8) Departmentation by Market or Distribution Channel: Companies who
want to ensure that their product reaches the intended customers through
multiple channels so that the product enjoys high saliency and provides
easy reminder to the customers can consider this type of departmentation.
• (9) Departmentation by Services: This form of departmentation exists in
combination with other type(s) of departmentation. The examples are
Management Information System (MIS), Human Resource Management,
Legal, Secretarial Assistance, House-keeping, Maintenance,

22. Matrix Organization
• Matrix organization is a hybrid organization structure which is the
combination of Product/ Project and Functional forms. This kind or
organization is seen in project based companies like construction,
research organizations like ISRO.
• In this structure the functional structure is overlapped with project
structure as each project needs the functional support.
• The functional managers work together with project managers who
will be responsible for completion of project.

23. Matrix Organization
The subordinates will report to two superiors i.e. the
Functional head and the Project Head.
Chief Executive Officer
Finance Engineering
Project 1
Marketing
Procureme
nt
Project 3
Project 2

24. Matrix Organization could be made more effective
by
• Define the objectives of the project or function
• Clarify the roles, authority, and responsibility of managers and team
members
• Ensure that influence is based on knowledge and information rather than
on rank
• Balance Power of functional and project managers
• Select experienced manager for the project who can lead
• Undertake organization and team development
• Install appropriate cost, time and quality controls that report deviations
from standards on a timely basis
• Reward project managers and team members fairly

25. LINE AND STAFF ORGANIZATON

26. LINE AND STAFF CONCEPT
Line organization: The quantum of authority is maximum
at the top and lowest at the bottom. People at the top
have a formal authority to direct and control their
immediate subordinates.
Line and staff Organization: Narrower in approach. I
includes the right to advise, recommend and counsel the
staff specialists.
Functional Organization: Keeping the specialists in top
position. The specialists have a limited command over
the people from different department. The subordinates
get order not only from their superiors but from the
specialists too.

27. Forks & Small Earthmovers
Division
Trucks
Division
Tools
Division
Purchasing
Materials
Handling
Fabrication Painting Assembly Sales Distribution
Human
Resources
Department
Engineering
Department
Line do the mainline functions/Staff assist
Staff
Managers
Line
Managers

28. Line and staff conflict
The line managers view themselves as supreme as they
directly accomplish the objectives of an enterprise.
Therefore, staff members may feel ignored resulting into
a conflict situation.
Major reasons of conflict (Line Managers View)
1. Interference in their work
2. Lack of practicality and too theoretical
3. lack of accountability
4. Credit shared by the staff specialists

29. Line and staff conflict
 Major reasons of conflict (Staff’s Viewpoint)
1. No proper use of the staff members
2. Resistance to adopt new ideas
3. Staff do not have the proper authority to get even the
best ideas executed by the subordinates.
Suggestions:
1. Clear line of demarcation i.e. line has the
implementation responsibility and staff has the advisory
function.
2. Line managers must justify why a particular advise can’t
be implemented.

30. Line and staff conflict
3. Staff members need to be more tolerant as the
changes are always disliked first.
4. Staff personnel should give concrete suggestions to
the line managers about why a certain proposal be
implemented.
5. Line managers also need to understand that a certain
opportunity may be missed out if timely action (as
proposed by the staff) is not taken.

31. DELAGATION AND DECENTRALIZATION

32. DELEGATION OF AUTHORITY
 Delegation is process in which a superior assigns some of
the tasks within his jurisdiction to his subordinate. It
enables a manager to concentrate more on some
important matters.
 Elements in delegation:
1. Assignment of responsibility to the subordinate.
2. Granting of authority to the subordinate
3. Subordinate becomes responsible to his superior
although the overall responsibility vests in hand of
superior.

33. WHAT IS AUTHORITY
Authority is a legitimate right to make decisions to carry
out decisions and to direct others.
Managers expect to have the authority to assign work,
hire or fire employees and the allotment of money.
Organizations have a formal authority system that depicts
the authority relationship between the people and their
work.
E.g. in case of line organization, superior has an authority
over his subordinates.
In case of line and staff, the staff has authority over the
subordinates but they work with the line managers.
Functional authority allows managers to direct specific
processes or policies in other departments.

34. WHAT IS RESPONSIBILITY
• Responsibility is the obligation to accomplish the goals
related to the position and the organization. In order to
enable the subordinate do his duty well, it is the duty of a
superior to tell him what is expected of him.
• Manager at whatever level of the organization have the
same basic responsibilities when it comes to managing
the workforce i.e. direct employees toward objectives,
oversee the work effort of employees, deal with the
immediate problems and report the progress of work to
superiors.

35. WHAT IS ACCOUNTABILITY
It is the obligation to carry out responsibility and exercise
authority in terms of performance standards.
When a subordinate is given an assignment and is granted
necessary authority to complete it, the final phase is
holding the subordinate responsible for results.
However, the extent of accountability depends upon the
authority and responsibility delegated.
A person cannot be held answerable to the acts not
assigned to him by his superior.
For effective accountability, performance standards be
communicated in advance to the subordinate and he must
accept it.

36. IMPORTANCE OF DELEGATION
1. To help the superiors concentrate on more important
matters.
2. Subordinates given authority to take decisions to
dispose off the matters quickly. Thus, it helps in quick
decision making.
3. Employees feel motivated and try to prove themselves
for the trust reposed by the superiors in them.
4. Serves as a tool for the future training of executives.
5. It improves work performance of subordinates as
delegation is given according to their specialization.

37. PROBLEMS IN DELEGATION
Difficulties on the part of superior:
1. Resistance: That I can do the job in a better way.
2. Lack of ability of a manager to correctly issue
instructions to the subordinates.
3. Lack of willingness to let go: superior wants to have
dominance over the work of subordinates
4. Lack of trust in subordinates: because of their inability
5. Ineffective controls: where the manager does not set up
adequate controls or he has no means of knowing the
proper use of authority, he may feel hesitant to delegate
the authority

38. PROBLEMS IN DELEGATION
Difficulties on the part of subordinate:
1. Lack of self confidence
2. Desire to play safe by depending upon the boss for all
decisions.
3. Fear of committing mistakes and then criticized
4. Overburden with duties
5. Inadequacy of information for performing the duties.
Difficulties on the part of organization:
1. Non clarity of authority responsibility structure
2. Lack of effective control 3. Inadequate planning

39. GUIDELINES FOR EFFECTIVE DELEGATION
1. Clear cut objectives i.e. the subordinate must know
the objective of work delegated to him
2. Unity of command i.e. the subordinate must receive
orders from a single executive.
3. Clear explanation of the work assigned and authority
delegated
4. Reasonable control over delegatee i.e. executive may
evaluate the performance and issue necessary
instructions from time to time.
5. No intervention in day to day work of the delegatee
6. The subordinates must be reasonably trained for the
job

40. CENTRALIZATION AND DECENTALIZATION
• Centralization is the systematic and consistent reservation of
authority at central points within the organization.
• In centralization, little delegation of authority is the principle;
• Power and discretion are concentrated at the top levels.
• The more centralization the more control to make decisions rests at
the top management.

41. Centralization and Decentralization
• Decentralization:
• Decentralization is the systematic effort to delegate to the lowest
levels of all authority except that which cannot be delegated.
• Decentralization is said to be greater when:
• More decisions are made at lower levels
• More important decisions are made at lower levels
• More functions are affected by decisions at lower levels
• Checking on decisions at lower levels is minimal.

42. Types of Decentralisation
• Profit Centres
• Cost/Expense Centres
• Investment Centres
• Profit Centres: Profit centre is a responsibility centre whose budgetary
performance is measured by the difference between revenues and costs-
other words profits.
• Under profit centre the organization is divisonalized on a product basis.
• There will be operational independence having control over all decisions
influencing profits
• Complete freedom to buy and sell in alternative markets

43. Types of Decentralisation
• Cost/Expense Centres:
• Where it is difficult to find out revenue with a unit but is relatively
easy to determine costs of operation, cost centres are established.
• In a cost centre the manager is responsible for using resources within
the overall cost/budgetary limits.
• Research and Development

44. Types of Decentralisation
• Investment Centres: Investment Centres are very common in case of
multiproduct business. In order to measure product performance,
decentralization by investment centres is usually advocated with
managers will be responsible for investments with autonomy for
acquisition, use and disposition of capital/ fixed use resources;
• Here performance is judged on the basis of return on investment

45. REASONS FOR DECENTRALIZATION
1. Better access to local information: Local managers
know better about the local conditions like strength
and nature of local competition, local labour work
force etc.
2. More timely response: In centralized form information
sent to head office and results awaited. In
decentralized local managers can quickly respond to
customers demands.
3. Focus on central management: Central management
gets free to concentrate on more important issues.

46. REASONS FOR DECENTRALIZATION
4. Training and evaluation of segment managers: it gives a
chance to senior managers to evaluate the capabilities of
subordinate managers.
5. Motivation of segment managers: self esteem and self
actualization needs of the segment managers get
satisfied. Greater responsibility supplies them more
satisfaction and motivate them to exert greater effort.