Principles of Management - Useful for Anna University & Madras University Syllabus

1. ORGANISING
- R.Shyam Prasad

2. Syllabus
Unit - III
Organizing : Types of Organizations - Organisation
Structure - Span of Control and Committees -
Departmentalisation - Informal Organisation.

3. Definition of Organization
According to Haimann “Organization is the structural
frame work within which the various efforts are
coordinated & related to each other”
Koontz and O’Donnell defines as “Organisation is
the establishment of authority and relationships with
provision for coordination between them, both
vertically and horizontally in the enterprise
structure.”

4. Organizational Structure
An organizational structure consists of activities such
as task allocation, coordination and supervision,
which are directed towards the achievement of
organizational aims.
It can also be considered as the viewing glass or
perspective through which individuals see their
organization and its environment.

5. Types of Organizational Structure
Line Structure
Line & Staff Structure
Functional structure
Matrix structure
Task Force
Committee

6. Types of Organizational Structure
Line Structure
Has a very specific line of command.
The approvals and orders in this kind of structure come from top to
bottom in a line
This kind of structure is suitable for smaller organizations like small
accounting firms and law offices.
This is the sort of structure that allows for easy decision-making and
is also very informal in nature.
They have fewer departments, which makes the entire organization a
very decentralized one.
It is not effective for larger companies.

7. Line Structure

8. Line and Staff Structure
Line and Staff Structure
In the line structure, information and approvals come from top to bottom,
with staff departments for support and specialization.
Line and staff organizational structures are more centralized.
Here line and staff have authority over their subordinates, but staff
managers have no authority over line managers and their subordinates.
The decision-making process becomes slower in this type of organizational
structure because of the layers and guidelines that are typical to it. Also,
let's not forget the formality involved.

9. Line and Staff Structure

10. S.No Line Authority Staff Authority
1 Right to decide and command Right to provide advice, assistance
and information
2 Contributes directly to the
accomplishment of Organisational
objectives
Assist line in the effective
accomplishment of Organisation
objectives
3 Relatively unlimited and general Relatively restricted to a particular
function
4 Flow downward from a superior to
subordinate
May flow in any direction
depending upon the need of advice
5 Creates superior and subordinate
relation
Extension of line and support line
6 Exercise control Investigates and reports
7 Makes operating decision Provides idea for decision
8 Bears final responsibility for results Does not bear final responsibility
9 Doing functions Thinking function
10 Provides channel of communication No channel of communication is
created
Difference between Line and Staff Authority

11. Functional Structure
This concept is based on functional foremanship by FW
Taylor
The org. is divided into a number of functional areas.
Each area is managed by an expert
People are classified according to the function they
perform in the organization.
An individual receives orders from several functional
heads.
This leads to operational efficiencies.

12. Functional Structure
This is best suited for a producer of standardized
goods and services at large volume and low cost.
Coordination and specialization of tasks are
centralized in a functional structure.
However it could also lead to a lack of communication
between the functional groups within an organization,
making the organization slow and inflexible.

13. Older Functional Structure

14. Modern Functional Structure

15. Matrix structure
The matrix structure groups employees by both
function and product. This structure can combine the
best of both separate structures.
A matrix organization frequently uses teams of
employees to accomplish work, in order to take
advantage of the strengths, as well as make up for the
weaknesses, of functional and decentralized forms.

16. Matrix structure

17. Task Force
It comprises a group of people with different
background brought for a temporary period to
perform a specific task.
When such task is completed the task force will be
dissolved and people in the group are sent to their
respective original positions or departments.

18. Committee
The work done by an organisation in modern times is
varied in nature & considerable in volume.
The time at its disposal is limited. It cannot,
therefore, give close consideration to all the issues and
other matters that come up before it.
A good deal of its business is, therefore, transacted by
what are called the Committees.

19. Committee
A committee is a group of expert people in a field are
brought together to advice / recommend solution for
a particular problem.
Committee in Govt of India.
Dr Kirit Parikh Petrol Price Committee
2G scam: Joint Parliamentary Committee

20. Difference formal & informal org.
Formal organization Informal organization
It is deliberate & planned
It is shown in org chart
It is created to achieve org goals
Rules, duties & responsibilities
are written & clearly defined
Formal authority is attached to
the position
It provides a clear org structure
and division of labor
It is natural & Spontaneou
It is not shown in org char
It is created to satisfy social need
It has unwritten rules & Tradition
Informal authority is attached to th
perso
It is structure less and develops out o
social contac

21. Span of Management
Appropriate span of Management must be determined by the specific of the manager in
a particular situation.
Factors governing Span of Management
Ability of the manager
Ability of the Employees
Type of work
Well defined authority & Responsibility
Geographic locations
Level of Management
Economic Consideration

23. Span of Management
Characteristics Tall Org Flat Org
Levels of Management Many Few
Span of Management Narrow Wide
Management positions Many Few
Communication Slow Fast
Nature of supervision Constant Flexible

24. Span of Management
Narrow span – superior with less number of subordinate to monitor
Advantages
Close supervision
Close control
Fast Communication between subordinates & superiors
Disadvantages
Superiors tend to get too involved in subordinate work
Many levels of Management
High cost due to many levels
Excessive distance between lowest level and top level

25. Span of Management
Wide span - superior with more number of subordinate to monitor
Advantages
Superiors are forced to delegate
Clear policies must be made
Subordinates must be carefully selected
Disadvantages
Tendency of overloaded superiors to become decision bottlenecks
Danger of superiors loss of control
Requires exceptional quality of managers

26. Decentralization
It refers to the disposal of authority i.e. the authority
to take decision lies with persons at various levels
Advantages:
Relief to top executives of taking decision
Motivates sub ordinates to take decision
Effect. supervision & control as more time is avb.
Better decision can be taken as people closer to reality
take decision.

27. Centralization
According to henry fayol ”Everything which goes to
increase the importance of the sub ordinates role is
decentralization, everything which goes to reduce it is
centralization”.
Advantages:
Helps to research & forecasting uncertain things.
Utilizing Top management talent
Uniformity of policies & procedures
Duplication of work avoided

28. DEPARTMENTATION
It is a process of grouping individual jobs into departments in
order to achieve organizational objectives smoothly. Need &
Importance of departmentation:
Specialization
Expansion
Autonomy
Appraisal
Control

29. Types / basis Departmentation
Based on Functions
Based on Products
Based on Territory
Based on Customers
Based on Numbers
Based on Time

30. Based on Functions
Each dept is organized on the basis of specialized
activity it carries on. This
Each specialized function is further sub divided to
accommodate even more specialized functions
This is the most logical & time proven and natural
extension of departmentation in many companies

31. Based on Functions

32. Based on Products
It is employed in companies where there are multiple
products which are very different in marketing or
production or distribution of the product.
These companies departmentalize the product
category but have the common activities such as
accounts, finance, Treasury as centralized activities

35. Based on Territory
It is applied by companies whose activities are
geographically spread & there is a need for similar
product or service throughout the country. .
When local custom, practices, preference change
from one place to other then territory based
departments are suitable.
Territory based departments are classifies as zones,
divisions, Branches.

37. Based on Customers
When products or serviced offered change with the
type of customer then this kind of departmentalize is
used.
Each type of customer usually require different
service such as different pricing, packaging, credit
policy, advertisement media, Extra attention such
customer service, discounts. Etc.

40. Based on Numbers
When activities are grouped on the basis of the
specialized service offered by a collection of people,
then this method of departmentation is used.

42. Splintered authority
It refers to the pooling of authority of different
managers in order to achieve an objective or solving a
problem.
Ex: When reducing cost of a product, it implies that
different departmental managers work together,
managers from departments like Design, R&D,
Production, Purchase departments are needed to
rationalize & decide the product cost.