Organization is the backbone of management. Sound organization contributes greatly towards continuity & success of the organization. Organizing is the process of integrating the physical, financial & human resources & establishing the productive relationship across them to accomplish the pre-determined goals. It is concerned with the building up a stable framework or structure of various inter-related parts of the enterprise; each part having its own function & being centrally regulated. Basic principles of organizing: Achievement of Goal Division of work Well defined jobs & Authority Discipline Co-ordination Security & support Better Human Relation Adaptability Formal organization consists of pre defined goal & well defined structure of the jobs having clear cut authority & responsibility. It is based on basic rules, regulations, principles & practices where employees accomplish their task & achieve the goal of the organization. In formal organization each & every employee is responsible for his/her own task & performance. Examples: Production house & Service sectors Informal organization values both personal & social relationship which is spontaneously established within the formal set up. There is not any strict rules & regulations, but there is high scope of liberty & feelings. The relationships are voluntary based on emotional set up. Therefore, no conscious effort is required to hold the relations. Examples: friendship group. Both formal & informal organizations play very vital role in organizational set up. Formal organizations work independently & informal organizations depend upon formal organizations. Line organization is the most oldest & simplest form of administrative organization. Line organization is also known as scalar organization as authority flows from top to bottom. There is the line officer who has unified control and independent decision making power in their field. Specialized or supportive services do not take place in line organizations. There is also inadequate communication & some times lack of proper co-ordination due to one way communication. Example: President, Vice President, Supervisor & Employees. Line & Staff organization is a modification of the line organization & it is more complex than the pure line organization. In this kind of organization, line officers & staff officers (Generalists & Specialists) work together. Line officers plan & execute the work whereas staff officers play advisory role. Power of command remains with the line executives & staff serves only as counselors who reduce the burden of the line managers & help to take quick decision. Centralization refers to the process in which organizations take decisions & plan. The decision making power is retained in the hand of the head of the organization & all other employees have to obey this. Decentralization is just the opposite of centralization. It refers to delegation of decision making authority through out an organization.

1. ORGANIZATION &
ORGANIZING
BY: Dr. Debajani Palai
Organization & organizing
Classification of Organizations: Formal Organization & Informal Organization
Line & Staff Relation
Centralization Vs. Decentralization
Span of Control
Structures of Organization

2. ORGANIZATION & ORGANIZING
 Organization is the backbone of management. Sound organization contributes
greatly towards continuity & success of the organization.
 Organizing is the process of integrating the physical, financial & human resources
& establishing the productive relationship across them to accomplish the pre-
determined goals.
 It is concerned with the building up a stable framework or structure of various
inter-related parts of the enterprise; each part having its own function & being
centrally regulated.

3. BASIC PRINCIPLES OF OTGANIZING
 Achievement of Goal
 Division of work
 Well defined jobs & Authority
 Discipline
 Co-ordination
 Security & support
 Better Human Relation
 Adaptability

4. CLASSIFICATION OF ORGANIZATIONS FORMAL
ORGANIZATION
 Formal organization consists of pre defined goal & well defined structure of the
jobs having clear cut authority & responsibility.
 It is based on basic rules, regulations, principles & practices where employees
accomplish their task & achieve the goal of the organization.
 In formal organization each & every employee is responsible for his/her own task
& performance.
 Examples: Production house & Service sectors

5. INFORMAL ORGASNIZATION
 Informal organization values both personal & social relationship which is
spontaneously established within the formal set up.
 There is not any strict rules & regulations, but there is high scope of liberty &
feelings.
 The relationships are voluntary based on emotional set up. Therefore, no conscious
effort is required to hold the relations.
 Examples: friendship group.
 Both formal & informal organizations play very vital role in organizational set up.
Formal organizations work independently & informal organizations depend upon
formal organizations.

6. LINE ORGANIZATION
 Line organization is the most oldest & simplest form of administrative
organization.
 Line organization is also known as scalar organization as authority flows from top
to bottom.
 There is the line officer who has unified control and independent decision making
power in their field.
 Specialized or supportive services do not take place in line organizations.
 There is also inadequate communication & some times lack of proper co-
ordination due to one way communication.
 Example: President, Vice President, Supervisor & Employees.

7. LINE & STAFF ORGANIZATION
 Line & Staff organization is a modification of the line organization & it is more complex than the
pure line organization.
 In this kind of organization, line officers & staff officers (Generalists & Specialists) work together.
Line officers plan & execute the work whereas staff officers play advisory role.
 Power of command remains with the line executives & staff serves only as counselors who reduce
the burden of the line managers & help to take quick decision.
 Two types of authorities flow (Line Authority & Staff Authority) in this kind of organization &
division of work & specialization take place simultaneously.
 The whole organization is divided into different functional areas to which staff specialists are
attached.
 Examples: Marketing Manager, Market Supervisor & Salesman.
 Examples: Finance Manager, Chief Assistant & Accountant. Similarly, Production Manager, Plant
Supervisor & Foreman.

8. CENTRALIZATION
 Centralization refers to the process in which organizations take decisions & plan.
The decision making power is retained in the hand of the head of the organization
& all other employees have to obey this.
 There are some organizations, where top management makes all the decisions &
middle & lower level managers merely implement the decisions taken by the top
level.
 In centralization little delegation of authority is the rule: power & discretion are
concentrated in the hands of few executives. Decision making & control
mechanism reside at the top level of management.
 It may be essential for small organization for its survival in a highly competitive
world. But absolute centralization is untenable because it would mean that
subordinates have no authority & accountabilities.

9. FACTORS INFLUENCING CENTRALIZATION
 Nature of organization (sole proprietorship)
 Size of organization (small)
 Nature of task (easy & not require specialist)
 Delegation ability (capability of management to delegate authority to
subordinates)
 Employees’ efficiency (employees having lack of skills & are not responsible)
 Centralization is focused, cost effective & creates better command, but it slows
down operations, delays in decision making, reduces scope of specialization,
discourages initiative, overburdens top management & lacks adaptability to
change.

10. DECENTRALIZATION
 Decentralization is just the opposite of centralization. It refers to delegation of
decision making authority through out an organization.
 The more decentralised a system, is the more it relies on lateral relationships & less
it can rely on command or force.
 Decentralization reduces the burden of the top management & facilitates growth
of the organization.
 It is helpful for the expansion of the organization with strong motivational power of
employees.
 It encourages development of managers by providing them opportunities with
autonomy.

11. DELEGATION OF AUTHORITY
 Delegation of authority means division or sub-allocation of power or authority or
downwards to the subordinate.
 It focuses on devolution of authority on subordinates to perform their assigned
duties or tasks.
 It is the process of organization by which managers make it possible for others to
share the work of accomplishing organizational objectives.
 Delegation consists of granting authority or the right to take decision in certain
defined areas & subordinates take their responsibilities to accomplish the task.

12. PROCESS OF DELEGATION
 Delegation is based on following processes. These are:
 Preparing
 Planning
 Discussing
 Auditing
 Appreciating

13. CONT…
 Preparing is the first step of delegation which aims to identify what should & what
should not be delegated. The supervisor delegates tasks to subordinates in which they
can perform better.
 Planning is meeting with the chosen subordinates to describe the task, their duties &
responsibilities. It also aims that subordinates should focus on action plan.
 Discussing includes reviewing the objectives of the delegation as well as the action plan
of the subordinates. The supervisor should clarify & solicit feedback from subordinates.
 Auditing is monitoring the progress of the delegation & making adjustments in
response to unforeseen problems.
 Appreciation is accepting the completed task & acknowledging the efforts of
subordinate.

14. ELEMENTS OF DELEGATION
 Elements of Delegation are: Authority, Responsibility & Accountability.
 Authority: It can be defined as the power & right of a person to make proper
allocation & utilization of resources, to take decisions & to give orders to achieve
the goal of the organization. It must be well defined & it flows from top to bottom.
 Responsibility: It is the duty of the person to complete the task assigned to
him/her. A person who is given responsibility should ensure that he/she
accomplishes the task assigned to him/her.
 Accountability: It means giving explanations for any variance in the actual
performance from the expectations set. It can not be delegated & it states that
answerable for the end result. The top level management is the most accountable.

15. SPAN OF MANAGEMENT/SPAN OF
CONTROL
 Span of management refers to the number of subordinates who report directly to a
specific manager. It is one in which a manager can supervise & control effectively a
group of persons at one time.
 Span of control can be wide & narrow.
 In Wide Span of Control a manager can supervise & control effectively a large
group of persons at one time or a large number of subordinates at one time. Basic
features of this span are: prompt response from the employees, better
communication & co-ordination & less overhead cost of supervision.
 In Narrow Span of Control a manager can control a few number of employees at a
time. According to this span the work & authority is divided among many
subordinates. In narrow span of control proper communication & co-ordination is
very difficult.

16. FACTORS INFLUENCING SPAN OF
CONTROL
 Capacity of the superior
 Capacity of the subordinate
 Nature of the work
 Degree of decentralization
 Delegation of authority
 Degree of planning
 Principle of scalar chain
 Principle of unity of command

17. CONT…
 Superiors or managers having more capacity in respect of leadership,
communication, decision making, control etc. have wide span of control.
 Efficient & trained subordinates discharge their functions without much help from
the superiors.
 If the nature of the work is repetitive, employees require less attention & the span
is wide.
 Higher degree of decentralization leads to wide span of control.
 When work is delegated to lower levels in an efficient & proper way, confusion is
less & span of control is wide.

18. CONT…
 Higher the degree of planning leads to wide span.
 In scalar chain command or authority flows from top to bottom which facilitates
effective organization as resources will be utilised properly.
 Unity of command avoids communication gap & helps in quick accomplishment of
the task. It creates easy co-ordination & effective organization.
 Spans of management determine the number of hierarchical levels in an
organization.
 A Tall Structure is one that has narrow spans of management & many hierarchical
levels in an organization.
 A Flat Structure is one that has broader spans of management & few hierarchy.

19. DIFFERENT ORGANIZATION STRUCTURES
 The structure or design of an organization depends upon size of the organization,
nature of business, objectives & strategy of business along with organizational
environment.
 Different types of structures:
 Functional organization structure
 Product organization structure (Divisional)
 Geographic organizational structure (Divisional)
 Matrix organizational structure

20. FUNCTIONAL ORGANIZATION STRUCTURE
 Functional organization structure is the most common model of organizations.
 Organizations with such a structure are divided into smaller groups based on
specialised functional areas, such as operations, finance, marketing, human
resources, IT etc.
 The organization’s top management consists of several functional heads, such as:
head of HR, head of Marketing etc.
 Communication generally occurs within each functional area & is communicated
across departments through the departmental heads.
 This structure provides greater operational efficiency as employees are functionally
grouped based on expertise, but the demerit is they do not support other
functional departments.

21. PRODUCT ORGANIZATIONAL STRUCTUR
 In product organizational structure organizations are organized by a specific product
type.
 Each product category is considered as a separate unit & falls within the reporting
structure of an executive who oversees everything related to that particular product line.
 For example, in a retail business the structure would be grouped according to product
lines.
 Organization structured by product category facilitates autonomy by creating
completely separate processes from other product lines within the organization.
 It promotes depth of understanding within a particular product area & also promotes
innovation, but it is very difficult to recruitment of personnel having strong skill in a
particular product.

22. GEOGRAPHIC ORGANIZATIONAL
STRUCTURE
 The organizations that go beyond a city or state & having different customers
across the world use geographic organizational structure.
 It brings together employees from different functional specialists & allows
geographical division.
 This organization responds more quickly & efficiently to market needs & focuses
efforts solely on the objectives of each business unit, increasing results.
 Hence such type of organization increases cost & demands more effort as it
spreads across the world.

23. MATRIX ORGANIZATIONAL STRUCTURE
 A matrix structure is organised to manage multiple dimensions. It provides for reporting
levels both horizontally & vertically & uses cross-functional teams to contribute
functional expertise.
 This type of structure brings together employees & managers across departments to
work towards accomplishing common organizational objectives.
 It leads to efficient information exchange& communicate with each other frequently to
solve issues.
 It promotes democratic style of management & enhances employee motivation.
 However, it often creates internal complexity, as reporting is not limited to a single
supervisor. Sometimes employees tend to get confused as to whom they report &
directed by whom.

24. DEPARTMENTALIZATION
 The division of labour divided the jobs into smaller activities. In order to coordinate
these activities, they are grouped together which is known as departmentalization.
 Departmentation is defined the process of forming departments or grouping
activities of an organization into a number of separate units for the purpose of
efficient functioning.
 Examples: divisions, departments, sections, branches, groups etc.

25. BENEFITS OF DEPARTMENTATION
 Specialization: Departmentation leads to the benefits of specialization as various
organizational activities are grouped according to their relation with the specific
functions or objectives. Every departmental manager specializes in the tasks
assigned to him.
 Administrative control: Departmentation helps in effective managerial control
because the standards of performance for each & every department can be laid
down precisely. Every department has a specific objective & own budget.
 Responsibility: Since organization work is divided into manageable units &
authority & responsibility are precisely defined. It is easier to fix the accountability
of different managers for the performance of various tasks.

26. CONT…
 Autonomy/Freedom: The departments created through departmentation are semi-
autonomous units. Their heads are given a sufficient degree of authority to run
their departments which increases the efficiency of the departments.
 Development of Managers: Departmentation helps in the development of
managerial personnel by providing them opportunities to take independent
decisions & initiatives. The executives can develop themselves for promotion to
higher jobs.
 Efficient Work Process: Workers are grouped on the process or activity used by the
work. Grouping on the basis of functioning of the organization like: raise capital,
purchase raw materials, greater research help to smooth running of the
organization.