Chapter 4 » Organizing

1st Semester

Concept and meaning of organization

  •   Organization is defined as the determination of relationship between materials as well as human resources. It is most important and basic function of management.
  • It includes division of work, coordination of people and appropriate establishment of materials and resources.
  • Therefore we can say that organization is necessary function of management. Without it a business firm can’t move ahead.
  • In short organization refers to a mechanism which enables man to live together and perform the activities collectively. It is the foundation on which the whole structure of management is built.

Principles of organization

1. Principle of unity of objectives: Organizational goals, departmental goals, and individual goals must be clearly defined. All goals and objectives must have uniformity. When there is contradiction among different level of goals desired goals can’t be achieved. Therefore, unity of objectives is necessary
2. Principle of specialization:  Sound and effective organization believes on organization. The term specialization is related to work and employees. When an employee takes special type of knowledge and skill in any area, it is known as specialization. Modern business organization needs the specialization, skill and knowledge by this desired sector of economy and thus, efficiency would be established.
3. Principle of coordination: In an organization many equipment, tools are used. Coordination can be obtained by group effort that emphasize on unity of action. Therefore, coordination facilitates in several management concepts
4. Principle of authority: Authority is the kind of right and power through which it guides and directs the actions of others so that the organizational goals can be achieved. It is also related with decision making. It is vested in particular position, not to the person because authority is given by an institution and therefore it is legal. It generally flows from higher level to lowest level of management. There should be unbroken line of authority.
5. Principle of responsibility: Authentic body of an organization is top level management, top level management direct the subordinates. Departmental managers and other personnel take the direction from top level management to perform the task. Authority is necessary to perform the work .only authority is not provided to the people but obligation is also provided. So the obligation to perform the duties and task is known as responsibility. Responsibility can’t be delegated. It can’t be avoided.
Principle of delegation: Process of transferring authority and creation of responsibility between superior and subordinates to accomplish a certain task is called delegation of authority. Authority is only delegated, not responsibilities in all levels of management. The authority delegated should be equal to responsibility
7. Principle of efficiency: In enterprise different resources are used. Therese resources must be used in effective manner. When the organization fulfill the objectives with minimum cost, it is effective. Organization must always concentrate on efficiency.
8. Principle of unity of command:  subordinates should receive orders from single superior at a time and all subordinates should be accountable to that superior. More superior leads to confusion, delay and so on.
9. Principle of span of control: unlimited subordinates cant be supervised by manager, this principle thus helps to determine numerical limit if subordinates to be supervised by a manager. This improves efficiency.
10. Principle of balance: the functional activities their establishment and other performances should be balanced properly. Authority, centralization, decentralization must be balance equally. This is very challenging job but efficient management must keep it.
11. Principle of communication:  Communication is the process of transformation of information from one person to another of different levels. It involves the systematic and continuous process of telling, listening and understanding opinions ideas, feelings, information, views etc, in flow of information. Effective communication is important
12. Principle of personal ability: for sound organization, human resources is important. Employees must be capable. Able employees can perform higher. Mainly training and development programs must be encouraged to develop the skill in the employees
13. Principle of flexibility:  organizational structure must be flexible considering the environmental dynamism. Sometimes, dramatically change may occur in the organization and in that condition, organization should be ready to accept the change
14. Principle of simplicity: this principles emphasizes the simplicity of organizational structure, the structure if organization should be simple with minimum number of levels do that its member an understand duties and authorities.

Organizing process

  1. Determination of objectives: In the 1st step of organizing process, the objective of an enterprise is to be determined. Every business firm set the goals and they want to achieve these goals. Further existence of business firms depend on the goal achievement. In this process, strategy, planning and policies are made.
  1. Determination of activities: After determination of objective, the activities must be determined. There may be various activities in an enterprise. According to the goals of the firm the activities must be determined. The activity may be divided into different functions like production, financing, sale, administration, recruitment etc. all these activities must be directed towards the goals of the enterprise.
  1. Grouping activities: In organization different works of different nature have to be performed. When similar natures of work are grouped in unit, section, or department, then that is known as grouping of activities. It is a function of departmentation. For example the activities of production may be grouped separate in production department
  1. Allocation of duties and responsibility: After grouping the activities, an individual is assigned to a specific job or post. According to position, duties, and responsibilities the ob must be specified. When duties are provided to the employee then he/she is responsible for doing the job. Therefore it is an important step of organizing process.
  1. Delegation: Mainly authority is in top level management. And the authority must be delegated to worker through middle level and lower level management. Authorities, duties, and responsibilities come together. So without authorities, duties, and responsibilities there is no proper work done and balance.
  1. Communication: After proper delegation of authority, effective communication system must be developed. It is the most important step that helps in liking so many department, position and other authority group. When communication system is not effective, the organizing function is not better.
  1. Coordination: All employees, department, divisions and branches conduct many activities. Proper and effective coordination coordinates these activities. After communicating all essential information and messages all resources and factors must be coordinated in the enterprise. Without proper coordination, team work can’t be established and consequently the organizational goals can’t be achieved.

Meaning of authority, responsibility and accountability

Meaning of authority
Authority is the kind of right and power through which it guides and directs the actions of others so that the organizational goals can be achieved. It is also related with decision making. It is vested in particular position, not to the person because authority is given by an institution and therefore it is legal.
Meaning of responsibility
Authentic body of an organization is top level management, top level management direct the subordinates. Departmental managers and other personnel take the direction from top level management to perform the task. Authority is necessary to perform the work .only authority is not provided to the people but obligation is also provided. So the obligation to perform the duties and task is known as responsibility.
Meaning of accountability
Subordinates receive the authority from top level of the organization and they also receive the command and direction to perform the work. In other words, they are authorized and responsible for a specific function. Sometimes the task may not be performed effectively the subordinates may not be performed effectively. The subordinates must report to boss about the assigned task. S/he must answer his/her performance which is known as accountability.

Meaning of delegation of authority

All activities are not performed by one person. Authority should be provided to the subordinates too. Process of transferring authority and creation of responsibility between superior and subordinates to accomplish a certain task is called delegation of authority. It can take place without decentralization. It can be withdrawn by delegator at any time. It minimizes the burden of managers of unit, departments or plant. Relationship is between superior and immediate subordinates are indicated. It is technique of management used to get the things done through others. It is confined to manager and subordinates. Authority is only delegated, not responsibilities. Very important to management process Control remains in hand of superior who supervise the activities of subordinates. It is an art of management science. When authority is not given to subordinates there is no performance. Delegation is the process of sharing power and work (deliver the power from one to another).

Principles of delegation of authority

1. Principle of parity of authority and responsibility– parity of authority and responsibility is one of the important principles of delegation of authority. There is equality in assigned task and power to do the work. Authority to the subordinates is given by the superior on the basis of assigned task. So Authority to the subordinates is given nether more or less than the task otherwise their can be improper utilization of authority and mismanagement of task.
2. Principle of absoluteness of responsibility– according to it, responsibility can’t be delegated. Only authority can be delegated. The person who delegates authority is himself responsible for his seniors.
3. Principle of unity of command– according to it, subordinates must be commanded by one superior, they should take their task from one superior and should be accountable fro their responsibility toward the superior level of operation
4. Principle of functional definition of authority and responsibility– as per this principle. Duties and task assigned by the superior and the authority given to fulfill the task should be clearly explained and decided. Bt this subordinates can know about the limit of one’s right, duties and responsibility.
5. The scalar chain– according to it, authority flows from top to bottom. So that scalar chain is the basis of relationship between the superior and subordinates. It emphasizes the relation between superior and subordinates by which delegation will be easier.

Meaning of decentralization of authority.

  • Decentralization is delegation of and dispersion of authority from top executive to the low level administrator or it may be geographical dispersion of authority from central to many branches. It is not possible without delegation of authority.
  • It prepares the organizational participants of the organization.
  • It is both philosophy and technique of management. Relationship is between top level, management, departments and units.
  • It involves all managers at all level and relates relationship between departments, sections and units. Withdrawal of authority is not simple in this case.
Needs/ advantages of decentralization of authority
 
1. It provides relief to top executives from routine and time consuming work and helps them to devote greater attention to organizational level works
2. It ensures executive developmentof capable managers because subordinates get opportunity for exercising their own judgment, makes own decision, deal will difficult situations, handle the risk and be trained
3. It facilities growth and diversification of the organization because it helps to expand their production and diversifies production through conversion of centralized structure to decentralized structure.
4. It permits the managers, close to work and knowledgeable, to make quick and better decisionsabout circumstances of problems, details of work and so on.
5. It provides rights, power, and authority, prestige to middle and low level management which helps in getting opportunity for leadership and participation and higher motivation.
6. It leads to effective supervision and control by evaluating the performance of each unit.