business studies notes cbse class 12 -ORGANISING

5. Organizing

Summary

In general terms, ‘organizing’ refers to the systematic arrangement of things and activities. However, in the context of management, ‘organizing’ may be interpreted in two ways—as a structure and as a process.

Meaning of organizing As a process, organizing is concerned with the productive integration of human, physical and financial resources to meet the goals of an organisation. As a structure, organizing involves creating a structural framework within which the individual efforts are coordinated to meet the needs of an organisation.

Importance of organizing and organizational structure

•        Organizing lends to specialization, as the whole work is sub-divided into specific activities and allocated to different Individuals.

•        Organizing helps to create a well-defined structure of jobs, as the roles and responsibilities of each job position are clearly defined in the organizing process.

•        Organizational structure clarifies the authority and power associated with each job position in the organisation.

•        Organizing helps to avoid duplication of work through a clear-cut distribution of work between individuals and groups.

•        Organizing facilitates: coordination between the various levels of management by synchronizing the efforts of people at various levels.

•        Organizing serves as a source of support and security by assigning a definite job designation to each employee.

•        Organizing facilitates  adaptation of a business to changes in external environment.

Process of organizing

•        Division  of work is  the first  step in the organizing process.  It  involves subdivision of the total work to be done into specific jobs to promote specialization, efficiency and economy.

•        Grouping of jobs, or departmentation, is the second step in the organizing process. It relates to grouping similar jobs into departments on the basis of functions, type of product, geographical area, etc.

•        Establishing authority-responsibility relationships is the third step in organizing process, involving the linking  of  all jobs in a hierarchy by authority-responsibility relationships.

Structure of organisation

•        An organizational structure is a system of job positions reflecting the roles and responsibilities associated    with each job position and authority responsibility relation between them. The organizational structure appears like a pyramid with a narrow top and wide bottom.

•        The  following  factors  need   to  be  kept  in  mind  while  designing  an organizational structure job design, departmentation, span of control and delegation of authority.

Types of organizational structure

•        Functional structure is created by grouping the various activities of an organisation on the basis of basic functions to be performed, like finance, marketing, production and personnel.

• Divisional structure is created by grouping the various activities  to be performed in an organisation on the basis of various product lines. It is useful in large and diversified organisations.

Formal organisation

•         Formal organisation is a deliberately planned and created structure of activities and authority-responsibility relationships to meet the organizational goals.

Features of formal organisation

•        It is deliberately planned and created by management.

•        It strives to achieve organizational goals.

•        It is rigid in nature.

•        It contains a well-defined structure of authority and responsibility.

•        It follows the formal channel of communication, i.e., scalar chain.

Informal organisation

•                                Informal organisation is a network of social relationships which arises             

              spontaneously from within a formal organisation to meet the social and cultural     

              needs of its members.

Features of informal organisation

•        It arises spontaneously from within a formal organisation as a result of social interaction among members of the organisation.

•        It strives to meet social and cultural needs of the members.

•        It is flexible in nature.

•        It is a complex network of human relationships.

•        It follows informal channels of communication.

Delegation of Authority

         The process by which a manager shares some of his work and authority with his 

         subordinate is known as delegation of authority.

Importance of delegation of authority

•        Delegation of authority reduces the workload of managers, as through delegation the manager shares his workload with his subordinates.

•        It provides the basis for superior-subordinate relationships, as grant of authority by superior to subordinates gives meaning to superior-subordinate relationships.

•        It improves managerial effectiveness, as by delegating routine work to the subordinates, the managers can concentrate on important matters.

•        It motivates subordinates, as it gives them a sense of importance and also an opportunity to apply their creativity and skill to their job.

•        It helps to develop managers, as it gives the subordinates an opportunity to individually handle and solve managerial problems.

•        It facilitates the growth of the organisation, as it develops the potential of employees.

Elements of Delegation

•        The three elements in the process of delegation are the assignment of tasks, grant of authority and creation of responsibility and accountability.

•        The principle of delegation by results expected states that there should be a relation between the results expected from a subordinate and the amount of authority granted to him.

•        Principle of parity of authority and responsibility states that there should not be any disparity between  the authority granted  to a subordinate and responsibility imposed on him because responsibility without authority makes the person ineffective and grant of excessive authority to subordinates makes him misuse it.

•        The principle of absolute responsibility states that authority can be delegated but responsibility cannot be delegated by a superior. The superior remains responsible, or accountable, to his superior for the tasks which may be assigned to his subordinate. The responsibility of the superior is absolute.

•        The authority level principle states that before taking a decision, a manager should ensure that he has due authority to take a decision at his level and if he does not have authority to take decisions at his level, he should refer to his superior.

Centralization of authority

•                               Centralization of authority refers to concentration of authority for decision-

              making and actions in the hands of a few managers at the higher level.

Decentralization of authority

•                               Decentralization of authority refers to the systematic delegation of authority at all         

              levels of management and in all departments of the organisation for decision-  

              making and actions appropriate at the respective levels:

I             Importance of decentralization: Decentralization helps an organisation to cope                        

              with changes, reduces the workload of managers, facilitates growth of an      

              organisation, helps to develop managers, facilitates decision-making, ensures         

              smooth running of an organisation and promotes initiative and creativity.

Meaning and Importance of Organizing

Very-Short-Answer Questions

1.      What is meant by organizing?The managerial function of organizing refers to    

         the process of integrating human, physical and financial resources required to    

         meet the goals of an organisation. It also involves determining the various 

         activities / jobs to be performed, grouping similar jobs into departments, then 

         designing the organizational. Structure accordingly and establishing authority-

         responsibility relationships among various job positions.