MN106

Principles of
Managemen
t
Module 3

BBA/BCA
Concept of organizing

Organizing is the second function of management

following planning. Organizing process results in a
structure of the organization.
Organising in general, means systematic
arrangement of activities.
Organising synchronises and combines human,
physical and financial resources.
Organising as a process relates to sub-dividing and
grouping of activities.
Organizing definition

According to Haney, “Organization is harmonious

adjustment of specialised parts for the accomplishments of
some common purpose or purposes.
According to Haimann, “Organization is the process of
defining and grouping the activities of the enterprise and
establishing the authority relationship among them.”
According to Mc Farland, “An identifiable group of people
contributing their efforts towards the attainment of goals
is called organization.”
Characteristics of
organizing: –
• (1) Division of work
• (2) Coordination
• (3) Plurality of persons
• (4) Common objectives
• (5) Well-defined Authority and Responsibility
• (6) Organization is a structure of relationship
Importance of Organizing

(1) Benefits of Specialization

(2) Clarity in Working Relationship
(3) Optimum Utilization of Resources
(4) Adaptation to Change
(5) Effective Administration
(6) Development of Personnel
(7) Expansion and Growth
Steps in the process of
organizing
1. Determining the
activities to be
performed to 2. Grouping Similar 3. Assignment of
achieve the Activities: Duties:
objectives of the
organization:

4. Establishing
Reporting
Relationships:
1. Determining the activities to be
performed to achieve the objectives
of the organization:

After defining the

objectives of the At this step, a list of
organization, as the next activities is prepared and
step, it necessary to each major activity is
determine the activities divided into smaller
to be performed to parts.
achieve those objectives.
2. Grouping Similar
Activities:
The next step is to group the activities on the
basis of similarity or relatedness.
 This is known as classification of activities.
The activities of same nature are grouped
together and assigned to a particular
department. e.g., purchase of raw material,
purchase of manufactured parts, etc. are given
to the purchase department.
Similarly, financial arrangements, maintenance
of accounts can be given to finance department.
3. Assignment of
Duties:
At this stage, the tasks are assigned to each post.
e.g., the purchase of raw material and manufactured
goods will be assigned under the purchase manager.
In the same way the finance manager will be given
the responsibility of making financial arrangements.
While assigning these duties, it is important to match
the nature of the work and the capabilities of the
person to whom the work is assigned.
Also necessary authority is assigned to them for the
performance of work.
4. Establishing Reporting
Relationships

When two or more than

two persons are required
for the attainment of
Last step is to define the
common goals, for proper
interrelationships among
administration it is
various positions.
important that their
interrelationship must be
defined very clearly
 Formal organisation
• Formation: Formal organisation is created by top-level
management for the smooth functioning of the organisation.
• Purpose: It is created to achieve the organisational objectives,
and it gives more emphasis on work rather than interpersonal
relationships.
• Reporting Relationship: The position, responsibility, and
accountability of each person are clearly defined. These things
clarify who will report to whom and avoids confusion in an
organisation.
• Stability: Formal organisation is stable due to its well-defined
structure.
• Chain of Command and Communication: Formal organisation
follows the official chain of command and communication at
every step.
• Flexibility: Formal organisation is rigid because members are
required to behave in a prescribed manner.
• Coordination: Formal organisation coordinates and integrates
the effort of various departments.
Advantages & disadvanatges
advanatge Fixation of Responsibility: It is easier to fix responsibility
because mutual relationships are clearly defined.

s of formal
organisati Clarity of Duties: The role and duties of each member are
clearly and explicitly specified. So, there is no confusion,
and it helps in avoiding duplication of effort.
on
Unity of Command: There is unity of command as formal
the organisation makes more use of official channels of
command and communication.

Helpful in achieving Objectives: It leads to the effective

accomplishment of objectives by providing a framework for
operations to be performed and clarify of roles in the minds
of employees.

Provides Stability: It provides stability to the organisation

as the behavior of employees can be fairly predicted since
there are specific rules to guide them.
Disadvanatges of formal
organisation

01 02 03
Delay in Action: Formal Lack of Ignore Human
communication may lead Initiative: Formal Elements: Formal
to delays in decision- organisation does not organisation has given
making and action, as the allow any deviation from more emphasis on its work
official chain of command policy and rules, which are and structure. Therefore, it
has to be followed. laid down by the ignores the importance of
management. It kills the interpersonal relations and
spirit of initiative and human needs.
creativity amongst the
members of the
organisation.
 Formation: Informal organisation emerges on its own
Informal within the formal organisation due to interaction
amongst employees.
organisati Purpose: The main purpose of an informal organisation

on is to satisfy social and cultural needs and to fulfill the

common interest of the members of the organisation.

Reporting Relationship: There is no definite pattern of

authority and responsibility.

Stability: Due to the lack of a definite structure, the

informal structure is less stable.

Chain of Command and Communication: There is

no definite direction of communication for the flow of
information. Information flows independently.

Flexibility: This organisation is flexible because it has

no standard for measures of behaviour.
Informal Faster Communication: Informal organisation follows
the independent channel of communication because
organisati there is no prescribed official channel. It leads to a
faster spread of information as well as quick feedback.
on Sometimes, management also uses such
communication to transmit certain information, which
advantage the formal system fails to convey.

s Fulfill Social Needs: Informal organisation satisfies

the social needs of the members, which are not
satisfied in formal organisation. This enhances their job
satisfaction, as it gives them a sense of belongingness.

Help in achieving Organisational Objectives: It

contributes towards the fulfillment of organisational
objectives by compensating for inadequacies in the
formal organisation. Informal organisation provides
feedback about the work experience as they discuss
their views and ideas with superiors.
Disadvantages of informal
organisation

Resistance to Pressure of Group

Change: Informal Spread of Rumours: When Norms: In the case of
organisation is bounded by an informal organisation informal organisation, people
custom and culture, so it spreads rumours, it becomes are under pressure to follow
resists change. Such a destructive force and goes the group norms, even if such
resistance may delay or against the interest of the norms are against the
restrict the growth of the formal organisation. interest of the formal
organisation. organisation.
Organizational
structure
• An organizational structure outlines how certain activities
are directed to achieve the goals of an organization.
• Successful organizational structures define each
employee's job and how it fits within the overall system.
• A centralized structure has a defined chain of command.
Decentralized structures give almost every employee a
high level of personal agency.
• Types of organizational structures include functional,
divisional, flatarchy, product/market and matrix structures.
• Senior leaders should consider a variety of factors
including the business's goals, industry, and culture before
deciding which type of organization is best for their
businesses.
Types of Functional
organisatio organisational
nal structure
structure
Product /market
organisational
structure
Matrix organisational
structure
Functional Departments are organized based on common
organisationa skills, expertise, and work activities

l structure Power and decision-making authority are

consolidated primarily at the top levels of the
organization, with a strong hierarchy-based
decision-making style

Information flows up and down within functional

silos, with less cross-functional communication

Individual departments have clearly defined goals

related to their specialized contributions

Employees develop specialized skill sets and

extensive expertise within their specific function.
advantag
es of a
Increased productivity
functional
structure Skill development
Minimized cost of
operation
Clarity
disadvantag
es of a Hindered decision-
functional making
structure
Competition
between
departments

Narrow scope
Product/Market
organisational structure
• Decentralization – Divisions operate independently with their own decision-
making.
• Product/Market Focus – Each unit specializes in a product or market.
• Clear Accountability – Each division manages its own profits and losses.
• Duplication of Functions – Functions like marketing may be repeated across
divisions.
• Flexibility – Divisions can quickly adapt to changes in the market.
• Customer-Centric – Tailored products/services to specific customer segments.
• Resource Inefficiency – Higher costs due to duplicated efforts across
divisions.
Advantages of Product/Market
Organizational Structure:
• Focus and Specialization: Each division specializes in a product or
market, leading to better expertise and tailored strategies.
• Flexibility: Divisions can quickly respond to market changes or
customer demands.
• Clear Accountability: Each unit is responsible for its own financial
performance, making it easier to track success.
• Customer-Centric: Products and services can be customized for
specific market segments, improving customer satisfaction.
• Innovation: Competition among divisions may drive innovation and
creativity.
Disadvantages of Product/Market
Organizational Structure:
• Duplication of Efforts: Functions like HR, marketing, and finance are
repeated across divisions, leading to inefficiency.
• Higher Costs: The duplication of resources can result in increased
operational costs.
• Internal Competition: Rivalry between divisions for resources or
attention can lead to conflicts.
• Lack of Coordination: Divisions may not collaborate well, leading to
inconsistency across the organization.
• Resource Imbalance: Some divisions might dominate resources
while others struggle.
Matrix organizational
structure
• 1. Dual Reporting Lines: In a matrix organisation, employees have
two bosses. They report to a functional manager who focuses on their
career growth and expertise in a specific department. They also report
to a project manager who oversees their work on a particular project.
• 2. Functional Departments: Matrix organisations have different
departments like marketing, finance, or engineering. Each department
has its area of expertise and supports employees in their respective
fields.
• 3. Project Teams: Matrix organisations create teams that bring
together people from different departments to work on specific projects.
These teams have members with various skills and knowledge to
contribute.
• 4. Efficient Resource Allocation: A key benefit of a matrix
organisation is that resources can be shared across different projects.
This helps the organisation make the best use of employee skills and
expertise, leading to better productivity.
Matrix organizational
structure
• 5. Flexibility and Adaptability: Matrix organisations are well-suited for changing
and complex situations. They can quickly adjust resources based on project needs,
allowing them to respond effectively to new opportunities or challenges.
• 6. Collaboration: The matrix structure encourages collaboration and
communication between different departments. People with different expertise work
together on projects, sharing knowledge and finding innovative solutions.
• 7. Dual Focus: In a matrix organisation, employees have to balance their
responsibilities in both their functional roles and project work. They contribute to
the success of their department and the projects they are involved in, making a
broader impact on the organisation.
• 8. Complex Reporting Relationships: Since employees have two bosses, there
can be some complexities in reporting and accountability. To make it work smoothly,
clear communication, well-defined roles, and effective coordination are important.
Span of management

• Span of management is the number of people or subordinates that the

manager can control and manage.
• The term ‘span of management’ is also known as ‘span of control’ and
‘span of supervision’.

• An organisation needs to maintain a balance between the number of

employees within a team and the number of employees that a
manager is responsible for taking care of.
• It relies on the type and nature of the work in the organisation.
• The span of control of a manager thus depends upon their
subordinates, which can range from a few to a hundred.
Factors Determining Span of
Management
Types of span of
management
Wide Span of Management Narrow Span of
(Flat Structure): Management (Tall Structure):
• A manager supervises many • A manager supervises fewer
employees. employees.
• Fewer hierarchical levels. • More hierarchical levels.

• Encourages autonomy and • Allows for close supervision

direct communication. and control.

• Suitable for routine and • Suitable for complex or

repetitive tasks. specialized tasks.
Delegation of authority

Delegation of authority in management refers to the process by which a

manager assigns responsibility and grants authority to subordinates to carry
out specific tasks or duties. It involves three key elements:
• Assignment of Responsibility: The manager assigns tasks or duties to a
subordinate.
• Granting of Authority: The manager provides the subordinate with the
necessary authority to complete the assigned tasks, including decision-
making power.
• Creation of Accountability: The subordinate is held accountable for the
performance and results of the assigned tasks. The manager retains
ultimate responsibility but expects the subordinate to deliver.
The importance of delegation of
authority includes:
• Efficient Task Management: Distributes workload, allowing managers
to focus on higher-priority tasks.
• Employee Development: Provides opportunities for subordinates to
grow and develop skills by taking on more responsibility.
• Better Decision-Making: Decisions can be made faster at lower levels
where detailed knowledge of tasks exists.
• Increased Motivation: Employees feel trusted and empowered,
boosting morale and job satisfaction.
• Organizational Flexibility: Frees up management to address strategic
concerns while ensuring smooth day-to-day operations.
•Thank you!!