Unit 4.

Organizing
Concept of Organizing
• Organizing is one of the most important basic function of
management. It is the process of creating functional structure of
organization required to implement plan and decision for attaining
organizational goals.
• Another way, organizing is the process of determining and the
dividing the task, creating job positions and their link, assigning job
responsibilities to the right position and allocating authority to
make decision promptly (immediate) regarding the job.
• Organizing creates shape of responsibility-authority relationship in
the organization to ensure who has to do what and what decision
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• According to Theo Haimann: “Organizing is the process of defining
and grouping activities of the enterprise and establishing authority
relation among them.”
• According to Freeman and Gilbert: “Organizing is the process of
arranging all allocation work, authority and resources among an
organization’s members so that they can achieve the organizational
goal.
• R. w. Griffin, “ Organizing means grouping activities and resources in a
logical fashion.”
• Thus, organizing is deciding how best to do the organizational
activities. It is the process of identifying, grouping and establishing
relationship between activities with proper delegation of authority for
orderly use of resources within the management system.
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• It is the process of dividing and designing the job, setting the
proper job relation, grouping the job to make the units and
departments, assigning jobs to employees, allocating resources,
and coordinating effort within the organizational members.
Function of organizing
• The function of organizing are as follows:
1. Facilitates specialization
2. Define responsibility-authority relationship
3. Establish the channel of communication
4. Avoids duplication and overlapping
5. Serves for coordination and cooperation
6. Serve as employees motivation\
7. Serve organizational growth and diversification
Principles of organizing
• Principles are guidelines which are formulated with the finding of
test and practices. Management expert have propounded a
number of principle guidelines for designing the organizational
structure. The following are the principle of organizing:
1. Principle of unity of objective
2. Principle of specialization
3. Principle of span of control
4. Principle of exception
5. Principle of scalar chain
6. Principle of unity of command
7. Principle of delegation of authority
8. Principle of efficiency
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9. Principle of simplicity
10. Principle of flexibility
11. Principle of balance
12. Principle of direction
13. Principle of continuity
Process of organizing
 Organizing is the process of deciding how best group the
organizational elements i.e. functions, responsibilities and
authorities.
 There are six fundamental steps, as described below, in designing
organizational, structure.
1. Designing job
2. Grouping job
3. Establishing reporting relation
4. Differentiation between positions
5. Coordinating activities
6. Distributing authority
Organizational Architecture/Structure/Design
• Organizational architecture is the structure or system of the
organization. It is a framework through which can organization
operate.
• Organizational structure concern with hierarchy within the
organization, division of work, delegation of authority and
responsibility and creation of departments and unites.
• Organizational architecture may be studies in three ways. The are
vertical differentiation, horizontal differentiation and modern
organizational structure.
• Vertical Differentiation
In this structure divides the organization according to hierarchies or layers
reflected by authority, responsibility, control and communication.
According vertical differentiation organization may be tall and flat
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1. Tall organization structure: It has many layers of management

and tall chain of command. The large companies with large
number employee adopt tall structure. It has narrow span of
control, manager can provide effective supervision.
2. Flat organization structure: It has fewer level of management
and wide span of control. It tend to empower the employees by
allowing them a greater sense of responsibility and autonomy.
The major facture to choose organizational structure is the size
of organizational. If the organization is using improved
technology, they follow flat structure since they do not need a
large number of employee.
Horizontal Structure
• This structure relates to division of the organization in to similar or
parallel units or departments based on function, division, place and
products. According to horizontal differentiation organizational structure
can be divided in to functional, divisional, geographic, and matrix.
• Functional structure: A functional structure groups task and activities
by organization function, such as production/operation, marketing,
finance/accounting, research and development and management
information systems. It facilitates active sharing of knowledge within
each functional area.
• The major advantage of this structure are functional specialization,
employee efficiency, proper communication and proper allocation of
resources.
• The limitations are complex process, difficulty to obtaining final result
and suspicious environment.
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• Multidivisional structure: The divisional organizational structure is a
system in which a company segments it’s employees based on product or
markets, as opposed to their job roles. Under this, the responsibility for day
to day operations are delegated division manager.
• The main advantage of this structure are suitable for multibusinesses,
Attention and dynamism, proper monitoring and evaluation and employee
efficiency.
• Geographic Structure: It is the process of grouping the job to be carried
out for the different geographic territories. This method is suitable for large
organization having large network such as transportation related
organization, financial organization etc.
• The major advantage of this structure are customer centered service, close
communication and organizational effectiveness.
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• Matrix structure: Matrix structure includes dual lines of budget
authority with dual sources of reward and punishment, shared
authority, dual reporting channels, and a need for an extensive
and effective communication system.
• Functional resources are shared in a matrix structure. Individual
with a high degree of expertise can divided their time as needed
among projects, and they in tern develop their own skill and
competencies more than in other structure.
• The main advantage of this structures are organizational
effectiveness, effective decision and participation, proper
communication, work specialization and creativity.
• Limitation of this structure are high work load, high operational
cost, difficulty of balance, complexity, power straggle etc.
Modern Organizational Structure
• The organizational structures are modernized with greater
flexibility and multiple responsibility. Following modern
organizational structure are common in practice.
1. Team based structure: Team is a group of people having
complementary skill. Teams are founds at operational level to
improve the productivity and to enhance the performance of the
employee. Autonomous teams are effective to reduce stress and
promote the environment of innovation and creativity. Problem
solved teams, self managed teams, cross functional teams, virtual
teams etc. are the types of teams.
2. The main advantages of this structures are collective goal setting,
mutual trust, effective communication, complementary skill,
flexibility in operation etc.
3. The limitations are source of conflict, difficult to coordinate, lack
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2. Network structure: The network structure is comparatively a
newer organizational structure which is viewed less hierarchy, more
flat, more decentralized and more flexible than other structure. In
this structure, manager should coordinate and control relations that
are both internal and external to the firm. It is based on social
network of interaction.
• At the industry level, complex network can include technological
and innovation network that may span several geographic area and
organizations.
• At the organizational level, social networks can be intra-
organizational or inter-organizational representing either formal or
informal relationship to accomplish the task focusing to achieve
organizational goal.
• The major benefits of this structures are eliminate over
departmentation, Minimum administration cost, flexible in
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• The limitations are possibility of conflict, difficult to coordinate,
minimize competency, increase dependency, loss of control etc.
3. 360 Degree Structure: 360 degree organizing is mostly focused
on the contribution of employee and their skill along with the
competencies. Under this each manager takes the accountability,
responsibility and central decision making authority.
• It is the balanced way to view the actual performance of
employee in the area of teamwork, leadership, interaction,
interpersonal communication, mutual and self defined
contribution, mutual accountability and sincerity of work habit of
the employee.
• The benefits of this structures are self-awareness, get
opportunities, focus on strength, identify the role and
transparency.
Delegation of Authority
• Delegation means assigning something to other to act towards the
attainments of the predetermined goals. Authority is the
legitimate power of individual for making decision on their job
responsibility.
• Delegation of authority is the process by which managers assign
a position of their total work to their sub-ordinates along with
rights for making decisions to accomplish the job effectively and
efficiently.
• It establish the pattern of authority between supervisor and sub-
ordinates. It is the formal process of sharing authority from
supervisor to the qualified subordinates to enable them to make
decision and use resource efficiently.
• According to Risky W. Griffin- “Delegation is the process by
which manager assign a portion of their workload to others.”
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• According to Terry and Franklin- “Delegation means conferring
authority from one manager or organizational unit to another to
accomplish particular assignment.”
• According to theo Haimann- “Delegation of authority merely means
the granting of authority to sub-ordinates to operate within prescribed
limit.”
• Finally, the delegation of authority support manager to get more
work done through others. It help reduce the work overload of
manager as subordinates effectively make decision under the scope
of positional responsibility.
Advantage of delegation of authority
 Delegation of authority develop the personal capability of
subordinates. Properly delegated authority facilitates following
advantages:
1. Reducing workload
2. Improving efficiency
3. Empowering employee
4. Increased accountability
5. Facilitates growth
6. Basis of organizational structure
Disadvantage (Problems) of Delegation of Authority
• Problems related with managers
1. Lack of directing ability
2. Lack of trust
3. Fear of subordinates
4. Showing personal importance
• Problems related with subordinates
1. Lack of self confident
2. Lack of incentive
3. Lack of information and resource
4. Fear of criticism
5. Habit of depending upon manager
Centralization of Authority
• Centralization is the process of systematically retaining decision
making power at the top level of management. In simple holding
decision making power in center (top level management).
• The centralized organization, considerable authority and
accountability remains at the top level of the hierarchy. Top level
manager makes all decisions without any consent of subordinates.
• According to Ricky W. Griffin- “Centralization is the process of
systematically retaining power and authority in the hands of higher
level manager.”
• Allen- “Centralization is the systematic and consistent reservation
of authority at central point in an organization.”
• Weihrich, and koontz- “Centralization as an aspect of management,
is the tendency to restrict delegation of decision making. A high
degree of authority is held at or near top by managers in the
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• Finally, centralization is the philosophy to which decisions are
reserved to the top level managers by provision. Under this
system, top level manager hold total authority for every decision
in organization.
Advantage of Centralization
• Centralization is the philosophy of making decision at top level
of the management. This facilitates following advantage.
1. Unity in decision
2. Less operation cost
3. Simplified structure
4. Unified leadership
5. Better coordination
6. No duplication and overlapping
7. Integrates operation
Disadvantage of Centralization
• Centralization is not always beneficial. It is not suitable in large
and diversified organizations. The following are the major
disadvantage of centralization.
1. Delay in decision
2. Limited capability
3. Work overload
4. Low morale and motivation
5. Chance for power misuse
6. Lack of environmental adoptation
Decentralization
• Decentralization is the philosophy of systematically delegating
the authority to middle and lower level management in
accordance with their responsibilities.
• It is the process of providing authority or decision making power
to the possible level at which the work is to be done.
• In actual situation, top level management can not supervise and
control the activities of all levels in the organizations. Top level
management has to delegate required degree of authority to lower
level so that lower level manager can make quick decision
independently and implement them.
• According to Louis A Allen- “Decentralization is the systematic
and consistent delegation of authority to the level where the work
is performed.
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• Dale S. Beach- “Decentralization means placing the authority and
decision making power as close as possible to the level at which
the work is done.”
• Grey and smeltzer- “Decentralization refers to the extent to which
managerial authority is delegated or pushed downward in a
organization.”
• Finally, decentralization of authority is the consequence of
delegation of authority. It allow decision making power to the
person or level where the decisions need to be made and
implemented. It reduce the workload of top level manager.
Advantage of Decentralization
• The following are the advantage of decentralization;
1. Quick decision
2. Easy communication
3. Employee morale and motivation
4. Reduce work load
5. Facilitates growth and diversification
6. Environmental adaptation
7. Employee satisfaction
8. High productivity
9. Low turnover
Disadvantage of Decentralization
• The following are the disadvantage of decentralization;
1. High cost
2. No uniformity in decision
3. Chance of conflict
4. Poor communication
5. Greater risk
6. Chance of misuse of authority
7. Poor decision
Devolution
• Devolution is an administrative type of decentralization when
organization develop function they transfer authority for decision
making, finance and management to quasi-autonomous units of
local departments with corporate status.
• It is the process of constitutional reform whereby power, but not
legal sovereignty, is distributed to national or regional institution.
• Mainly, there are three types of devolution;
1. Administrative devolution
2. Financial devolution
3. Legislative devolution
Staffing
• Staffing is the process of hiring eligible candidates in
the organization or company for specific positions. In
management, the meaning of staffing is an operation of recruiting
the employees by evaluating their skills, knowledge and then
offering them specific job roles accordingly.
• Staffing can be defined as one of the most important functions of
management. It involves the process of filling the vacant position
of the right personnel at the right job, at right time.
• Therefore it is very important that each and every person should
get right position in the organization so as to get the right job,
according to their ability, talent, aptitude and specializations so
that it will help the organization to achieve the pre-set goals in
the proper way by the contribution of manpower. Thus it can be
said that it is staffing is an essential function of every business
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• In modern organization staffing function is done with acquiring
employees in permanent basis, daily basis, consult purpose, and
contract employee. Thus staffing function include the following
major activities.
1. Identifying workforce need and planning for getting right
person at right job.
2. Recruitment and selection of appropriate personnel for vacant
position.
3. Planning training for development work for success planning.
4. Conducting performance appraisal and determining
compensation.
Importance of Staffing
• The following are the importance of staffing function of
management;
1. Searching competent personnel
2. Higher performance
3. Optimum utilization of resources
4. Employee satisfaction and morale
5. Continuous growth
6. Achieve cost efficiency
7. Maintain organizational structure