OrganizationFormal intentional structure of roles

Specific person is assigned for specific job

Necessary authority is given

Organizing may be defined as the

structure and process by which a co-operative group of human beings allocates

their tasks among members, identifies

relationships and integrates its activities toward common objectives.

Organization Process

SupportingObjectives,

Policies & Plans

Enterprise Objective

Identification & Classification

of Tasks

Grouping activities in light of

Resources & Situation

Delegation Of

Authority

Vertical & Horizontal Coordination of

Authority

Departmentation:

Departmentalization is

the process of grouping

Jobs according some

logical Arrangement.

Grouping Activities By:• Function• Product• Geography• Customer

Departmentation By Function:

Managing Director

Purchase Department

Personal Department

Market Department

Production Department

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1. Functional departmentalization: Functional departmentalization groups jobs together those jobs involving the same or similar activities.

Merits: Each department can be staffed by experts Coordination is easier Supervision is facilitated

Departmentation By Product:

Managing Director

General ManagerTelevision

General ManagerCell Phone

General ManagerWashing machine

Color T.VBlack/WhiteT.V

Plazma T.V

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2. Product departmentalization: Product departmentalization involves grouping and arranging activities around products or product groups.

Merits: All activities around a product or product groups is

integrated or coordinatedEffectiveness of decision is enhancedThe performance of individual product can be

assessed more easily

Departmentation By Territory:

Chief Executive officer

Vice PresidentCanadianOperation

Vice PresidentEuropean Operation

Vice PresidentWesternOperation

Vice PresidentEastern U.SOperation

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3. Location departmentalization:

Location departmentalization grouping jobs on the basis of defined geographic sites or areas. Transportation companies, police departments use location departmentalization.

Merits:It enables organization to respond easily to unique

customers and environmental characteristics

Departmentation By Customer:

Managing Director

CommunityBanking

Corporate Banking

Agricultural Banking

Real Estate AndMortgage Banking

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4.Customer departmentalization: Organization structures its activities to respond to and interact with specific customers or customers. The lending activities in most banks are tailored to meet the needs of different customers.

Business loansConsumer loanAuto loanShopping loanMortgage loanMarriage loan

Merits:

1. Specialized customers deal with unique customer or customer groups

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Distributing authority: Delegation: Delegation is a process by which authority is

distributed among employees. It is the process by which managers assign a portion of their total workload to others.

Delegation process:

Step-01:The manager assign the responsibilities or gives the subordinates a job to do.

Step-02:The subordinates is given authority to do that job

Step-03: The manager establishes subordinates’ accountability

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Reasons for delegation:

• It enables the managers to get more work done• Subordinates may help the managers to reduce their

burden by doing a portion of their tasks• Sometimes subordinates have more expertise in

addressing a particular problem than the manager does• Subordinates learn about the overall operations by

participating in decision making process

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Problems in delegation:

Managers may be reluctant to delegate Managers are so disorganized that they are unable to

plan work in advance and can not delegate appropriately

Managers may worry that subordinates will do too well and pose a threat to their own advancement

Managers may not trust the employees Subordinate are reluctant to accept delegation They may be afraid that failure will result in a warning Subordinates may perceive that there are no rewards

for accepting additional responsibilities They may prefer to avoid risks.

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• Centralization: Centralization is the process of systematically retaining authority and power in the hands of higher level management. McDonald, Wal-Mart follows centralization.

• Decentralization: Decentralization is the process of systematically delegating (distributing) power and authority throughout the organization to middle and lower –level managers. General Electrics, Sears follows decentralization.

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Factors determining Centralization & Decentralization

1. External environment

2. Nature of decision

3. Ability of lower-level managers.

Division of Labor

The degree which tasksIn the organization are subdivided into separate job

• Division of labor:• Makes efficient use of

employee skills• Increases employee

skills through repetition• Less between-job

downtime increases productivity

• Specialized training is more efficient

• Allows use of specialized equipment

• Division of labor:• Makes efficient use of

employee skills• Increases employee

skills through repetition• Less between-job

downtime increases productivity

• Specialized training is more efficient

• Allows use of specialized equipment

Unity of Command:A subordinate should have only superior to he or she is directly responsible.

Line and Staff Authority:Line Authority: A line organization is one in which there is a direct flow of authority from the top of the organization to the bottom.

Staff Authority: Staff authority is the authority given to individuals who support, assist and advice others who haveline authority.

• Line manager responsibilities:     Placing the right person on the

right job     Training employees     Improving job performance of

each job     Orienting new employees in

the organization.

• What do you mean by Span of Management?

     Span of management refers to the number of people a manager can effectively and efficiently supervise. There is no definite number that a manager can effectively and efficiently supervises.

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Factors influencing appropriate span:

Researchers identified that a set of factors that will influence the span for a particular circumstances. These factors are:

Wide span is effective, if –

the managers and subordinates are competentAll subordinates are in one locationthere is a fairly comprehensive set of standard

proceduresmost jobs are similarnew problems are rareemployees prefer to be self-directed

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• Narrow span is effective in the following situations-

– Subordinates are widely scattered– Job situations require a great deal of

interactions– Only a few SOPs exist– Tasks are different– Problems are new and occur frequently

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Tall vs. Flat structure

1. A flat structure will lead to higher levels of employee morale and productivity

2. Tall structure is more expensive because the large number of people involve

3. Tall structure fosters communication problems because there are large number of people through whom information pass.

• Organization with narrow Spans

• Advantages:     Close supervision     Close control• Fast communication between

immediate subordinates and superior

• Disadvantages:     Superiors tend to get too

involved in subordinates work.     Dangers of layering     High costs due to many level     Excessive distance between

lowest level and top level

• Organization with Wide Spans   Advantages:      Superiors are forced to

delegate     Clear policies must be made     Subordinate must be carefully

selected

• Disadvantages:     Tendency of overloaded

superiors to become decision bottlenecks.

     Dangers of superior's loss of control

     Requires exceptional quality of managers.