CHAPTER 4
Organizing
Chapter 4: Organizing
Lesson Outcomes:
At the end of the term, the students should be able to;
1. Understand the nature of organization
2. Identify and discuss the types of organization structures
3. Identify and understand the organization theories and its application
4. Understand the meaning of Delegation
5. Discuss the differences of informal and forma organization
Introduction
Organizing can be defined as a process that initiates implementation of
plans by clarifying jobs, working relationships and effectively deploying
resources for attainment of identified and desired results (goals).
Therefore, it is a process which coordinates human efforts, assembles
resources and integrates both into a unified whole to be utilized for achieving
specified objectives. Organizing is the managerial function and this function of
organizing is known as process of organization.
To organize is to harmonize, co-ordinate or arrange in a logical and
orderly manner.
Making the rational division of work into groups of activities and tying
together the positions representing grouping of activities for accomplishment of
desired objectives is the function of management and this function is known as
organizing.
Nature of Organization
Organization is a social system composed of people, structure and
technology for achieving common goals in a dynamic environment.
In other words, Organization is a human association, where two or more
people come together with a certain common aim and equipment and desire
to achieve certain common goals through planned joint effort and team work.
According to S.A Sharlekar and V.S. Sherlekar, “Organization is a
mechanism or a basic framework enabling person to work together effectively
and achieve the set goals through integrated group effort. It is a medium for the
management to exercise managerial functions.”
Similarly, according to W.J Duncan, “An organization is a collection of
interacting and interdependent individuals who work toward common goals
and whose relationship are determined according to a certain structure.”
Therefore, organization is a place with certain structure, where people
come and work together to achieve a common goal, in a changing
environment.
Tribe, ethnic groups, families are not organization.
The three essential of an organizations are: - a. people b. common goal c. Joint
effort.
Characteristics of Organization:
1. Human Association: Organization is the place where people work
together to achieve the common goals. Thus, there is always the
involvement of human resource to perform a variety of activities in goal
achievement process.
2. Common goal: Every organization has its goals. It is a common purpose
which binds all the individuals and groups to contribute their effort.
3. Division of work: Organization always divides the large task into smaller
packages for easy and prompt functioning by individuals. This brings
specialization in work.
4. Hierarchy of authority: Organization has a chain of command,
determined by hierarchy of authority. Under the basis of job responsibility
and accountability, skill demand of the job and complexity of the job
hierarchy of authority is constructed. The power of decision making and
control is always determines by the hierarchy of authority in organization.
5. Flexibility (Environmental Adaptation): Organizational activities directly
and indirectly influence by the environmental factors. So it is always
formulate its plans and policies that can match the changing
requirements of environment.
Types of Organization
We find different kinds of organization in our society. These organizations
are classified according to the nature and purpose. They are as follows:-
1. Business organization: The organization which is established in order to
make profit is known as business organization. The prime beneficiaries of
these organizations are the owners or shareholders. E.g. Surya Nepal
Company, Buddha Air etc.
2. Non-profit Social Organization: The organizations which are established
not for making profit but for giving or providing services to the
customer/clients or community are nonprofit social organizations. E.g. Red
Cross, Hospital etc.
3. Cooperative Organization: These types of organization are established to
reduce the effort of competition and maximize the value of cooperation.
The main aim of this organization is to fulfill the individual needs and
prosperity of all members involved through collective effort.
4. Government Organization: The organization formed by the government to
provide service to general public is government organization. They can
be ministries, department, military, police etc. The main goals of this type
of organization are regulation and welfare of general public.
5. International Organization: The organizations which are established by the
involvement of different countries for the sake of their welfare are called
international organization. E.g. ASEAN, SAARC, UNDP, IMF etc. These
organizations are always engage in promoting the collective interest of
member countries.
Principles of Organizing and Approaches
Organizing:
Organizing is related to designing and assigning jobs for individuals to work more
effectively and efficiently. Organizing refers to grouping of jobs, allocating jobs
in divisions and units, assigning people to work, delegation of authority and
responsibility to achieve a common goal.
According to Allen, Organizing refers to,” The process of identifying and
grouping the work to be performed, defining and delegating responsibility and
authority and establishing a pattern of relationship for the purpose of enable
people to work most effectively together in accomplishing objectives.”
Organizing is more related to structuring relations between people, jobs and
organization through designing jobs, grouping them into manageable units and
determines job related responsibility of individuals.
Importance of organizing as management function:
The following are the importance of organizing:
1. Specialization: Organizational structure is a network of relationships in
which the work is divided into units and departments. This division of work
is helping in bringing specialization in various activities of concern.
2. Well defined job: Organizational structure helps in putting right man on
right job which can be done by selecting people for various department
according to their qualification, skill and experience This is helping in
defining the jobs properly which clarified the role of every person.
3. Clarifies authority: Organizational structure helps in clarifying the role
positions to every manager. This can be done by clarifying the power to
every managers and the way he has to exercise those power should be
clarified so that misuse of power do not take place.
4. Coordination: Organization is the means of creating coordination among
different departments of the enterprise. It creates clear cut relationships
among positions and ensures mutual cooperation between individuals
and groups.
5. Effective administration: The organization structure is helpful in defining the
job positions. The roles to be performed by different managers are
classified. Specialization is achieved through division of work. This all leads
to effective and efficient administration.
6. Growth and diversification: Organizing helps in determining the effective
and efficient framework, which facilitates coordination between authority
and responsibility and concentrating on specialization. This enables the
organization in capacity building and increases their level of activities.
7. Scope of new changes: As the role of each individuals and groups are
clear, along with their authority and responsibility, they can take decisions
independently to adopt in changing environment. This may bring new
changes into the running of an organization.
Principles of Organizing:
Organizing is one of the major functions of management. It is performed
by all managers and it is a continuous process. The principle of organizing has to
do with the grouping of organizational activities into various units and dividing
responsibility and authority accordingly. Some of the widely practiced principles
are as follows:
1. Objective: An objective is an end or goal to be achieved. The goals and
objectives must be clearly defined for the entire organization for each
department and even for each position in the organization structure.
Once the objectives have been clearly defined, organizing function
become easier.
2. Specialization or division of Labor: The concept of division of work is based
on the principle of specialization and efficiency. Specialization helps to
break down overall task of organization ad divide it into the smaller
component parts. Greater output can be obtained when each person
concentrates on doing the thing for which he/she is best qualified.
3. Span of control: Span of control represents a numerical limit of
subordinates to be supervised or controlled by a manger. It is believed
that organizational efficiency is increased by limiting the span of control
at any point in the hierarchy to a small number.
4. Scalar Chain: The chain of supervisors ranging from the top management
to the lowest rank managers should be clearly defined. The chain of
command should be short and clear which makes decision making and
communication more effective.
5. Unity of Command: In organizing activities, it is better when an employee
receives orders from only one supervisor. Direction from several superiors
may result in confusion, chaos, conflict and indiscipline.
6. Delegation of authority: Proper authority should be delegated at all level
of management. The authority delegated should be equal to
responsibility so as to enable each manager to accomplish the task assign
to him/her.
7. Responsibility: Once authority is given, managers have to be responsible
for their actions. They are also responsible for the action of their
subordinates.
8. Efficiency: The organization structure should enable to function efficiently
and accomplish organizational goals/ objectives with the lowest possible
cost. Hence it should ensure optimum utilization of all resources.
9. Simplicity: The organization should be kept as simple as possible. A
complex organization means difficulty of communication and
coordination.
10. Flexibility: Since, external environment always changes, it is necessary to
cope up with the changing environment. Organizational structure should
be flexible enough to cope up with the changes in the external
environment.
11. Balance: There should be a reasonable balance in the size of various
departments and between centralization and decentralization.
Imbalances creates problem to achieve its goals for an organization in an
effective and efficient way.
12. Unity of Direction: There should be one objective and one plan for a
group of activities having the same objective. A boss with many
objectives will create chaos. Thus unity of direction facilitates verification
and coordination of activities.
13. Staffing: Staffing principle focuses on employing, rewarding and
developing people in the organization to motivate them in order to work
in the direction to achieve organizational goals.
Organizational Theories and Application
Organizational theory studies organizations to determine the frameworks
and structures that the organization uses to do the organizational functions and
routines. On many accessions organizational theories can also be used for
solving organizational problems. Its main purpose is to maximize efficiency and
productivity, and meet the expectations of stakeholders. Theories about
organizational structure can help in planning for organizational success
considering that these theories may influence how an organization deals with
issues and allocates resources.
Organizational Theories
Classical Organizational Theory
Classical organization theory was developed in the first half of the 20 th
century as a way of bringing together scientific management, bureaucratic
theory and administrative theory. Scientific management focused on getting
the best people and equipment, studying each production task. Bureaucratic
theory involved establishing a hierarchy to describe the division of labor in a
company and recognizing the importance of specialization. Administrative
theory worked to establish a set of management principles that applied to all
organizations. One of the criticism of classical organization theory is that
motivation is only a function of economic rewards, like working so goof and so
hard for salaries and benefits only.
Noeclassical Organization Theory
Improvements in organization theory led to consideration of the work
environment. Productivity improves in an environment with consistency of values
and purpose. Organizations can succeed with a cohesive environment where
subordinates are accepting of managerial authority, like employees are
empowered and given authority to decide on certain things; this system is useful
in the building up of employees’ career.
Contingency Theory
Contingency theory deals mainly with conflict, which previous theories
considered something to be avoided at all costs. Conflict is unavoidable, but
according to contingency theory it is manageable. Organizations evolve to
meet their own strategic needs in rational, sequential and linear ways. Adapting
to changes in the environment is important to managerial and organizational
success. Managers must be able to make decisions contingent on current
circumstances.
Systems Theory
Systems theory describes the interaction of all parts of an organization
and how one change in one area can affect multiple other parts. Systems may
not always interact in a lineal manner. Small changes in one part may cause
bug changes in another part, while large changes in one area may only result in
small changes in another. Organizations act as systems interacting with their
environment. For example, a problem in purchasing inferior quality of materials
can result to a bigger problem in production which finally affects the ultimate
aim of the business-sales. Another example would be in marketing research, the
right approach in the change of preference in hand gadgets (Apple). iPhone 6
and 6 Plus made huge sales but it resulted to a drop in sales of iPad Mini simply
because some are already satisfied with the bigger 6 and 6 Plus screen.
Delegation
Delegation of Authority
Delegation of Authority means division of authority and power downwards
to the subordinates. Delegation is about entrusting someone else to do parts of
manager’s job. By description, delegation of authority is the subdivision and sub
allocation of powers to the subordinates in order to achieve effective results.
Elements of Delegation
1. Authority – In context of a business organization, authority can be defined
as the power and right of a person to use and allocate the resources
efficiently. Making decisions and giving orders to achieve the
organizational objectives is part of the definition of authority. Authority
should be accompanied with an equal amount of responsibility.
Delegating the authority to someone else does not imply escaping from
accountability. Accountability still rests with the person having the utmost
authority.
2. Responsibility – refers to the duty of the person to complete the task
assigned to him. Responsibility without adequate leads to discontent and
dissatisfaction among the person. The middle level and lower level
management hold more responsibility. The person held responsible for a
job is answerable for it. If he performs the tasks assigned as expected, he is
bound for praises. While if he does not accomplish tasks assigned as
expected, then also he is answerable for it.
3. Accountability – Being accountable means being innovative as the
person will think beyond his scope of job. It may include asking the
question. “What is at stake?” Accountability, in short, means being
answerable for the end result, it is something that cannot be escaped and
it is arising from responsibility.
The following are the steps in delegation of authority.
1. Assignment of Duties – the one who delegates first to define the tasks and
duties to the subordinate. He also has to define the result expected from
the subordinate.
2. Granting of authority – Subdivision of authority takes place when a
superior divides and shares his authority with the subordinate. This would
explain why every subordinate should be given ample independence to
carry out the tasks given to him by his superiors.
3. Creating Responsibility and Accountability – granting of power is not the
end of the delegation process. The obligation of an individual to carry out
his duties to the best of his ability as per the directions of his superior should
also be given emphasis. One must be reminded that, when an authority is
delegated, responsibility is created and accountability is imposed.
Therefore, it is important that with every authority position an equal and
corresponding responsibility should be attached.
Formal and Informal Organization
Formal Organization refers to a structure of well-defined jobs each
bearing degree of authority and responsibility. It is a conscious determination by
which people accomplish goals by adhering to the standards set by the
structure. This kind of organization is an arbitrary set-up in which each person
responsible for his performance. This type of structure is normally appropriate for
matured organization with considerable number of employees assigned to
different specific jobs.
Informal Organization refers to a network of personal and social
relationships which spontaneously originates within the formal set-up. Informal
organizations develop relationships which are built on likes, dislikes, feelings and
emotions. Therefore, the network of social groups based on friendships can be
called as informal organizations. Normally, there is no conscious effort made to
have informal organization. It emerges from the formal organization and it is not
based on any rules and regulations as in the case of formal organization. Firmly
embedded within every informal organization are informal groups and the
notorious grapevine; the following are their descriptions:
Informal groups
Workers may create an informal group to go bowling, form a union,
discuss work challenges, or have lunch together at any particular
day of the week. The group may last for several years or only a few
hours. Sometimes employees join these informal groups simply
because of its goals. Other times, they simply want to be with others
who are similar to them. Still others may join informal groups simply
because they want to be accepted by their coworkers.
The grapevine
The grapevine is the informal communications network within an
organization. It is completely separate form and sometimes much
faster than the organization’s formal channels of communication.
Formal communication usually follows a path that parallels the
organizational chain of command. By contrast, information can be
transmitted through the grapevine in any direction up, down,
diagonally across the organizational structure.
Subordinates may pass information to their bosses, an executive
may relay something to a maintenance worker, or employees in
different departments may share tidbits. Grapevine information
may be concerned with topics ranging from the latest
management decisions to the results of Miss Universe or who won
Game 1 of 2018 NBA finals to pure gossip. The information may be
important or of little interest. By the same token, the information on
the grapevine may be highly accurate or totally distorted. Although
managers may think that the informal organization is nothing more
than rumors that are spread among the employees, it is actually a
very important tool in maintaining company-wide information flow.
Results of studies show that the office grapevine is 75 percent to 90
percent accurate and provides managers and staff with better
information than formal communications.
[Link]
administration/organizational-theories-and-application/30905663
Activity 1:
1. Discuss the 5 characteristics of organizations. (25pts)
2. What is Delegation and why is it important to organization? (10pts)
References:
[Link] (Data Retrieved January 25, 2023)
[Link] (Data Retrieved January 28, 2023)
