16 Organizing

Tejinder Sharma

Introduction:-

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.
Organising becomes necessary when more than one person work towards achieving some common objective. In that case, it is important to define the role of each person, define his authority and responsibility and coordinating and synchronizing the team as a whole to attain the objectives. Organising does this job. Without organising it would not be possible to attain the objectives since no one would be clear as what he is supposed to do. There would be overlapping and clashes over the work. Organising determines the work to be done by the employee and give him the right to use materials, machinery, equipment, etc.

The work of the organisation is divided into a number of job positions. Relationships are then established among the different positions in the organisation. The outcome of the organising process is a set of formal relationships which is known as organisation structure. In this lesson, we shall study about the process of organising which leads to the setting up of an organisation structure.

Meaning and definition of organizing: –

The word organization is derived from the word ‘organism’. As is the case with organism, each part has its own role, working independently, but has a definite relationship with the main body Similarly, under organising, the entire business is divided into different parts and perform their own function but they are all related to the main objectives of the business. Thus, organization means dividing the whole organisation into various departments and departmental positions and the relationship between them. Moreover, in order to run their work smoothly, their authority and responsibility have to be prescribed.
It must be made clear that the need for an organization arises only when there are a couple of people working in the enterprise. If there is only one person, he is expected to perform all the functions single-handedly and there will be no need to divide the work. In the absence of division of work, organization is meaningless.

Definitions of organization: –

Different scholars have been given different views about the meaning of organization.

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.”

According to Chester Barnard, “Organizing is a function by which the concern is able to define the role positions, the jobs related and the co-ordination between authority and responsibility. Hence, a manager always has to organize in order to get results.

A study of the above mentioned definitions makes it clear that organization is a process to define and classify the functions to be performed for the attainment of the objectives of the organization, and also establish relationship among different organisational positions.

Before we get into further discussion, it is important to understand the meaning of Responsibility, Authority, and Accountability.

(i) Responsibility: Responsibility is the obligation of a subordinate to perform the assigned duties. When a subordinate accepts duties, he has to perform those duties in the manner desired by the superior.

(ii) Authority: Authority includes the right to take decision, right to issue orders and the right to take action if orders are not carried out. When a person is given certain duties to perform, he must be given necessary authority also to perform those duties as well. Otherwise, he will not be able to do the task assigned. An engineer for example, who is responsible for the completion of a project, has the authority to command his subordinates, procure the needed material, seek assistance of experts otherwise, he will not be able to work effectively. No person should be given any authority unless certain duties have been assigned to him. Authority should always follow responsibility otherwise authority could misused.

(iii) Accountability: After assigning duties and granting authority, one more relationship gets created which is known as accountability. Accountability means answerability. Each subordinate becomes answerable to his superior for performance of work and use of authority. Accountability flows upward and cannot be delegated. It is absolute. Each subordinate is accountable to his superior who in turn is accountable to his own superior. In this way, every person becomes accountable to top management. Accountability ensures that the work is done as planned and authority is properly used. An important principle of accountability is the principle of single accountability. A person should be accountable to one superior only. If a person is accountable to two or more persons, he may avoid the work.

Characteristics of organizing: –

From the study of the various definitions given by different management experts we get the following characteristics of organizing.

(1) Division of work: Division of work is the basis of an organization. There can be no organization where work is to be done by an individual. Under division of work the entire work is divided into many parts. Each part of it is further sub divided into sub- parts. Individuals are assigned their part of work. This piece of work when performed repeatedly, gradually makes that person an expert. Thus, under organization an effort is made to achieve the objectives successfully by way of division of work.

(2) Coordination: Organising coordinates the work of different persons for the attainment of objectives. Under it the entire work is divided and subdivided into different job positions and their authority and responsibility is clearly defined. Thus superior subordinate relationships also get established. Everyone knows his role in the organisation and there are no overlapping and clashes over work responsibilities.

(3) Plurality of persons: Organization is a group of many persons who assemble to fulfil a common purpose. An organization structure cannot be created (or need not be created) when there is only an individual to perform the entire work.

(4) Common objectives: Organisation aims at achieving the common objectives. There are various parts of an organization each performing their own functions. But each function has been designed to achieve common objectives.

(5) Well-defined Authority and Responsibility: Under organization, relationships are established between different positions right from the top to the bottom. It is clearly specified as to what will be the responsibility of every position and adequate authority is given to fulfil the responsibility assigned. There should be parity between authority and responsibility. If responsibility is more than authority, work cannot be performed and if authority is more than responsibility, there will be misuse of authority.

(6) Organization is a structure of relationship: Organising defines the role positions and also relationship between these positions in the organization and defines responsibility and authority for the performance of these functions. It establishes superior subordinate relationships. This way, it establishes a structure for achieving organisational goals.

Importance of Organizing

The importance of organizing becomes clear with the help of the following points:

(1) Benefits of Specialization: Under organizing all the activities are subdivided into various works or jobs. Each sub work is assigned to competent persons who become experts by doing a particular job time and again. In this way, division of work leads to specialization.

(2) Clarity in Working Relationship: Organizing clarifies the working relations among job positions. It establishes authority and responsibility. It specifies who is to report to whom. Therefore, communication becomes effective. It also helps in fixing accountability.

(3) Optimum Utilization of Resources: Organizing leads to optimum utilization of resources. Each job positions is clearly defined along with its authority and responsibility. It avoids confusion and duplication of any job. Consequently, there is optimum utilization of all the available resources e.g., material, machine, financial, human resource, etc. in the organization.

(4) Adaptation to Change: Organizing process makes the organization capable of adapting to any change. This becomes possible only because there exists a clear network of relationships right from the top to the lower level. It also makes communication of any sort easy and effective.

(5) Effective Administration: organizing makes administration effective by clarifying the authority of each position and its responsibility. Everyone also knows to whom he is accountable to. In this way, the confusion on authority is put to an end and effective administration becomes possible.

(6) Development of Personnel: Organizing helps develop personnel through delegation of authority. A superior can delegate his authority to subordinate. It provides the subordinates with the opportunity to take higher level decisions. It not only motivates them but also gives them a chance to show their creativity. Consequently, it helps them to grow and develop.

(7) Expansion and Growth: The process of organizing allows the employees the freedom to take decisions which helps them to grow. They are always ready to face new challenges. This situation can help in the development of the enterprise. This helps in increasing the earning capacity of the enterprise which in turn helps its development.

Principles of organization or Requisites of an Ideal and Sound Organization: –

1. Principle of unity of objectives: All activities in an organization should aim at achieving common goals. All departmental goals must be clearly defined and should aim at achieving the overall goal of organization. Also, efforts must be made to synchronize the individual goals with organizational goals.

2. Principle of specialization: Sound and effective organization rests on specialization. When an employee takes special type of knowledge and skill in any area, it is known as specialization. By dividing the work into small tasks, each employee is required to perform a task repeatedly. In this way, he becomes an expert in his area and benefits the organization by specializing in it.

3. Principle of coordination: Organization establishes coordination. Coordination is obtained by group efforts with clearly defined roles that emphasize on unity of action.

4. Principle of parity of authority and responsibility: Authority is the power or right to give orders, make decisions, and enforce obedience . Responsibility is the obligation to perform the duties assigned. There should a balance between them otherwise more authority than required will lead to abuse of authority. Similarly, without adequate authority, responsibility cannot be fulfilled effectively as the employee will not be having powers to make decisions and enforce his orders.

5. Principle of delegation: Process of transferring authority and creation of responsibility between superior and subordinates to accomplish a certain task is called delegation of authority. A superior can
delegate authority but not responsibility. Responsibility is absolute. The ultimate responsibility vests with him only. He would be answerable to his superior for non performance of work by his subordinates. Also, the principle of parity of authority and responsibility should not be disobeyed in delegation as well.

6. Scalar Principle: Under this principle all the people working in the organization should be bound with one another from top to bottom in a vertical chain. For example, Board of Directors > General Manager > Departmental Manager > Supervisor > Foreman > Workers.

7. Principle of unity of command: Subordinates should receive orders from single superior at a time and all subordinates should be accountable to that superior only. More superiors leads to confusion, delay and shirking of work.

8. Principle of span of control: Span of control refers to the number of employees under the direct supervision of the superior. Larger span of control is more difficult to supervise and coordinate. However, it depends upon a number of factors like the ability of the superior and nature of his work etc. Span of control determines the number of levels in the organisation.

9. Principle of flexibility: Organizational structure must be flexible considering the environmental dynamism. Sometimes, change may need to be incorporated in the organization structure due to changes in the environmental factors and in that condition, organization structure should have capability to permit the change.

10. Principle of simplicity: This principle emphasizes the simplicity of organizational structure. The structure of organization should be simple with minimum number of levels so that its employee can understand duties and authority easily. Also, simple structure is cost effective and easy to understand.

Steps in the process of organizing

1. Determining the activities to be performed to achieve the objectives of the organization: After defining the objectives of the organization, as the next step, it necessary to determine the activities to be performed to achieve those objectives. At this step, a list of activities is prepared and each major activity is divided into smaller parts. For instance, manufacturing garments may require activities such as purchase of raw material, purchase of manufactured goods, production, quality control, advertisement, sales, finance, accounting, arrangement of employees and research & development etc.

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. This is necessary to avoid conflict and confusion and to ensure that work is performed as planned.

4. Establishing Reporting Relationships: Last step is to define the interrelationships among various positions. When two or more than two persons are required for the attainment of common goals, for proper administration it is important that their interrelationship must be defined very clearly . One should know as to who he is superior to and who is his subordinate. For example, the purchase manager will be the superior for all the employees of the purchase department and subordinate to the general manager. A clear organizational structure is drawn and all the employees are made aware of it. This ensures overall control and a coordinated effort towards the achievements of predetermined goals of business.

Formal and informal organisation

Organizations are basically classified on the basis of relationships. There are two types of organizations formed on the basis of relationships within an enterprise. In other words, two kinds of relationship can be established among the employees, firstly, the relationship that is definite and has been defined before hand and secondly, those relations which are not definite and have not been defined before hand. We will now study them in detail.

Formal organization: – A formal organization means an organization in which the responsibilities, authority and mutual relationships among all the employees working in an enterprise are clearly defined. This structure of the organization is created after a lot of deliberation and is based on the division of work. Each individual knows his relationship with others and knows who is his superior and who is his subordinate. Formal organization is bound by rules and procedures and everything is done according to these pre-determined rules and procedures.

According to Chester Bernard, “An organization is formal when the activities of two or more persons are consciously coordinated towards a common objective.”

Main characteristics of Formal Organization: –

(1) It is deliberated created- This organization is deliberated created for the successful attainment of the objectives of the concern.

(2) It is based on rules and procedures and is Impersonal – Formal organization it is based on rules and procedures and not on personal relationship but working relationships.

(3) Formal Authority- In formal organisation, authority is vested in the office or post for the performance of the responsibility assigned and flows downwards . It can also be delegated.

(4) Based on division of work- The main foundation of formal organization is division of work.

(5) Defined Inter-relationship- A formal organization is a system that clearly explains the inter-relationship between various job positions. Thus, everybody knows his relationship with other organisational positions and also his authority and responsibility.

(6) It is more stable- Under this organization changes are not introduced as per desires but as per major changes in external environment. Though it is flexible but stable as well.

Informal Organization

According to Chester Bernard, “That organization is informal where the mutual relations are established unconsciously for common objectives.”

An informal organization is that organization which is not established deliberately but comes into existence because of common interests, likes, dislikes and religious and communal relations within the formal set up. The network of social groups based on friendly relations can be called as informal organization. It emerges from the formal organization and it is not based on any rules and procedures. In this organization an individual does not help another individual in his activities simply because he is responsible for it but because of friendly relationships. For example, in a formal organization a communication follows a prescribed path. Communication flows from foreman to manager through a supervisor but in an informal organization a foreman can directly communicate to manager as they may share a mutual friendly relation which may emerge out of any common interest or friendly relationship. Not only this, a foreman or supervisor can talk directly to the general manager. Thus, in an informal organization no stringent rules or procedures are followed but is completely based on mutual friendly relationships.

Main characteristics of Informal Organization

(1) It is not deliberated created: – An informal organization is not deliberately created but comes into existence on the basis of friendly relationship and common interests.

(2) No written rules and procedures: No written rules and procedures govern informal organisation but gradually some norms do emerge informally like helping the member of their group to find solution to the problems related to his work or his own self, protecting the members of their community from the managerial exploitation etc.

(3) It is Personal: – Under this the feelings of individuals are kept in mind and nothing is imposed upon them.

(4) No formal Authority: – No formal authority relationships exist in an informal organisation. Relationships are based on mutual friendly relationships among members.

(5) No place on organization chart: – An informal organization has no place on the organization chart. Organization chart is a diagram which clarifies the relationship among various posts established in the organization.

(6) Existence: the existence of informal organisation depends upon the formal organisation.

For a concern both formal and informal organizations are important. Formal organization originates from the set organizational structure and informal organization originates from formal organization. They are the two phases of same concern.

Summary:

Organizing is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them. Organizing provides structure to the business enterprise. Organization arises only when the number of people working in an enterprise is more than one. If there is only one person, he is expected to perform all the functions single-handedly and there will be no need to divide the work. In the absence of division of work, organization is meaningless. We have studied process of organizing. By following the process there is systematic division of work and clarity of authority and responsibility. Organisation structure is both formal and informal which persist within the organization and both are important for successful running of the concern .

References

(1) http://notes.tyrocity.com/chapter-4-principles-of-organization-business-studies-xii/
(2) http://www.yourarticlelibrary.com/organization/7-points-on-the-importance-of-organising-inbusiness/948/
(3) Business Management: Dr. P. C. Pardeshi
(4) Management: Tasks, Responsibilities, Practices: Peter Drucker
(5) Management: A Global Perspective, Herold Koontz