Chapter 1.5 – Organising
Table of Contents
Business Studies Chapter 1.5 – Organising
1. Introduction to Organising
Organising is the management function that follows planning. It involves the arrangement of resources (human, material, financial, etc.) to implement the plans effectively. Organising includes the identification and classification of required activities, grouping them into manageable tasks, and assigning them to responsible employees, thus ensuring clarity and coordination.
Example: Wipro’s restructuring to improve customer orientation by dividing the company into subsidiaries focusing on different sectors like telecommunications, financial services, and engineering.
2. Steps in the Process of Organising
The process of organising consists of the following steps:
a. Identification and Division of Work
- The first step is to identify and break down the work required to achieve organisational goals. This division allows work to be completed more effectively by avoiding duplication and spreading the workload.
Example: In a school fete, tasks like decoration, ticketing, and food arrangements are assigned to separate committees.
b. Departmentalisation
- Once tasks are divided, similar activities are grouped together into departments. This allows for specialisation and easier management.
Example: In a company, departments like production, marketing, finance, and HR are created to group related activities together.
c. Assignment of Duties
- Jobs are allocated to individuals based on their skills and competencies, ensuring that the right tasks are assigned to the right people. This maximises efficiency.
d. Establishing Authority and Reporting Relationships
- Reporting relationships are established to clarify who reports to whom. This eliminates ambiguity and ensures smooth communication.
Example: In a hierarchical structure, a production manager reports to the general manager, and workers report to the production manager.
3. Importance of Organising
a. Benefits of Specialisation
- Organising allows for the systematic allocation of jobs, leading to specialisation. Repetitive tasks lead to increased efficiency as workers become experts in their assigned jobs.
b. Clarity in Working Relationships
- Clearly defined authority and responsibility ensure smooth communication and coordination.
c. Optimum Utilisation of Resources
- Organising avoids duplication of efforts and ensures that resources are used efficiently.
d. Adaptation to Change
- An effective organisational structure can be modified easily to accommodate changes in the business environment.
e. Effective Administration
- By defining roles and responsibilities clearly, organising helps in the smooth execution of work and leads to effective administration.
f. Development of Personnel
- Delegating responsibilities allows managers to focus on growth and develop new methods. It also allows subordinates to handle complex tasks, preparing them for future roles.
g. Expansion and Growth
- Organising allows businesses to grow by adding new job positions, departments, or even expanding into new geographical territories.
4. Types of Organisational Structures
Organisational structures can be classified into two main types:
a. Functional Structure
- Functional Structure groups similar jobs under specialised departments such as production, marketing, and finance.
Advantages:
- Promotes specialisation and efficiency.
- Ensures better control and coordination within departments.
- Minimises duplication of efforts, leading to economies of scale.
- Easier to train employees in a specific function.
Disadvantages:
- May lead to functional empires, where departmental goals overshadow organisational goals.
- Difficult to coordinate across departments.
- May create inter-departmental conflicts.
b. Divisional Structure
- Divisional Structure is where organisations are divided based on product lines, with each division functioning as a separate unit.
Advantages:
- Promotes product specialisation and accountability.
- Divisions have more autonomy, leading to quicker decision-making.
- Makes expansion easier by adding more divisions for new products.
Disadvantages:
- May lead to increased costs due to duplication of functions across divisions.
- Divisions may work in silos, leading to conflicts.
5. Formal and Informal Organisation
a. Formal Organisation
- Formal organisation refers to the official structure designed by management to achieve specific goals. It defines the roles, responsibilities, and authority of each position within the organisation.
Advantages:
- Ensures clarity in roles and responsibilities.
- Promotes unity of command and efficiency.
- Allows easy identification of responsibility and accountability.
Disadvantages:
- Can lead to delays in communication due to rigid structures.
- May stifle creativity due to strict adherence to rules.
b. Informal Organisation
- Informal organisation arises naturally through social interactions among employees. It is not officially recognised but can influence how work gets done.
Advantages:
- Facilitates faster communication.
- Fulfills employees’ social needs and boosts morale.
- Provides valuable insights into employee sentiments, acting as a feedback mechanism.
Disadvantages:
- Can give rise to rumours and miscommunication.
- May resist organisational changes.
6. Delegation
Delegation involves the transfer of authority and responsibility from a superior to a subordinate. It is a necessary tool for managers to reduce their workload and focus on more strategic tasks.
Elements of Delegation:
- Authority: The right to command and make decisions. Authority flows from top to bottom.
- Responsibility: The obligation to perform assigned tasks. Responsibility flows upward, with subordinates accountable to their superiors.
- Accountability: Subordinates must report back and answer for the outcome of their tasks. Accountability cannot be delegated.
Importance of Delegation:
- Helps in effective management.
- Promotes employee development and builds leadership skills.
- Motivates employees by showing trust and empowerment.
7. Decentralisation
Decentralisation is the delegation of authority to lower levels of management, allowing decision-making to occur at the points of action.
Importance of Decentralisation:
- Develops initiative and self-reliance among subordinates.
- Promotes managerial talent development.
- Leads to quicker decision-making as decisions are made closer to the point of action.
- Reduces the burden on top management, allowing them to focus on strategic decisions.
- Facilitates growth by enabling departments or divisions to function autonomously.
Difference Between Delegation and Decentralisation:
- Delegation refers to the downward assignment of authority, while decentralisation extends decision-making powers throughout the entire organisation.
8. Comparison Between Centralisation and Decentralisation
| Basis | Centralisation | Decentralisation |
| Decision Making | Retained at the top management level. | Spread throughout lower levels of management. |
| Control | Higher control from the top management. | More autonomy at lower levels. |
| Scope | Narrow, confined to higher levels. | Wide, extending to all levels. |
| Freedom of Action | Limited freedom for lower managers. | Greater freedom for lower managers. |