UNIT-III ORGANISING

1. Define organizing.
Organizing is the process of identifying and grouping of activities required to attain the
objectives, delegating authority, creating the responsibility and establishing relationships for the
people to work effectively.

2. Mention any 4 characteristics of an organization.

 Common objectives
 Specialization or division of labor
 Authority of structure
 Group of persons
 Co-ordination

3.State the kinds of organizational charts.

Vertical chart
Horizontal or left to right chart
Circular or concentric chart.

4. What is Span of control?

Span of control means the number of people managed effectively by a single superior in
an organization. The term “span of control” is also known as “span of management”, “span of
authority” and “span of responsibility.”

5. State the differences between formal and informal organization.

The formal organization is a system of well defined jobs, each bearing a definite measure
of authority, responsibility and accountability.
Informal organization is a network of personal and social relations not established by
the formal organization but arising spontaneously as people associate with one another.

6. State the important factors in determining an effective span.

1 Capacity of superior
2 Capacity of subordinate
3 Nature of work
4 Type of technology
5 Delegation of authority

7. What is line authority and staff authority?

In line authority, a superior exercises direct command over a subordinate.
Staff authority is advisory.

8. What are the factors affecting span of control?

 Ability of the executive
  Nature of work
 Subordinate training
 Effectiveness of communication
 Control devices (Any four)

9. Define authority
Authority is the formal right of the superior to command and compel his subordinates to
perform a certain act.

10. What are the disadvantages of organizational charts?

i) Chart becomes outdated quickly
ii) Does not show informal relationship
iii) Does not show duties and responsibilities
iv) Poorly prepared charts might create misleading effects.

11. Define decentralization.

It is the process of transferring and assigning decision making authority to lower levels
of an organizational hierarchy.
Or
If the power is fully distributed to the subordinates of the organization, it is called
decentralization.

12. Mention the disadvantages of decentralization.

i) It is difficult to have a uniform policy and procedure
ii) There is a possibility of duplication of work
iii) There is increase in complexity of coordination of decentralized organizational units.
iv)If not followed properly, decentralization will create chaos.

13. What is delegation of authority?

It is a process which enables a person to assign works to others and delegate them with
adequate authority to do it.

14. Mention any two differences between delegation of authority and decentralization.

In delegation, a superior continues to be responsible for the work delegated to his

subordinates while in decentralization the superior is relieved from his responsibility for the
work decentralized and the subordinate becomes responsible for that.
Delegation is essential to the management process whereas decentralization is optional.

15. What are the barriers to effective delegation of authority?

On the manager’s side barriers may be due to:
i)Fear of competition
ii)Lack of confidence in subordinates
iii)Lack of ability to direct
iv)Unwillingness of the manager to delegate authority.

PART B
 1. Define formal and informal organizations. Discuss the benefits and limitations of formal
and informal organizations and enumerate any eight differences between them.

Formal organization is a system of well defined jobs, each bearing a definite measure of
authority, responsibility and accountability.

Informal organization is a network of personal and social relations not established or

required by the formal organization but arising spontaneously as people associate with
one another.
Advantages of formal organization:
Overlapping of responsibility is easily avoided.
A sense of security arises from classification of task.
Motivates the employees
More stable organization can be ensured.
Boundary of each worker is clearly defined.

Advantages of informal organization:

It gives satisfaction to the workers.
It motivates the workers
It is one of the useful channels of communication
It encourages the executives to plan the work correctly.
It fills up the gaps and deficiency of the formal organization.

Advantages of informal organization

They may function as counter- productive
It indirectly reduces the effort of management to promote the greater productivity.
Members are likely to put their own group satisfaction ahead of the organization’s
objective.
It is a carrier of rumour

Differences between Formal Organizationand Informal Organization

Sl. No Formal Organization Informal Organization

1. Prescribed structure of roles and Natural and spontaneous structure
relationship coordinated towards a arising out of the social tendency of
common objective people to associate and interact
2. Goals and tasks are oriented towards Goals and tasks are centered around
productivity, profitability and so on. individual and group satisfaction
3. Well defined in shape Shapeless
4. Ranks of individuals are made clear by Ranks of individuals are implicit
titles
5. Written system of reward and Unwritten system of reward and
 punishment punishment
6. The organization is enduring and may The organization is not very
grow to any size enduring being dependent on the
sentiments of members. It tends to
remain small.

2. What is departmentalization? List out its need and explain it based on different strategies.

Departmentalization is a process of dividing the large monolithic functional

organization into small and flexible administrative units.

Need for departmentalization:

 Efficiency of the work
 Development of managers
 Standards for performance can be fixed easily
 Provides motivation by developing the feeling of autonomy.
 Facilitates budget preparation etc.

Departmentalization by different strategies – 12 Marks (with explanation)

Based on functions
Every organization of a given type must perform certain jobs in order do its work. For
example, key functions of a manufacturing company include production, purchasing,
marketing, accounting, and personnel. The functions of a hospital include surgery,
psychiatry, nursing, housekeeping, and billing. Using such functions as the basis for
structuring the organization may, in some instances, have the advantage of efficiency.
Grouping jobs that require the same knowledge, skills, and resources allows them to be
done efficiently and promotes the development of greater expertise. A disadvantage of
functional groupings is that people with the same skills and knowledge may develop a
narrow departmental focus and have difficulty appreciating any other view of what is
important to the organization; in this case, organizational goals may be sacrificed in favor
of departmental goals. In addition, coordination of work across functional boundaries can
become a difficult management challenge, especially as the organization grows in size
and spreads to multiple geographical locations.
Based on product
Large, diversified companies are often organized according to product. All the activities
necessary to produce and market a product or group of similar products are grouped
together. In such an arrangement, the top manager of the product group typically has
considerable autonomy over the operation. The advantage of this type of structure is that
the personnel in the group can focus on the particular needs of their product line and
become experts in its development, production, and distribution. A disadvantage, at least
in terms of larger organizations, is the duplication of resources. Each product group
requires most of the functional areas such as finance, marketing, production, and other
functions. The top leadership of the organization must decide how much redundancy it
can afford.

-
Based on customers
An organization may find it advantageous to organize according to the types of customers
it serves. For example, a distribution company that sells to consumers, government
clients, large businesses, and small businesses may decide to base its primary divisions
on these different markets. Its personnel can then become proficient in meeting the needs
of these different customers. In the same way, an organization that provides services such
as accounting or consulting may group its personnel according to these types of
customers.
 Based on regions or territory
Organizations that are spread over a wide area may find advantages in organizing along
geographic lines so that all the activities performed in a region are managed together. In a
large organization, simple physical separation makes centralized coordination more
difficult. Also, important characteristics of a region may make it advantageous to
promote a local focus. For example, marketing a product in Western Europe may have
different requirements than marketing the same product in Southeast Asia. Companies
that market products globally sometimes adopt a geographic structure. In addition,
experience gained in a regional division is often excellent training for management at
higher levels.

 Based on time
 Based on numbers
 Based on Process
 Matrix organisation

3. What is an organization chart? List out its uses and discuss its types in detail. (16)

It is a diagram that displays a reporting or relationship hierarchy. It is used to show the

structure of a business, government or other organization.
Uses: ( Atleast four uses as below)
  Used as a management tool for planning purpose
 Shows work responsibilities and reporting relationships
Types (With explanation and diagram):
 Top down or vertical chart
 Horizontal or left to right chart
 Circular or horizontal chart

Line Organisation:
Line organisation is the simplest form of organisation structure. Line organization is the
oldest and simplest method of administrative organization. According to this type of
organization, the authority flows from top to bottom in a concern. The line of command
is carried out from top to bottom. This is the reason for calling this organization as scalar
organization which means scalar chain of command is a part and parcel of this type of
administrative organization. In this type of organization, the line of command flows on an
even basis without any gaps in communication and co- ordination taking place. The line
structure is based on the scalar principle, which states that authority and responsibility
should flow in a direct line vertically from the highest level of the organisation to the
lowest level. The primary emphasis in the line organisation is upon the superior-
subordinate relationship. Every person in the organisation is in the direct chain of
command. (Figure 1).

Features of Line Organization

1. It is the simplest form of organization.
2. Line of authority flows from top to bottom.
3. Specialized and supportive services do not take place in these organizations.
4. Unified control by the line officers can be maintained since they can
independently take decisions in their areas and spheres.
5. This kind of organization always helps in bringing efficiency in communication
and bringing stability to a concern.

Merits of Line Organization

1. Simplest-
 2. Unity of Command
3. Better discipline
4. Fixed responsibility
5. Flexibility
6. Prompt decision

Demerits of Line Organization

1. Over reliance
2. Lack of specialization
3. Inadequate communication
4. Lack of Co-ordination
5. Authority leadership

Line and Staff Organisation

Line and staff organization is a modification of line organization and it is more
complex than line organization. According to this administrative organization,
specialized and supportive activities are attached to the line of command by appointing
staff supervisors and staff specialists who are attached to the line authority. The power of
command always remains with the line executives and staff supervisors guide, advice and
counsel the line executives. Personal Secretary to the Managing Director is a staff
official. Most business organisations, except the very small, have this type of structure.
As the organisations have grown complex, the problems of line executives have become
sufficiently complicated. The line executives being generalists need the advice of
personnel with specialised knowledge and functions to tackle these problems. For this
purpose, the staff positions arecreated in the organisation. In line and staff organisation,
the line authority remains the same as it does in the line organisation i.e. the authority
flows from top to bottom; and the line executives perform the major functions; the staff
functionaries support and advise the line executives. For example, for sound management
of human resources, the line managers are provided specialised assistance through
personnel/Human Resource managers. As staff functionaries are employed to perform
supportive role, they do not have any power of command in the organisation (Figure 2).
Features of Line and Staff Organization
1.There are two types of staff :
a. Staff Assistants- P.A. to Managing Director, Secretary to Marketing Manager.
b. Staff Supervisor- Operation Control Manager, Quality Controller, PRO
2. Line and Staff Organization is a compromise of line organization. It is more complex
than line concern. 3. Division of work and specialization takes place in line and staff
organization.
4. The whole organization is divided into different functional areas to which staff
specialists are attached.
5. Efficiency can be achieved through the features of specialization.
6. There are two lines of authority which flow at one time in a concern:
a. Line Authority b. Staff Authority
7. Power of command remains with the line executive and staff serves only as counselors
Merits of Line and Staff Organization
1. Relief to line of executives
2. Expert advice.
3. Benefit of Specialization
4. Better co-ordination
5. Benefits of Research and Development.
6. Training
7. Balanced decisions
8. Unity of action

De merits of Line and Staff Organization

1. Lack of understanding
2. Lack of sound advice
3. Line and staff conflicts
4. Costly
5. Assumption of authority
6. Staff steals the show

Functional Structure
This is the most widely used form of organisation structure because of its simple logic and
commonsense appeal. Here the tasks are grouped together on the basis of common functions. So,
all production activities or all financial activities are grouped into a single function which
undertakes all the tasks required of that function. A typical chart of a functional organisation is
presented in Figure 3.
The functional structure suits best to the small to medium organisations producing one or a few
products, where the goals of the organisation emphasise functional specialisation, efficiency and
quality. When the activities or jobs are grouped keeping in mind the functions to be performed
then it is called functional structure. These functions are organized in to separate departments.
For example, in a manufacturing concern division of work into key functions will include
production, purchase, marketing, and personnel. Functional organization has been divided to put
the specialists in the top position throughout the enterprise. This is an organization in which we
can define as a system in which functional department are created to deal with the problems of
business at various levels. Functional authority remains confined to functional guidance to
different departments. This helps in maintaining quality and uniformity of performance of
different functions throughout the enterprise. The concept of Functional organization was
suggested by F.W. Taylor who recommended the appointment of specialists at important
positions. For example, the functional head and Marketing Director directs the subordinates
throughout the organization in his particular area. This means that subordinates receives orders
from several specialists, managers working above them

Features of Functional Organization

1.The entire organizational activities are divided into specific functions such as operations,
finance, marketing and personal relations.
2. Complex form of administrative organization compared to the other two.
3. Three authorities exist- Line, staff and function.
4. Each functional area is put under the charge of functional specialists and he has got the
authority to give all decisions regarding the function whenever the function is performed
throughout the enterprise.
5. Principle of unity of command does not apply to such organization as it is present in
line organization.
Merits of Functional Organization
1. Specialization
2. Effective Control
3. Efficiency
4. Economy
5. Expansion
 6. Easy supervision
7. Easy coordination
8. Effective training-

Demerits of Functional Organization

1. Confusion
2. Lack of Co- ordination
3. Difficulty in fixing responsibility-
4. Conflicts
5. Costly

4.Explain the following:

a. Delegation of Authority
Delegation consists of granting authority or the right to make decisions in certain
defined areas and charging the subordinate with responsibility for carrying through an
assigned task.
Importance: (Atleast four as below)
Relieves managers from heavy workload
Helps to improve job satisfaction
Helps in maintaining healthy relationship with subordinates
Types:
Over delegation
Under delegation
Process of delegation:
 Determination of results expected
 Assignment of duties
 Authorization for actions
 Creation of obligation

Few guidelines for making delegation effective

b. Decentralization

If the power is fully distributed to the subordinates of the organization, it is called decentralization.

Decentralization means delegation of authority at every level. It is the even and systematic
distribution of decision making authority to the lowest level of management. Under
decentralization every employee working at different levels gets some share in the authority.
Decentralization is a policy matter and managers plan in advance whether to go for centralized
or decentralized policy. In a decentralised organisation, action can be taken more quickly to
solve problems, and more people provide inputs into decisions. For firms having a number of
plants, which are located at different places, decentralisation is more beneficial. With most of
the large companies now preferring to make organisations more flexible and responsive, there
has been a marked change towards decentralised decision making.
Factors determining degree of decentralization
 Size of organization
History of the organization
Availability of managers
Pattern of planning
Environmental influences
Control techniques

Main advantages of decentralization:

1. It reduces the burden of the top management
2. It can contribute to staff motivation by enabling middle and lower level managements to get
a taste of responsibility, and by encouraging the use of knowledge, innovation, and initiative by
all employees.

Main disadvantages of decentralization:

1.It requires greater coordination by senior management
2. It can lead to inconsistency of treatment of customers, clients or public, especially in service
industries
3. Decentralisation does require a plentiful supply of capable and wellmotivated managers, who
are able to cope with increased responsibility which decentralisation brings about

5.What is the need for and scope of human resource management? What are the various factors
affecting human resource management? Explain the various functions of human resource
management. (16)

Human resource management is also known as staffing.

Human resource management is concerned with competing for and competing on human
resources. Competing for involves recruiting and employing right personnel and
competing on involves developing, retaining and integrating personnel to achieve
competitive advantage.
Need or Importance of human resource management:
 Helps a company to achieve objective
 Provision of job satisfaction of employees

Scope:
 Planning
 Job analysis and design
 Recruitment and selection
 Orientation and induction
 Training and development
 Performance appraisal
 Compensation planning and remuneration
 Motivation, welfare, health and safety
 Industrial relations
Factors affecting human resource management: - 2 Marks
 External factors
 Internal factors
Functions of human resource management:
 Estimating Manpower Requirements
 Recruitment and selection of staff
 Training and Development of Staff
 Promotion and Transfer
 Remuneration
 Orientation of staff
 Performance appraisal
 Management development
 Career development
 Organizational development

Estimating Manpower Requirements

It is making an analysis of work and estimating the manpower requirement to accomplish
the same. The first step of staffing is to estimate the size and structure of the staff. In the
present complex and dynamic business environment, planning for manpower requirement
is the responsibility of the top management. Features of estimating staff requirements:
1. Presenting inventory of existing number and type of staff employed.
2. Determining the period for which the people are required
3. Ascertaining manpower needs with regard to the number and the type of people
required. It is a comparison of the existing manpower and the required manpower.
4. Activity based manpower planning, taking into consideration the acquisition,
utilization, improvement and preservation of the organizations human assets.

Recruitment and selection of staff

It is identifying and attracting capable applicants for employment. It ends with the
submission of applications by the aspirants. Recruitment is an activity of establishing
contact between the employer and the employee. Both the internal and the external
sources of recruitment maybe used to recruit the required staff. In order to select the most
suitable candidate for the job written test, psychological tests and physical tests should be
administered. Candidates should also be interviewed before the final selection. These
tests discover the hidden ability of the candidates, differentiate between intelligent and
non – intelligent candidates and help in the selection of the most suitable candidate.

Training and Development of Staff

It is concerned with imparting and developing specific skills for a particular purpose.
According to Jucius, ―The term training is used to indicate processes by which the
aptitude, skills and abilities of employees to perform specific jobs are increased.‖ The
employee must have the theoretical and practical knowledge of the work, he is required
to perform. The theoretical knowledge can be gained in the institutions but for the
practical knowledge training is required. Therefore, the training acquaints the employees
with the real situations of the work and helps him in the faultless accomplishments of the
work. Training is a part of incentives given to the workers in order to develop and grow
them within the concern. Training is generally given according to the nature of activities
and scope of expansion in it. Along with it, the workers are developed by providing them
extra benefits of in-depth knowledge of their functional areas. Development also includes
 giving them key and important jobs as a test or examination in order to analyze their
performances.

Promotion and Transfer

A promotion is the appointment of a member to another position within the same
department or elsewhere in the organization which involves duties and responsibilities of
a more complex or demanding nature and is recognized by a higher pay grade and salary.
A transfer is the appointment of a member to another position within the same
department or elsewhere in the organization, involving duties and responsibilities of a
comparable nature and having a similar pay grade and salary. In certain circumstances,
the transfer may be at a lesser pay grade or salary. Employees are promoted to higher
ranks on the basis of merit and seniority. Staffing also involves transfer of employees
from one place to other place according to their ability, competence and experience. It
also takes into consideration the needs and interests of the employees. A promotion is a
move up the organizational ladder whereas job rotation and transfers are lateral moves.

Remuneration
It is a kind of compensation provided monetarily to the employees for their work
performances. This is given according to the nature of job- skilled or unskilled, physical
or mental, etc. Remuneration forms an important monetary incentive for the employees.
The management should ensure that the employees are suitably remunerated for the
services rendered by them. Remuneration paid maybe in the form of wages, salaries,
allowances and perks. Wages are normally paid according to time rate of piece rate
system.
Orientation of staff
Once screening takes place, the appointed candidates are made familiar to the work units
and work environment through the orientation programmes. Orientation of the selected
employees enables them to adjust themselves to the real situations, work and the
environment of the organization. Here, the employees may be taken round the plant or
office, supplied with the literature containing information, policies and achievements of
the enterprise and maybe shown a power point presentation about the organization and
also shown a video to help them get a feel of the organisation.

Performance Evaluation
In order to keep a track of the behavior, attitudes as well as opinions of the workers
towards their jobs regular assessment is done to evaluate and supervise different work
units in a concern. It is basically concerning to know the development cycle and growth
patterns of the employee in a concern. Also it is a systematic evaluation of personnel by
superiors or others familiar with their performance so as to rank the employees to
ascertain their eligibility for promotions.

6.Enumerate and explain the various steps involved in staff selection process.

Selection is the process of differentiating between applicants in order to identify those

with a greater likelihood of success in a job. - 2 Marks)
Steps involved in staff selection process: - 14 Marks (With explanation)
 Screening of applications
 Selection Tests
 Preliminary interview
 Medical examinations
 Final interview
 Approval
 Placement