Organization Formal 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 Supporting Objectives, 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

5 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 Manager Television General Manager Cell Phone General Manager Washing machine Color T.V Black/White T.V Plazma T.V

7 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 coordinated  Effectiveness of decision is enhanced  The performance of individual product can be assessed more easily

Departmentation By Territory : Chief Executive officer Vice President Canadian Operation Vice President European Operation Vice President Western Operation Vice President Eastern U.S Operation

9 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 Community Banking Corporate Banking Agricultural Banking Real Estate And Mortgage Banking

11 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 loans  Consumer loan  Auto loan  Shopping loan  Mortgage loan  Marriage loan Merits: 1. Specialized customers deal with unique customer or customer groups

12 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

13 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

14 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.

15 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.

16 Factors determining Centralization & Decentralization 1.External environment 2.Nature of decision 3.Ability of lower-level managers.

Division of Labor The degree which tasks In 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 have line 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.

21  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 competent  All subordinates are in one location  there is a fairly comprehensive set of standard procedures  most jobs are similar  new problems are rare  employees prefer to be self-directed

22 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

23 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.