Class 12 Business Studies Lesson 4

Concept of Organizing:

Organizing is the main function of management. It can be taken as the backbone of management. It is the process of identification and grouping of activities of enterprises and established in the activity and relationship among them. It ensures the right person, at the right places, at the right time. Grouping the activities and resources in a logical manner is organizing. It includes dividing the work, assigning people to it, allocating resources and coordinating effort, job designing ,structuring, authority responsibility, etc.

According to Henry Fayol, “to organize business means to provide everything useful do it like function, raw materials, tools, capital and personnel. In conclusion, organizing is a managerial function that involves arranging and structuring work to accomplish the organizational goal.

Process of organizing:

1.Determination of objectives: Every organization is organized and established with particular objectives which is the first step of an organization process. Without objective, organizing has no meaning. All the activities in organizing is carried out to fulfil those activities. Thus, objectives the organization should be clearly determined.

2. Identification of activities: The next step in organizing is to identify and define the activities to be performed in order to fulfil the objective. Thus, organisations should identify its activities to be done, considering the environmental change.

3. Grouping activities: after identification of activities, the next process is grouping in the activities. The act of grouping of activities is known as departmentation.
For example production department, sales, financing, human resource, marketing department etc. And these activities may be grouped in different basics like functions, products, customers, etc.

4. Allocation of duties and responsibilities: Now, in the fourth step of the organising process, a group of related activities is assigned to different individuals for the ability of the individual, capability of people and job requirement must be matched. The process of assigning duties creates responsibility to perform the work among workers and avoid duplication of work and overlapping efforts.

5. Delegation of authority: Delegation of authority is an essential step of organising. Without delegation of authority, individuals will not be able to perform his/her task. The authority and responsibility should be properly balanced and top level management most delegate authority to its lower level management.

6. Coordination: In order to get optimum performance, coordination is necessary. The activities and effort of different individuals and departments should be coordinated for teamwork and efficient performances.

Principles of organising:

 

1. 1. Authority and responsibility: Authority English punctuality is the major part of an organisation. They must be clear and balance these two factors. Responsibility without authority cannot perform work confidently and authority without responsibility makes a person irresponsible.
   2. Balance: According to this principle there must be balance ok equal workload among all departments and employees. The main objective of this principle are:

To increase efficiency.
To manage division of work.
To manage centralisation and decentralization.
To balance between vertical and horizontal structure.
To balance resources between top level management and middle level management.
To balance between management and communication.

3. Co-ordination: every organisation has established a predetermined and defined goal. The different departments and employees are involved in various activities but a common goal. This principle makes harmonious working relations between all departments and employees and all levels of enterprises.

4. Division of work: entire work of an organisation should be divided into different parts. the employees should only action part of job. In other words, division of work improve efficiency and productivity of the workers. In a sound organisational structure division of work can be practice well.

5. Efficiency: organisation should be able to attain the missions and objectives of enterprise at the minimum cost. It can be done only by establishing efficiency. An efficient organisational structure helps to operate the resources efficiently. Proper organisational structure and knowledge are experienced by employees are essential to achieve organisational efficiency.

6. Flexibility: the organisation structure must be flexible or adjustable in any situation. For example, internal and external environment. This principle sweet be so flexible that organisation can easily adopt any kind of political, economic, social and technical changes. lack of flexibility or complex procedures or absolute control are the obstacle of growth and development of organisation.

7. Goal: the goals of the organisation influences the organisation’s structure. Hence, the goals and objectives must be clearly defined for its department and employees then the entire goal of the organization cannot be achieved.

8. Leadership: this principle states that there must be only one superior who gives command. It means only one superior command to many sub ordinates. if a person is to receive direction from several superior it may result confusion, conflict and indiscipline.

9. Simplicity: organisational structure should be simple. It should be very easy to understand about authority, rules, regulation and duties of everyone in the organisation. it promotes better understanding relationship and cooperation among all the members.

10. Scalar chain: scalar chain is also known as a chain of command. This principle states that the authority flow from the top level to lower level and the chain of command should not be broken. Chain of command should be short and clear which makes decision making and communication more effective.

11. Specialisation: specialisation refers to the distribution of works among the workers on the basis of their qualification, experience and talent. it increases the efficiency of workers and motivates them to put their paste in the work. When an individual employee repeatedly performs specific single job then he/she becomes an expert in the job.

12. Span of control: it is a principal or it is just a device with the help of which phone number of subordinates can be controlled, their number can be determined and their activities can be supervised. A manager cannot supervise and control unlimited numbers of subordinates. Hence, depending upon the size and nature of an organisation, one can have narrow or wide span of control to bring effectiveness in order to achieve the organizational goals.

13. Homogeneity: it is a logical process of grouping similar activities into one group. it means similar words having the same objectives it should be divided into one group.

14. Continuity: the business activities of an organisation are a continuous process up to the existence of the organisation. it is never ending function of an organisation because of changing environment. Continuity health organisation to survive and run for long duration of time.

Importance of organising:

The importance of organisation are as follows:

1. Efficient administration: A sound organisation is necessary for efficient administration and management. Organising is an important and only tool to achieve enterprise goal. It helps the management in many ways. It defines various activities and their authority relationship in the organisational structure. It can avoid confusion and delay as well as duplication of work.

2. Optimum utilisation of human resources: A sound and effective organisation utilizes to human resources properly. it places the right person in the right job in the right position and department. Such matching of individual and job help in better use of human talent and capability

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3. Facilitates growth and diversification: scientific organising function facilitated growth and diversification of an organisation. Any organisation should not remain always in the same condition. It should be developed and diversified according to the running of time. Organisational structure plays an important role in its growth and diversification. Organising contributes to the growth and diversification of the enterprise through decentralization.

4. Optimum use of new technology: use of new technology in organising process is flexible. a scientific organising function provides opportunity for optimum use of technological innovation. Dynamic organising and be effectively and easily adjusted to the technological changes.

5. Specialisation: organisational structure is the network of relationship in which the work is divided into units and department. This division of work is helping in having specialization in various activities concern.

6. Effective coordination and communication: it is the only sound organising of an enterprise which creates coordination and establishes communication among various department and individual along with different level of enterprise. It is helps to establish structural relationship between difficult jobs and position.

7. Productivity and job satisfaction: organising process is based on democratic and participative management. Hence, the entire organisation’s environment is favourable for productivity and job satisfaction.

Organisational structure: the organisational structure of an organisation is referred to as the Framework that is designed to clarify the tasks, authority, responsibility and power of managers and staff in a systematic manner. An organisational structure is most important requirement of management that removes barriers and conclusion from the performance of duties and rights. It is also called organisational chart

Types of organisational structure:

There are three types of organisational structure they are:

 

1. Line organisation structure: Line organisation is one of the simple and oldest type of organisation. Which organisation provides the clear division of authority and responsibilities. In which type of organisation, the authority flows from top level to bottom level and accountability and flows from bottom level to top level management. It is also called military organisation is it was first developed and used by military.

Types of line organisation structure:

a. Pure line organisation: Pure line organisation is that type of organisation in which similar type of works is performed by the workers/employees. And workers are grouped for carrying out their duties. These employees are under direct control of supervision of one manager.

b. Departmental line organisation: in departmental line organisation, different departments are established to carry out the function and each department has a department head to control and supervise to employees. The employees of one department can’t be directed and controlled by the other department head.

Characteristic of line organisation:

a. Scalar chain: There is scalar chain formal line of authority moves from top to bottom in a straight line. This chain specifies the root of order, information, etc.
b. Span of control: there is a limit on subordinates under one supervisor in line organisation. This number varies with the volume nature and type of work. Normally one manager and 1 to 4 employees on average.
c. Level: there are different levels of management such as top level medium level and lower level. EA level of management has certain authority and responsibility.
d. Flow of authority: there is vertical flow of authority and responsibility. possibility goes downward from top-level and accountability goes upward from bottom level along the chain of command.
e. Unity of command: there is unity of command. An employee received order from his hall immediate boss. He/she is enjoyable with him/her.
f. Unified control: the control is unified and concentrates on one person and therefore, he can independently make visions of his own. Infect control ensure better discipline.

Disadvantage of line organisation:

a. Autocratic: Authority is centralised at top level in organisation. It leads to autocratic behaviour. Lower level of subordinates has no opportunity to take part in decision making.

b. Lack of specialisation: There is no functional specialisation in line organisation. As one person looks over all the work the work relating to his department it, there is no scope for specialisation. One person cannot be expert in all area.

c. Scope of favoritism: There is scope for favouritism in line organisation. In organisation, the anomalies short age favouritism nepotism hypocrisy personals prejudice, etc. get encouraged by which incompetent personals can get higher position. Lower level is not provided with any opportunity to present their view point of the top level.

d. One-way communication: There is one-way communication from top to bottom. The policies and strategies which are framed by the top level authority are carried out in the same way. This leaves new scope of communication from the other end. The complaints and suggestions of lower authority and not communicated back to the top level authority.

e. Useful for small organisations: line organisation is very old, simple and common type of organisation. it is extremely useful for small organisation but not useful for big and dynamic organisations.

2. Line and staff organisation: Line and staff organisation structure is also simple structure. it defines duties authority’s responsibilities and accountabilities for all level of employees. It has unity in command. Direction goes from top to downward and request goes from bottom to upward. Special employees or technicians are appointed to help chief executive. Their duty and authority are not prearranged in line what they work is the advisory. They have no authority to give order or direction. The objective of line and staff organisation structure is to use experts and technicians to achieve organisational effectiveness. The expert and technicians give advice and suggestion to line officials and managers. The help managers in policy making activities.

Line and staff design structure have two types of staff: they are in line authority and functional specialists. Line authority add those employees who have officially sanctioned ability to give order to subordinate employees within an organisation and functional specialists are advisors of line authorities. Function of specialists are expert of an organisation. The provide advice to the line authority is in in the performance of their duties. Functional specialist has no authority to give direction to the line authority.

Characteristics:

a. Mixed structure: the line and staff organisational structure is the blend of line and staff design structures. It ensures all the benefits of both line and staff. It was evolved in order to avoid the defects of the line and staff organisation and achieve the advantage of these two forms of organisation.

b. Practical decisions: in this organisational structure, there is a provision offline opportunities and functional specialist. The functional specialist provides advice to the line officers or authority in the performance of their duties, which ensures high quality of decisions.

c. Work efficiency: there is a provision of two types of staff in line and staff. They are line authority and functional specialist. Line authority has officially sanctioned ability to give orders to subordinate employees within an organisation but have no authority to give direction to the functional specialist. Provision of two types of staff increases work efficiency.

d. Effective coordination: This organisational structure ensures effective coordination among different levels of management and union. Top level of management plays a vital role in maintaining coordination in an organisation command, rules and regulations.

e. Flexible: Line and staff organisation is highly flexible. Organisation can create new department most existing department and appoint line authority and functional specialist is for requirement of the organisation.

 

Advantage of line and staff organization:

a. Socialization: this type of organisation is based on planned functional specialisation.
b. Simple: this is very easy to understand and implement.
c. Sound decision: line and staff organisation had made it possible to take second decision.
d. Reduce workload: best of officers provide expert suggestions often detailed analysis of each important management activity. This reduces the workload of line officers.
e. Flexibility: in line and staff organisation, start can be added to the line without disturbing the procedure. Hence, there is greater flexibility in the organisation.

f. Coordination: when all activities relating to one department are managed by one individual, there is possibility of effective coordination.

 

Advantages of line and staff organisation:

 

a. Relief to line executive: On a line and staff organisation, the advice and counselling which is provided to line executive divides the work between the two. The line executive can concentrate on the education of plants and they get relieved of dividing their attention to many areas.

b. Expert advice: the line and staff organisation facilitates expert advice to the line executive at the time of need. the planning and investigation which are related to different metals can be done by the staff is specialist and line officials can concentrate on execution plans.

c. Better of specialisation: Line and staff through division of all concern into two types authority divides the enterprise into parts and functional areas. This helps every official and officials to concentrate in their own area.

d. Better coordination: line and staff organisation through specialisation is able to provide better decision making and concentration remains in few hands. this feature helps in bringing coordination in work is every official is concentrating in their own area.

e. Benefit of research and development: through the advice of specialised staff, line executive get time to execute plans by taking productive decision which are helpful for a concern. this gives a wide scope to the line executive to bring innovation and go for research work in those areas. This is possible due to the presence of staff specialist.

 

Disadvantage of line and staff organisation:

 

The disadvantage of line and staff organisation are as follows:

a. Conflict: there is generally conflict between the line executives and staff executives. Line managers feel that staff specialist do not always give right type of advice and staff officers generally complain that dear advice is not properly considered.

b. Lack of initiation: line managers excessively depend on staff’s advice for decision making. the original idea, action and initiative of online managers may be gradually reduced.

c. Costly process: this form of organisation is relatively expensive because under this form two separate types of executive line and staff are to be employed at high salary.
d. Confusion: in this form of organisation, authority and responsibility between the line and staff executive may not be clearly made which may result in confusion and may hamper the coordination.

e. Negligence: staff member lack practical knowledge. They are not accountable for result.

3. Functional organisational structure:

Functional organisational structure was developed by F.W. Taylor to save the serious problem of lack of socialisation in the line of organisational structure and the lack of authority to implement tyre of expert in the line and staff organisational structure. According to him, each person is not specialised in different subjects. Therefore, he is in a position that activity should be divided into groups or main groups and how to handle the activities. Under functional organisation the entire work of organisation is divided into major function. Functional organisation groups employees according to board business activities resulting in departments such as development, manufacturing, sales, manufacturing department, HR department and finance department. Departmental managers supervise wide base of employees under them. Each employee is superior. each department performs is specialised functions for the entire organisation. The sales department deals with sales on behalf of the entire organisation.

Characteristics:

The characteristics of functional design structure are:

a. Division of activities: The functional design structure device business activities into specific functions of research and development, manufacturing, sales, finance, human resource and so on.

b. Functional departments: The functional design structure device departments on the basis of functions of organisation such as research and development department, manufacturing department, sales department, finance department, human resources department and so on.

c. High efficiency: High efficiency is achieved in functional design structure because every function is performed with specialist.

d. Suitable: A functional structure is best suited as a producer a producer of standardized product as large volume and low cost.

e. Effective communication: The functional organizational structure ensures effective communication between functional groups. People easily communicate and co-ordinate with their friends and departments.

f. Centralization: All the authorities and decision making power are centralized in the hand of top manager.

Advantages of functional Organizations structure:

1. Specialization: It ensures maximum use of the principle of managers specialization. All managers are specialized of their field. Hence, it provides the benefit of specialization.

2. Efficiency: It increase the efficiency of the subordinates they get advice and assistance from specialist. Efficiency also higher because every person concentrate on a single leading function.

3. Relief to executive: This organization is based on specialization. Therefore, every executive concentrate on a particular activity they are not over burdened with work.
4. Mass production: It facilitates mass production through specialization and standardization of operation.

5. Flexibility: Any Change in the organization can be introduced without disturbing the whole organization. Hence, there is an element of flexibility in this types of organization.

Other advantage:

It ensure the separation of mental and manual function.

Division of work is possible.

There is the possibility of promoting cooperation as there is no space for one man control.

Disadvantages of functional Organizations structure:

1. Lack responsibility: Management has to face difficulty in defining authorities and responsibilities to the employees because of multiple authorities. There is also difficult to group organizational activities into different department.

2. Lack of unity of command: Functional design structure lacks of command as a result one worker has to obey orders of several bosses and has to be responsible to all.

3. Conflict: Due to the lack of clearly defined authority, conflict may appear between foreman and supervisor in functional organization. They may remain in own stand on certain issues.

4. Highly mechanized: The functional design structure is highly mechanized. It is not appropriate in stable environment and for routine task and technology. It cannot manage change.

5. Lack of Coordination: There may be a lack of mutual understanding between the function specialist and other subordinates which may result in lack of co-ordination.

6. Delay in decision making: Management has to invert more time to come into a concrete decision, So there may be relay decision making.

Departmentation:

Departmentation is the process of grouping jobs according to the sound logical arrangement. It simplifies administration, increases efficiency, managers the right person at the right place and fixes authority and responsibility. It also motivates and develops managers and facilitates coordination of specialists. Departmentation combines jobs into several groups. It can be made on the basis of functional area, number, customer, process, product time and service.

According to Y.K. Bhusan, “Departmentation is the process of grouping activities into units for a purpose of administration”

In conclusion, the process of grouping the activities into department is known as departmentation. Improvise advantages of specialization, fixes authority and responsibility, accountability, develop managers and helps to achieve organizational effectiveness.

Methods/types/basis of departmentation:

A. Departmentation by function: This is a very popular basis of departmentation. It is very simple and most common method of departmentation. Under this method, activities are grouped into different functions and each major function is grouped into a separate department. For example: production, marketing, finance, personal and research and department in a manufacturing company. It exists almost in every organization big or small is shown in the figure.

General Manager (GM)

Finance department Marketing department Production department HR department

Advantages:

i. Logical Form: it is your most logical form of departmentation.

ii. Better coordination: it ensures better coordination in an organization.

iii. Opportunity: employees have the opportunity to move up within the functional areas which gives reasons for them to stay long term.

iv. Eliminates duplication: It eliminates duplication in work.

v. Effective control: effective control is possible in functional departmentation.

vi. Reduces the burden of top management: this type of departmentation reduces the overload and overburdened of the top management. The CEO need not have to give his/her time to the departmental work, he/she can get sufficient time in planning for growth and development of the organization.

vii. Autonomy: department has the autonomy to work as for rules and regulation on change head of department and employees do better for the department and prosperity of their concerned department.

Disadvantage:

i. Costly: it involves maximum supervision and administrative cost.

ii. Not suitable for large organizations: If the organization grows larger, the functional areas can become difficult to manage properly.

iii. Conflicts: functional areas may become distracted by their own goals and focus on them rather than on overall company objectives.

iv. Declines in organizational effectiveness: The major goal gets less importance from departmentation on the basis of functions. This brings decline in organizational effectiveness.

v. Static: it is static. It cannot response to the environmental change

B. Departmentation by product or service: Grouping of organization activities on the basis of product or product line is called departmentation by product. This type of departmentation is important in a multiline large scale enterprise. Thus, product departmentation is suitable for a large enterprise with diversified product i.e. multiline goods or service. For example: agriculture good departments, general consumer goods department, technical or consumer durable product department, machinery and equipment department, etc.

Advantages:

i. Utilization of capital, skills and knowledge: it becomes possible for the maximum utilisation of capital, person’s skill any special knowledge.

ii. Effective coordination: Effective co-ordination takes place among departments of the organization.

iii. Responsibility: responsibility of success and failure lies at the departmental level. Departmental manager of HOD Bosch all the responsibilities of his/her department.

iv. Suitable for large organizations: this method of fermentation is very suitable for large organizations which deals with many kinds of product or product lines.

v. Specialisation: Each department is dealt with by separate managers who have special knowledge, ability and experience about the product line. Thus, this method of departmentation ensures specialisation.

Disadvantages:

i. Costly: it involves maximum administrative and other costs. It requires knowledge, skilled, experienced and motivated managers and other employees.

ii. Problem in coordination: If there is lack of coordination among departments then problems may appear in the way to goal achievement.

iii. Lack of autonomy: since planning, policy making and controlling remain in the hand of chief executive officer, departmental managers do not get full autonomy.
iv. Ignorance of corporate objective: departmental manager may ignore the corporate objectives.

v. Unhealthy competition: unhealthy competition text place among departments which leads the organization towards failure.

C. Departmentation by territory: Departmentation can be done on the basis of Territory or geographic location. It is useful to a large scale enterprise whose activities are widely geographically dispersed. Bank, insurance company, tele company, education, etc. generally, adopt this type of departmentation. Under this type of departmentation, activities are grouped into two regions; zones, branches etc. Many multinational companies add these types of functions.

Advantages:
i. Emphasis on local region: The local region can gain benefit from this method of departmentation. Details to develop the local market in different regions. Special attention is given to the local market.

ii. Better coordination: This method of departmentation insurance coordination through the creation of regional divisions.

iii. Effective communication: There effective communication with customers in this type of organization. direct contact can be maintained with the local people.
iv. Economy: economics can be maintained by utilising local resources effectively and efficiently.

v. Dynamic: it considers environmental change. It can manage change effectively.

Disadvantages:

i. Need of efficient and experienced employees: efficient and experienced employees are needed to conduct regional departments. Without them, no organization can develop and expand.

ii. Costly: business departments incurred extra expenses which increases production and administration cost. It is a costly method of departmentation.

iii. Difficulty in coordination and control: if the functions are dispersed, it is difficult for the central office to effectively coordinate and control.

iv. Problem in integration: there is a problem of integration of regional division.
v. Suitable: geographic departmentation is suitable only for the big size business organization.

D. Departmentation by customer: The activities of an enterprise that are grouped on the basis of the type of customer is called departmentation by customer. Big enterprises that provide special service to this types of customers adopt this type of departmentation. It increases concentration on customer needs. It creates strong public image.

Delegation of authority:

Delegation of authority is a process of giving power or authority to subordinate by the superior in order to perform a particular task. Delegation of authority always flows from upward to downward. Delegation of authority is practically the basis of modern management.

According to F.G. Moore, “delegation means assigning world to others and giving them authority to do it”. In conclusion we can say that delegation of authority is assigning work to others and giving them necessary authority to do the same work. it is a process which enables manager to put the managerial decisions in actions.

Principle of delegation of authority:

i. Equity of authority and responsibility: it is the most important principle of delegation of authority. The authority to the subordinates is given by superior on the basis of the task assigned to them, neither more nor less to the task. If more authority is delegated possibly there may be misuse and if less authority is delegated perhaps it may be difficult to accomplish the task.

ii. Absoluteness of responsibility: according to this principle, only authority can be delegated but responsibility cannot be delegated. the person delegating authority is himself responsible to his seniors. So, responsibility cannot be delegated.

iii. Unity of command: As far as possible should be commanded by one superior. We should take their task from one superior and discharge their responsibility to the same superior. It will help subordinates to know the sources of authority.

iv. Scalar chain: according to this principle, authority list from top to downward. Scalar chain is the basis of relationship between senior and subordinates. A proper understanding of scalar principle is necessary for the proper functioning of the organization.

v. Functional definition of authority and responsibility: Before delegating authority, a manager should define clearly the functions to be performed by subordinates. Each subordinate must fully understand the nature and significance of his job. It’s relationship with other jobs and limits of his authority.

Importance of delegation of authority:

i. Higher productivity: delegation of authority ensures higher productivity. Subordinates use are motivated to give their best at work. Delegation of authority of also reduces the overburden of manager, as a result it they have enough time to engage in policy making and managerial function.

ii. Quick decision making: delegation of authority ensures quick and rational decision making. Efficient it can take the decision quickly within the limits of authority. They have also easy to take decision on routine matters. They do not need to consult which prepare for the same task.

iii. Improves morale: delegation of authority improves the morale of subordinates as they are given duties and authority to complete same duties. Subordinates feel that they are crucial and they are needed for organization. Their attitude will be positive towards their superior and organization. They will be creative and innovative.

iv. Effective communication: delegation of authority ensures effective communication which develops good relationships between the superior and subordinates. The subordinates are answerable to superiors and the superiors are responsible for performance of subordinates. Effective communication also improves the overall quality of organizational climate.

v. Maintains cordial relationship: delegation of authority maintains cordial relationship between superiors and subordinates. superior trust their subordinates and give them adequate authority and subordinates accept their responsibility. Unity of command and scalar chain also enhances dear relationships.

vi. Employee development: delegation of authority helps to develop subordinates or employees by providing opportunities of learning, enhancing their managerial skills, involving them in the decision making process and making them efficient successors. It provides efficient managers.

Barriers to effective delegation of authority:

i. Lack of ability to direct: some higher level managers cannot have ability to direct subordinates such managers do not like to delegate authority.

ii. Lack of trust: delegation implies a trust full attitude between the superior and subordinates. Lack of confidence in the capacity and the subordinates. Lack of confidence in the capacity and ability, manager may not trust subordinates. If they felt subordinates and not capable of accepting the responsibility, they may not get a chance.

iii. Lack of self-confidence: most of the subordinates lack self-confidence to work with full authority. As a result, they raise barriers in delegation of authority.

iv. Fear of competition: some managers may feel that if the authority is delegated, their good news will do better and they may pose a threat to their advancement. show your off competition from a lower level is a barrier to effective delegation.

v. Fear of criticism: lack of motivation in management discourages subordinates to take a responsibility and accept authority. Such an environment is found in organizations where there is a lack of reward and adjustment system.

Decentralization (top to lower):

Decentralization means the systematic delegation of authority or power of decision making to the lowest level of organization or its branches or department where the work is to be performed. IT relates which distribution of authority, disbursement of power and granting of authority to the subordinates. It is just the opposite of centralisation. Decentralization of authority is a management philosophy through which managers at middle level and lower level are given the opportunity to take decision and action on matters related to their respective area of work.

According to S.P. Robbins, “Decentralization is the degree to which authority has been delegated to downwards.”

Advantages/needs/importance of decentralization:

i. Relief to top executive: Decentralization relief top executive from routine and day-to-day time-consuming works. As a result, top level management devote greater attention to order important organizational issues like planning, strategy and decision making.

ii. Quicker and better decision: Decentralization leads to quicker and better decision making. The authority to make decisions is placed in the hands of those who are responsible for executing the decision.

iii. Development of managers: Decentralization philosophy income managers to make decisions and exercise their own judgement. They learn the art of exercising decision and making authority. This develops managerial competency.

iv. Higher motivation: decentralization helps to improve the job satisfaction and morale of lower level managers by fulfilling their needs for autonomy, participation and status. It also fosters team spirit and feeling of cooperation among the subordinates.

v. Facilitate diversification: decentralization of authority facilitates growth and diversification of organizational activities. It helps to develop and introduce new product markets and activities and also productivity and profitability.

Factor affecting Decentralization of authority:

i. Size of the organization: an important factor to influence decentralization is the size of the organization. if the organization is big in size and away is big then decentralization is compulsory otherwise authority is centralized.

ii. Dispersion of operation: authority Decentralization is also influenced by the dispersion of operation. If an organization has conducted its activities indifferent places or regions, it needs to decentralize authority, if not it does not need decentralization.

iii. Nature of decision: nature of decision is also influenced by decentralization. If the nature of decision is complex, expensive, special and long term affecting authority, decentralization cannot be possible. For example; the functions such as planning, organising, directing, controlling, etc. shouldn’t be decentralised. Only simple nature functions can be decentralized.

iv. Philosophy of top management: decentralization of authority also depends on the philosophy of top level management. If top level management believes in authority decentralization it becomes possible or otherwise it becomes impossible.

v. Growth and expansion of organization: if an organization has developed expansion and has grown big, it’s division and subdivision work for several regions. The workload becomes heavy and authority Decentralization becomes compulsory for systematic conduction of organising expansion. Its functional area becomes limited and activity digitalization is not needed.

vi. Control techniques: management will be willing to delegate authority to subordinates if control techniques are good. In the absence of adequate control technique, there is least chance of Decentralization.

vii. Organization Strategy and environment: The study and environment of an organization influence the market position and its competitive strength. These factors in turn affect the degree of decentralization of the organization.

Importance of delegation of authority:

Effective management.

Development of employees

Create future managers

Better coordination

Facilitates growth

Reduce the load of Managers

Improve superior subordinates relationship

Important questions:
Define the organizing? Explain its process.
Describe the principle of organizing.
What is department? Explain the different method of departmentation.
Define the organization structure? Explain the various types of organization structure.
What is delegation of authority? Explain the principle of delegation of authority?
What are the differences between delegation of authority and decentralization of authority.
What is decentralization of authority? Explain the advantages of decentralization.
Explain the barrier of delegation of authority.
What are the factors of affecting decentralization of authority.