CHAPTER FIVE

THE ORGANIZING FUNCTION

Organizational Structure • Delegation • Centralization & Decentralization • Departmentation
Learning Objectives
By the end of this chapter, the learner should be able to:
 Explain the meaning, purpose and characteristics of the organizing function of management.
 Describe the elements and types of organization structure, distinguishing formal from informal
organization.
 Outline the steps in the process of organizing.
 Explain the concept of span of control and the factors that determine it.
 Describe the various bases of departmentation and evaluate their advantages and disadvantages.
 Distinguish between authority, responsibility, accountability and power.
 Explain the concept, importance and principles of delegation of authority.
 Distinguish between centralization and decentralization of authority and the factors that determine the
degree of each.

5.1 Introduction to the Organizing Function

Organizing is the second major function of management, following planning. It can be defined as the process
of defining tasks and activities to be carried out in order to achieve particular objectives. While planning
involves formulating organizational goals and objectives and determining the course of action required to
achieve them, organizing entails grouping activities in such a way that organizational goals and objectives are
achieved in an effective and efficient manner.
The process of organizing also involves the allocation of responsibilities so that everyone in the organization
knows their tasks and is aware of the resources available to them in order to accomplish their tasks within a
particular time frame. For an organization to achieve its goals and activities, it requires an organization structure.

Key Definition
Organization structure is a chart/design that describes the way in which the inter-related groups in an
organization are constructed. It shows the chain of command and the official channel of communication
that exists within an organization.

The primary purpose of organizational structure is to divide and allocate work and authority, and then coordinate
and control that work, in pursuit of organizational goals.

5.1.1 Elements of Organization Structure

• Job definition – the task requirements of a particular job in an organization.
• Authority – the right derived to guide/direct the actions of others.
• Span of control – the number of subordinates who report directly to a single manager or supervisor.
• Responsibility – an obligation/duty placed on an individual to perform a given assignment/task.
• Accountability – responsibility for one's own actions.

5.1.2 Defining Organization

According to Chester Barnard, an organization is a system of consciously coordinated activities or forces of
people working together and formally agreeing to combine their efforts for a common purpose. Bebeian and
Zamnuto define an organization as a social entity that is goal-directed and deliberately structured, with a
permeable boundary.
Four key elements emerge from these definitions:
• Social entity – a gathering of people, as opposed to plans, machines or buildings, although these also
exist within an organization.
• Goal-directed – all efforts of the organization are directed towards a common goal.
• Deliberately structured activity system – complex tasks are systematically divided into specialized
jobs and grouped into separate departments so resources are used more efficiently.
• Permeable boundary – boundaries separate the organization from other organizations and determine
who and what is inside or outside it.

5.2 Types of Organization

5.2.1 Formal Organization
A formal organization is a structure with formally and consciously coordinated relationships between two or
more persons working towards a common objective. It is a pattern of relationships and tasks defined by official
rules, policies and systems, made up of official authority and responsibility relationships. It lays down the
channel of communication, flow of authority and accountability, rules and procedures.

Characteristics of Formal Organization

• Has clearly defined inter-relationships.
• Based on rules and procedures.
• Based on division of work.
• Deliberately created to achieve organizational goals.
• Impersonal – feelings are ignored.
• Stable.
• Flows downwards and is delegated.

5.2.2 Informal Organization

Informal organization is a pattern of influence and interaction among people, motivated by the need to feel a
sense of belonging and to fit in. It is a set of evolving relationships and interaction patterns that are not officially
prescribed — a natural and spontaneous network formed on the basis of personal attitudes, values, friendship,
and similarity of work, among other factors.

Characteristics of Informal Organization

 Based on formal organization – it is created after the formal organization is formed.
 Has no written rules and procedures.
 Has an independent channel of communication whose flow cannot be specified.
 Not deliberately created – emerges out of mutual relationships and taste.
 Has no place in an organizational chart or manual.
 Personal – feelings are considered.
 Lacks stability.
5.3 Characteristics, Importance and Principles of Organizing
5.3.1 Characteristics of Organizing
• It is the basic function of management.
• It is the process of grouping activities to achieve organizational objectives.
• Organizing helps in granting/permitting authority.
• It coordinates various functions and departments.
• Effective communication is possible through some organization structures.
• It is an association of people who unite to obtain the general objectives of an organization.

5.3.2 Importance of Organizing

 Promotes specialization and speedy performance of tasks.
 Helps avoid duplication of work and overlapping of responsibilities among employees and work
groups.
 Ensures scientific division of work – the total workload is divided among individuals and groups
based on qualification, experience and competence.
 Creates a solid foundation for focusing managerial attention on the accomplishment of enterprise
objectives.
 Facilitates adjustment to changes in workload caused by changing conditions.
 Encourages creative thinking among employees.
 Provides for optimum use of technological improvements.
 Increases overall managerial efficiency.

5.3.3 Principles/Guidelines to Organizing

• Clear line of authority – running from top to bottom, enabling each individual to know their rights
and authority.
• Unity of command – no subordinate should report to more than one boss.
• Clear written responsibility under each superior.
• Managers' responsibility for the acts of their subordinates should be clearly stated.
• Authority and responsibility should be delegated as far down as possible, encouraging participation.
• The number of levels of authority should be as few as possible, for easy communication.
• The principle of specialization should be applied to facilitate efficiency and quality of work.
• Line and staff functions should be kept separate to avoid role ambiguity.
• The span of control should be reasonable and well established.
• There should be fair and even distribution of work among employees.

5.4 The Process of Organizing

Building an organization structure is an important management function. The process of organizing consists of
the following sequential steps:
 Figure 5.1: The five steps in the process of organizing

• 1. Determination of tasks and division of work – the first step is to determine the tasks required to
accomplish the set objectives.
• 2. Enumeration, definition and grouping of activities – activities are classified into appropriate
departments and divisions according to similarity and common purpose. Fayol divided business
activities into technical, commercial, financial, security, accounting and managerial categories; in
modern enterprises, manufacturing, marketing, purchasing, financing and personnel are the main
activities. This grouping of activities is known as departmentation.
• 3. Assignment of duties – individual departments are allotted to different positions and individuals.
The duties of each individual are defined on the basis of ability and aptitude, and clear definition of
responsibility avoids duplication of work and overlapping effort.
• 4. Delegation of authority – once duties and responsibilities are fixed, each individual must be given
the authority necessary to carry them out. A chain of command is created from top to bottom through
successive delegation, linking individuals horizontally and vertically through formal authority-
responsibility relationships, with provision for coordination of effort.
• 5. Establishment of span of control – this refers to the number of employees who report directly to a
single manager or supervisor.

5.5 Span of Control

Span of control (also called span of management, supervision or authority) refers to the number of people a
supervisor or superior can effectively supervise – the number of subordinates reporting directly to a superior.
There is always a limit to the number of subordinates each executive can supervise effectively, because every
executive has limited time, knowledge, attention and capacity. There are two broad types of span of control:

Figure 5.2a: Narrow span – a tall organization structure

 Figure 5.2b: Wide span – a flat organization structure

5.5.1 Narrow Span of Control

The narrower the span, the closer the supervision and the higher the administrative cost, due to a higher
managers-to-worker ratio.

Advantages of Narrow Span

• Allows the manager more time to guide and supervise subordinates effectively.
• The manager has more time to perform important tasks personally rather than delegate them.
• Improves the quality of decision-making.
• Easier to develop group cohesiveness among employees reporting to each manager.
• Facilitates more effective communication.

Disadvantages of Narrow Span

• Increases the total number of organizational levels, making it difficult for higher-level managers to
keep in touch with operating realities.
• Increases the total number of employees, raising the cost of labour.
• Creates coordination problems between different managers and organizational units.

5.5.2 Wide Span of Control

A manager who has a large number of subordinates is said to have a wide span of control. This results in an
organization with relatively fewer levels of management, referred to as a flat organization.

Advantages of Wide Span

• Gives subordinates the chance for more independence.
• Forces managers to develop clear goals and policies.
• Helps managers to delegate work effectively and select and train employees carefully.

Disadvantages of Wide Span

• Managers may become overloaded with work.
• Chances of loss of control are high.
• Not suitable for complex activities.
• May result in high indiscipline cases.
• May create coordination and communication problems.
• Not suitable for incompetent employees.
5.5.3 Factors Influencing Span of Control
 Geographical dispersion – widely dispersed branches call for a smaller span.
 Capability of workers – highly capable workers need less supervision, allowing a wider span.
 Capability of the boss – an experienced manager with good knowledge of workers can supervise more
of them.
 Similarity of tasks – similar subordinate tasks allow for a wider span.
 Volume of other tasks – a manager with other responsibilities should have fewer direct reports.
 Clarity of plans – clear plans, authority and responsibility reduce the need for frequent guidance.
 Degree of decentralization – highly decentralized organizations allow for a wider span.
 Communication and control techniques – effective systems widen the span that can be managed.

5.6 Departmentation
Departmentation is the process of creating departments by grouping individual jobs into departments. It allows
a large and complex organization to be divided into smaller and more flexible administrative units. A
department is a distinct area, unit or system of the organization, with specific duties, over which a manager has
authority for performance.
There are several bases/types of departmentation, each suited to different organizational circumstances:
• Functional departmentation
• Product departmentation
• Departmentation by process/equipment
• Departmentation by numbers
• Geographical/territorial departmentation
• Departmentation by customers
• Matrix organization structure

5.6.1 Functional Departmentation

Under functional departmentation, each major/basic activity is organized as a separate department. A basic
activity is one whose performance is vital for the organization's survival; major functions are further subdivided
into sections.

Figure 5.3: Functional departmentation

Advantages
 • Cheaper than other forms, with minimal duplication of resources.
• Promotes specialization.
• Each functional area receives focused attention, and departmentation begins by identifying essential
activities.
• Logical, as it groups similar activities together and contributes to organizational simplicity.
• Maintains centralized control of strategic decisions.
• Each department is staffed by experts, leading to better performance.
• Reduces conflicts and makes delegation easy.
• Forces managers to work as a team.

Disadvantages
• Due to inter-dependence of departments, failure of one may lead to failure of the entire system.
• Inter-departmental conflicts may arise from differing objectives.
• Does not allow for development of general managers.
• Difficult to identify where profits/losses are made on individual products.
• The chain of command can become excessively long, slowing communication and leading to slow
decision-making.

5.6.2 Product Departmentation

Under product departmentation, each major product is organized as a separate department, with each department
responsible for the production, sales and finance of that product.

Figure 5.4: Product departmentation

Advantages
• Failure in one department does not affect others.
• Facilitates development of general managers.
• Reduces the chain of command and facilitates faster decision-making.
• Makes it possible to identify unprofitable products in the portfolio.
• Healthy inter-product competition and better quality products/services.
• Coordination and control of activities is much easier.

Disadvantages
 • Duplication of efforts and facilities.
• May be more expensive than functional departmentation.
• Under-utilization of resources when demand for a particular product falls.
• May complicate the structure where a firm has many products, creating coordination problems.
• Difficult to achieve organizational goals where little coordination takes place between departments.

5.6.3 Geographical/Territorial Departmentation

Useful for large-scale enterprises whose activities are geographically dispersed. Each region is organized as a
department, with departmentalization decisions guided by customer convenience and economic factors.
Examples include banks, insurance companies, transport and distribution companies. Activities are divided into
zones, divisions and branches.

Figure 5.5: Geographical/territorial departmentation

Advantages
• More convenient for customers.
• Branches/subsidiaries react more appropriately to local conditions.
• Managers and workers in the branch serve customers better.
• Facilitates development of general managers.
• Faster decision-making, since consultation with head office is minimized.

Disadvantages
• Branches/subsidiaries can be expensive to maintain.
• Communication problems may arise.
• Control problems may arise for regions in remote locations.
• Managers may pursue their own interests in the absence of direct supervision.
• Duplication of effort and activities.

5.6.4 Departmentation by Customers

Activities are grouped according to the type of customer served – for example, a large clothing enterprise may
be divided into retail, wholesale and export divisions. This type is common in banks and departmental stores,
with each department specializing in a particular class of customer.
 Figure 5.6: Departmentation by customers

Advantages
• Special attention to the tastes and preferences of each customer class enhances goodwill and sales.
• Benefits of specialization can be derived.
• The enterprise gains intimate knowledge of the needs of each customer category.

Disadvantages
• Applies mainly to sales, creating difficulties in coordinating other functions.
• Under-utilization of facilities and manpower during low seasons.
• Customer-department managers may pressure for special facilities and benefits.
• May lead to duplication of activities.

5.6.5 Departmentation by Process/Equipment

Activities are grouped on the basis of production processes or equipment involved. Generally used in
manufacturing enterprises at a lower organizational level – for example, a printing press may consist of
composing, proofreading and binding departments.

Figure 5.7: Departmentation by process/equipment

Advantages
• Encourages specialization.
 • Facilitates proper maintenance of equipment.
• Effective utilization of manpower.
• Machines arranged so a series of operations is economical.

Disadvantages
• Difficulties in coordinating different process departments.
• Conflict may arise among managers of different processes.
• Volume of production must be large enough to justify a separate department.

5.6.6 Departmentation by Numbers

This entails identifying persons who perform the same duties and placing them under one superior/manager. Its
success depends on the number of persons included in the group, and it is widely applied in the military. A key
limitation is the assumption that success depends solely on the number of people involved.

Advantages
• Quite effective, especially where few persons are involved.
• Enhances coordination within a unit, as members report to a single manager.

Disadvantages
• With a large number of persons, it may fail to achieve desired results.
• Useful only at the lowest level of the organization.
• Groups of specialized personnel are likely to be more efficient than those based only on numbers.

5.6.7 Matrix Organization Structure

The essence of matrix organization is combining functional and project/product patterns of departmentation
within the same structure. This is often used in engineering, where a project manager is placed in charge of all
engineering and support personnel necessary to accomplish an entire project — staff report to both a functional
manager and a project manager.

Figure 5.8: Matrix organization structure – dual reporting lines between functional and project managers

Advantages
• It is result-oriented.
• Professional identification is maintained.
• Pinpoints product/project profit responsibility.
Disadvantages
• Conflicts within the organization may arise.
• Possibility of disunity of command.
• Requires managers with effective human relations skills.

Problems with Matrix Management

• Conflict between functional and project managers competing for limited resources.
• Role conflict – role ambiguity and overlap.
• Imbalance of power/authority between functional and project managers.
• Managers may over-document to protect themselves, increasing administrative cost.
• Requires time-consuming meetings.

Guidelines for Effective Matrix Management

 Define the objective of the project/task clearly.
 Clarify the roles, authority and responsibility of managers and team members.
 Ensure influence is based on knowledge and information, not rank.
 Balance the power of functional and project managers.
 Select an experienced manager who can provide leadership.
 Undertake organization and team development.
 Install appropriate time, cost and quality controls.
 Reward project managers and members fairly.

5.7 Authority, Responsibility, Accountability and Power

5.7.1 Authority
Authority is the legitimate right to give orders and have those orders obeyed. Its exercise involves a superior-
subordinate relationship, and it relates to the right to decide, direct others to act, or perform certain duties in
pursuit of organizational goals. Authority has three characteristics: it is a right; it involves making decisions,
taking action or performing duties; and it is granted for the purpose of achieving organizational goals. Authority
is therefore legitimate power exhibited by the organizational structure.

5.7.2 Responsibility
Responsibility is an obligation to perform work or activities assigned to an individual. Accepting a job entails
taking up the responsibility to perform the tasks involved. It is mandatory and depends on the level of authority
given, and it can be continuous or a specific obligation, going hand in hand with accountability.

5.7.3 Accountability
Accountability is the mechanism of ensuring that a person who is supposed to do a particular job actually does
it correctly — a way of becoming answerable for attained results. It can be established through personal
inspection by the manager, subordinate reporting, a controlling department, or reporting by others such as
customers. Before accountability can be established, responsibility must be clearly understood, the person must
be qualified and capable, and sufficient authority must exist to accomplish the task.
Accountability is closely linked to responsibility; a manager's accountability cannot be delegated to someone
else. Managers are usually accountable not only for their own actions and decisions but also for the actions of
their subordinates.

5.7.4 Power
Power is the ability to influence the beliefs, actions or behaviour of another person. Unlike authority, which is
official, power is largely personal.

Authority vs. Power

Authority Power

Positional Personal

Has one source – organizational structure Can originate from several sources

Associated with formal organization and is Can be both formal or informal

always formal

Impersonal – exercised to achieve Often personal/subjective – can be exercised for

organizational goals personal interest

Usually flows from top to bottom Can flow from any direction

Can be delegated Some forms cannot be delegated (e.g. expert

power)

Authority and responsibility should be Not a requirement; it is pervasive

balanced; found only in higher positions

Sources of Power
• Legitimate power – results from the formal position held by an individual, e.g. general manager,
marketing manager.
• Reward power – derived from a person's ability to reward others; may be formal (e.g. a pay rise) or
informal (e.g. acceptance within informal groups).
• Charismatic power – based on the desire to be liked by others, exhibited through a unique, likeable
character or personality.
• Expert power – arises from special knowledge or skills held by an individual, e.g. teachers,
engineers, doctors.
• Coercive power – derived from the ability to punish or recommend punishment, formally (e.g.
dismissing a worker) or informally (e.g. isolating a member).

5.8 Delegation of Authority

Delegation of authority is the process of vesting decision-making or performance of duties to subordinates —
passing needed authority to a subordinate so as to accomplish a particular responsibility. Authority is said to be
delegated when a superior assigns part of his or her rights to a subordinate.

5.8.1 Features of Delegation of Authority

 • Occurs when a manager grants some of his or her rights to a subordinate.
• A manager cannot delegate authority he or she does not possess.
• A manager never delegates all authority to a subordinate – only part of it is transferred.
• Delegation does not reduce a manager's status – the manager retains the right to exercise control and
can reduce, enhance, withdraw or take back delegated authority.
• No manager can avoid responsibility by delegating authority to subordinates.

5.8.2 Importance of Delegation of Authority

 Allows the manager to distribute workload among subordinates.
 Pushes authority nearer to the point of action, enabling faster decisions without referring to higher
authorities.
 Improves motivation and morale through employee involvement in decision-making.
 Serves as a means of training and developing subordinate executives, who acquire decision-making
skills.
 Improves harmony within the organization through shared authority.
 Facilitates organizational growth through involvement of subordinates in positions of authority.

5.8.3 Principles/Guidelines to Effective Delegation of Authority

• Grant a proper amount of authority – responsibility expected of subordinates should be balanced
with a proper amount of authority; failure to do so means subordinates are held responsible for what
they cannot achieve.
• Define the results expected – the delegator must clearly define expected results, avoiding ambiguity
if subordinates are to be held accountable.
• Consider the capability of the subordinate – authority should go to those who are competent and
willing to accept it, considering background, competence, experience and limitations.
• State authority clearly – delegated authority and its relationship to others in the organization should
be well defined.
• Modify authority when necessary – since business operates in a dynamic environment, delegated
authority may need to be increased, reduced or withdrawn over time.
• Follow the chain of command – delegation should align with the organization structure, with a
subordinate reporting to only one superior.
• Develop a willingness to delegate – lack of courage to delegate limits subordinates' role in decision-
making.
• Create a supportive climate – managers must give material and moral support to enable
subordinates to exercise delegated authority effectively.
• Develop an effective communication system – free flow of information enables clear instructions
and necessary clarification.
• Establish an effective control system – performance standards help measure the effectiveness of
delegated authority.
• Provide appropriate incentives – suitable financial and non-financial incentives reward successful
assumption of authority.

5.8.4 Reasons Why Managers May Not Delegate

• Feeling of superiority – believing subordinates cannot work without supervision.
 • Fear of exposure – an incompetent manager may fear delegation exposing that incompetence.
• Habit pattern – close personal involvement in all aspects of work, developed over time.
• Risk avoidance – insecurity about losing position or subordinates misusing authority.
• Loss of importance – delegating without good reason, or being capable enough to see no need to
delegate.
• Geographical limitations – reluctance where there are geographical barriers between manager and
subordinate.
• Poor communication channels – lack of proper systems discourages delegation.

5.8.5 Reasons for Subordinates' Failure to Accept Delegated Authority

• Fear of responsibility – subordinates may find it safer to execute decisions than to make them.
• Fear of criticism – reluctance due to fear of being criticized or blamed.
• Inadequate resources – fear that necessary resources will not be available.
• Lack of self-confidence – doubt about capability to discharge new responsibilities.
• Inadequate incentives – lack of motivation where delegation is not accompanied by suitable reward.

5.8.6 Advantages of Delegation of Authority

 Promotes prompt action, as no consultation is required before decisions are made.
 Enables managers to perform higher-level activities, since some decisions are left to lower levels.
 Helps subordinates develop professionally through challenging activities, building confidence.
 Leads to better decisions, made close to where problems occur.
 Improves subordinates' morale through active involvement in decision-making.
 Provides benefits of specialization and harmony within the organization.

5.8.7 Disadvantages of Delegation of Authority

• Subordinates may make serious mistakes for which superiors remain responsible.
• Subordinates may lack the drive to put in maximum effort.
• Delegated work suffers where responsibility is assigned without appropriate authority.
• Work suffers where subordinates avoid making decisions.
• Increased cost associated with incentives created by delegation.

5.8.8 Barriers to Effective Delegation of Authority

 Negative personal attitude – managers who lack confidence in subordinates.
 Unwillingness to let others make mistakes – though mistakes are part of learning.
 Fear that subordinates will make mistakes in exercising delegated authority.
 Perceived threat – fear that delegation will expose incompetence, leading to replacement.
 Disrespect of others' opinions – unwillingness to welcome different views.
 Unwillingness to let go – reluctance to give up part of one's authority.
 Need to retain authority.
5.9 Centralization and Decentralization of Authority
This section examines the dispersion of authority within an organization.

5.9.1 Decentralization of Authority

Decentralization is the tendency to disperse decision-making authority within an organization structure. It is a
fundamental aspect of delegation, to the extent that if authority is not delegated, it remains centralized. As a
philosophy and policy, decentralization is the systematic effort to delegate to the lowest levels of authority,
except that which can only be exercised at central points. It implies more than delegation — it reflects a
philosophy of organization structure, guided by specific policies, proper selection and training of people, and
adequate control. A policy of decentralization affects all areas of management.

5.9.2 Centralization of Authority

Centralization refers to the degree to which authority is retained by higher-level managers rather than delegated.
If a limited amount of authority is delegated, the organization is characterized as centralized; if a significant
amount is delegated to lower levels, the enterprise is described as decentralized.

Figure 5.9a: Centralized authority structure

Figure 5.9b: Decentralized authority structure

Advantages of Centralization
• Produces uniformity of policy and action.
• Results in fewer risks of errors by subordinates who lack information or skills.
• Utilizes the skills of central and specialized experts.
• Enables closer control of operations.
• Provides for integration, keeping all parts of the organization moving harmoniously towards a
common objective.
• Enables emergency decisions to be made quickly.
• Lowers operating cost by reducing duplication of resources.

Disadvantages of Centralization
• Resistance to change – ideas and policies are discussed within a small circle of leaders, limiting new
ways of doing things.
• Poor creativity – a top-down approach naturally discourages creative thinking at front-line levels.
• Limited commitment – loyalty is often limited when direction comes entirely from a central office.

5.9.3 Factors Affecting the Degree of Centralization/Decentralization

 Size and complexity of the organization – larger enterprises force central managers to delegate more.
 Geographical dispersion – wider dispersion tends to result in greater decentralization.
 Competence of personnel available – subordinate competence is a key determinant.
 Adequacy of the communication system – good systems may allow top management to retain
centralized control.
 History of the organization – firms that grew from within under personal leadership tend to be more
centralized; those that grew through mergers and acquisitions tend to be more decentralized.
 Philosophy of top management – management attitudes bear strongly on the degree chosen.
 Importance of the decision – vital decisions are typically made at the top; participatory-oriented
managers favour decentralization.
 Uniformity of policy – greater need for uniformity means greater centralization.
 Business dynamics – stable operating environments tend to favour more centralized structures.

5.10 Chapter Summary

This chapter examined the organizing function of management — the process of defining tasks, grouping
activities and allocating authority and responsibility so that organizational goals are achieved effectively.
Organization structure was shown to comprise job definition, authority, span of control, responsibility and
accountability, and organizations were classified as formal or informal.
The five-step process of organizing (determining tasks, grouping activities, assigning duties, delegating
authority and establishing span of control) provides the framework through which structure is built. Span of
control — narrow or wide — shapes whether an organization is tall or flat, with implications for supervision,
cost and communication.
Departmentation was explored through its seven principal bases — functional, product, geographical, customer,
process, numbers and matrix — each offering distinct advantages and disadvantages depending on
organizational size, complexity and environment. The chapter also distinguished authority, responsibility,
accountability and power, and examined delegation of authority as the mechanism through which authority is
dispersed, along with the barriers that commonly prevent effective delegation.
Finally, centralization and decentralization were presented as two ends of a continuum describing how much
decision-making authority is retained at the top versus dispersed to lower levels, with the appropriate degree
depending on factors such as organizational size, geographical spread, competence of personnel and
management philosophy.

5.11 Review Questions

 Define organizing and explain its importance to a modern business enterprise.
 Distinguish between formal and informal organization, citing their key characteristics.
 Outline and explain the five steps in the process of organizing.
 Explain the concept of span of control. Discuss the advantages and disadvantages of a narrow span
versus a wide span of control.
 Using suitable diagrams, describe any four bases of departmentation and evaluate their respective
advantages and disadvantages.
 Distinguish between authority, responsibility, accountability and power.
 Discuss the principles that should guide effective delegation of authority in an organization.
 Explain the factors that determine the degree of centralization or decentralization of authority in an
organization.