Chapter 10
Fundamentals of Organising
Meaning of Organisation
Organising is a “process of defining the essential relationships among people, tasks and activities
in such a way that all the organisation’s resources are integrated and coordinated to accomplish
its objectives efficiently and effectively”. — Pearce and Robinson
➢ As a structure : Organising is a set of relationships that defines vertical and horizontal
relationships amongst people who perform various tasks and duties.
➢ As a process : While the structure designs the system and its sub-systems, process defines the
way this structure is designed.
Nature of Organisation
1. Structure of relationships
2. Managerial function
3. Ongoing process
4. Encourages
5. Foundation of management
6. Goal-oriented
7. Adaptive to change
8. Situational
Process of Organising
The process of organising involves the following steps :
1. Determination of objectives
2. Division of activities
(a) Greater output
(b) Efficiency
(c) Facilitates training of less-skilled workers
3. Grouping of activities
4. Define authority and responsibility
5. Co-ordination of activities
6. Reviewing and re-organising
Importance of Organising
1. Facilitates administration
2. Growth and diversification
3. Creates synergies
4. Establishes accountability
5. Optimum use of
6. Facilitates communication
7. Facilitates creativity
8. Improves inter-personal
9. Facilitates coordination
10. Facilitates teamwork
11. Facilitates control
12. Increase in output
13. Optimum allocation of resources
Organisation Chart
➢ It is a “line diagram that depicts the broad outlines of an organisation’s structure.”
What Does Organisation Chart Show
The organisation chart depicts the following areas of organisation structure:
1. Division of work : The workload of the organisation is divided into smaller units. Activities performed at each level are
depicted through a box.
2. Chain of command : The line of authority flowing from top to bottom in single lines shows the relationship between
superiors and subordinates.
3. People who perform the activities : Along with what activities are performed, the boxes also sometimes show the
names of people who perform those tasks.
4. The levels of management : Organisation charts clearly indicate the number of levels in the organisation structure.
5. The basis of division : The basis on which organisation charts are prepared, i.e., the basis on which organisational
activities are divided is also indicated in these charts. Different bases of division for preparing organisation charts are:
(a) Division by functional areas : The functions performed by the organisation form the basis for preparing the
organisation chart.
(b) Division by product : These organisation charts are made by companies that sell multiple products.
(c) Division by customers : When organisations sell goods to different types of customers, the organisation charts
appear as follows :
(d) Division by geographical area : These organisation charts depict the structure of organisations which sell goods in
different geographical areas.
(e) Matrix Organisation
Merits of Limitations of
Organisation Charts Organisation Charts
• 1. Clarity of organisation • 1. Blue-print of formal
structure relationships
• 2. Authority-responsibility • 2. Broad view of organisation
relationships structure
• 3. Location of experts • 3. Reporting informal
• 4. Location of potential areas relationships
of conflict • 4. Misinterpretation of charts
• 5. Scope for organizational • 5. Extent of authority
improvement • 6. Dynamic environment
Kinds of Organisation Charts
Organisation charts are broadly of the following types —
1. Vertical organisation charts - Vertical charts show the flow of authority from top to bottom
2. Horizontal organisation charts - Horizontal charts show flow of authority from left to right
3. Circular organisation charts - Circular charts show top position in the innermost circle
(concentric circles) which flows towards middle and lower level managers in outward circles.