MODULE III -ORGANISING

Organising is a basic managerial function. It is the backbone of the management.

It is the foundation upon which structure management is built. Without efficient
organization, no management can perform its functions smoothly. A sound
organization contributes greatly to the success of the enterprise.

Meaning

Organizing means bringing together the necessary men. machines, materials, and
money for the achievement of common objectives. It is concerned with grouping
activities, allocating work, and assigning duties and responsibilities among
various individuals. In a static sense, an organization is a structure manned by
individuals who work together toward a common goal. In a dynamic sense, the
organization is a process of welding together a framework of positions to achieve
the objectives of an enterprise.

Definitions

Louis A. Allen

"Organisation is the process of identifying and grouping the work to be

performed, defining and delegating responsibility and authority, and establishing
relationships for the purpose of enabling people to work most effectively together
in accomplishing objectives."

Theo Haimann

Organising is the process of defining and grouping the activities of the enterprise
and establishing the authority relationships among them. In performining the
organizing function, the manager defines and assigns activities. So that they can
be most effectively executed.
Nature of organization

Organization is one of the basic functions of management. A business cannot be

run successfully without organization. In the words of Henry Fayol, "to organize
a business is to provide with everything useful to its functioning; raw materials,
tools, capital and personnel."

1, Division of work

To attain the common objectives of an organization, the total work is divided into
activities and functions.

2. Co-ordination

Once work is divided, it becomes a necessity to coordinate the various divisions,

functions, or activities. It brings unity and harmony.

3. Açcomplishment of objectives

People form organizations to accomplish common objectives. The objectives of

organization should be clearly stated. If not, the Organisation structure becomes
meaningless.

4. Authority and responsibility

Various positions of an organization are arranged in a hierarchical order, The

authority and responsibility of each position are clearly defined.

5. Communication

No organization can survive without an efficient system of Communication. It is

the nervous system of an organisation which co-ordinates the various activities.

6. Continuous Process

It is not a one-step function. Managers are continuously engaging organizing and

re-organizing.
7. Structure of Relationship

Organization connotes a structure of relationships, which are formal and informal.

It is necessary to study both formally and in relationship to understand the nature
of any organization.

Purposes

1. To focus attention on the objectives,

2. To help people to work effectively to attain the objectives,

3. To establish healthy relationships between positions,

4. To define clearly the responsibilities of each position,

5. To combine and co-ordinate individual and group activities, to facilitate the

attainment of objectives.

6. To help management to have control over various business functions,

7. To help employees make their best contribution to increasing production, and

to ensure co-operation and team spirit among the employees.

Importance of Organisation

Organisation is a form of human association for the attainment of common

objectives. It has been playing a vital role in every walk of life which could be
analysed as follows:

[Link] facilitates the growth of the enterprise by increasing efficiency.

[Link] encourages specialisation.

3. It ensures diversification of activities.

[Link] promotes improvements.

5. It helps innovations.

6. It encourages the optimum use of resources.

7. It motivates the workers through decentralization.

8. It stimulates creative thinking and initiative among the workers

9. It provides training facilities.

10. It creates team spirit among the workers.

11. It develops healthy human relations in the enterprise.

The following words of Andrew Carnegie, a great industrialist of the USA, clearly
reveal the importance of organization. He says “Take away our factories, our
trade, our avenues of transportation, our money, but leave me with our
organization and in four years, I will have re-established myself.

Principles of Organisation

The success or failure of an organization is measured by its results. If it achieves

the desired objectives, it is sound and efficient. Management experts like Taylor
and Henry Fayol suggest that the success of an organization can be ensured better
if certain basic Principles are observed. The following principles will serve as a
guideline for any successful organization.

1. Unity of Objectives

1t is essential to establish useful objectives in every area of operation and at all

levels. Then, the organization as a whole and its various units should have a clear
understanding of these objectives.

2. Specialisation

There should be specialization or division of work at all levels. The work assigned
to an individual should be up to his ability, education and skill.
[Link]

Every employee should have a definite place and purpose in the organization. The
powers, responsibilities, and duties of every person should be indicated. This will
reduce the chances of misunderstanding.

4. Efficiency

The objectives of the organization must be attained at a minimum cost. An

organization is efficient when it satisfies the individual and the social needs at the
lowest possible cost.

5. Span of control

Span of control means the number of people one can supervise directly. A man
can't supervise people at work beyond a certain number. Every manager should
have a limited number of subordinates reporting to him directly. Generally, the
span should be narrow for complex work and wide for simple and routine work.
The span should be neither too wide nor too narrow.

6. Functional definition

The duties, responsibilities, and powers of every person in the organization

should be properly and clearly defined. This is necessary to avoid confusion,
overlapping and conflict between the positions.

[Link] principle

The scalar principle states that "authority and responsibility should flow in a clear
unbroken line from the highest executive to the lowest." There should be a chain
of authority which is created by the process of delegation. The purpose of this
principle is that subordinates must know who delegates authority to the them and
to whom they are responsible.
8. Balance

organization should maintain a proper balance between its various departments.

It means t that the allocation of authorities, funds and staff must be in a balanced
manner. Any particular department shall not be given any undue importance.

9. Unity of command

Each subordinate shall have only one superior who has command over him. He
shall receive orders from one superior alone and be accountable to that superior
alone. This is based on the rule that "no man can serve two masters at the same
time.

10. Simplicity

The organisation structure should be simple so that it is easily understood by each

and every person. A complex organisational structure will create doubts and
conflicts among persons. There may be over-lappings and duplication of efforts.
These could be avoided in a simple structure. It helps in the smooth running of
the organisation.

11. Authority and responsibility

The authority and responsibility of each employee should be clearly defined.

They must be co-extensive and must be equated.

12. Flexibility

It means permitting adjustments for changes in the organization. A good

organization should be able to change and to adapt itself to new conditions.

13. Exception principle

It means that only exceptional and complicated problems are referred to the top
management. The routine and day-to-day problems are solved by the lower level
management.
14. Departmentation

The departmentation refers to how the activities, of an organization is divided and

formed into specialised groups or departments. In other words, it deals with the
grouping of activities of concern.

15. Delegation of authority

An executive cannot perform everything by himself. So he delegates some of his

powers to others and gets the work done through them. Delegation reduces the
workload of the executives.

16. Co-ordination

It means unifying the activities of a group of people. The success of an

organization depends on the managerial ability to co-ordinate the various
functions.

17. Decentralisation

A good organisation is one which has a decentralise management. Since there is

active participation of all the employees in the decision-making process, a
decentralised management can get their support in implementing the decisions.

Formal and Informal Organisation

Formal organisation

A formal organisation refers to the relationship and structure of jobs and positions
in an organisation which are based on rules and procedures. It is built by the
management to realise the objectives of It is bound by rules, systems and
procedures. According to Chester Bernard, "an organisation is formal when the
activities of two or more persons are consciously co-ordinated towards an
enterprise common objective,".
In the words of Allen, "The formal organization is a system of well-defined jobs,
each bearing a definite measure of authority, responsibility and accountability."
It involves those relationships that relatively stable and change only slowly.

Informal Organisation

An informal organization refers to the relationship between people in an

organisation which is not based on procedures and regulations, but on personal
attitudes, whims, prejudices, likes and dislikes. The activities of the people are
deliberately co-ordinated. They work together because of their personal likes and
dislikes.

It is an unofficial social pattern of human relations. According to Chester Bernard

“Informal organisation is joint personal activity without conscious common
purpose though contributing to joint results. "

Distinction between Formal and Informal Organization

Organization Structure

The organizational structure represents an invisible framework of organizations.

It can be described as the architectural design of the building. The architect or the
engineer who draws the plan has to consider several factors before the actual
drawing of a plan. The location, the availability of area, the purpose, the financial
resources etc. are a few factors that are usually considered by the architect when
a plan for a building is drawn. Similarly, in the case of organization structure,
there are a number of factors to be considered such as the object of the enterprise,
attitude, and nature of the management, available personnel, size, and location.
These factors help to decide the type and form of an organization structure.
Types or Forms of Organisation

Organizational structure is mainly concerned with the allocation of tasks and

delegation of authority. There are different ways of division of work and
distribution of authority. Consequently, several types of organization structure
have evolved. There are mainly six types of organization structure.

1. Line organisation,

2. Functional organisation,

3. Line and Staff organisation,

4. Project organisation,

5. Matrix organisation, and

6. Committee organisation

1, Line Organisation

Line organization is the simplest and the oldest type of organization structure. It
is also known as a military or departmental organization since it originated in the
military. In this type, the authority flows from the man at the top level to the man
at the lowest level vertically in a line. The directions are issued by the man in
charge of the whole organization and are directly conveyed to the person
responsible for the execution of the job.

The business unit is divided into several departments. Each department is

under the control of a departmental head. He is responsible for organizing it.
Above the departmental heads, there is a General Manager to whom they are
responsible. The General Manager is responsible to the Board of Directors,
elected by the shareholders of the unit. Under it, a departmental head receives
orders from the general manager and passes them on to his immediate
subordinates. The subordinates may similarly communicate the orders to workers.

Advantages

[Link]

Every member knows to whom he is responsible.

2. Fixed responsibility

Every member has a definite and fixed responsibility.

3. Simplicity

It is simple to explain to the employees and easy to establish.

Lines of authority and responsibility are direct, simple and clear.

4. Discipline

Since the men at lower levels are directly responsible to one authority there is a
greater discipline among the employees.

5. Prompt decisions
It facilitates quick and prompt decisions as authority and responsibility are
unified.

6. Flexibility

It is flexible and adjustable to changing conditions.

7. Co-ordination

It is easy to co-ordinate different activities in the organization.

8. Unified control

It ensures unity of control by conforming to the scalar principle of organisation.

Disadvantages

1. Overloading

It overloads a few executives with difficult duties. Too much is expected of the
persons in authority. They do not get time for innovations and independent
thinking.

2. Discouraging co-operation

It discourages large scale co-operation as undue importance is given to one

executive.

3. Lack of specialisation

There is no scope for specialisation of any type. But, specialisation is inevitable

in modern business due to its complex nature.

[Link] for favoritism

Because only one person controls all the executive powers of a department, there
is much scope for nepotism and favouritism. As a result, inefficient people may
get higher and better posts.
[Link] of communication

There is usually no Communication from the lower ranks to the higher. So correct
information cannot be obtained.

This system can be followed successfully in small business units, routine type
concerns and industries where automatic machinery is installed.

II. Functional organisation

The functional type of organization was introduced by F.W. Taylor, the founder
of scientific management. Under this system, several departments will be created
based on different functions and will be under the charge of experts. The workers
in each department have to take orders from many supervisors. For each work,
they have to get instructions from the concerned functional head. Thus, this
system aims at specialization in all fields.

Advantages

1. Specialisation
It is based on the principle of division of labour. It enables the concern to take
advantage of the specialisation of functions.

2. Separation

It ensures the separation of manual and mental functions.

3. Efficiency

Since the workers have to perform only a limited number of functions, it

facilitates a higher degree of efficiency.

4. Mass Production

Mass production is possible due to specialization and standardization.

5. Co-operation

There is greater scope for achieving co-operation.

Disadvantages

1. Lack of Discipline

Since the workers work under different bosses, it is difficult to maintain discipline
among the workers.

2. Lack of all-round executives

Since there is a narrow specialisation among executives, it is difficult to develop

them into all-around executives.

3. Lack of speed

Speed of performance is very often hindered.

4. Conflict

It may lead to conflict among foremen of equal ranks.

5. Lack of definite responsibility

It is difficult for the management to take responsibility for unsatisfactory results.

6. Lack of coordination

It is difficult to secure the co-ordination of the executives on the lower levels.

7. Complications in Operation

It is very complicated to operate as it entails the division of functions into many

sub-functions. It is system has been found successful only in big concerns for
division of work at the top level. But for the division of work in various
departments, the system has not been found successful as there is no clear line of
authority.

distinction between Line Organisation and Functional Organisation

[Link] AND STAFF ORGANISATION

The line and staff system divides the work of administration of business units into
two broad divisions viz. STAFF, which is responsible for planning, and LINE,
which is responsible for the actual performance of the work. Staff is attached to
the line to assist the line, in discharging its duties in the best possible capacity.
The staff decides what, when, and by whom a particular work is to be done. The
staff in an organization consists of experts who have no line of authority. Their
function is largely advisory. But because of their superior knowledge of a
particular function, their advice is usually accepted. The line is responsible for
the actual performance of the work planned by the staff.

Advantages

1. Specialisation

It is based on the principle of specialization. It helps the enterprise make use of

the benefits of specialization of functions.

2. Expert advice

It provides the benefit of expert advice to the line management.

3. Individual responsibility
It is based on the principle of individual responsibility and authority. At the same
time, it permits staff specialization also.

4. Opportunity for promotion

Since there are many responsible jobs, able and efficient workers get the
opportunity for promotion.

5. Training ground

The services of the staff are an excellent training medium for the line officers.

Disadvantages

1. Confusion

There is a possibility for confusion throughout the organization as to the functions

and positions of staff members concerning line supervisors.

2. Ineffective

The staff may be ineffective because of a lack of authority to carry out its
functions.

3. Too much reliance

Certain line officers rely too much on the staff to do the thinking and planning.
This weakens their capacity.

4. Misinterpretation

The line officers may misunderstand and misinterpret the advice of the staff.

5. Objection of line officers

Line officers may object to the activities of the staff members due to the feeling
that the prestige and influence of linemen suffer from the presence of specialists.
The line and staff type of organization is better than other types of organization
because it combines specialized knowledge with line authority.
The distinction between Line Organisation and Line && Staff Organisation

[Link] ORGANISATION

This structure is of recent origin and is adopted when an organization has to

execute large projects for a long duration. Each project is organized as a semi-
autonomous project division. The project manager coordinates the activities of
different persons and is responsible for the successful completion of the project.
When a project is completed, the project division undertakes a new project.

Advantages

[Link] helps to Concentrate attention on complex projects.

[Link] allows maximum use of specialized knowledge and skills.

[Link] provides greater flexibility in handling specialized projects.

4. It facilitates better coordination of organizational resources.

5. It enables the fixation of individual responsibility for results and makes for
meaningful control.

6. Unity of command is maintained.

Disadvantages

1. Uncertainty in project structure arises because the project manager has to deal
with specialists having different approaches and interests.

2. A project manager's job becomes very difficult due to a lack of clearly defined
responsibility, lack of clear communication patterns, and lack of standards of
performance for various professionals.

3. Decision-making is very difficult due to unusual pressures from specialists and

time-limits for the completion of the project.

[Link] is difficult for the project manager to motivate and control the specialists as
conflicts arise quite often among the specialists.

V. Matrix Organisation

This is one of the latest types of organizational designs which makes an

organizational structure flexible. Matrix organization is a combination of
functional department organization and project organization structures. It is
characterized by overlapping of command, control, and behavior patterns.

Matrix organization has been defined as "any organization that employs a

multiple command system that includes not only the multiple command structure
but also related support mechanism and an associated organizational culture and
behavior pattern. " Thus, the essence of matrix organization is the combining of
functional and project forms of organization.

Advantages

[Link] focuses attention and resources on a single project which facilitates better
planning and control.

[Link] helps in the completion of projects on time.

[Link] is very flexible and so can be applied usefully to an organization involved in

small and large projects.

[Link] provides motivation to the personnel engaged in a project.

[Link] also improves communication and coordination by facilitating direct contact

between the project managers and the functional groups.

6. It helps to utilize the services of professionals as it stresses the authority of

knowledge rather than status.

7. It helps to maintain high technical standards.

Disadvantages

1. It may result in power struggles and conflicts in the organisation due to the lack
of unity of command.

[Link] creates confusion among personnel to identify their respective superiors as

there are both formal and informal relationships.
3. It is very difficult to co-ordinate the personnel from different functional
departments.

[Link] is not easily possible to make joint decision - making and sharing of resources.

[Link] administrative costs are very high under it.

VI. COMMITTEE ORGANISATION

Committee is a kind of [Link] may be defined as “ a group of people who

make decisions or presents points of view and whose conduct is governed by a
set of rules”.A committee consist of group of [Link] is set up to perform
specific [Link] of Directors are one of the example of this organisation.

According to Allen “Acommittee is a body of persons appointed or elected tomeet

an organised basis for the consideration of matters brought before it.” This is an
important instrument of management in modern organisation.

Advantages

1. Pooling of knowledge and experience

A committee is an effective method of bringing the collective knowledge and

experience of a number of persons to solve many difficult problems.

2. Motivation through participation

Committees allow the employees to participate in the decision-making process.

Thus, they help to improve loyalty and commitment of employees.

[Link] of co-ordination

They serve as an important tool for unifying and integrating various viewpoints
by bringing different departmental managers together,
[Link] of diverse interest groups

By giving representation to various interest groups, committees avoid conflicts

and improve the togetherness of the group.

5. Management development

Committees help the managers to acquire new outlooks. better experience and
knowledge. This improves their managerial talents,

6. Effective Communication

Committees help to communicate the policies and programs quickly and

effectively throughout the organization.

7. Consolidation of authority

A committee permits management to consolidate authority that is splintered over.

several departments and to take decisions in time.

8. Check against misuse of power

It helps to avoid the concentration of too much authority on a single individual.

It provides an effective check against misuse of power.

[Link] action

A committee acts as a strategy to delay or postpone action and to avoid individual

responsibility.

Disadvantages

[Link]

Committees are expensive both in terms of money and time. They require heavy
incidental expenses like printing and stationary, refreshments, etc.

[Link] decisions
A committee tends to be indecisive. Its functioning is very slow and it cannot take
quick decisions.

[Link] decisions

Committees usually make compromise decisions accommodating opposite view

points. Such a decision is only an acceptable decision and not the best one.

[Link] of responsibility

A Committee cannot fix the responsibility for wrong decisions on any individual.
This results in inefficiency and evasion of responsibility.

5. Misuse of committees

Committees are sometimes misused to avoid action, to take unpleasant decisions

or to delay decisions.

Organisation Chart

An organisation chart is a graphic record which clearly pictures the formal

organisation structure. It shows the formal superior- subordinate relationships. A
chart is a blueprint of company organisation, its functions, lines of authority, and
key positions. shows who supervises and controls whom and how the various
units are inter-related. It is a graphic portrayal of positions in the enterprise and
the formal lines of communication among them.

Characteristics

I. It is a diagrammatical presentation.

[Link] shows principal lines of authority in the organization.

3. It shows the interplay of various functions and relationships.

4. It indicates the channels of communication.

Advantages

1.1t shows the key positions in the managerial hierarchy,

2. It gives us adequate information merely at a glance.

[Link] shows what activities are performed and who does them.

[Link] defines the scope and limits of the job and explains tasks to be performed at
each position.

[Link] serves as a valuable guide to the new personnel in understanding the

organisation and their training.

[Link] also shows the inter-relationship of all positions.

Disadvantages

[Link] shown on the chart may be out-of-date.

[Link] can not represent precise human relationships between the boss and his
subordinates.

[Link] can not introduce rigidity into the relationships. Updating is not possible
without disturbing the entire set-up.

[Link] can not reveal the real relationships in the formal organization structure. In
modern enterprises, informal relations are very important.

Organisation Manual

An organization manual includes descriptions of each job and other information.

It is an authoritative guide to the company's organization. It consists of records of
top management decisions, standard practices and procedures, and descriptions
of various jobs. This manual is maintained in a loose-leaf book form. It sets down
all the details of the organization, its objectives and policies, authorities,
functions, duties, and responsibilities of each unit.
Advantages

1.A manual settles quickly all misunderstandings in the organisation.

[Link] relieves the managers from the botheration of repeating the same information
time and again.

[Link] provides uniformity and consistency in the procedures and practices.

[Link] also helps in the training of new employees.

[Link] avoids jurisdictional conflicts by avoiding overlapping of authority.

[Link] enables quick decisions as instructions and policies are stated in definite
words.

Limitations

1. Small concerns can not afford to have a manual since its preparation is a costly
and time consuming process.

2. Manual brings rigidity to the organization. It levels little scope for individual
initiative and discretion.

3. It puts on record those relationships which no one likes to see exposed.

Departmentation

An enterprise can manage only a limited number of persons directly. This

limitation restricts the size of the enterprise if it does not opt for the device of
departmentation.

Departmentation is the grouping of activities into departments, divisions, or

other homogeneous units. It is also known as department-alisation. A department
is a division, branch, regiment or some other organizational unit over which a
manager has authority for the performance of task. In short, departmentation is
the process of dividing activities and people into department or other managable
units.

Objectives

The following are the chięf objectives of departmentation:

1. To specialise activities.

[Link] simplify managerial tasks.

3 To maintain control by grouping employees within well-defined areas, and

4 To facilitate timely checks on the performance of an individual department.

Significance of Departmentation

Departmentation is necessary account of the following reasons.

1, Efficiency

The efficiency of management and enterprise is increased because everyone

knows precisely his duties and authority. The individuals are enabled to make
better performance.

2. Specialisation

It enables an organization to make use of the benefits of specialization. Since

every department looks after one major function, expertise is developed.

[Link]

One manager can supervise and direct only a few subordinates, In the absence of
departmentation, the size of the organization will be restricted to a manager's span
of control. Departmentation helps the enterprise to expand and grow.

[Link]
Departmentation nécessitates the division of the enterprise into semi-autonomous
units with adequate freedom. The feeling of autonomy provides job satisfaction
and motivation.

5.. Fixation of accountability

Since jobs are well-defined and responsibilities are mentioned, it is easy to fix
accountability for the results.

6. Development of managerial Faculties

Departmentation provides the departmental managers with the opportunity to take

initiative. It is a training device for them. They can learn new managerial skills.

7. Performance Appraisal

It presupposes the existence of standards of performance. This helps in fixing

responsibility and in evaluating work done by an individual a group or the
department as a whole.

8. Better Control

Departmentation facilitates better control by precisely fixing the standards of

performance for every department. Budgets are prepared to control the income
and expenditure of different departments.

Methods of Departmentation (Departmentalisation)

There are certain methods of creating departments in an enterprise which are

discussed below:

1. Departmentation by Function

Under this method, the departments are created based on specified functions to
be performed. For example, in a manufacturing enterprise, the major functions
like production, purchase, finance, marketing, and personnel may be grouped into
different departments.
2. Departmentation by Product

Under this method, every major product is organized as a separate department.

Each department looks after the production, sales, and finance of one product.
This type of departmentation is followed in multi-line large-scale organizations.
For example, in an automobile manufacturing unit, there are separate sections to
deal with cars, buses, trucks, etc.

[Link] by Customer

This method is based on the grouping of activities according to the type of

customers. An enterprise provides specialized services to different classes of
customers through different departments. For example, a college may offer day
courses, evening courses and Correspondence courses.

4. Departmentation by Process or Equipment

Under this method, activities are grouped on the basis of the production process
or equipment involved. This method is generally used in a manufacturing
enterprise and at lower-level organizations. For instance, a printing press may
consist of composing, proofreading, printing, and binding departments.

[Link] by Territory

Departmentation based on territory or geographical area is known as territorial

departmentation. This is very useful to large-scale enterprises whose activities are
geographically spread over a wide area. Under this, all activities in a given area
or territory are grouped together. Ex. Indian Railways.

[Link] by Numbers

Under this method, activities are grouped based on their performance by a certain
number of persons. For example, in the army, soldiers are grouped into squads,
battalions, companies, brigades, and regiments based on the number prescribed
for each unit.

[Link] by Time

This method of departmentation consists of grouping the activities based on the

time of their performance. For instance, a factory operating twenty-four hours
may have three departments, one each for morning, day, and night shifts. This is
to obtain the advantages of people specialized to work in a particular shift.

8. Composite or Combined Departmentation

A departmentation can be considered the best if it facilitates the achievement of

organizational objectives most economically and efficiently. Each method of
departmentation has its own merits and demerits. No single pattern is ideal for all
situations. Hence, big enterprises follow a composite or combination of several
methods. Usually, functional departmentation is used at the top level. While the
product or territorial departmentation is used for the sales department, the process
or equipment departmentation is used for the production function.

Authority

Authority refers to the powers and rights entrusted to a person to perform work
delegated. When a responsibility or duty is assigned to a particular subordinate,
he must be given the authority or power to perform the duty. Delegation of
responsibility is followed by delegation of authority. Authority is a legal or
rightful power, a right to command or to act. It is the power to command others
to do or not to do a certain thing necessary for realizing the objectives of the firm.
It refers to the right to make decisions and to get the decisions carried out. Without
authority, a manager ceases to be a manager. It is the basis for responsibility and
the binding force in the organization.
Definitions

1. Henry Fayol

"Authority is the right to give orders and power to exact obedience."

2. Simon

"Authority may be defined as the power to make decisions which guide the
actions of others. It is a relationship between two individuals, one superior, and
the other subordinate.

Characteristics of Authority

[Link] is the existence of a right in authority. This places the manager in a

position to regulate the behavior of his subordinate

2. The authority given to a manager is legal and legitimate. It is supported by

tradition, law or standards of authenticity.

3. Authority is formal.

4. Authority is exercised by making decisions and seeing that they are carried out.

5. The authority (rights) enjoyed by a position is not unlimited. The extent and
limits are defined in advance.

[Link] is a relationship between two individuals - one superior and the other
subordinate.

7 Authority is the key to the managerial job. Without it a manager Cannot direct
the actíons and behaviour of his subordinates.

[Link] is used to achieve organizational goals.

[Link] use of authority is determined by the personality factors of the possessor.

10. The use of authority may control the negative aspects of behaviour
11. Authority gives the right of decision-making. In the words of Terry,
"Authority is exercised by making decisions and seeing that they are carried out.

12. Authority can be delegated. A manager can transfer a part of authority to his
subordinates.

Responsibility

Responsibility is a specific duty or work assigned to a position. In the words of

Allen "Responsibility is the work assigned toa position or function." When the
superior assigns duties to his subordinates, the latter have the responsibility to
perform the assigned task.

Concept of Responsibility

Responsibility is one of the most misunderstood terms in the literature of

management. It is used in two different senses.

1. Responsibility as a duty or a task

Some management scholars define responsibility as a duty or task assigned to a

subordinate by his position in the organisation.

2. Responsibility as an obligation

Some writers consider responsibility as an obligation of an individual to perform

the duty assigned to him. Responsibility is an obligation to perform certain
functions to achieve certain results.

Features

[Link] can be assigned to human beings only.

[Link] arises from a superior-subordinate relationship.

3. Responsibility may be a continuing obligation or it may be confined to the

performance of a single function.
4, Responsibility may be defined in terms of functions or targets or goals.

[Link] is absolute and cannot be delegated.

[Link] flows upward. A subordinate is always responsible to his

superior.

7. Responsibility is a derivative of authority and so it commensurates with

authority.

[Link] creates accountability and the two go together.

Distinction between authority and responsibility

The following differences between authority and responsibility are notable:

Accountability

Accountability is the obligation to carry out responsibility and exercise authority

in terms of performance standards, It comes into existence when a person accepts
the obligation to perform the assigned task. Once a subordinate is assigned a duty
and given the necessary authority to complete it, he becomes answerable for
results, In short, accountability is the answerability to render account of
performance. Responsibility arises from authority while accountability arises
from responsibility. When work is delegated to a subordinate he becomes
accountable to the delegator for the performance of the work. Every delegation
creates a new accountability. Accountability cannot be delegated.

Delegation of Authority

In modern times, there is a tendency towards large-sized business units. As the

size expands and operations increase, management becomes difficult. The
manager cannot perform all the managerial functions. He will have to divide his
work and entrust some of it to his subordinates. The process of dividing and
entrusting work to others is known as delegation. It is the practice of the art of
getting things done through others. When authority is also entrusted to the
subordinates along with the work, it is known as delegation of authority. This is
a dynamic feature of modern management

Defintions

Louis A. Allen

"Delegation is the entrustment of responsibility and authority to another and the

creation of accountability for performance.

2. Douglas C. Basil

"Delegation consists of granting authority or the right to decision- making in

certain defined areas and charging the subordinate with responsibility for carrying
through the assigned task."

Elements of Delegation

The process of delegation involves three essential elements or aspects viz.

responsibility, authority, and accountability. However, some management experts
hold the view that the process of delegation should include the determination of
expected results as the first step.
[Link] of results expected

[Link] is the first step in the process of delegation of authority. A manager has to
define the results he wants to obtain from his subordinates for the achievement of
organisational objectives. This will enable the subordinate to know by what
standards his performance will be evaluated.

2. Assignment of Duties or Responsibility

The manager then, assigns specific duties or tasks to each subordinate. While
assigning duties and responsibilities, he must ensure that the subordinates
understand and accept their duties. Moreover, the assignment of responsibilities
may be done on the basis of the qualifications, experience and aptitude of the
subordinates.

3. Granting of Authority

The delegator also grants authority to his subordinates for the performance of the
assigned work. The subordinates can not discharge their responsibilities without
adequate authority. Authority enables the subordinates to use resources, to take
decisions and to exercise discretion.

[Link] of Accountability

Delegation creates accountability on the part of the subordinates for the assigned
work. The subordinates are answerable to the delegator for the proper
performance of the assigned work and for the exercise of the delegated authority.
However, the extent of accountability depends up on the extent of delegation of
authority and responsibility.

According to W.H, Newman "These three inevitable attributes of delegation are

like a three-legqed stool. Each depends on the others to support the whole and no
two can stand alone,

Importance of Delegation
Delegation of authority is the key to organization. It is an art of higher order. All
managers should be proficient in this art. Louis Allen has rightly observed. "How
well one delegates determines hos. well one manages." Delegation of authority
facilitates effective management by providing the following advantages:

[Link] of Work-load

Delegation lightens the burden of the executives by assigning the routine matters
to their subordinates. Thus, the executives can concentrate on important policy
matters.

[Link] Decision-making

The subordinates need not go to their supervisors every time to make decisions
regarding routine matters. Thus, it facilitates quick decisions.

3. motivation

Delegation helps to improve the job satisfaction, motivation, and morale of

subordinates. It also satisfies their need for recognition, responsibility, and
freedom.

4. Training

It serves as a tool for training executives for the future. This enables the
organization to face future challenges efficiently.

5. Expansion of Business

Delegation facilitates the expansion and diversification of business through a

team of competent and contented workers. In the absence of delegation, firms
would remain small.

6. Specialised Knowledge

It enables a manager to obtain the specialized knowledge and expertise of the

subordinates.
7. Efficient Functioning

Delegation provides the basis for the efficient and effective functioning of the
firm by binding the formal organization together.

8. Better performance

It improves the performance of work because responsibility is given to the

subordinates based on specialisation.

[Link] Relation

Delegation increases interaction and understanding among managers and

subordinates. Thus, it maintains healthy relations between them.

Principles of Delegation

The principles are guides to successful delegation. Delegation may be ineffective

unless the following principles are recognised in practice:

1. Functional Definition

A manager should clearly define the functions to be performed by his

subordinates. He should also define the objectives of each task, the activities
involved, and its relationship with other tasks.

2. Delegation by Results Expected

The results to be achieved by the subordinate are decided before the delegation
of authority. This helps him know by what standards his performance will be
judged.

3. Clarification of Limits of Authority

The limits of authority must be clarified to each subordinate. This will avoid
overlapping of authority. This will allow the subordinate to exercise initiative and
freedom and to check misuse of authority.

4. Parity of Authority and Responsibility

There shall be a proper balance between authority and the responsibility of a

subordinate. There is no common denominator for measuring parity between the
two. But, the authority should be delegated commensurate with responsibility.

[Link] of Accountability

Accountability can not be delegated. No executive can escape accountability for

the activities of his subordinates through delegation. He can not pass on his
obligation to his subordinates.

6. Authority Level Principle

Managers at each level should take all decisions within the jurisdiction. They
should not go to their superiors for decisions that they are authorized to take
themselves. Only matters outside the scope- of authority shall be referred to the
superiors.

[Link] of Command

At one time, a subordinate shall receive commands and be accountable to only

one superior. If a person has to report to two superiors for the same duty,
confusion and friction will arise. So, dual subordination should be avoided.

8. Scalar Chain

This principle refers to the chain of direct authority-accountability relationship

from superior to subordinate throughout the organization. A clear understanding
of the scalar chain is necessary for the proper functioning of the organization.

9. Effective Communication
There should be two-way communication between the superior and the
subordinate. The superior should give instructions in clear words. He must allow
the subordinate to seek clarification if needed.

Steps for successful Delegation

l,. Establishing clear and definite goals

2. Developing an attitude of tolerance of human mistakes

3. Developing a faith in the ability of subordinates,

4. determining what to delegate.

[Link] clearly the authority and responsibility of each subordinate

6. Motivating subordinates through incentives and encouragement,

7. Providing training to subordinates in accepting delegation,

[Link] a complete job to a subordinate and making him responsible for it,

[Link] controls to enable the subordinate to know, measure, and evaluate

his performance,

10, Creating a work environment free from fear and frustration, and

11. Providing free and open lines of communication.

Delegation of authority can be made effective and successful only when the above
steps are followed in an organization.

Decentralization of Authority

Centralization and decentralization are opposite terms. They refer to the location
of decision-making authority in an organization. Decentralization means the
disposal of authority throughout the organization. According to Louis Allen
decentralization refers to the Systematic effort to delegate to the lowest levels all
authority except at which can only be exercised at central points. It is the
distribution of authority throughout the organization.

Decentralization is an extension of delegation. It is not the same thing as

delegation. It is something more than delegation. Delegation means entrustment
of responsibility and authority from one individual to another. However,
decentralization means the scattering of authority throughout the organization.

Advantages

The main benefits of decentralization are the following:

[Link] helps to reduce the workload of top executives,

2. It helps to improve the job satisfaction and morale of lower-level managers.

3. It avoids red-tapism and delays, as quick decisions are taken the subordinates.

[Link] facilitates the growth and diversification of the enterprise.

[Link] helps to develop the managerial skills of lower-level executives,

6. It also ensures intimate relationships between superiors and subordinates.

Distinction Between Delegation and Decentralisation

Centralisation of Authority

Centralization implies the concentration of authority at the top level of the

organization. In the words of Louis Allen "Centralisation is a systematic and
consistent reservation of authority at central points within an organization."
Under centralization, all important decisions are taken by the top executives. The
operative decisions and actions at lower levels are subject to the close supervision
of the top executives.

Centralization and decentralization are relative terms because every

organizational structure contains both features. As Henry Fayol remarks,
Everything that goes to increase the importance of the subordinate's role is
decentralization, everything which goes to reduce it is centralization,"

Advantages

[Link] utilizes the talents of the top leader most effectively.

[Link] facilitates the integration of all operations of the different parts of the
organization.

[Link] helps to develop a strong coordinated top management team.

4. It ensures uniformity of policies and plans.

5. It minimizes duplication of functions and facilities.

Distinction Between Decentralisation and Centralisation