Introduction to Management Principles Course Code: MGMT109 BBA/BBA-IB/B.

Com- 1st Semester (2025-2026)

Module III: Organizing

Concept
Objectives
Nature of organizing
Types of Organization
Delegation of authority
Authority and responsibility,
Centralization and Decentralization
Span of Control

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 ORGANIZING DEFINATION

 According to Koontz and O'Donnell, "Organization involves the grouping of activities

necessary to accomplish goals and plans, the assignment of these activities to appropriate
departments and the provision of authority, delegation and co- ordination."
 Organization involves division of work among people whose efforts must be co- ordinated
to achieve specific objectives and to implement pre-determined strategies.

NATURE OR CHARACTERISTICS OF ORGANIZING

From the study of the various definitions given by different management experts the following
information about the characteristics or nature of organization,
(1) Division of Work: Division of work is the basis of an organization. In other words, there can
be no organization without division of work. Under division of work the entire work of business is
divided into many departments .The work of every department is further sub- divided into sub-
works. In this way each individual has to do the saran work repeatedly which gradually makes that
person an expert.
(2) Coordination: Under organizing different persons are assigned different works but the aim of
all these persons happens to be the some - the attainment of the objectives of the enterprise.
Organization ensures that the work of all the persons depends on each other’s work even though it
happens to be different. The work of one person starts from where the work of another person ends.
The non-completion of the work of one person affects the work of everybody. Therefore,
everybody completes his work in time and does not hinder the work of others. It is thus, clear that
it is in the nature of an organization to establish coordination among different works, departments
and posts in the enterprise.
(3) Plurality of Persons: Organization is a group of many persons who assemble to fulfill a
common purpose. A single individual cannot create an organization.
(4) Common Objectives: There are various parts of an organization with different functions to
perform but all move in the direction of achieving a general objective.
(5) Well-defined Authority and Responsibility: Under organization a chain is established
between different posts right from the top to the bottom. It is clearly specified as to what will be the
authority and responsibility of every post. In other words, every individual working in the
organization is given some authority for the efficient work performance and it is also decided
simultaneously as to what will be the responsibility of that individual in case of unsatisfactory work
performance.
(6) Organization is a Structure of Relationship: Relationship between persons working on
different posts in the organization is decided. In other words, it is decided as to who will be the
superior and who will be the subordinate. Leaving the top level post and the lowest level post
everybody is somebody's superior and somebody's subordinate. The person working on the top
level post has no superior and the person working on the lowest level post has no subordinate.
(7) Organization is a Machine of Management: Organization is considered to be a machine of
management because the efficiency of all the functions depends on an effective organization. In the
absence of organization no function can be performed in a planned

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 manner. It is appropriate to call organization a machine of management from another point of view.
It is that machine in which no part can afford tube ill-fitting or non-functional. In other words, if
the division of work is not done properly or posts are not created correctly the whole system of
management collapses.
(8) Organization is a Universal Process: Organization is needed both in business and non-
business organizations. Not only this, organization will be needed where two or mom than two
people work jointly. Therefore, organization has the quality of universality.
(9) Organization is a Dynamic Process: Organization is related to people and the knowledge
and experience of the people undergo a change. The impact of this change affects the various
functions of the organizations. Thus, organization is not a process that can be decided for all times
to come but it undergoes changes according to the needs. The example in this case can be the
creation or abolition of a new post according to the need.

IMPORTANCE OR ADVANTAGES OF ORGANIZING

Organization is an instrument that defines relations among different people which helps them to
understand as in who happens to be their superior and who is their subordinate. This information
helps in fixing responsibility and developing coordination. In such circumstances the objectives of
the organization can be easily achieved. That is why, it is said that Organization Is a mechanism of
management. In addition to that it helps in the other functions of management like planning,
staffing, leading, controlling, etc.
The importance of organization or its merits becomes clear from the following facts,
(1) Increase In Managerial Efficiency: A good and balanced organization helps the managers to
increase their efficiency. Managers, through the medium of organization, make a proper
distribution of the whole work among different people according to their ability.
(2) Proper Utilization of Resources: Through the medium of organization optimum utilization of
all the available human and material resources of an enterprise becomes possible. Work is allotted
to every individual according to his ability and capacity and conditions ant created to enable him to
utilize his ability to the maximum extent. For example, if an employee possesses the knowledge of
modem machinery but the modem machinery is not available in the organization, in that case,
efforts are made to make available the modem machinery.
(3) Sound Communication Possible: Communication is essential for taking the right decision at
the right time. However, the establishment of a good communication system is possible only
through an organization. In an organization the time of communication is decided so that all the
useful information reaches the officers concerned which. in turn, helps the decision-making.
(4) Facilitates Coordination: In order to attain successfully the objectives of the organization,
coordination among various activities in the organization is essential. Organization is the only
medium which makes coordination possible. Under organization the division of work is made in
such a manner as to make all the activities complementary to each other increasing their inter-
dependence. Inter-dependence gives rise to the establishment of relations which, in turn, increases
coordination.
(5) Increase in Specialization: Under organization the whole work is divided into different parts.
Competent persons are appointed to handle all the sub-works and by handling a particular work
repeatedly they become specialists. This enables them to have maximum work performance in the
minimum time while the organization gets the benefit of specialization.
(6) Helpful in Expansion: A good organization helps the enterprise in facing competition. When
an enterprise starts making available good quality product at cheap rates, it increases

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 the demand for its products. In order to meet the increasing demand for its products an organization
has to expand its business. On the other hand, a good organization has an element of flexibility
which far from impeding the expansion work encourages it.

ORGANIZING PROCESS
Organization is the process of establishing relationship among the members of the enterprise.
The relationships are created in terms of authority and responsibility. To organize is to harmonize,
coordinate or arrange in a logical and orderly manner. Each member in the organization is assigned
a specific responsibility or duty to perform and is granted the corresponding authority to perform
his duty. The managerial function of organizing consists in making a rational division of work into
groups of activities and tying together the positions representing grouping of activities so as to
achieve a rational, well-coordinated and orderly structure for the accomplishment of work.
According to Louis A Allen, "Organizing involves identification and grouping the activities to be
performed and dividing them among the individuals and creating authority and responsibility
relationships among them for the accomplishment of organizational objectives."
The various steps involved in this process are:
a) Determination of Objectives:
It is the first step in building up an organization. Organization is always related to certain objectives.
Therefore, it is essential for the management to identify the objectives before starting any activity.
Organization structure is built on the basis of the objectives of the enterprise. That means, the
structure of the organization can be determined by the management only after knowing the
objectives to be accomplished through the organization. This step helps the management not only
in framing the organization structure but also in achieving the enterprise objectives with minimum
cost and efforts. Determination of objectives will consist in deciding as to why the proposed
organization is to be set up and, therefore, what will be the nature of the work to be accomplished
through the organization.
b) Enumeration of Objectives:
If the members of the group are to pool their efforts effectively, there must be proper division of the
major activities. The first step in organizing group effort is the division of the total job into
essential activities. Each job should be properly classified and grouped. This will enable the people
to know what is expected of them as members of the group and will help in avoiding duplication of
efforts. For example, the work of an industrial concern may be divided into the following major
functions – production, financing, personnel, sales, purchase, etc.
c) Classification of Activities:
The next step will be to classify activities according to similarities and common purposes and functions
and taking the human and material resources into account. Then, closely related and similar
activities are grouped into divisions and departments and the departmental activities are further
divided into sections.
d) Assignment of Duties:
Here, specific job assignments are made to different subordinates for ensuring a certainty of work
performance. Each individual should be given a specific job to do according to his ability and made
responsible for that. He should also be given the adequate authority to do the job assigned to him.
In the words of Kimball and Kimball - "Organization embraces the duties of designating the
departments and the personnel that are to carry on the work, defining their functions and specifying
the relations that are to exist between department and individuals."
e) Delegation of Authority:
Since so many individuals work in the same organization, it is the responsibility of management to lay
down structure of relationship in the organization. Authority without responsibility is a dangerous
thing

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

to whom he is accountable; corresponding to the responsibility authority is delegated to the subordinates for
enabling them to show work performance. This will help in the smooth working of the enterprise by
facilitating delegation of responsibility and authority.

2. FORMAL AND INFORMAL ORGANIZATION (TYPES OF ORGANISATION)

Organizations are basically classified on the basis of relationships.

There are two types of organizations formed on the basis of relationships in an organization
1. Formal Organization - This is one which refers to a structure of well defined jobs each
bearing a measure of authority and responsibility. It is a conscious determination by which
people accomplish goals by adhering to the norms laid down by the structure. This kind of
organization is an arbitrary set up in which each person is responsible for his performance.
Formal organization has a formal set up to achieve pre- determined goals.
2. Informal Organization - It refers to a network of personal and social relationships which
spontaneously originates within the formal set up. Informal organizations develop
relationships which are built on likes, dislikes, feelings and emotions. Therefore, the network
of social groups based on friendships can be called as informal organizations. There is no
conscious effort made to have informal organization. It emerges from the formal organization
and it is not based on any rules and regulations as in case of formal organization.
Relationship between Formal and Informal Organizations
Formal Organizations Informal Organizations

Formal Organization is an organization in which Informal Organization is formed within the

job of each member clearly defined, whose formal organization as a network of the
authority, responsibility and interpersonal relationship when people
accountability fixed interact with each other.
Formal organization originates from the set informal organization originates from
organizational structure formal organization
Formal organization can workInformal organization depends totally upon the
independently formal organization.
The formal organization is goal-oriented An informal organization, on the other hand,
develops automatically and
spontaneously.
The behaviour of the members of the formal The behaviour of the members of the informal
group is according to rules and regulations set group is according to the individual and group
by the management. interests.
Focus on Work Performance Focus on Interpersonal relationship

Features of Formal organisation:

(1) The formal organisational structure is created intentionally by the process of organising.
(2) The purpose of formal organisation structure is achievement of organisational goal.
(3) In formal organisational structure each individual is assigned a specific job.
(4) In formal organisation every individual is assigned a fixed authority or decision-
making power.
(5) Formal organisational structure results in creation of superior-subordinate relations.
(6) Formal organisational structure creates a scalar chain of communication in the organisation.

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 Advantages of Formal Organisation:
1. Systematic Working:
Formal organisation structure results in systematic and smooth functioning of an
organisation.
2. Achievement of Organisational Objectives:
Formal organisational structure is established to achieve organisational objectives.
3. No Overlapping of Work:
In formal organisation structure work is systematically divided among various departments and employees.
So there is no chance of duplication or overlapping of work.
4. Co-ordination:
Formal organisational structure results in coordinating the activities of various departments.
5. Creation of Chain of Command:
Formal organisational structure clearly defines superior subordinate relationship, i.e., who
reports to whom.
6. More Emphasis on Work:
Formal organisational structure lays more emphasis on work than interpersonal relations.

Disadvantages of Formal Organisation:

1. Delay in Action:
While following scalar chain and chain of command actions get delayed in formal structure.
2. Ignores Social Needs of Employees:
Formal organisational structure does not give importance to psychological and social need of
employees which may lead to demotivation of employees.
3. Emphasis on Work Only:
Formal organisational structure gives importance to work only; it ignores human relations,
creativity, talents, etc.

Features of informal organisation:

(1) Informal organisational structure gets created automatically without any intended efforts
of managers.
(2) Informal organisational structure is formed by the employees to get
psychological satisfaction.
(3) Informal organisational structure does not follow any fixed path of flow of authority
or communication.
(4) Source of information cannot be known under informal structure as any person
can communicate with anyone in the organisation.
(5) The existence of this organisational structure depends on formal organisation structure.

Advantages of Informal Organisation:

1. Fast Communication:
Informal structure does not follow scalar chain so there can be faster spread of
communication.
2. Fulfills Social Needs:
Informal communication gives due importance to psychological and social need of employees which
motivate the employees.
3. Correct Feedback:
Through informal structure the top level managers can know the real feedback of employees on
various policies and plans.

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 Disadvantages of Informal organisation:
1. Spread Rumours:
According to a survey 70% of information spread through informal organisational structure are
rumours which may mislead the employees.
2. No Systematic Working:
Informal structure does not form a structure for smooth working of an organisation.
3. May Bring Negative Results:
If informal organisation opposes the policies and changes of management, then it becomes very
difficult to implement them in organisation.
4. More Emphasis to Individual Interest:
Informal structure gives more importance to satisfaction of individual interest as compared to
organisational interest.

3. ORGANIZATION CHART
The definition of an organization chart or "org chart" is a diagram that displays a reporting or
relationship hierarchy. The most frequent application of an org chart is to show the structure of a
business, government, or other organization.
Org charts have a variety of uses, and can be structured in many different ways. They might be
used as a management tool, for planning purposes, or as a personnel directory, for example. Perhaps
organization doesn't operate in a "command and control" style, but instead relies on teams.
Organizational charts are useful in a number of ways.
 Show work responsibilities and reporting relationships.
 Allow leadership to more effectively manage growth or change.
 Allow employees to understand how their work fits into the organization's overall scheme.
 Improve lines of communication.
 Create a visual employee directory.
 Present other types of information, such as business entity structures and data
 hierarchies.
The type of organization chart you make should mirror the managament philosophy and
organizational structure of the company.
There are four basic types of organizational charts:
1. Functional Top-Down
2. Divisional Structure
3. Matrix Organizational Chart
4. Flat Organizational Chart

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 4. ORGANIZATION STRUCTURE
An organization structure is a framework that allots a particular space for a particular department or
an individual and shows its relationship to the other. An organization structure shows the authority
and responsibility relationships between the various positions in the organization by showing who
reports to whom. It is an established pattern of relationship among the components of the
organization.

March and Simon have stated that-"Organization structure consists simply of those aspects of
pattern of behaviour in the organization that are relatively stable and change only slowly." The
structure of an organization is generally shown on an organization chart. It shows the authority and
responsibility relationships between various positions in the organization while designing the
organization structure, due attention should be given to the principles of sound organization.

Significance of Organization Structure

 Properly designed organization can help improve teamwork and productivity by providing
a framework within which the people can work together most effectively.
 Organization structure determines the location of decision-making in the organization.
 Sound organization structure stimulates creative thinking and initiative among
organizational members by providing well defined patterns of authority.
 A sound organization structure facilitates growth of enterprise by increasing its capacity
to handle increased level of authority.
 Organization structure provides the pattern of communication and coordination.
 The organization structure helps a member to know what his role is and how it relates to
other roles.

PRINCIPLES OF ORGANIZATION STRUCTURE

Modern organizational structures have evolved from several organizational theories, which have
identified certain principles as basic to any organization structure.
a) Line and Staff Relationships:
Line authority refers to the scalar chain, or to the superior-subordinate linkages, that extend
throughout the hierarchy (Koontz, O'Donnell and Weihrich). Line employees are responsible for
achieving the basic or strategic objectives of the organization, while staff plays a supporting role to
line employees and provides services. The relationship between line and staff is crucial in
organizational structure, design and efficiency. It is also an important aid to information processing
and coordination.
b) Departmentalization:
Departmentalization is a process of horizontal clustering of different types of functions and
activities on any one level of the hierarchy. Departmentalization is conventionally based on
purpose, product, process, function, personal things and place.
c) Span of Control:
This refers to the number of specialized activities or individuals supervised by one person.
Deciding the span of control is important for coordinating different types of activities effectively.
d) De-centralization and Centralization:
De-centralization refers to decision making at lower levels in the hierarchy of authority. In contrast,
decision making in a centralized type of organizational structure is at higher levels. The degree of
centralization and de-centralization depends on the number of levels of hierarchy, degree of
coordination, specialization and span of control.

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 Every organizational structure contains both centralization and de-centralization, but to varying
degrees. The extent of this can be determined by identifying how much of the decision making is
concentrated at the top and how much is delegated to lower levels. Modern organizational
structures show a strong tendency towards de-centralization.

5. TYPES- LINE AND STAFF AUTHORITY

In an organization, the line authority flows from top to bottom and the staff authority is exercised
by the specialists over the line managers who advise them on important matters. These specialists
stand ready with their specialty to serve line mangers as and when their services are called for, to
collect information and to give help which will enable the line officials to carry out their activities
better. The staff officers do not have any power of command in the organization as they are employed
to provide expert advice to the line officers. The 'line' maintains discipline and stability; the 'staff'
provides expert information. The line gets out the production, the staffs carries on the research,
planning, scheduling, establishing of standards and recording of performance. The authority by which
the staff performs these functions is delegated by the line and the performance must be acceptable to
the line before action is taken. The following figure depicts the line and staff authority:
Types of Staff
The staff position established as a measure of support for the line managers may take the following
forms:
1. Personal Staff: Here the staff official is attached as a personal assistant or adviser to the line
manager. For example, Assistant to managing director.
2. Specialized Staff: Such staff acts as the fountainhead of expertise in specialized areas like R & D,
personnel, accounting etc.
3. General Staff: This category of staff consists of a set of experts in different areas who are meant to
advise and assist the top management on matters called for expertise. For example, Financial advisor,
technical advisor etc.
Features of line and staff organization
 Under this system, there are line officers who have authority and command over the
subordinates and are accountable for the tasks entrusted to them. The staff officers are
specialists who offer expert advice to the line officers to perform their tasks efficiently.
 Under this system, the staff officers prepare the plans and give advice to the line officers and
the line officers execute the plan with the help of workers.
 The line and staff organization is based on the principle of specialization.
Advantages
 It brings expert knowledge to bear upon management and operating problems. Thus, the line
managers get the benefit of specialized knowledge of staff specialists at various levels.
 The expert advice and guidance given by the staff officers to the line officers benefit the entire
organization.
 As the staff officers look after the detailed analysis of each important managerial activity, it
relieves the line managers of the botheration of concentrating on specialized functions.
 Staff specialists help the line managers in taking better decisions by providing expert advice.
Therefore, there will be sound managerial decisions under this system.
It makes possible the principle of undivided responsibility and authority, and at the same time
permits staff specialization. Thus, the organization takes advantage of functional organization
while maintaining the unity of command.
 It is based upon planned specialization.

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

  Line and staff organization has greater flexibility, in the sense that new specialized activities
can be added to the line activities without disturbing the line procedure.

Disadvantages
 Unless the duties and responsibilities of the staff members are clearly indicated by charts and
manuals, there may be considerable confusion throughout the organization as to the functions
and positions of staff members with relation to the line supervisors.
 There is generally a conflict between the line and staff executives. The line managers feel that
staff specialists do not always give right type of advice, and staff officials generally complain
that their advice is not properly attended to.
 Line managers sometimes may resent the activities of staff members, feeling that prestige and
influence of line managers suffer from the presence of the specialists.
 The staff experts may be ineffective because they do not get the authority to implement their
recommendations.
 This type of organization requires the appointment of large number of staff officers or experts
in addition to the line officers. As a result, this system becomes quite expensive.
 Although expert information and advice are available, they reach the workers through the
officers and thus run the risk of misunderstanding and misinterpretation.
 Since staff managers are not accountable for the results, they may not be performing their
duties well.
 Line mangers deal with problems in a more practical manner. But staff officials who are
specialists in their fields tend to be more theoretical. This may hamper coordination in the
organization.

6. DELEGATION OF AUTHORITY
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the manager
should delegate authority. Delegation of Authority means division of authority and powers downwards
to the subordinate. Delegation is about entrusting someone else to do parts of your job. Delegation of
authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to
achieve effective results.

Elements of Delegation

1. Authority - in context of a business organization, authority can be defined as the power and right of
a person to use and allocate the resources efficiently, to take decisions and to give orders so as to
achieve the organizational objectives. Authority must be well- defined. All people who have the
authority should know what is the scope of their authority is and they shouldn’t misutilize it. Authority
is the right to give commands, orders and get the things done. The top level management has greatest
authority. Authority always flows from top to bottom. It explains how a superior gets work done from
his subordinate by clearly explaining what is expected of him and how he should go about it.
Authority should be accompanied with an equal amount of responsibility. Delegating the authority to
someone else doesn’t imply escaping from accountability. Accountability still rest with the person
having the utmost authority.

2. Responsibility - is the duty of the person to complete the task assigned to him. A person who is
given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for
which he was held responsible are not completed, then he should not give explanations or excuses.
Responsibility without adequate authority leads to discontent and dissatisfaction among the person.
Responsibility flows from bottom to top. The middle level and lower level management holds more
responsibility. The person held responsible for a job is answerable for it. If he performs the tasks
assigned as expected, he is bound for praises. While if he doesn’t accomplish tasks assigned as
Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida
 expected, then also he is answerable for that.

3. Accountability - means giving explanations for any variance in the actual performance from the
expectations set. Accountability cannot be delegated. For example, if ’A’ is given a task with
sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task is done well,
responsibility rest with ’B’, but accountability still rest with ’A’. The top level management is most
accountable. Being accountable means being innovative as the person will think beyond his scope of
job. Accountability ,in short, means being answerable for the end result. Accountability can’t be
escaped. It arises from responsibility.

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 DELEGATION PROCESS
The steps involved in delegation are given below

1. Allocation of duties – The delegator first tries to define the task and duties to the subordinate. He
also has to define the result expected from the subordinates. Clarity of duty as well as result expected
has to be the first step in delegation.

2. Granting of authority – Subdivision of authority takes place when a superior divides and shares
his authority with the subordinate. It is for this reason; every subordinate should be given enough
independence to carry the task given to him by his superiors. The managers at all levels delegate
authority and power which is attached to their job positions. The subdivision of powers is very
important to get effective results.

3. Assigning of Responsibility and Accountability – The delegation process does not end once
powers are granted to the subordinates. They at the same time have to be obligatory towards the duties
assigned to them. Responsibility is said to be the factor or obligation of an individual to carry out his
duties in best of his ability as per the directions of superior. Therefore, it is that which gives
effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted.

4. Creation of accountability – Accountability, on the others hand, is the obligation of the individual
to carry out his duties as per the standards of performance. Therefore, it is said that authority is
delegated, responsibility is created and accountability is imposed. Accountability arises out of
responsibility and responsibility arises out of authority. Therefore, it becomes important that with
every authority position an equal and opposite responsibility should be attached.

Therefore every manager, i.e., the delegator has to follow a system to finish up the delegation process.
Equally important is the delegatee’s role which means his responsibility and accountability is attached
with the authority over to here.

7. Centralization and
Decentralization
CENTRALIZATION:
It is the process of transferring and assigning decision-making authority to higher levels of an
organizational hierarchy. The span of control of top managers is relatively broad, and there are
relatively many tiers in the organization.
Characteristics
Philosophy / emphasis on: top-down control, leadership, vision, strategy.
Decision-making: strong, authoritarian, visionary, charismatic.

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 Organizational change: shaped by top, vision of leader.
Execution: decisive, fast, coordinated. Able to respond quickly to major issues and
changes. Uniformity. Low risk of dissent or conflicts between parts of the organization.
Advantages of Centralization
Provide Power and prestige for manager
Promote uniformity of policies, practices and decisions
Minimal extensive controlling procedures and
practices Minimize duplication of function
Disadvantages of Centralization
Neglected functions for mid. Level, and less motivated beside personnel.
Nursing supervisor functions as a link officer between nursing director and first-
line management.

DECENTRALIZATION:
It is the process of transferring and assigning decision-making authority to lower levels of an
organizational hierarchy. The span of control of top managers is relatively small, and there are
relatively few tears in the organization, because there is more autonomy in the lower ranks.

Characteristics
 Philosophy / emphasis on: bottom-up, political, cultural and learning dynamics.
 Decision-making: democratic, participative, detailed.
 Organizational change: emerging from interactions, organizational dynamics.
 Execution: evolutionary, emergent. Flexible to adapt to minor issues and changes.
 Participation, accountability. Low risk of not-invented-here behavior.

Three Forms of decentralization

 De-concentration. The weakest form of decentralization. Decision making authority is
redistributed to lower or regional levels of the same central organization.
 Delegation. A more extensive form of decentralization. Through delegation the responsibility
for decision-making are transferred to semi-autonomous organizations not wholly controlled
by the central organization, but ultimately accountable to it.
 Devolution. A third type of decentralization is devolution. The authority for decision- making
is transferred completely to autonomous organizational units.

Advantages of Decentralization
 Raise morale and promote interpersonal relationships
 Relieve from the daily administration
 Bring decision-making close to action
 Develop Second-line managers
 Promote employee’s enthusiasm and coordination
 Facilitate actions by lower-level managers
Disadvantages of Decentralization
 Top-level administration may feel it would decrease their status
 Managers may not permit full and maximum utilization of highly qualified personnel
 Increased costs. It requires more managers and large staff
 It may lead to overlapping and duplication of effort

Centralization and Decentralization are two opposite ways to transfer decision-making power

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 and to change the organizational structure of organizations accordingly.

There must be a good balance between centralization and decentralization of authority and power.
Extreme centralization and decentralization must be avoided.

In an organisational hierarchy, much goes on behind the relationship between managers and subordinates.
When the number of subordinates increases, the manager may not be able to supervise them effectively. For
any organisation to run successfully, there should be a limit to the number of subordinates who should be
under one manager. This aspect can be understood better in terms of the span of management.

What is Span of Management?

The span of management refers to the ideal number of subordinates who report to and are supervised by one
manager. Also known as the span of control (SOC), it determines how many subordinates are able to provide
maximum output without costing too much under one manager/supervisor. It also relates to the Unity of
Command principle under Fayolism, which discusses that there should be one manager who should be
providing guidance to subordinates. Without determining an optimal number, a manager may be unable to
perform the controlling function. Likewise, coordinating, directing, etc., will also suffer. With that, the long-
term plans suffer.

Types of Span of Management

There are two basic types when it comes to discussing the span of management.

Wider Span of Management It refers to situations when the organisational hierarchy consists of one manager
and many subordinates. For this span of management type, the manager supervises many subordinates who
are themselves skilled to conduct duties without much directing and controlling.

Narrow Span of Management This is the opposite situation, when there is more than one manager in an
organisation to handle a few subordinates. One of the best advantages here is that the subordinates get
thoroughly supervised and the manager can exercise their duties more efficiently

How Number of Subordinates is Related to Organisational Structures

To recap, when there are many subordinates under one manager, the span of management is considered
broader/[Link] if it is the opposite situation, the span of management is narrower. You can then assume
that the span of management should be understood in a situational context.

Do note, that the span of management or control relates to the subordinates reporting to a manager. Let’s see
how subordinates and managers affect the organisation’s structure.

Tall Structure In a tall structure, there are less number of subordinates under managers. There are different
levels of management that deal with a specific number of subordinates under each level. Here, a narrower
span of management works. Tall structures have more managers and the scope of managerial work is more
complex, and hence, the fragmentation.

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 Flat Structure There is not much hierarchy in a flat organisational structure. Here, a manager has to
supervise subordinates who are more or less at the same hierarchical level. That also means the roles of
subordinates are neither too varied nor complex.

Factors that Affect Span of Management

Look into the most important factors that will help you understand the span of management in more detail.
Manager’s Capability & Competence The more competent the manager is, the more likely it is that they will
be able to supervise more subordinates than a less competent [Link] managers are able to make better
decisions that help not just the organisation, but also the professional growth of the subordinates. Developing
competence and managerial skills is a focus of executive MBA programmes online designed for working
professionals

Subordinate’s Capability & Competence When the subordinates are not well-trained, it is ideal to have a
narrow span of management. The reason is because the manager would have to spend more time to train
them. On the other hand, the subordinates are highly skilled, the manager will not have to deal with
intervening in every action taken by the subordinate.

Nature & Complexity of Work When the workload is repetitive, it does not matter how many of the
subordinates are under one manager. It is essential to have a narrow span of management when the work is
more complex and non-repetitive.
Complete Supervision Supervision when required is crucial.A manager should have the time to provide it to
subordinates when they need it.A situation where the manager does not have the bandwidth to provide
supervision is not ideal for the long term.
Organisational Planning It is essential to determine the span of management when planning is done on an
organisational [Link] should state how many subordinates should report to one manager and have
some amount of contingency in case, the plan does not work out.
Levels of Management The span of management is directly related to the levels of management. When there
are more levels, there is more hierarchy, which means it will be a narrow span of management.

How to Identify the Right Span of Control Identifying the right span of control is important in every
organisation. Usually, the human resources department calculates the span of control ratio using the formula.
Span of Control = No. of employees / No. of managers This is a starting point, [Link] there cannot
be a predefined number to justify the right span of control ratio. Instead, the way to define it properly is by
mapping how many ‘direct reports’ go to the manager.

According to McKinsey & Company, there are five managerial archetypes that handle a varied number of
reports based on the role.
 Player or Coach is for teams that do not have repeatable processes and require self-sufficiency that
takes longer. The number of reports this managerial archetype gets is 3 to 5.
 Coach is for teams that have guidelines on processes but still require mentorship. Typically, the
manager receives 6 to 7 reports.
 Supervisor’s responsibility is a little lighter than the first two. Individuals in the team have clarity on
the processes with clear organisational guidelines. The supervisor archetype is there to help when
they team members require understanding on specific activities which are not defined properly. The
manager here receives 8 to 10 reports.
 Facilitator is one who only oversees daily, pre-defined activities. Such a manager can deal with more
direct reports, about 11 to 15.
 Coordinator is for teams which are self-sufficient and the processes are clearly defined. This
archetype receives more than 15 reports.
Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida
 Authority and Responsibility
1. Introduction:

Management is system of hierarchical relationship and organising as one of the functions of

management provides a structure to this system. Organizing is the backbone of management.
The word ‘organization’ is also used widely to connote a group of people and the structure of
relationships.

According to Louis Allen “Organizing refers to the process of identifying and grouping work to
be performed, defining and delegating responsibility and authority and establishing relationship
for the purpose of enabling people to work most effectively together in accomplishing
objectives.”

The aforesaid definition of organizing emphasizes upon the fact that: Defining responsibility.
Delegating authority, establishing relationship between authority and responsibility are of soul
of organizing. Organisation constitutes a formal structure with clear responsibility & definite
authority. It determines the flow of authority and responsibility.

2. Authority:

Authority is the key to managerial functions. It is the right or the power assigned to an executive
to achieve certain organizational objectives. Authority is right to direct others to get things done.
Authority is a commanding force binding different individuals. It indicates the power of making
decisions, giving orders and instructions to subordinates. e.g. a person may be entrusted
authority regarding spending money, to assign work, making day to day plans, to issue materials,
hiring employees or order merchandise etc. Without authority, a manager cannot get the work
done through others.

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

According to Henry Fayol “Authority is the right to give order and the power to exact
obedience”.

Koontz and O’Donnell defines authority as “the power to command, to act or not to act in a
manner deemed by the possessor of the authority to further enterprise or departmental
performance”.

Authority enables a manager to discharge his responsibilities. If a manager does not have
adequate authority, he cannot perform these functions effectively. Authority empowers an
individual to take decisions and to command and to exercise control over his subordinates for
execution of policies and programmes. Authority is a legal power which is possessed by a
person from his superior officers and with the help of which he succeeds in getting the things
done by his sub-ordinates. Authority makes possible the compliance of the orders which would
merely be words in the absence if authority. Authority flows downwards. Authority is delegated
from above but must be accepted from below i.e. by the subordinates.

2.1 Authority Characteristics

The following are the characteristics of authority:

1. Legitimacy:

Legitimate power is called authority. To be effective, authority should always be legitimate

otherwise, it will not be obeyed. Authority is vested to an individual by the virtue of his the
position in the organisation.

2. Dominance:

An individual or a group which possesses authority exercises dominance over other. Authority
determines superior subordinate relationship. Authority decreases as one moves down in the
hierarchy.

3. Accountability:

The individual who possess authority is liable to superior for fulfilling his obligations by using
such authority Accountability is the most significant characteristic of authority. Accountability
ensures performance according to standards.

4. Authority flows Downward :

Authority is a downward flowing concept. The lower we go down in the hierarchy, the lesser is
the authority. Higher authority is enjoyed by higher organisational positions. Authority
establishes superiority.

5. Delegation of Authority :

Authority flows from the higher level to the lower levels. Authority can be delegated to the
lower levels in the organization for sharing the work load of the superior. But one thing must be
Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida
noted that even though authority can be delegated but the responsibility of performance of
obligation always lies with the delegator.

6. Parity of Authority and responsibility:

Authority should never be assigned without responsibility. Authority and responsibility should
go together. Authority must be equal to Responsibility. This is also one of the fourteen principles
of management advocated by Fayol. Responsibility and authority are closely linked. A manager
can fulfil his responsibility only if he has adequate authority to perform that task. An employee
must be clear about what is expected of him.

If authority is greater than responsibility ,then this could result in autocratic behaviour
and misuse his authority. Similarly, if responsibility is greater than authority, then this could
result in frustration as discharge of responsibilities is not possible without adequate authority.
e.g. if a manager has been assigned the responsibility to purchases raw material but has not been
given any authority to make the financial commitments regarding the payment of such
purchases, this would frustrate the manager as he could not accomplish the desired goal
effectively but would be held answerable for the act which was beyond his authority.

Figure 1: Depicting balance between Authority and Responsibility.

Imbalance of authority and responsibility will hamper the achievement of the organizational
goals. It may also strain the relations between management and employees.

2.2 Difference between ‘Authority’ and ‘Power’

Generally the word power and authority are used interchangeably. But there is a clear-cut
difference between the two. Power is a much broader concept than authority. Koontz. et al
defines Power as “the ability of individuals or groups to induce or influence the beliefs or
Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida
actions of other persons or groups”. The points of difference between power and authority are as
follows:

1. Right to Command : Authority is the right to command where as power is the ability to
command.

2. Right to Exercise : Authority arises out of a the organisational position whereas, power is
exercised by the person .

3. Positional and Legitimate : Authority is the legitimate power. Authority is associated with
the position of a person in the organisation. But power is not institutional, rather it is personal. It
may be acquired through any means. May it be political, monetary power or because of personal
attributes.

4. Authority Increases : Authority is associated with organisational position so it increases as

one goes up in the organizational hierarchy, but it need not be the case with the power.

5. Authority a Downward Concept : Authority is a downward flowing concept, whereas power

flows in all directions.

3. Responsibility

Responsibility is the duty to perform an assigned task. Fayol held that authority flows from
responsibility. Managers who have been assigned responsibility should also be given adequate
authority for the discharge of their obligations.

In the words of Theo Haimann, “Responsibility is the obligation of a subordinate to perform the
duty as required by his superior”.

McFarland defines responsibility as “the duties and activities assigned to a position or an

executive”.

3.1 Features of Responsibility:

1. Responsibility is to assign duty to human beings only.

2. Responsibility is the obligation of a subordinate to properly perform the assigned duty.

3. It arises from superior subordinate relationship

4. Responsibility flows upward. A subordinate is always responsible to his superior.

5. Responsibility cannot be delegated.

6. The person accepting responsibility is accountable for the performance of assigned duties.

7. It is hard to fulfill responsibility without authority.

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

4. Difference between Authority and Responsibility

Basis Authority Responsibility

It is the right of a superior

It is the obligation of a
to give orders and
Meaning subordinate to perform an
instructions to
assigned task.
subordinates.

It flows from top to It flows from bottom to

Flow
bottom top

It generally arises from It arises from superior

Basis
organizational position. subordinate relationship.

It can be delegated by a
It cannot be delegated. It
Delegation superior to his
is absolute.
subordinate.

5. Delegation of Authority

There is a wise saying, “Nothing is impossible if you can delegate.” People who know what,
how and when to delegate can achieve great results. Delegation refers to the transfer of
duties/responsibilities by a superior to his subordinates along with the requisite authority to
accomplish the job assigned.

One of the important features of delegation is that although the superior can delegate his
authority to the subordinate for the accomplishment of desired objectives but the ultimate
responsibility of the task rests with the superior. The superior cannot escape from his
responsibility for non satisfactory performance. The superior is accountable for the performance
of his subordinate to his own superiors.

E.F.L. Brech has said – “Delegation is a process of sharing a few or all of the four elements of
the management process, i.e. command, planning, co-ordination and control”. He also said that
the delegation is not a question of issuing instructions but is a bringing down of the executive’s
responsibility and transmission of part or all of it to other persons.
Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida
A manager alone cannot perform all the work. Delegation enlarges the capacity of a manager
through sharing of workload. Without delegation organization structure becomes useless.
Management of organization becomes impossible without delegation.

Delegation begins with sharing of responsibilities with the subordinates along with assigning the
requisite authority so that his subordinates can perform the work effectively. The manager
charges the subordinate with accountability for the work assigned and this whole process is
known as delegation.

Good delegation is about balancing responsibility, authority and accountability.

5.1 Merits of Delegation

(i) Reduces work load: A manager by delegating the authority can reduce his work
load. Since he cannot handle all work by himself, he can delegate the work which can
be handled by his subordinates and can concentrate on more important works.
Delegation helps in concentrating on more important works.

(ii) It trains subordinates for future responsibilities: Delegation also helps in

developing the personnel within the organization. It trains them for the future
responsibilities as they gain experience of work related to higher position.

(iii) Effective management: Through delegation, a manager can concentrate on

important works and can delegate the routine work to the subordinates. Thus, it reduces
the work load and avoids the wastage of time on less important work and concentrate
on more important matters.

(iv) It develops increased sense of responsibility: Delegation of authority

motivates the subordinates. They feel motivated to know that his abilities are
recognized and they are trusted upon by their superiors. This improves his
performance. Delegation works as a motivator for employees with higher level needs.

(v) Avoids delay: Delegation helps in taking timely decisions. The superiors can
concentrate on more important matters and the less important matters can be handled
by the superiors. Thus, the word load of superior gets divided and hence timely
decisions could be taken.

(vi) Basis of Management Hierarchy: Delegation establishes superior-subordinate

relationship which is the base for hierarchy of managers. Superiors delegate only when
they have trust in subordinates. So delegation improves the relations between superiors
and subordinates.

5.2 Difficulties In Delegation

Obstacles /barriers for delegation can be i) On the part of superiors as well as ii) on the part of
subordinates.
Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida
5.2.1 Some of the reasons managers have difficulty delegating authority include:

1. Lack of trust on superior: A superior may hesitate to delegate under the fear that employees
will not be able to perform as efficient as he himself could.

2. Fear of better performance by the sub-ordinate: Sometimes, executives hesitate to

delegate on account of the fear of losing his authority. The subordinate might be efficient and
superior does not delegate fearing that he will perform better than the superior . No executive
would like to delegate when he feels that his subordinate may surpass him.

3. Fear of losing control over subordinate: Executive know that once authority is delegated
they will loose the grip over their subordinates and hence hesitate to delegate.

4. Lack of time : Sometimes, the superior is too busy with his day to day work that he donot get
any time to delegate.

5. Don’t know how to delegate: Delegation also becomes difficult when the superior doesnot
know how to delegate the authority.

5.2.2. The obstacles in delegation on part of subordinates include:

1. Fear of criticism

2. Absence of self confidence

3. Difficulty in decision making

4. Lack of information

5. Interference by superiors.

6. Poor superior- subordinate relationship.

7. Absence of positive incentives.

5.3 Principles of Delegation

The following principles may be considered as essential for effective delegation of authority:

1. Proper Planning : Delegation of authority should be with proper planning. The objectives to
be achieved should be very clear along with the plans and functions to achieve those objectives.
Only then there can be proper delegation as it would be clear as to what is required to be
performed by each and every person and what authority is required to be given.

2. Reward for delivering excellent results:Effective and successful delegation of authority

must be rewarded. This will provide a proper environmental climate for fuller delegation and
effective assumption of authority.

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

3. Select appropriate subordinate of delegation : The subordinate selected should be capable
of handling the authority assigned to him. His skills and qualification should be appropriate
according to the task. This is the purpose of the managerial function of staffing, most carefully
considered.

4. Maintain parity of authority and responsibility: There should be parity of Authority and
responsibility. A person cannot be held responsible for performance of certain task for which he
had inadequate authority.

5. Establish accountability: Along with authority and responsibility, accountability of the

subordinate should also be established. He should be answerable for the achievement of desired
results. For Example, A sales manager, charged with the responsibility of increasing sales of
company’s product should be given authority to hire competent salesmen, pay wages and
incentives, allow concessions, within specified limits. The subordinate should be made
answerable for the proper performance of the assigned and for the exercise of the delegated
authority. The extent of accountability depends upon the extent of delegated authority and
responsibility. He is accountable only to his immediate superior. However, with delegation,
superior cannot escape from his responsibility and accountability to his own superior for
performance by his subordinate. Thus responsibility and accountability cannot be delegated.

6. Ensure Unity of Command : Unity of Command ensures that there is only superior to whom
the subordinate is accountable. This is necessary to avoid confusion and friction.

7. Maintain adequate communication: There should be free and continuous flow of

information between the superior and the subordinate so that time to time relevant information
may be furnished to him for decision making.

8. No interference with subordinates’ authority: The subordinate to whom authority is

delegated must feel free to use his authority. He should take it as an opportunity for growth and
development rather than as the fear of being punished. However superior could review progress
mentor and advise but should not interfere with day to- day functioning of the subordinates.

5.4. Delegation Process

First of all we wil discus the process of delegation. Fig 2 shows the various steps in the process
of delegation

Figure 2: Delegation Process

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

As a first step, the manager is assigned with the responsibility to do a work. He should be made
clear as to what is expected of him . After that, he is granted with the authority which empowers
him to fulfil is obligation. After responsibility and authority are assigneed, the last step is
creating accountability. He is made answerable for a particular activity or action. this way
delegation is made.

5.5 Elements of Delegation

There are three elements of delegation:

i. Responsibility

ii. Authority

iii. Accountability

1. Responsibility: Responsibility means the obligation of the individual for the work assigned to
him.. The process of delegation begins when manager passes on some of his duties to his
subordinates. After a superior share some of his duties with the subordinate, the subordinate
becomes responsible to him for the work assigned, but the superior also remains responsible for
the performance of that work to his own boss. So here we can see that two types of
responsibilities have been created:

Operational responsibility: It is the responsibility of the delegatee ( subordinate) to the

delegator( superior)

Ultimate responsibility: It is the responsibility of the superior to his own boss for the
achievement of the goals. In this case, if the subordinate to whom responsibility has been
delegated could not perform his obligation, then the superior cannot escape from his
responsibility on excuse that it was not his but his subordinates’ fault. Thus, responsibility is
absolute and flows upwards.

2. Authority: Authority means power to take decision. To carry on the responsibilities that have
been assigned to him, every employee needs to have adequate authority. So, when
responsibilities are assigned to an individual, appropriate authority is also delegated to him so
that smooth performance of the responsibilities could be assured.

3. Accountability: To be accountable means to be liable for a particular activity or action. This

liability gets created because the organisation also provides authority to carry out the
responsibilities. Authority may be in form of decision making for use of organisational resources
etc. Accountability is created to ensure that the employees or subordinatesachieve the desired
results. Performance is measured and compared with the standards under Accountability.

Like responsibility, Accountability is also absolute. It cannot be passed or delegated. A superior

cannot escape from his accountability to his own superior even after delegation.

5.5.1 Features of Accountability:

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida

 1. Accountability is the answerability for the expected result.

2. It cannot be delegated or passed.

3. Like responsibility, accountability also flows upward.

4. Accountability is not same as blame.

5. Authority, Responsibility and Accountability are Inter-related.

5.5.2. Prerequisites of an effective accountability system

For effective accountability system:

1. Responsibility should be clearly specified. An employee must know what is expected from
him.

2. Adequate authority should be provided to meet the assigned responsibilities

3. Individual performance should be measured.

4. Individual should be made answerable for his performance.

5. Accountability standards should be consistently applied at all levels.

6. SUMMARY

Authority and Responsibility and Accountability should go together for effective organisation.
Authority flows downwards whereas responsibility and accountability flow upwards. Without
accountability, individual cannot be held answerable for his performance. Authority
Responsibility and Accountability are the three elements of delegation. Delegation enables the
superior to share his authority with the subordinates. However, he himself remains accountable
to his superior for the performance of the duties assigned. He cannot escape from his
responsibility merely by delegating some of the powers vested in him to his subordinate. Thus,
accountability is absolute.

References

 Henry Fayol, General and Industrial Managements, McGraw-Hill, New York, 1996.
 E.F.L., Brech, The Principles and Practice of Management, Sir Pitman & Sons, London.
 Chhabra, T.N. and Suri, R.K., Management Process and Perspectives, Ist edition 2000, Kitab
Mahal.
 Prasad Manmohan, Management Concepts and Practices, Ist edition 1998; HimalayaPublishing
House

Dr Poojaa Singh Chauhan ABS, AUGN Amity University Greater Noida