Dr. Joseph Paul Ph.D.
Unit – 3
• Organizing
Dr. Joseph Paul Ph.D.
Organizing
• 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.
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NATURE OR CHARACTERISTICS OF
ORGANIZING
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Staffing
• Staffing is the basic function of management which involves
that the manager is continuously engaged in performing the
staffing function. They are actively associated with the
recruitment, selection, training, and appraisal of his
subordinates.
• According to Koontz and O'Donnell, “The managerial function
of staffing involves managing the organization structure through
proper and effective selection, appraisal and development of
personnel to fill the roles designed into the structure.”
Dr. Joseph Paul Ph.D.
Importance of Staffing
[Link] is a basic function. Human resource are the critical resource of the organization.
So, this resource needs to be properly managed. Staffing ensures its proper management. It
ensures the right person at the right job and at the right time.
[Link] ensures the recruitment and selection of the right type of people. It
attracts and seeks the qualified applicants to fill the vacancies.
[Link] provides planning for the effective utilization of efforts and potentialities of
individual and groups.
[Link] of Human Capital- Another function of staffing is concerned with human
capital requirements. Since the management is required to determine in advance the
manpower requirements. Therefore, it has also to train and develop the existing personnel
for career advancement. This will meet the requirements of the company in the future.
[Link] Higher Morale– The right type of climate should be created for the workers to
contribute to the achievement of the organizational objectives. Therefore, by performing the
staffing function effectively and efficiently, the management is able to describe the
significance and importance which it attaches to the personnel working in the enterprise.
[Link] Performance of Other Functions-For the efficient performance of other
functions of management, staffing is its key. Since, if an organization does not have the
competent personnel, then it cannot perform the functions of management like planning,
organizing and control functions properly.
Dr. Joseph Paul Ph.D.
Significance of Staffing
• Staffing is termed as a generic function: It is a
function in which all managers take part. Many aspects
of human relations are considered in staffing. Staffing is
a generic function of management.
• Involvement of the human element: One of the
most important chores is managing the human
component of a company. The performance of a brand
undoubtedly depends on how well this function takes
place.
Dr. Joseph Paul Ph.D.
• It helps in measuring the success of a company.
• Role of managers in the same: Managers, as we mentioned
before, have a huge role in staffing.
• Some of their responsibilities include hiring the right person for the
most suitable role, introducing new staff to the company, training
employees and improving their performance, helping them develop
their skills, and giving them other benefits. This is the staffing
function of management.
• Management of human resources: In all companies, managers
perform all the duties related to employees’ salaries, welfare, and
working conditions. Whereas in larger companies, there are
dedicated departments known as human resource departments.
• These departments manage the people of the workplace.
Human resource is a specialized area that needs the expertise of
professionals.
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Types of Staffing
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Conclusion of Staffing
• To wrap it up, staffing is very crucial to know the
importance of Staffing for smooth running a company.
Without proper recruitment of the right individuals, the
business cannot function smoothly. Managers need to
be very careful while recruiting staff for specific
positions.
Dr. Joseph Paul Ph.D.
Types of Organizations
Based on relationship, an organization divided into two broad categories
1. Formal Organization
2. Informal Organization
Dr. Joseph Paul Ph.D.
Formal Organization – A Formal organization refers to the structure of well-
defined jobs, everyone bearing a definite measure of authority, responsibility,
and accountability. The structure is consciously designed to enable the people of
an organization to work together for accomplishing common objectives.
Characteristics of Formal organization
[Link] rules and procedures
[Link] through delegation of authority
[Link] on specialization and division of work
[Link] defines the objectives and goals
[Link] effective system of communication
f. Clear relationships between superiors and subordinates
[Link] charts usually drawn
Dr. Joseph Paul Ph.D.
• Informal Organization – Informal organization refers to the relationship
between people in an organization based on personal attitudes,
emotions , likes and dislikes. These relations are not having any official
backing and not based on rules and regulations.
• Characteristics of Informal Organization
• The structure is not based on any rules and procedures
• It is based on common interests of members
• There is no clear-cut objectives and goals
• Mostly based on informal communication
• There is no official authority and responsibility
• There is no clear relationships among the people
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• Differences between Formal and Informal Organizations
• 1. Power
• 2. Chain of command
• 3. Goals
• 4. Flexibility
• 5. Formation
• 6. Purpose
• 7. Flow of authority
• 8. Behavior of members
• 9. Governance
• [Link] up
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Dr. Joseph Paul Ph.D.
• Principles provide guidelines or direction to create an effective organization
structure. While designing a good organization structure , a manager must
observe these principles; when organization structure is based on these
principles, it tends to be a good organization.
• [Link] of Unity of Objectives
• [Link] Efficiency
• [Link] of Labour
• [Link] – Responsibility
• [Link]
• [Link] Chain
• [Link] of Control
• [Link] of Command
• [Link]
• [Link]
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Types of Organization Structures
• Organization structure is defined as "The logical arrangement of
task and the network of relationships and roles among the
various positions established to carry out the activities”.
• Organization structures can be broadly classified into the
following types:
• [Link] Organization structure.
• [Link] and staff Organization structure.
• [Link] Organization structure
• [Link] Organization structure.
• [Link] Organization structure
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• [Link] ORGANISATION STRUCTURE
• Line Organisation is the oldest and the simplest form of organisation
structure. It is also referred as the Military form of organisation. An
important feature of such types of organisation is the superior sub-
ordinate relationship
• In this type of organisation authority descends from the top to
bottom level. Sub-ordinates become responsible to their immediate
superiors. The topmost management has full control over the entire
enterprise.
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• Features of Line Organisation
• There is no provision for staff experts
• Each subordinate directly responsible to his superior
• Every worker is responsible to one executive only
• The authority and responsivity of each position is specified
• The line of authority are vertical flowing from the top to bottom
• This structure is suitable for
• If the business is comparatively small
• If the processes are easily directed
• If the work is of a routine nature
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Dr. Joseph Paul Ph.D.
Advantages & Disadvantages of Line
Organisation Structure
Advantages
Simplicity
Discipline
Economical
Attraction to talented persons
Disadvantages of Line Organization Structure
Heavy burden on line executives.
Non-availability of services of experts
Too much dependence on limited executives
Rigidity
Delays in communication, limited freedom to employees
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[Link] and staff organisation
• Line and staff organization is an extension, expansion , or improvement of line
organization. Staff means a team of experts. The staff is responsible to give
expert advice to line managers and extend necessary assistance to them to
perform their respective functions effectively.
• Features of Line and Staff Organization
• This organization is based on combination of both line and staff people.
• The line people are the executives and staff people are their advisors.
• The staff people do not have the power to command the line officers
• This type of organization is suitable for large concerns.
• The staff people have no executive positions in the concern and are thinkers,
while the line officers are the doers
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Line and Staff Functions
• The line related to main functions and objectives of organisation
• Line managers are empowered to take and implement decisions.
• Staff advice, assistance, counselling to line managers to attain the
goals.
• The staff analyses the problems, collects and analyses information.
Develops alternatives and helps line managers make the right
decisions in time.
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Dr. Joseph Paul Ph.D.
Advantages & Disadvantages
• Advantages of Line and Staff Organization
• Less burden on executives
• Services of experts available
• Sound decision-making
• Benefits of specialization
• Training opportunities to employees
• Disadvantages of Line and Staff Organisation
• Delay in decision-making
• Conflicts between line and staff executives
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[Link] Organization Structure
• Functional organisation is based on expert knowledge and makes the
greatest use of division of labour resulting in high efficiency and
specialisation. There are separate functional departments for major
functions of an enterprise. Each department does its function for the
entire organisation. The functional organisation works through the
line organisation.
• Features of Functional Organisation Structure
• The whole task of the enterprise is divided in to specialized functions
• Each function is performed by a specialist
• The specialist operate with considerable independence
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Dr. Joseph Paul Ph.D.
Advantages/Merits of Functional Dr. Joseph Paul Ph.D.
Organization
• Facilitates specialization
• Benefits of large-scale operations
• Effective coordination
• Operational flexibility
• Ensures effective supervision
• Disadvantages of Functional Organization
• Absence of unity of command
• Fixing responsibility
• Unsuitable to non-manufacturing activities
• Costly
• Creates confusion among workers
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[Link] Organisation Structure
A matrix structure is a combination of two or more types of
organisational structures. In this structure, employees usually have dual
reporting relationships - generally to their functional manager as well
as the project manager. Typically, one reporting line will take priority
over the other (eg staff may have to report to their functional manager
before reporting to the project manager).
Dr. Joseph Paul Ph.D.
Dr. Joseph Paul Ph.D.
Advantage of the matrix structure
Improve decision-making, since there are two chains of command
Improve communication across the business
Allow staff to apply their skills in different roles
Help share best practice and ideas across teams
Increase efficiencies due to sharing resources across departments
The matrix structure can also help businesses achieve quick market
adaptation to changing customer needs.
This structure is most suitable for businesses operating in a dynamic
environment.
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Disadvantages of a matrix organisational structure
A matrix structure may not be well suited for businesses
working in a more settled environment.
confusion regarding roles, responsibilities and priorities
blurred lines of accountability
difficulties in coordinating tasks or functions
power struggle between the project manager and the
functional manager
large overhead costs, on account of having multiple
managers
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Committee Organisation
Committee organisation is widely used for purpose of discharging advisory
functions of the management. A committee is a group of people who meet
by plan to discuss or make a decision on a particular subject.
According to Davis “A committee is a group of individuals who meet for
the purpose of effecting an integration of ideas concerning a solution for
some problems”.
According to Newman “A committee consists of a group of persons
specially designated to perform some administrative act. It functions only
a group and requires the free interchange of ideas among its members”.
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Dr. Joseph Paul Ph.D.
Advantages of Committee organisation
It facilitates co-ordination of activity of various departments
It is a good media of training and educating employees
It helps to improve the motivation and morale of
employees.
Intelligent solutions can be secured for com[lex problems.
It is an effective instrument of communication.
Disadvantages of Committee organisation
It is costliest
Committee management is slower in reaching
decisions than a one-man rule.
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Departmentation/Departmentalization
A department is a distinct area, unit, or sub-system of organisation
over which a manager has authority for performance of specified
activities. It is also known as division, branch.
Departmentation/Departmentalization involves dividing an
organization into different departments, which perform tasks
according to the departments' specializations in the organization.
Departmentation is an essential part of the organizing process.
Simply speaking it is a process of grouping of various activities into
well defined divisions or departments. Such departments or
divisions operate under the control of a manager known as
departmental head.
Need/ Importance of Dr. Joseph Paul Ph.D.
Departmentation
Advantages of Specialization
Departmentation enables an enterprise to avail of the benefits of
specialization. When every department looks after one major function,
the enterprise is developed and efficiency of operations is increased.
Feeling of Autonomy
Normally departments are created in the enterprise with certain degree
of autonomy and freedom. The manager in charge of a department can
take independent decisions within the overall framework of the
organisation. The feeling of autonomy provides job satisfaction and
motivation which lead to higher efficiency of operations.
Dr. Joseph Paul Ph.D.
• Expansion
• One manager can supervise and direct only a few subordinates. Group
ing of activities and personnel into departmentation makes it possible
for the enterprise to expand and grow.
• Fixation of Responsibility
• Departmentation enables each person to know the specific role he is
to play in the total organisation. The responsibility for results can be
defined more clearly, precisely and accurately and an individual can
be held accountable for the performance of his responsibility.
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• Upliftment of Managerial Skill
• Departmentation helps in the development of managerial skill.
Development is possible due to two factors. Firstly, the managers focus
their attention on some specific problems which provide them effective
on-the-job training. Secondly, managerial need for further training can
be identified easily because the managers’ role is prescribed, and
training can provide them opportunity to work better in their area of
specialisation.
• Facility in Appraisal
• Appraisal of managerial performance becomes easier when specific
tasks are assigned to departmental personnel. Managerial performance
can be measured when the areas of activities are specified, and the
standards of performance are fixed. Departmentation provides help in
both these areas.
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• Administrative Control
• Departmentation is a means of dividing the large and complex
organisation into small administrative units. Grouping of activities and
personnel into manageable units facilitates administrative control.
Standards of performance for each and every department can be
precisely determined.
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Dr. Joseph Paul Ph.D.
• Types of Departmentations
• [Link] by Functions
• [Link] by Products
• [Link] by Territories
• [Link] by Process
• [Link] by Customers
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Dr. Joseph Paul Ph.D.
• [Link] by Functions:
• The enterprise may be divided into departments based on functions
like production, purchasing, sales, financing, personnel etc. This is the
most popular basis of departmentation. If necessary, a major function
may be divided into sub-functions.
• For example, the activities in the production department may be
classified into quality control, processing of materials, and repairs and
maintenance.
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Dr. Joseph Paul Ph.D.
The advantages of functional departmentation
(a) It is the most logical and natural form of departmentation.
(b) It ensures the performance of all activities necessary for achieving the
organisational objectives.
(c) It provides occupational specialisation which makes optimum utilization of
man-power.
(d) It facilitates delegation of authority.
(e) It enables the top managers to exercise effective control over a limited
number of functions.
(f) It eliminates duplication of activities.
(g) It simplifies training because the managers are to be experts only in a
narrow range of skills.
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Disadvantages of functional departmentation
(a) There may be conflicts between departments.
(b) The scope for management development is limited. Functional
managers do not get training for top management positions. The
responsibility for results cannot be fixed on any one functional
head.
(c) There is too much emphasis on specialisation.
(d) There may be difficulties in coordinating the activities of
different departments.
(e) There may be inflexibility and complexity of operations.
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(B) Departmentation by Products
• In product departmentation, every major product is organised as a
separate department. Each division may be sub-divided into
production, sales, financing, and personnel [Link]
departmentation is useful when the expansion, diversification,
manufacturing and marketing characteristics of each product are
primarily significant.
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Dr. Joseph Paul Ph.D.
Advantages of Product Departmentation
Product departmentation provides several advantages which may be stated as follows:
(a) Product departmentation focuses individual attention to each product line which fa
cilitates the expansion and diversification of the products.
(b) It ensures full use of specialised production facilities. Personal skill and specialised
knowledge of the production managers can be fully utilised.
(c) The production managers can be held accountable for the profitability of each prod
uct. Each product division is semi-autonomous and contains different functions. So,
product departmentation provides an excellent training facility for the top managers.
(d) The performance of each product division and its contribution to total results can
be easily evaluated.
(e) It is more flexible and adaptable to change.
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Disadvantages of Product departmentation
Product departmentation presents some problems as follows:
(a) It creates the problem of effective control over the product divisions by the top
managers.
(b) Each production manager asserts his autonomy disregarding the interests of the
organisation.
(c) The advantages of centralisation of certain activities like financing, and
accounting are not available.
(d) There is duplication of physical facilities and functions. Each product division
maintains its own specialised personnel due to which operating costs may be high.
(e) There may be under-utilisation of plant capacity when the demand for a
particular product is not adequate.
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(C) Departmentation by Territory/ Geographical
Territorial or geographical departmentation is specially useful to large-scale
enterprises whose activities are widely dispersed. Banks, insurance
companies, transport companies, distribution agencies etc. are some
examples of such enterprises, where all the activities of a given area of
operations are grouped into zones, branches, divisions etc.
It is obviously not possible for one functional manager to manage efficiently
such widely spread activities. This makes it necessary to appoint regional
managers for different regions.
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Dr. Joseph Paul Ph.D.
Advantages of Territorial department
Territorial departmentation offers certain facilities in operation. These are pointed out below:
(a) Every regional manager can specialize himself in the peculiar problems of his region.
(b) It facilitates the expansion of business to various regions.
(c) It helps in achieving the benefits of local operations. The local managers are more familiar
with the local customs, preferences, styles, fashion, etc. The enterprise can gain intimate
knowledge of the conditions in the local markets.
(d) It results in savings in freight, rents, and labour costs. It also saves time.
(e) There is better co-ordination of activities in a locality through setting up regional divisions.
(f) It provides adequate autonomy to each regional manager and opportunity to train him as
he looks after the entire operation of a unit.
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Disadvantages of Territorial departmentation
Territorial departmentation have the following problems:
(a) There is the problem of communication.
(b) It requires more managers with general managerial abilities. Such managers
may not be always available.
(c) There may be conflict between the regional managers.
(d) Co-ordination and control of different branches from the head office become
less effective.
(e) Owing to duplication of physical facilities, costs of operation are usually high.
(f) There is multiplication of personnel, accounting and other services at the
regional level.
(D) Departmentation by Dr. Joseph Paul Ph.D.
Customers
In such method of departmentation, the activities are grouped
according to the type of customers. For example, a large cloth store
may be divided into wholesale, retail, and export divisions. This type of
departmentation is useful for the enterprises which sell a product or
service to several clearly defined customer groups. For instance, a large
readymade garment store may have a separate department each for
men, women, and children.
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Dr. Joseph Paul Ph.D.
Dr. Joseph Paul Ph.D.
Disadvantages of customer departmentation
This method of departmentation may have certain disadvantages,
specially when it is followed very rigidly. These are as follows:
(a) Co-ordination between sales and other functions becomes difficult
because this method can be followed only in marketing division.
(b) There may be under-utilisation of facilities and manpower in some
departments, particularly during the period of low demand.
(c) It may lead to duplication of activities and heavy overheads,
(d) The managers of customer departments may put pressures for
special benefits and facilities.
(E) Departmentation by Process Dr. Joseph Paul Ph.D.
or Equipment:
In such type or departmentation the activities are grouped based on
production processes involved or equipment used. This is generally
used in manufacturing and distribution enterprises and at lower levels
of organization. For instance, a textile mill may be organized into
ginning, spinning, weaving, dyeing and finishing departments. Similarly,
a printing press may have composing, proof reading, printing and
binding departments. Such departmentation may also be employed in
engineering and oil industries.
Dr. Joseph Paul Ph.D.
Dr. Joseph Paul Ph.D.
Dr. Joseph Paul Ph.D.
Dr. Joseph Paul Ph.D.
Span of Control
Span of control-often referred to as Span of management or Span of
supervision. It is an important principle that states that there should be a
manageable number of subordinates under one superior.
Definitions
Span of control refers to the number of subordinates who can be effectively
controlled by a supervisor. It also denotes the number of subordinates who
report to a superior.
Span of control refers to the number of subordinates who directly report to
the superior , or the number of subordinates that a superior can manage
effectively.
Dr. Joseph Paul Ph.D.
Dr. Joseph Paul Ph.D.
Determination of Span of Dr. Joseph Paul Ph.D.
Management
V. A Graicunas a French management consultant , suggested
mathematical formulas to fix the number of subordinates under one
superior. He identified following relationships.
[Link] relationships=n
[Link] group relationships=n(2n-1-1)
[Link] Relationships= n(n-1)
[Link] Relationships=n(2n/2+n-1)
Factors effecting Span of Dr. Joseph Paul Ph.D.
Management
Capacity of Superior
Capacity of Subordinates
Nature of Work
Degree of Centralization
Facilities available
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Dr. Joseph Paul Ph.D.
Authority
Authority is a key concept in the organization and is mainly related to
positions. Every manager receives the authority from his superior by
the delegation process.
Definitions
Herbert 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 is superior, and the other is subordinate. The
superior frames and transmits decisions with the expectations that the
subordinate will accept the decisions. The subordinate executes such
decisions, and his conduct is determined by them”.
Dr. Joseph Paul Ph.D.
Features of Authority
Legitimate Right
Positional
Formal Relationship
Key to managerial action
Result Oriented
Dr. Joseph Paul Ph.D.
• Delegation of authority concerned with offering or granting of
authority by superior to subordinates. A person who delegates
authority is known as the delegator, who receives the authority is the
delegatee and the process of granting authority is the delegation.
• Delegation refers to assigning task to others and giving them authority
to do it.
• Definition
• George [Link] – Delegation means conferring authority from one
executive or organizational unit to another in order to accomplish
particular assignments.
Dr. Joseph Paul Ph.D.
Advantages/Benefits of Delegation of Authority
• Reduced Burden
• Effective and Quick Decisions
• Job Satisfaction
• Sense of Responsibility
• Development of Managerial Qualities
Elements of Delegation of Dr. Joseph Paul Ph.D.
Authority
• 1] Responsibility
• A manager will assign some specific work or task to his
subordinate. Thus he is assigning his team-member or subordinate
with some responsibilities.
• 2] Authority
• Now if the subordinate has to fulfill his responsibility he will need
the tools to do so. One of these tools is the authority that comes
with responsibility.
• 3] Accountability
• Once the manager delegates the work and the authority, he needs
to check on the work of his subordinates. He is accountable for the
work done by his subordinates.
Dr. Joseph Paul Ph.D.
Dr. Joseph Paul Ph.D.
Centralization and Decentralization
Dr. Joseph Paul Ph.D.
Centralization
Dr. Joseph Paul Ph.D.
Dr. Joseph Paul Ph.D.
Dr. Joseph Paul Ph.D.
Merits of Centralisation
[Link] provides for maximum control over the entire organization.
b. It ensures that all the work is performed in the same manner and in
accordance with the same general policies and principles.
c. It ensures economy in administration by avoiding duplication of work.
[Link] is suitable for dealing with emergencies and unanticipated matters.
e. It helps in quick decision making which in turn facilitates effective
handling of emergency situations
Dr. Joseph Paul Ph.D.
Demerits of Centralisation
[Link] leads to delay in securing action as the field officials have to refer the matter to the
higher authorities.
b. It makes administration irresponsive as the head office acts without the knowledge
of local conditions and requirements.
c. It increases the burden of the top executives with routine functions and hamper their
development
d. It does not provide scope for employee participation in decision making
e. There is no scope for specialization because an individual will have to look after
many functions at a time
Dr. Joseph Paul Ph.D.
Decentralisation
• The assignment of authorities and responsibilities by the top level
management to the middle or low-level management is known as
Decentralization. It refers to the dispersal of decision making power to
the lower level of the organization.
• ‘Decentralization refers to the systematic effort to delegate to the
lowest levels all authority except that which can only be exercised at
central points’. – Louis A. Allen
Dr. Joseph Paul Ph.D.
Dr. Joseph Paul Ph.D.
Advantages of Decentralization / Importance of Decentralization
[Link] is a good philosophy to motivate the mangers so that it results in better job satisfaction.
2. It increases the morale of lower level managers by satisfying their need for participation and
independence.
3. It helps to meet the challenges and complexities of big enterprises and provides scope for
growth and development.
4. It promotes quick decision making and avoids confusion
5. It provides training for future managers by giving them an opportunity to develop their
skills.
6. It gives a relief to the top management from concentrating on day-to-day affairs and permits
them to concentrate on developmental activities.
Dr. Joseph Paul Ph.D.
Factors Determining the Degree of Decentralisation
[Link] and Complexity of the organization
2. Availability of competent managers
3. Top management outlook
4. Control techniques
5. Planning pattern
Dr. Joseph Paul Ph.D.
Advantages of Decentralization / Importance of Decentralization
[Link] is a good philosophy to motivate the mangers so that it results in better job satisfaction.
2. It increases the morale of lower level managers by satisfying their need for participation and
independence.
3. It helps to meet the challenges and complexities of big enterprises and provides scope for
growth and development.
4. It promotes quick decision making and avoids confusion
5. It provides training for future managers by giving them an opportunity to develop their
skills.
6. It gives a relief to the top management from concentrating on day-to-day affairs and permits
them to concentrate on developmental activities.
Dr. Joseph Paul Ph.D.
Disadvantages of Decentralisation
[Link] is costly because it requires competent people to be employed
to accept authority.
b. It may lead to inconsistencies, when every department or
division does not adopt procedures uniformly.
c. It creates a problem of among various units or departments.
d. Differences of opinions of top management and unit head often
lead to conflicts.
Dr. Joseph Paul Ph.D.