F.Y B.COM
SEMESTER : 1
STRUCTURE AND PROCESS OF BUSINESS
(SPB)
UNIT-III
ORGANIZATION STRUCTURE AND DESIGN
CONCEPT OF ORGANIZATION
● Organization is a mechanism or basic framework enabling persons to work effectively and achieve the set goals through integrated group efforts.
● Organization indicates conscious combination and systematic arrangement of various economic resources (inputs) in the form of 5 M's (1) Men (2) Money (3) Machines (4) Materials (5) Management caliber for the production of goods and services (output) as well as for the planned distribution of output in the home and/or foreign markets. Of course, management acts as the central organizing, directing and controlling authority for any enterprise requiring collective efforts to realize the common desired objectives.
● The moment a group of people come together with a certain common aim and equipment and desire to achieve certain common goals through planned joint efforts and team work, we have a organization.
● There are three essentials of organization:
(1) People, our great resources,
(2) Common goal, our destination and
(3) Common means or equipment, necessary for joint effort to reach the goal.
● A business organization draws from its environment, i.e society, flow of five resources or inputs -5 M's to carry on most efficiently production and/or distribution of its output of goods and services required in any market - regional, national, or even world market. Management brings about appropriate mix of resources to attain maximum productivity and satisfaction.
● Organization is understood as a dynamic process and a managerial activity which is necessary for bringing people together and trying them together in the pursuit of common objectives.
MEANING AND DEFINITION
● Organizing is the function of identifying the required activities, grouping them into jobs, assigning jobs to various position holders, and creating a network of relationship, so that the required functions are performed in a coordinated manner, leading to the accomplishment of desired goals.
● It involves identifying and grouping of activities and establishing authority-responsibility relationship
● Louis Allen Define Organization as...
"Organization is the process of identifying and grouping work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives."
The process of organizing involves establishing an intentional structure of roles for the staff at all levels of hierarchy in the organization.
● Organization : used in many ways:
1. Organization as an entity
● Organization as group of people
● Organization as a structure
● Organization as a process
1. Organization as an entity:
● Enterprise as a whole-company, corporation, partnership etc
● Organizing is defined as collectivity of people for achieving common objectives
William Scott defined Organization as...
"Organizations are collectivity of people that have been established for the pursuit of relatively specific objectives on a more or less on continuous basis.
Features:
● Sum total of human being
● Deliberate and conscious creation
● Contractual relationship among organization and its members
● Created to achieve objectives
● Rationality in coordination of activities (rules are set collectively and all are expected to obey)
● Structure (Relationship between individual and the position they occupy in the Organization)
2. Organization as group of people:
● Different groups created either formally or informally
Features:
● Organization refers to people
● Interact among others
● Interactions are specified by some sort of structure, i.e., who will interact with whom
● The interactions are meant to achieve some sort of objectives
3. Organization as a structure:
● Pattern of relationship
● Relationship among individuals and the position they hold in the organization
● Pattern in which various parts or components are interrelated or interconnected
● Structure tends to be somewhat permanent with provision of incorporating changes whenever required.
ORGANISING AS A PROCESS
4. Organization as a process:
● In present context, the term organization is mostly referred to as entity. Whenever it is used as process, it is termed as organizing rather as organization
● Organizing is a process that involves:
● Identifying and grouping of activities
● Divide it into departments, divisions and sections
● Delegate appropriate authority as well as responsibility so that they can carry out the work as planned and organization is able to achieve its objectives
ORGANISATION AS PROCESS : - [ ELEMENTS / STEPS]
1. Departmentation:
Identify activities which help to achieve organizational objectives and group closely related activities into Divisions, Departments and sections.
The process is known as Departmentation.
Departmentation is required to ensure that:
● All necessary activities are performed
● No duplication of activities
● Activities are performed in a coordinated way
● Also helps in determining Span of Management( how many individuals should be put under direct supervision of a manager)
● The various bases used for grouping activities can be on the basis of function, product, process, customer, Geographic region, time or a combination of these.
2. Linking Departments: The next issue comes before the management is to decide how various departments of the organization will be linked together so that they operate in a coordinated manner. The way these departments are linked together gives shape to overall organization structure.
3. Defining Authority and Responsibility:
● When activity or group of activities is assigned to an individual, he becomes responsible for the performance of those activities. He can discharge this responsibility properly only when he has corresponding authority, which comes to him through the process of delegation.
4. Prescribing Authority Relationships:
● Reporting relationship must be specified
● Every individual who functions in the capacity of superior has some authority, there is need for prescribing authority relationship among different individuals and departments in which hey functions.
● It helps individual to know what must be done, how it must be done, how a particular job is related to each other, how the work is progressing, who is supposed to handle the work and how the work has to be coordinated to achieve organizational objectives.
BASIC CONCEPTS
● DIVISION OF LABOUR:- The breakdown of a complex task into components so that individuals are responsible for a limited set of activities instead of the task as a whole. Sometimes referred to as division of labor. Division of labor implies that work must be divided to obtain clear - cut specialization with a view to improving the performance of individuals in the organization.
● The classical approach rests firmly on the assumptions that more a particular job is broken into its simplest components parts, the more specialized a worker can become in carrying out his part of the job. The more specialized a worker becomes in fulfilling his particular job, the more efficient the whole organization will be.
● For division of labor, ,it is necessary to identify the various activities to be performed. Such identification can be done at various levels in a large organization, because a major activity is to be fragmented into sub activities, these sub activities into further sub -sub activities and so on. This process leads to differentiating the tasks necessary to accomplish an objective.
● DEPARTMENTATION:-The first real task in designing an organization structure is the identification of activities and to group them properly. The process of grouping the activities is commonly known as departmentation. The term used to denote the departments that result from departmentation vary a great deal. In business organization such terms as division, department, and section are used, in government, these are called branch, department, bureau, and section, in military, these are referred to as battalion, group, company etc. Moreover, the terms used to designate departments may vary in different organizations of the same nature.
Departmentation is the process of analyzing, dividing, and arranging work or activities into manageable portions for individuals, sections and departments. Thus, departmentation is the organization wide division of work.
3.HIERARCHY: CONCEPT
The span of management/control refers to the number of people and departments that report directly to a particular manager. Once work is divided, departments created and the span of control chosen, managers can decide on a chain of command- a plan that specifies who reports to whom. These reporting lines are prominent features of any organization chart.
The result of these decisions is a pattern of multiple levels that is called a hierarchy. At the top of the organizational hierarchy is the senior ranking manager responsible for the operations of the entire organization. These managers are commonly referred to Chief Executive Officers (CEO's), Presidents or Executives Directors. Other, lower –ranking managers are located down the various levels of the organization.
SPAN OF MANAGEMENT
Choosing an appropriate span of management/control for an organizational hierarchy is important for two reasons.
First the span can affect what happens to work relationships in one particular department. Too wide a span may means that managers are overextended and employees are receiving too little guidance or control. In a department where a dozen or more employees are clamoring for their manager's feedback, there is potential for frustration as well as errors. Too narrow span, in contrast, is inefficient because managers are underutilized.
Second, the span can affect the speed of decision making in situation where multiple levels in the organization hierarchy are necessarily involved.
