Organizing in Management - Basic Elements of Organization

Organizing is the second function of management. It involves  grouping of activities,  assignment  of these activities into groups, delegation of authority and establish coordination among workers. In this article we will cover the following topics:

1. Organization.

2. Types of organization.

3. Basic elements of organization.

4. Factors affecting span of control.

5. Departmentation.

Organization

An organization is a social unit of people where they work together to achieve their common goals. By nature an organization of two types which are given below:

1. Formal Organization:

It is the system of well-defined jobs in a formally organized enterprise. These jobs are defined in terms of authority, responsibility and accountability. This type of organization is bound by rules and regulations. Usually these rules are in writing form. The formal organization is built around the four pillars of an organization such as division of work, scalar chain, span of control, and organization structure. Organization chart is useful for showing formal organization.

2. Informal Organization:

Informal organization is a system of interpersonal relationships that arise spontaneously when people associate with each other. There are no rules, systems and procedures, workers come close to each other for cooperation and coordination. It has no place in organization chart. According to Chester Barnard (founder of this phenomenon) informal relationships help organization members satisfy their social needs and get things done.

Basic Elements of Organization

According G. Scott there are four basic elements which he describes as the pillars upon which classical organization is built. They are:

1. Division of work.   (Division of labor)

2. Scalar Chain.

3. Span of control.      (Span of management)

4. Organization structure.

1.  Division of Work

The division of a complex task into components so that individuals are responsible for a limited set of activities. It is also known as division of labor. The division of labor avoids waste of time, duplication of efforts and waste of resources. Adam smith emphasized the importance of dividing activity to get the work done efficiently. According to him there were three reasons why the division of labor increases the quantity of work. First, the skill of the worker increases. Second, small amount of time is lost in passing from one type of work to another. Third, division of labor encourages the invention and use of special machinery that also adds to increased productivity.

2. Scalar Chain

It is the second pillar of an organization which represents the line of authority from top management to bottom. In other word, it creates management levels which are top level, middle level, and low level of management. Delegation, responsibility and authority are essentials components of scalar chain. A manager cannot retain a hundred percent power and authority because it will be overburdened to perform his real managerial task. Therefore, he delegates duties, assigns responsibility and grants authority. Duties define the task the worker is to do. Responsibility is the obligation to give account for accomplishment of the job. Authority means that the worker has power and right to make decisions, give orders and officially act within the organization.

3. Span of control

Span of control refers to the number of subordinates that can be controlled effectively and efficiently by a superior in an organization. In simple words, span of control means the number of subordinates a superior has. If this number is too large personal supervision becomes difficult. If this number is too small, work cannot be performed satisfactorily. In every organization, it must be decided how many subordinates a superior can managed. In normal situation it is four to eight subordinates at upper level of organization and eight to fifteen or more at the lower levels.  As the size of the company increases the number of subordinates at the top level increases and vice versa.

Factors Affecting Span of Control

a. Nature of work

If the work is repetitive in nature and does not require any special technique to perform, then a superior can managed a large number of subordinates.

b. Capacity of superiors

The ability and capacity of superiors greatly affects the span of control. If they are highly qualified, experienced and experts in their field, the span of control will be wide and vice-versa.

c. Capacity of subordinates

If the subordinates are capable, competent, experienced and have enough talent to perform the task assigned to them. In such a case, the superior can managed more number of subordinates and vice-versa.

d. Delegation of authority

Delegation of authority also affects the span of control. If the superior delegates the authority and power he has to take fewer decisions. Therefore, it will help to increase span of control.

e. Rate of change

The impetus rate of change in technology, markets, government policies and fashions narrows span. The industries which have unchanged working environment, the span is wide.

f. Use of objective standards

Standards are the plans which act as a yardstick to measure the performance. The manager must find out through use of objective standards whether subordinates are following the plans. Objective standards increase the span.

g. Communication techniques

The communication techniques may also affect the span of control. If electronic devices are used for communication will save a lot of time and span can be widen. If face to face communication is used, it will require more time.

4. Organization Structure

The way in which organizational activities are grouped, organized and coordinated toward the achievement of organizational goals. The structure of an organization is generally shown in organization chart. The organization chart is the Skelton of the organization which shows the authority and responsibility between various positions in an organization. The grouping of employees and activities into departments makes it possible to manage the increasing complexities of an organization. 

Departmentation

Departmentation is a crucial part of organizing. It is the process by which activities are grouped and each group is known as department. The process of departmentation takes place at all levels in the organization. It provides following advantages:

1. It promotes specialization because of systematic division of work among individuals.

2.  It helps in clearly fixation of responsibility.

3. It improves the operating efficiency of an organization.

4. Departmenation facilitates better and effective control.

5. Departmentation improves coordination.

Bases for Departmentation

1. By functions (type of work such as sales, production, finance etc.)

2. By product (manufacturing goods such as air conditioners, washing machines, iron etc.)

3. By territory (geographical area such as market location)

4. By customers (types of customers such as wholesaler, retailer)

5. By manufacturing process

6. By simple numbers

7. By time

8. By project