Concept of organising
Organising means deciding the jobs to be done, grouping them, giving them to the right people, and fixing who reports to whom, so that the plan can be put into action. It comes right after planning.
Process of organising
- Identification and division of work: break the total work into small, clear jobs.
- Departmentalisation: group similar jobs into units (departments), by function, product or area.
- Assignment of duties: give each job to a person who fits it best.
- Establishing reporting relationships: fix who gives orders to whom and who reports to whom.
Importance of organising
- Benefits of specialisation: people do the same work again and again and become experts.
- Clarity in working relationships: everyone knows their boss and duties.
- Best use of resources: no double work, no waste.
- Adapts to change: the structure can be changed as needed.
- Effective administration: clear roles avoid confusion.
- Develops staff: delegation gives juniors a chance to learn.
- Helps growth: new departments can be added easily.
Organisation structure
An organisation structure is the framework of jobs and reporting lines. It is often shown as a chart. The span of management is the number of juniors one manager can handle well; it decides how many levels the structure has.
Functional structure
Jobs are grouped by function: production, purchase, marketing, finance, HR. Good: specialisation, less duplication, easy control, easy training. Weak: departments care about their own goals, poor coordination, hard to judge who is responsible for profit, slow to change. Suits: big firms with one main product line.
Divisional structure
Jobs are grouped by product (or region). Each division has its own production, marketing and finance. Good: each division head is answerable for profit, quick decisions, easy to add new products, builds all-round managers. Weak: duplication of work and cost, divisions may fight for money, divisions may care only for themselves. Suits: firms with many different products.
| Basis | Functional | Divisional |
|---|---|---|
| Grouped by | Type of work | Product or area |
| Specialisation | Of functions | Of product lines |
| Responsibility for profit | Hard to fix | Easy to fix |
| Cost | Lower | Higher (duplication) |
Formal and informal organisation
Formal organisation is the structure designed by management, with fixed roles, rules and chain of command. It is stable and clear, but can be slow and rigid.
Informal organisation grows by itself when people meet, chat and become friends. It has no fixed rules. News spreads fast through the grapevine. It helps teamwork and meets social needs, but it can spread rumours and resist change.
| Basis | Formal | Informal |
|---|---|---|
| Made by | Management, on purpose | Staff, by itself |
| Purpose | Reach company goals | Meet social needs |
| Rules | Written | Unwritten |
| Flow of talk | Through chain of command | In any direction |
Delegation
Delegation means a manager hands over some work and the authority to do it to a junior. The manager stays answerable to his own boss.
Elements of delegation
- Authority: the right to give orders and decide. It flows downward.
- Responsibility: the duty to do the job well. It is accepted by the junior and flows upward.
- Accountability: answering for the final result. It flows upward and cannot be delegated.
Importance of delegation
It frees managers for big tasks, develops juniors, motivates them, helps the firm grow, builds a clear chain of command and gives better coordination.
Decentralisation
Decentralisation means spreading decision-making power to the lower levels across the whole organisation. Centralisation means keeping most decisions at the top. No firm is fully one or the other; it is a matter of degree.
Importance of decentralisation
- Builds initiative and confidence in juniors.
- Develops future managers.
- Quicker decisions, because people close to the problem decide.
- Frees top managers for big-picture work.
- Helps growth and gives better control through clear performance checks.
Delegation vs decentralisation
| Basis | Delegation | Decentralisation |
|---|---|---|
| Nature | A need: every manager must delegate | A choice (policy of top management) |
| Scope | Narrow: one manager to one junior | Wide: whole organisation |
| Freedom | Less; more control by the boss | More freedom to decide |
| Purpose | Lighten a manager's work | Give more power and freedom to lower levels |
Try it
Take your family's Sunday house-cleaning. List all the jobs (divide), group them (kitchen, rooms, clothes), give each group to one person, and decide who checks the work. Draw it as a chart. Then ask: did the parent delegate the authority to decide how to clean, or only the work?
Key formulas and definitions
- Organising process: identify and divide work → departmentalise → assign duties → establish reporting lines.
- Functional = grouped by function; Divisional = grouped by product.
- Authority flows down; accountability flows up and cannot be delegated.
- Decentralisation = delegation spread to all levels of the organisation.
Worked examples
1. A company making only cement has departments for purchase, production, sales and finance. Which structure is this?
Functional structure, because jobs are grouped by type of work and the firm has one main product.
2. A group makes soaps, biscuits and cement, each with its own production and sales team. Which structure suits it and why?
Divisional. The products are very different, so each needs its own team, and each division head can be held responsible for its profit.
3. A sales manager gives a junior the power to give 5% discount, but the junior's mistake causes a loss. Who answers to the general manager?
The sales manager. Accountability cannot be delegated. The junior answers to the sales manager, and the sales manager answers to the general manager.
4. Workers from different departments play cricket together and share news about a new bonus before the official notice. What is this?
Informal organisation; the news spread through the grapevine.
5. A retail chain lets each store manager decide local prices, staff hiring and stock. Is this delegation or decentralisation?
Decentralisation, because decision power is spread to lower levels across the whole organisation as a policy.
Common mistakes
- Saying accountability can be delegated. Only authority is delegated; accountability stays with the manager.
- Thinking delegation is optional. Delegation is a must for every manager; decentralisation is a policy choice.
- Saying informal organisation is always harmful. It can speed up communication and build team spirit.
- Mixing up the structures: grouping by product is divisional, not functional.