Organising

Informal Organisation.

Span of management refers to the number of subordinates that can be effectively managed by a superior or any higher authority. It determines the level of management in the structure.

The circumstances under which the functional structure will prove to be an appropriate

choices are as follows:-

• Large Size

• Requirement of Specialisation

Functional Organisation Structure

The steps in the process of organising are as follows: -

• Identification and division of work- To fulfil a target, it has to be divided according to the previous determined plans. It helps in restricting duplication of work and reduces the burden of the work on a particular person thereby increasing the efficiency of the organisation.

• Departmentalisation- When the target work is divided according to the set plans, the things which works that are similar are grouped together into a specific task. This is known as departmentalisation. It can be created using several criteria as a basis.

• Assignment of duties- Once departmentalisation is done, the work is assigned to various employees. The work should be assigned on the basis of the ability of the employee to do it effectively. Each employee is under a superior who controls the management of the task.

• Establishing reporting relationships- Each employee should know from whom he should take orders and to whom he is accountable. He/She must report the progress of the work and the superior should help the sub ordinates in times of need thereby maintaining a good relationship.

The elements of delegation are as follows:-

• Authority- Authority refers to the right of a person to command his subordinates and take action within his scope of position. It also refers to take a decision inherent in his position and tell people what to do and expect them to do it.

• Responsibility- It is the obligation of a subordinate to perform the assigned job given to him effectively. The subordinate is always bound to perform the duties assigned by the superior. He is always responsible to his superior.

• Accountability- It implies being answerable to the final outcome. A subordinate is always accountable to his superior.

The ways in which informal organisation support formal organisation:-

• Prescribed lines of communications are no followed. So it leads to faster spread of communication and quick feedback.

• It fulfils the social needs of the employees and maintains a good environment in the organisation. It enhances their job satisfaction and gives them a sense of belongingness in the organisation.

• It contributes to the fulfilment of the objective of the organisation by compensating for inadequacies in the formal organisation.

No, a large sized organisation cannot be totally centralised and decentralised. With its increased size and complexity, there is a tendency to move towards decentralised decision making. The employees who are directly and closely involved with certain operations tend to have more knowledge than the top order management. So there is a need for balance between these co-existing forces.

Decentralisation refers to the manners in which decision making responsibilities are divided among hierarchical levels. It refers to delegation of authority throughout all the levels of the organisation. Decision making authority is shared with the lower levels and is consequently placed nearest to the point of action. This decision making authority is pushed down the chain of command. Delegation is the process and decentralisation is the end result.

For Neha’s expanded organisation, Divisional Structure is recommended.

The usefulness of it is as follows:-

• She will avail the benefits of specialisation. As she introducing new items it will be better to make divisions for each product.

• She will be able to know her profit o loss margins and thereby plan accordingly.

Not at all. The production manager did not give him the authority to requisition tools and materials so he should not held the foreman responsible for not achieving the desired target. There should be a balance between authority and responsibility. If he had given the authority, then the foreman must have the responsibility to achieve the set target.

Delegation is considered essential for effective organising because-

• Effective Management- By empowering the employees the managers are able to function more effectively as they time to concentrate on important matters.

• Employee development- As a result of delegation, employees get more opportunities to showcase their talent. It enables them to develop new skills and perform more difficult and complex tasks. It makes them better leaders and decision makers and gain more experiences.

• Motivation of employee- Delegation helps in developing the talents of the employees. When a superior assigns a work to a subordinate, it makes the employee feel more charged and enthusiastic as the superior assigns the tasks as well as his trust in him. This makes the employee gain self confidence and try even harder to perfectly complete it. This shows the relationship between a superior and a subordinate.

• Facilitation of growth- Delegation helps in expansion of the organisation by providing a ready workforce to take up leading positions in new ventures. Trained and experienced employees are able to play significant roles in launch of new products by replicating the work ethos they have absorbed from the existing units in the newly set up branches.

• Basis of management hierarchy- Delegation of authority establishes superior subordinate relationships which are the basis of hierarchy of management. It is the degree and flow of authority which determines who has to report to whom.

• Better Coordination- The elements of delegation: Authority, Responsibility, Accountability help to define the powers, duties and answerability related to various positions of the organisation.

A divisional structure in an organisation comprises of separate business units and division. Each unit has a divisional manager who has the authority of the unit and is responsible for the performances of the unit.

The advantages of divisional structure are as follows:-

• Product Specialisation helps in the development of the skills as it gains experience from all forms regarding that product. This helps in achieving high aims with it.

• Divisional heads are accountable for profits, as revenues, cost related to different departments can be easily identified and assigned to them. This provides a proper basis for management. It also takes responsibility in poor performances and takes actions accordingly.

• It promotes flexibility and initiative as each division functions as an autonomous unit and it leads to further decision making.

• It provides expansion and growth as new divisions can be added without interrupting the existing ones by assigning new head and staff for the new division.

Limitations of divisional structure are as follows:-

• It may lead to a conflict because of formation of similar divisions due to different policies and different allocation of funds and each division will try to maximise its profit at the cost of the other.

• Creation of similar type of divisions leads to increase in the expenditure as there may be duplication of activities across products.

• It grants the manager the supreme authority to exercise his controls related to a particular division. In course of time such a manager may become selfish and see his own interests ignoring the organisations interest.

Decentralisation is an optional policy because whether or not an organisation should be decentralised is upto the top order management to decide it.

An organisation should be de decentralised because of the following reasons:-

• Develops initiative among subordinates- Decentralisation helps to promote self reliance and confidence among the subordinates. It gives them the power to judge and accordingly take a decision during a problem. They don’t have to depend on the higher authority and take their best judgement. This improves their confidence and prepares them to become leaders.

• Develops managerial talent for the future- Along with the training, it is the experience which makes a person fully job fit. Decentralisation gives them the chance to prove their worth and their talents create a reservoir of qualified manpower who can solve more challenging problems through promotions.

• Quick Decision making- In Decentralised organisations, the time taken to solve the problem is fast as it doesn’t depend on the advice of the superior authority. There is no requirement of any approval or any long channels which takes sufficient amount of time.

• Relief to the top management- Since decentralisation gives the power to the subordinates to tackle a situation on their own; it doesn’t involve the higher authority to approve or see to solve every problem. By this way, they could save a lot of time and utilise it in making other business policies or expanding the business.

• Facilitates growth- As decentralisation gives the authority to the subordinates to tackle and solve the problem on their own, it enables the whole unit to function efficiently. Consequently there are high returns and the business can be expanded fruitfully.

• Better Control- Decentralisation enables to evaluate the progress of a unit at a time and the members can be held accountable for the results. It enables the management to take necessary actions so that a unit can become more efficient.

The organisation should shift from functional structure to divisional structure as it is looking to diversify into manufacture new range of toys.

The benefits will be as follows:-

• The performance will be easily accessed.

• Easy Decision making.

• New electronic toys will be added without disturbing the previous toys.

The Company need to change complete formal organisation culture and accept informal things. The higher managerial superior should interact with the sub ordinates.

This will help the company in the following ways:-

• It will lead to faster spread of information. Prescribed lines of communications are not followed.

• A good relationship between the superior and subordinates thereby maintaining a healthy environment.

• It will collectively help them to achieve their set target.

The Company now needs to shift from centralization to Decentralization because it has grown in size. Decentralization will help the company in the following ways:-

• It will enable the sub ordinates to take minor decision which will reduce time and increase efficiency.

• It also develops managerial talents.

• Major policies will be taken by the higher authorities regarding performance of the business which will gradually catch up with the market.