Organizing – A Management Function

Organizing – A Management Function

Organizing is the function of management which follows planning. It is the process of establishing orderly uses for all resources within the management system of the organization. It is a function in which the synchronization and combination of human, physical, financial, and information resources takes place for the achievement of the results. Organizing function is essential because it facilitates administration as well as the functioning of the organization.

According to Louis A. Allen, “Organisation is the process of identifying and grouping of the works to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most efficiently”.

According to Chester Barnard, “Organizing is a function by which the concern is able to define the role positions, the jobs related and the co-ordination between authority and responsibility”.

Organizing is the next important function of management after the planning. In case of planning the management decides what is to be done in future. In case of organizing, it decides on ways and means through which it becomes easier to achieve what has been planned. Hence, organizing refers to the following process.

  • Identifying and grouping of the work to be performed.
  • Defining and determining responsibility and authority for each job position.
  • Establishing relationship among various job positions.
  • Determining detailed rules and regulations of working for individuals and groups in organization.

Organizing creates and maintains rational relationships between human, material, financial, and information resources by indicating which resources are to be used for the specified activities and also when, where, and how they are to be used. The organizing function leads to an organizational structure which defines precisely the authorities and the responsibilities. Organization structure is the pattern of relationships among various components or parts of the organization which prescribes the relations among various activities and positions. It defines the system of relations between elements, factors, and activities within the organization. The organizational structure is to be designed for some concrete conditions and objective needs of the organization. The following are the important factors which are to be taken into consideration in the process of designing of the organizational structure.

  • Environment – The environment is relevant for behaviour and the organization structure. The most important characteristics of environment that determine organization structure are complexity (determined by the number of elements affecting the organization, their variety and intensity of influence on the operations), stability (measured by the rate of changes in time, similarity of changes, and possibility of their foresight and comprehension), and uncertainty (related to availability of relevant information for rational decision-making).
  • Technology – It enables transformation of organizational inputs into outputs and it is an important determinant of the internal efficiency of the organization. Technology includes technical equipment for manufacturing, knowledge and ability for using the equipment, and working activity necessary for the transformation process. Considering the relationship between technical complexity of the organization and its structural characteristics, there are three groups of the organizations. The first group consists of the organizations which are having individual or small-lot production. In these organization the technology is universal, the technological process is subject to frequent changes, and they have a way of production which is characterized by a low level of centralization, a small number of hierarchy levels, informal proceedings, and verbal communication, which implies an organic organizational structure. The second group consists of the organizations with large-lot and mass production. In these organizations the activities are routine, the technological process is complex and not easy to change, there is a high level of standardization and specialization, and more hierarchy levels in the organization structure having a high level of formalization and routine distribution channels. The third group consists of the organizations with continually-process production. In these organizations the working process is continual in a certain production cycle, the operations and procedures are synchronized, the production is highly automated, technical complexity is at the highest level, centralization is low, communicating is verbal, and formalization is on a low level. All of these characteristics imply an organic structure of the organization.
  • Strategy – Starting from its internal potentials, chances and threats of environment, the organization designs its strategy for the realization of the objectives. This strategy requires a certain organization structure as the frame. The concept of organization structure as a consequence of the adopted strategy has evolved in the sense that the relationship between strategy and structure is that of reciprocity, which means that the organization structure also influences the strategy.
  • Size – Connection between the size of the organization (measured by the number of employees, power of installed capacities, total revenue, value of capital investment, and other factors) and its organizational structure is very easy to notice. Namely, when the organization grows up, its organization structure becomes more complex, and vice versa.
  • Forms of aggregating – The essence of aggregating in the process of organizational structuring is a result of the need to control, coordinate, and communicate, which implies linkages on vertical and horizontal bases. Vertical aggregating is suitable for large organizations, with a long hierarchical chain, as well as for organizations with stable and simple environment and routine technology. The aim of vertical aggregating is to enable top bottom coordination in organization through different levels of management structure, strong control, and two-way communication. However, an environment which is turbulent and also the complex technology need horizontal coordination of activities. Vertical aggregating with formal authority and horizontal aggregating, as its complement, is a way of achieving internal and external efficiency of an integral totality.

Importance of organizing

Organizing function follows the planning function. Plans prepared under the function of planning govern all aspects of organizing function. Since the organizing follows planning it is closely related to it. The organizing begins after the plans are prepared and is governed by the prepared plans. While the plans state where the organization is to go, organizing helps the organization how to get there.  Organizing function shows the management how the organization is to be built or how the existing one is modified to ensure that the goals set in the plans are achieved.

Organizing is essential because it facilitates administration as well as operation of in the organization. By the proper grouping of the work and the employees, production increases, overload of work is checked, wastage is reduced, duplication of work is restricted and effective delegation becomes possible. Organizing also facilitates growth and diversification of activities through clear division of work. It helps in developing a proper organization structure and the extent and nature of decentralisation can be determined. In addition to the above, it becomes possible through organizing to provide for the optimum use of technical and human resources. Besides organizing also encourages creativity and enhances interaction among different levels of management which leads to unification of efforts of all.

Organizing facilitates development of the organizational structure which becomes a tool for the management to achieve plans. This organizational structure is to be responsive with the changes in the plan. The organization which has taken the time, energy, and money to develop quality plans needs management who understand the importance of organizing.

Process of organizing

Organizing, like planning, is a process which is to be carefully worked out and applied. This process involves determining what work is needed, assigning those tasks, and arranging them in a decision-making framework (organizational structure). If this process is not conducted well, the results may be confusion, frustration, loss of efficiency, and limited effectiveness. The process of organising consists of the following five steps. (Fig 1)

  • Identification of activities – Each organization exists for fulfilling a specific purpose. This purpose identifies the activities which are performed by the organization. For example, in a manufacturing organization, production of the goods and their selling are the major activities in addition to the routine activities. And these activities are in variance with the activities of a service organization or an organization involved in the trading activities. Hence the identification of the various activities of the organization is an important step in the organizing function.
  • Grouping of activities – Once the activities have been identified, then there is a necessity that they are grouped. The activities are grouped in various ways. The activities which are similar in nature can be grouped as one and a separate department can be created. For example, activities related to the purchasing, production, marketing, and accounting and finance can be grouped respectively under purchase, production, marketing, and finance departments etc. Further in each department the activities can be further subdivided into various specific jobs.
  • Assignment of responsibilities – Having completed the exercise of identifying, grouping and classifying of all activities into specific jobs, the individual employees comes into picture since the employees are to be assign with the responsibilities to take care of activities related to the specific jobs.
  • Granting authority – On the basis of specific responsibilities given to individual employees, they are to be provided with the necessary authority for the discharge of the assigned responsibilities in order to ensure their effective performance and in turn the performance of the organization.
  • Establishing relationship – This is a very important part of the organizing function since each employee in the organisation is to know as to whom to report and which are the employee who are to work with him. This establishes a structure of relationships in the organization which helps to ensure that the organization has clear relationships. This structure of relationships also facilitates the delegation.

Five steps of organizing function

Fig 1 Five steps of the organizing function

For carrying out the organizing function usually four approaches are followed for designing the organization structure of the organization.

  • The first approach is the functional approach. It is the most common approach. It groups activities under the major headings such as production, marketing, finance, and personnel etc. It is a logical approach. Lines are clearly drawn between departments. But, difficulties can arise because employees get separated department wise and hence from each other. Their understanding and concern for the specialty areas outside of their own is not easy to achieve. It can lead to communication difficulties and lack of cooperation between functional areas. Also, it does not develop generalists in the management area.
  • The second approach is the geographic approach which groups the activities and responsibilities according to the geographical location. Expanding organizations often locate plants and sales units or repair facilities in various parts of the country because of favourable labour and materials costs, tax incentives, easy access to transportation, or the need to be located near customers to serve them quickly and efficiently. Geographic patterns work best when different laws, currencies, languages, and traditions exist, and have a direct impact on the ways in which the organizational activities are to be conducted. The geographic structure furnishes a training ground to develop general management abilities. A limitation of this approach is the cost of employees and facilities. When the organization makes the decision to expand geographically it automatically incurs cost through duplication of employee’s positions and additional building sites.
  • The third approach is the production line approach. This approach assembles the activities of creating, producing, and marketing each product into one department. This approach is normally considered if each product of the organization needs a unique marketing strategy, production process, distribution system, or capital resources. The major disadvantage is similar to the geographic approach which is the additional cost through duplication of the functions within each product line.
  • The fourth approach is the customer approach which groups activities and resources in response to the needs of specific customer groups. If customers have a different set of demands, needs, and preferences then the following of this approach is appropriate. If the decision is made to use this approach with only some of the organizational customers then there will be difficulty in coordinating the customer-based departments with departments organized in other patterns. Another possibility in this approach is the overspecialization. The facilities and employees may become so specialized to solve the needs of the customers that they cannot be used for any other purpose.

Organizing principles

Organizing function is effective only if the management follows some guiding principles in order to make important decisions and act upon them. For an efficient organizing function the following are the guiding principles.

  • Principle of specialization – According to the principle, the entire work of the organization is to be shared among the subordinates based on their qualifications, abilities and skills. Hence, effective organization can be achieved through specialization of sharing or dividing work.
  • Principle of functional definition – The principle states that all the work in the organization is to be fully and clearly described to the managers and subordinates. For instance, the initial work of production, marketing and finance, the authority of managers and the responsibilities of the workers and their relationships towards each other must be clearly described to all the employees working in the department. Hence, clarification in the authority and responsibility helps in the growth of the organization.
  • Principles of supervision or span of control – The principle states that the span of control shows the number of employees that a single manager can handle and control efficiently. Hence, the management is to decide the number of employees that a manager can handle and this decision can be chosen from either a wide or narrow span of employees. There are two types of span of control namely (i) wide span of control in which a manager can easily supervise and effectively handle a big group of subordinates independently, and (ii) narrow span of control in which a manager does not have to supervise and control a large group of employees as the work and authority is shared among many subordinates. Hence, the manager needs to supervise only a selected number of employees at one time.
  • Principle of scalar chain – It is that chain of command or authorization in which there is minimum wastage of resources, communication is unaffected, overlapping of work is prevented, and this facilitates effective organization. The flow of authorization from the top level to the bottom level enables the managers to understand their positions of authority and this helps in an effective organization.
  • Principle of unity of command – As per this principle, one subordinate is accountable to only one superior at one time. This helps in preventing lack of communication and feedback and also brings about quick response. Hence, the principle of unity of command leads to effectively combine both physical and financial resources which in turn aids in effective coordination and organization.

Benefits of organizing

The benefits of the organizing function are as follows.

  • The end result of the organizing process is an organization which is whole consisting of unified parts (a system) acting in harmony to execute tasks to achieve goals, both effectively and efficiently.
  • A properly implemented organizing process results in a clarified work environment. Everyone in the organization knows what to do. The tasks and responsibilities of all individuals, departments, and major divisions gets clarified. The type and limits of authority also gets determined.
  • There is an environment of coordination and cooperation in the organization. The interrelationships of the various work units gets developed. The principle of unity of direction which calls for the establishment of one authority figure for each designated task of the organization is achieved. This person has the authority to coordinate all plans concerning that task.
  • A formal decision-making structure gets established in the organization. This chain of command allows the orderly progression up and down the hierarchy for decision making and decision-making communications.